CONSUMER DURABEL

Introduction

Consumer durables refer to those consumer goods that do not quickly wear out and yields utility
over a long period of time. Some of the popular and common examples of these kinds of items are
electronic goods, kitchen appliances, home furnishings and leisure equipments etc. Consumer
durables can be broadly categorized into the following 3 heads:

White Goods: White goods mainly include air conditioners, refrigerators, washing machines, audio
equipments and speakers.
Brown Goods: This kind of consumer durables mostly include kitchen appliances like chimneys,
electric fans, grinders, iron, microwave ovens, mixers and varied other cooking ranges.
Consumer Electronics: Some of the mostly used consumer electronic goods are DVD players, MP3
players, mobile telephones, telephones, VCD players etc
Evolution and growth

With the continuous inflow of disposable income and the advancement of technology, the
need for the varied consumer durable goods are increasing. This in turn is leading to a strong
competition among the different consumer durable brands available in the nation as well as the
price gap between the same consumer goods of different companies are narrowing down. Day by
day these goods are becoming cheaper. The rural and urban market of consumer durables has been
growing at a rate of around 15 % on an average.

Growth prospects
India is likely to emerge as the world’s largest middle class consumer market with an
aggregated consumer spend of nearly US$ 13 trillion by 2030, as per a report by Deloitte titled
'India matters: Winning in growth markets'.

Fuelled by rising incomes and growing affordability, the consumer durables market is expected to
expand at a compound annual growth rate (CAGR) of 14.8 per cent to US$ 12.5 billion in FY 2015
from US$ 7.3 billion in FY 2012. Urban markets account for the major share (65 per cent) of total
revenues in the Indian consumer durables sector. In rural markets, durables, such as refrigerators,
and consumer electronic goods are likely to witness growing demand in the coming years. From
US$ 2.1 billion in FY 2010, the rural market is expected to grow at a CAGR of 25 per cent to touch
US$ 6.4 billion in FY 2015.
Some of the top consumer durables brands in India are:

·LG
·Nokia
·Philips
·Samsung
·Sony
·Whirlpool
·Blue Star
·Carrier
·Godrej India
·Hitachi India Limited
·Sharp India Limited
·Tata
·Toshiba India Private Limited
·Videocon
·Voltas
.

The consumer durable industry in the last few years has become an extremely competitive
sector and is making the retail environment particularly challenging. Consumers continually
engage in purchase and consumption of durables according to their own disposable income
challenges. Retailers and manufacturers are caught between the need to provide value while
trying to gain market share, keep their brands relevant and innovate rapidly in a fast growing
market.

Q&Q Research Insights Pvt Ltd has been working in the consumer durable sector for several years
– helping manufacturers and retailers increase profitability by understanding consumer purchase
motivations/drivers, seeking product attributes that are valued by consumers, identifying usage need
gaps, helping to refine the mix and size of product lines and optimizing their product portfolios.
We bring to the table, unprecedented experience in carrying out consumer research with durable
companies long established in the India, as well as the new entrants. We listen to your business
objectives and apply quantitative and qualitative research solutions to create a 360° understanding
of your issues with consumers, shoppers, brands, categories and retailers. Then, we deliver deep
market analysis and recommendations to drive confident business decisions for your brands.
Types of Research Conducted –
1. Brand Related Studies – including tracking, equity check, concept checks – We can help you find
the strengths, weaknesses and opportunities to improve your brand identity among consumers. We
carry out qualitative assessments using Focus Group Discussions, In-depth Interviews, Dyads,
Triads etc to understand the perception, likeability, recall and impact of your Marketing and
Advertising strategy.
2. Understanding Path to Purchase – Increasingly shopping behaviour is being seen from the
holistic perspective of the entire shopping experience. The experiential view of shopping takes a far
more holistic approach to the consumption process, right from involvement to post purchase usage.
The decision making process and value perceptions could vary depending on individual shopping
orientations, the cultural orientations as well as the economic and competitive environment in which
the consumer shops. Hence understanding the Path to Purchase becomes important, especially in a
consumer durable segment since it is a very well thought out, moderated and rationale process
unlike in the FMCG category. Q&Q conducts specialized path to purchase surveys using qualitative
and quantitative methodologies to gauge the need realization, awareness, evaluation, consideration
and finally the buying process.
3. Consumer Panel – Q&Q Consumer panels make use of consumers who are pre –fixed based on
given criteria. Information on their buying behaviour across the product categories is gathered
through multiple visits to the same consumer in the panel throughout the duration of project. It is a
continuous sample of randomly selected households, representative of the population of the Market
covered. These panels run over a period of time to gain a broad overview of purchasing habits.
The panel provides insights around product design and development, marketing, and branding
decisions, in addition to helping determine media strategies, and overall policy.
4. Retail Audit – Retail audits in the consumer durable segment mainly caters to understanding the
width of distribution by observing the retailer stocking pattern of the client brand vis-a-vis
competition, depth of distribution by understanding no. of units stocked of client brand vis-a-vis
other brands in the same category, brand & unit wise sale and finally understanding the reasons
behind stocking and promoting a particular brand within an organized or unorganized market
setting.
5. Market Share Analysis – In order to obtain a holistic view of your product v/s the competition,
we can study the market response to your product and sale trends over a period of time. This data is
then compared against the competition in order to predict an accurate market share of your product.

