There are several critical elements in packaging that attract consumers like shape, size and graphics of the packaging. Shape and size address the utility, handling comfort and storage requirements of a consumer. Graphics define consistency of brand colours, brand element detailing, brand message and clarity of information on the pack.

Since all these elements directly speak to the consumer, a lot of focus is now on pre-media. The primary goal of pre-media is to bring consistency in branding across different pack formats, multiple retail and packing locations. The red colour of Coca-Cola, the purple of Cadbury, the Gold of Five-Star chocolates, Blue of Pepsi, the Yellow and Red of Maggi are what reach consumers first. Consumers find comfort in associating with reliable brand colours. For brands, it becomes the starting point of engaging consumers with their products.

While brand owners today understand this concept, India throws up a lot of unique challenges at them. With a large geography to cover, logistics is a critical challenge. Brand owners address these through multiple packing locations – which create a tremendous challenge in brand image consistency.

The solution for this is to create a right pre-media strategy that organizes communication. Pre-media, through merging production challenges, legal limitation and brand identity elements, helps brand to achieve consistency on the retail shelf. By working as partners to consumer brands, pre-media players also help brand owners to manage critical production networks. A proper pre-media strategy helps brand owners to control cost of production and pass over the value saved to the consumer.

For global majors, India is a land of unique opportunity and challenge. Efforts to bring global brand standards has already picked up in the last few years. This is also pushing home-grown players to better their standards. Today, winning depends to a large extent on communicating with the consumers in a consistent manner. Brands are realizing this, and pre-media is playing a critical role in helping brands achieve their goal.

South India is incredibly diverse – be it language, culture, food or clothing. The four southern states have 25% of the country’s population, but 30% of its retail turnover. They are more literate and have higher levels of per capita income. Consequently South India is a very attractive market as far as retail is concerned.

 Some of the salient points about South India as a retail market are:

•  The South is the home of organized retail – and has built vibrant brands ranging back to the 1940’s.
• Entrepreneurs in the South are not risk averse – contrary to popular stereotype.
• Once they have found a robust business model, they are willing to scale – for example – textile,  apparel, jewelry retailers have built large (>50,000 sq. feet) single category showrooms, and have invested in marketing, technology and people.
• South India has built strong vibrant brands.
• Malls recognize that they need local and regional Southern brands as much as they need their national counterparts.
• The South has several retail “firsts” to its credit – the first electronics chain (VGP / Viveks) , largest jewelry chain, Large international sari brands (Nallis)

• Brands built in the South are consistent when they go national –

  whether its Nallis in Delhi or Kalyan Jewellers in Ahmedabad.

South India is the home of retail capabilities in India & has created the modern retail movement in this country. It has the wherewithal to accommodate new channels, new customers and the aspirations of the next generation of family entrepreneurs. It is the time for other South based brands to think and plan national.

(Bijou Kurien was the keynote speaker at the Kongu Retail Summit, Coimbatore held on 18^th March 2014)

For mot international retailers, growth in their home markets have levelled out, forcing them to look to emerging markets. Markets such as India, backed by favourable demographic profile and rising income levels – have become destinations for these retailers.  This trend is expected to continue and India is likely to emerge as one of the fastest growing economies[1] in the world.

As per estimates, the Indian retail sector was estimated at US$ 500 billion in 2012 and is likely to grow to US$900 billion by 2017, at a CAGR of more than 12%.

The retail sector comprises of 12 million traditional retail outlets as well as organised retailers. Organised retail, undertaken by the licensed retailers for branded apparels, lifestyle products, etc, is an emerging channel and offers huge growth potential due to low penetration.

Food and grocery form the largest share of the Indian Retail Market, this includes retailing of fresh fruits and vegetables, dairy products, staples, cereals, processed foods, ready to eat meals, spices and other edible products. Apparel was historically dominated by unbranded retailers selling through small garment and textile shops.

However, with the entry of foreign brands and the liberalisation of FDI regulations in single brand, this scenario has changed.  Today, apparel is considered as one of the most

organised segments.  In 2012, the apparels and accessories market was valued at USD 51 billion and it is growing at a healthy rate of 15% per annum[2].

The Advent of Foreign Direct Investment (‘FDI’)

Intermediaries and middlemen in India have dominated the value chain. Due to a number of intermediaries involved in the traditional Indian retail chain, norms are flouted and pricing lacks transparency creating greater noise for reforms

In 1997, India permitted FDI in wholesale cash and carry subject to government approval. Subsequently, requirement for approval was relaxed for FDI in wholesale cash and carry and 51% FDI in Single Brand Retail Trading (‘SBRT’) was allowed subject to government approval.

In April 2010, the government issued certain operational guidelines for Indian companies with FDI engaged in wholesale trading activities.  In January 2012, the government further liberalised the policy on SBRT by increasing the FDI cap from 51 to 100%, subject to certain conditions. In September 2012, 51% FDI permitted in Multi-brand Retail Trading (‘MBRT’) (subject to Government approval) in ten states and union territories (now twelve states and union territories)favouring the MBRT.

Internationally, Retailers do not distinguish between the forms of retailing ie SBRT and MBRT, however, the Indian FDI regulations/ guidelines make this distinction. .Investment in both SBRT and MBRT are subject to a separate set of guidelines/ restrictions.

Hence, it is critical to examine the regulations governing the Indian Retail Sector.

Indian Regulatory Environment

As mentioned above, FDI under SBRT was permitted to the extent of 100% with the condition that the same required prior Government approval. However, since then, the regulations have been liberalized further as follows[3]:

• Upto 49% – permissible under the automatic route (no prior approval of Government of India required)
• Beyond 49% – permissible subject to prior GOI approval

The liberalization comes with a set of prescribed conditions to ensure that the foreign investor makes genuine contribution to development of Indian infrastructure and logistics.

Concluding Remarks

Given that India is at the cusp of consumerism and the demand for discretionary spending categories has been increasing faster than the overall consumption market foreign retailers are exploring the opportunity to enter the Indian Retail market in light of the Indian FDI guidelines.

This has provided an opportunity for Indian players to substantially enlarge their retail and consumer products business and foreign MNCs to establish their business presence in India.

Traditionally, the Indian consumption wallet has been dominated by necessities, such as food and home products. However, with changing socio-economic and demographic profile, discretionary spending has been increasing.  Though food is expected to remain as the biggest part of the Indian consumption pie additional spending on lifestyle, home products, branded/ high-end apparels and luxurious products/ accessories are giving rise to the next wave of consumerism.

Further, on-line retail has also witnessed substantial growth and some of the popular Indian online retailers are Flipkart, Localbaniya, Indiatimes and Rediff Easy.  It is not only the private sector but also the government sector which has woken up to the possibilities that the internet has in store. This means that today people can not only purchase clothing, utensils, furniture, electronics, books, movies, flight tickets, rent cars and thousands other products online, but they can also book railway tickets on-line.

Marching ahead along with the consumer products sector, the retail sector is also expected to tread the path of expansion. India’s vast and growing population and change in consumption pattern is seen as providing impetus to the growth of the retail sector that is already on a high growth trajectory.