Indian consumer durables market is broadly segregated into urban and rural markets,
and is attracting marketers from across the world. The sector comprises of a huge middle
class, relatively large affluent class and a small economically disadvantaged class. Global
corporations view India as one of the key markets from where future growth is likely to
emerge. The growth in India’s consumer market would be primarily driven by a favorable
population composition and increasing disposable incomes.

Per capita GDP of India is expected to reach US$ 3,273.85 in 2023 from US$ 1,983
in 2012. The maximum consumer spending is likely to occur in food, housing, consumer
durables, and transport and communication sectors.
Market Size

The growing purchasing power and rising influence of the social media have enabled Indian
consumers to splurge on good things. Import of electronic goods reached US$ 53 billion in FY18.

Indian appliance and consumer electronics (ACE) market reached Rs 2.05 trillion (US$ 31.48
billion) in 2017. India is one of the largest growing electronics market in the world. Indian
electronics market is expected to grow at 41 per cent CAGR between 2017-20 to reach US$ 400
billion.

As of FY18, washing machine, refrigerator and air conditioner market in India were estimated
around Rs 7,000 crore (US$ 1.09 billion), Rs 19,500 crore (US$ 3.03 billion) and Rs 20,000 crore
(US$ 3.1 billion), respectively.

India’s smartphone market in 2018 grew by 14.5 per cent with a shipment of 142.3 million units.
India is expected to have 829 million smartphone users by 2022.

Consumer durables index under the Index of Industrial Production (IIP) has grown 7.5 per cent
year-on-year between Apr-Dec 2018.

Investments

According to the data released by the Department of Industrial Policy and Promotion (DIPP), the
electronics sector attracted foreign direct investment (FDI) worth US$ 2.27 billion between April
2000 and December 2018. The S&P BSE Consumer Durables Index has grown at 20 per cent
CAGR between 2010-17.

Following are some recent investments and developments in the Indian consumer market sector.

India is now the world’s second largest mobile phone manufacturer with presence of 120
factories as of July 2018.
 In July 2018, Samsung announced an investment of Rs 5,000 crore (US$ 745.82 million) for
expansion of manufacturing capacity to 120 million from 68 million devices at its Noida plant in
India.

Intex Technologies will invest around Rs 60 crore (US$ 9.27 million) in 2018 in technology
software and Internet of Things (IoT) startups in India in order to create an ecosystem for its
consumer appliances and mobile devices.

Micromax plans to invest US$ 89.25 million by 2020 for transforming itself into a consumer
electronics company.

Haier announced an investment of Rs 3,000 crore (US$ 415.80 million) as it aims a two fold
increase in its revenue by 2020.

Government Initiatives

National Policy on Electronics Policy was passed by the Ministry of Electronics & Information
Technology in February 2019.

A new Consumer Protection Bill has been approved by the Union Cabinet, Government of India
that will make the existing laws more effective with a broader scope.

The mobile phone industry in India expects that the Government of India's boost to production of
battery chargers will result in setting up of 365 factories, thereby generating 800,000 jobs by 2025.

The Union Cabinet has approved incentives up to Rs 10,000 crore (US$ 1.47 billion) for
investors by amending the M-SIPS scheme, in order to further incentivise investments in electronics
sector, create employment opportunities and reduce dependence on imports by 2020.

The Government of India has allowed 100 per cent Foreign Direct Investment (FDI) under the
automatic route in Electronics Systems Design & Manufacturing sector. FDI into single brand retail
has been increased from 51 per cent to 100 per cent; the government is planning to hike FDI limit in
multi-brand retail to 51 per cent.

Road Ahead
Indian appliance and consumer electronics (ACE) market is expected to increase at a 9 per cent
CAGR to reach Rs 3.15 trillion (US$ 48.37 billion) in 2022. Demand growth is likely to accelerate
with rising disposable incomes and easy access to credit. Increasing electrification of rural areas and
wide usability of online sales would also aid growth in demand.

The consumer durables industry is broken down into two different segments: consumer electronics
and consumer appliances. Although these products are sold globally, the classification of consumer
durables is generally restricted to sales and manufacturing activities which occur in India.

Within the Indian economy, about 67% of the consumer durables which are sold every year occur in
the country’s urban markets. Some of the most popular products sold by the industry are televisions,
air conditioners, and electric fans. Refrigerators and washing machines are popular items for the
industry as well.
By 2025, the consumer durables industry in India is expected to be the fifth-largest market of its
type in the world.

Important Consumer Durables Industry Statistics

#1. In 2017, the consumer durables industry was expected to reach $10.19 billion in revenues from
the sales of televisions in India. At its current CAGR of 9.8%, India is home to the world’s third-
largest television industry. (India Brand Equity Foundation)
#2. Through 2020, the electronics market in India is expected to grow at 41%. In 2017, the industry
reached Rs 1 trillion in value for the first time, which equates to $15.5 billion. (India Brand Equity
Foundation)
#3. The appliance and consumer electronics market reached a total value of $31.48 billion in 2017.
Exports from India from this industry account for $362.12 million in value for the 2017 fiscal year.
(India Brand Equity Foundation)
#4. The rural and suburban markets for the consumer durables industry is growing at a 25% CAGR.
In future years, it is expected that the rural and suburban consumers will share a 50/50 split of
industry revenues with urban consumers. (Fintapp)
#5. In the white goods market, washing machines contribute a 40% share of the revenues for the
industry segment. Air conditioners contribute 32% of the revenues, while refrigerators are
responsible for the remainder. (Fintapp)
#6. Consumer penetration levels of white goods in India are up to 7 times lower that rates found in
the rest of the world. Refrigerators have the highest market penetration rate for the industry at just
20%. The white goods market for India is just 9% of what it is for China. (Fintapp)
#7. In rural Indian markets, refrigerators and washing machines may have a market penetration rate
of only 0.5%. (Fintapp)
#8. Semi-automatic washing machines account for 70% of the revenues generated in the category.
(Fintapp)
#9. Urban areas account for 75% of the refrigerator sales that are generated each year by the
industry. Frost-free refrigerators in the 240- to 270-liter range generate the most sales for the
industry each year. (Fintapp)
#10. For air conditioner sales, split A/C models are 87% of the products sold within the category.
Northern India leads the consumer durables industry with air conditioner sales, contributing 38% of
total revenues. (Fintapp)
#11. Voltas is the brand with the largest market share in India, with a health 22% of sales. They are
followed by LG at 16%, Daikin and Hitachi at 13%, and Lloyd Electric at 13%. Both Voltas and
Lloyd Electric have over 10,000 dealers actively selling products to consumers within the industry.
(Fintapp)
#12. Manufacturers of air conditioners spend as little as 1% of their sales on advertising
expenditures. (Fintapp)
#13. The 5 largest companies within the brown goods segment of the consumer durables industry
account for 45% of the revenues generated. (India Brand Equity Foundation)
#14. Under the automatic route, 100% foreign direct investment is allowed within the industry.
Allowing 51% in multi-brand segments would fuel growth within the industry to an estimated $20.6
billion in value each year. (India Brand Equity Foundation)
#15. India is currently fourth in the world when it comes to the sale of annual smartphone revenues.
(India Brand Equity Foundation)
#16. The 50 largest cities in India showed growth levels within the consumer durables industry that
was equal to, or higher, than the GDP of the country in 2016. (India Brand Equity Foundation)
#17. In 2015, the market for flat-panel display televisions within India was expected to reach $6.4
billion. About 14.4 million units are purchased within this category each year. (India Brand Equity
Foundation)
#18. DVDs (digital video discs) still account for 80% of market revenues in the entertainment
category for the industry. Direct-to-home opportunities make up just 7% of the total industry right
now, with a total subscriber base of about 88 million people. (India Brand Equity Foundation)
#19. Even with its high levels of penetration, branded electric fans contribution about $830 million
in total value to the industry. To improve revenues, the Indian government offers $64 million in
incentives to manufacturers to promote the sale of energy-efficient fans. (India Brand Equity
Foundation)
#20. In the organized retail sector, which accounts for 98% of total sales in India each year,
consumer durables represent 12% of all retail sales that occur each year. That ranks third, behind
food, grocery, and general needs (42%) and clothes, textiles, or fashion (16%). (India Brand Equity
Foundation)

REPORTS

Indian appliance and consumer electronics (ACE) market reached Rs 2.05 trillion (US$ 31.48 billion) in 2017.
It is expected to increase at a 9 per cent CAGR to reach Rs 3.15 trillion (US$ 48.37 billion) in 2022.
Electronics hardware production in the country reached Rs 3.88 trillion (US$ 60.13 billion) in FY18, growing
at a CAGR of 26.7 per cent between FY14-18. Demand for electronics hardware in India is expected to reach
US$ 400 billion by FY24.

There is a lot of scope for growth from rural markets with consumption expected to grow in these areas as
penetration of brands increases. Overall consumer durable exports reached US$ 0.78 billion in 2017.
Consumer electronics exports from India reached US$ 362.12 million in FY18 and US$ 362.25 million
between April 2018-January 2019. Also demand for durables like refrigerators as well as consumer
electronic goods are likely to witness growing demand in the coming years in the rural markets as the
government plans to invest significantly in rural electrification. The S&P BSE Consumer Durables Index has
grown at 16 per cent CAGR between 2010-18. The consumer durables sector in India is expected to grow
8.5 per cent in 2018-19. Consumer durables index under the Index of Industrial Production (IIP) has grown
7.50 per cent year-on-year between Apr-Dec 2018.

White goods industry in India is highly concentrated. In washing machines and refrigerators, top five players
have more than 75 per cent market share, while in air conditioners and fans it is around 55-60 per cent. On
the other hand, kitchen appliances segment is fragmented with top five players having 30-35 per cent
market share.

Growing awareness, easier access, and changing lifestyles have been the key growth drivers for the
consumer market. The Government of India's policies and regulatory frameworks such as relaxation of
license rules and approval of 51 per cent foreign direct investment (FDI) in multi-brand and 100 per cent in
single-brand retail are some of the major growth drivers for the consumer market.

EMERGING TRENDS

Indian market is one of the largest growing electronics market

in the world and ranks on 5th position globally. India currently
has been growing at an average rate of 15% per year.
Digitalization is transforming the way consumers discover,
evaluate & purchase the products. The sector over a period of
time has also attracted increased investment which has led to
a strong focus on production, Distribution and R&D. Among
many reasons that have accelerated the demand growth, some
key trends that drive disruption to Indian Markets include:
Increased Affordability of the Products:
Aggressive price points, all year long discounts, be it festive or e-commerce push along with several
technological trends has turned the market dynamic. Reduced Tax Rates with GST and government
encouraging Make in India, the industry has built strong traction on manufacturing. Several Chinese
brands as well as domestic brands have set up units and also are heavily investing in India. Lastly,
witha strong push towards Manufacturing, products are expected to become cheap, which is further
expected to reduce the prices of the product.
Premiumisation:
The exposure to global technologies and lifestyle has created a perception shift and consumer
durables are not just viewed as utility products anymore. Consumers are today well aware and
equipped with information that helps them understand how opting for better technologies will result
in better usability. Consumers are seeking better designed and better technology products for both
comfort and convenience. And they are willing to pay for it as well. The interesting fact is that even
tier II and III markets have been showing a sizeable appetite for premium products. On the other
hand, brands are now enticing consumers for premium products at more affordable pricing.
Expansion in new segments:
We are not referring to the geographical expansion, but the widening ‘new’ consumer base. Today
we have a new age generation called the ‘millennial generation or Gen Y’ which decides what kind
of products and what technology to look at. This new segment shall open new avenues in the
market.
Cross-channel shopping and the continued rise of discounters:
The consumer who shops at only one type of store is becoming a rarity. Consumers are making
purchases from multiple retail banners, formats, and channels. Furthermore, shoppers are also
migrating towards discounters and away from local retailers. Discounter sales are growing at
approximately 5 per cent per year bringing stagnancy to retail formats. Also, India is the land of
occasions and festivals, therefore, customers are offered great deals. For instance, the prices of
products during Diwali, New Year, etc go down and customers are offered with great deals. Such
Occasion based strategies shall maintain the goodwill amongst buyers.
Shift to alternative resources:
Almost 50 per cent of the Indian households do not have access to electricity and neither the
capacity to pay high power bills. So, the future systems need to definitely look at alternative
resources to cover these markets. Also, a shift towards Eco-Friendly products will drive the future
too.

Havells India Ltd. (HAVELLS) - Company History

Havells India Ltd is a leading fast moving electrical goods company with presence across India. Its
product range includes Industrial & Domestic Circuit Protection Switchgear Cables& Wires Motors
Fans Power Capacitors Luminaires for Domestic Commercial & Industrial applications Modular
Switches Water Heaters and Domestic Appliances covering the entire gamut of household
commercial and industrial electrical needs. Havells owns prestigious brands like Havells Crabtree
and Standard. The company has 12 state-of-the-art manufacturing units in India located at Haridwar
Baddi Noida Sahibabad Faridabad Alwar and Neemrana. The company has 43 branch offices.
Havells India Ltd was incorporated as Havell's Pvt Ltd in August 1983 and converted into a public
limited company in March 1992. The company started their operations by producing miniature
circuit-breakers and distribution boards in the year 1984. Then they entered into a technical
collaboration with Christian Geyer Germany to manufacture miniature circuit-breakers in India. In
the year 1991-92 the company made additions to their facilities to manufacture plastic distribution
boards (PDBs) and earth-leakage circuit-breakers (ELCBs). In order to manufacture ELCBs the
company entered into technical collaboration with Schiele Industriwerke Germany. In the year 1996
the company entered into the manufacture of low tension power cables by acquiring an existing
cable manufacturing plant in Alwar Rajasthan which belongs to a sick unit from Rajasthan State
Industrial Development & Investment Corporation.In the year 2000 the company acquired Standard
Electricals Ltd and Duke Arnics Electronics Ltd. The company sold their entire shareholding of A J
Shehfar & Co Ltd in the year 2003. The company also sold their entire shareholding in Standard
Electricals Ltd during the year 2003-04. In the same year the company moved in to electrical
consumer goods segment and set up a state-of-the-art automatic plant for manufacturing Compact
Fluorescent Lamps at Faridabad in Haryana. During the year 2004-05 the company incorporated
Havell's (UK) Ltd in London. The company enhanced its installed capacity of Domestic
Switchgears Industrial Switchgears and Electrical Consumer Durables by 12650000 Nos 222000
Nos and 2000000 Nos respectively. With this expansion the total installed capacity of these
products increased to 27300000 Nos 1335000 Nos and 13200000 Nos respectively. Also they
introduced a complete range of indoor and outdoor lighting fixtures under the brand name Havells
in the market.In the year 2005-06 the company installed CCV Lines for making high voltage cables.
Also they installed a state-of-the-art automatic plant for manufacturing Compact Fluroescent Lamps
(CFL) at Haridwar in Uttarakhand and started their production from January 2006. Also they
installed a new plant to produce Fans and started production in October 2005. In the same year
Crabtree India Ltd was amalgamated with the company.In the year 2006-07 the company set up a
new plant in Noida for Power Capacitors. This plant an installed capacity of 600000 KVAR per
month and they commenced their production on February 2007. These are designed and
manufactured using S3 technology. Also they increased the production capacity of Domestic
Switchgear by 6000000 to 39600000 Nos. Industrial Switchgear by 800000 to 2600000 Nos.
Electrical wire Accessories by 14000000 to 20000000 Nos Cables & Wires by 230000 to 700000
Nos and Electrical Consumer Durables by 10000000 to 32400000 Nos.In the year 2007 the
company incorporated a wholly owned subsidiary with the name Havell's Holdings Limited in Isle
of Man. Also the company acquired SLI Lighting Products Inc. SLI Europe BV and Lighthouse
Investment Holdings Ltd on April 2007. The company changed their name to Havells India Ltd
(Apostrophe is removed from the word Havell's) with effect from July 28 2007. In April 20 2007
Havell's Netherlands B.V. a step subsidiary of the company completed the acquisition of
'Sylvania'.In the year 2008 the company set up a fully automatic plant for Havells Lafert Motors at
Neemrana. They set up Global Corporate office QRG Towers at Expressway Noida. Also they made
investment of Rs 50 crore in Global Center for Research and Innovation (CRI).In the year 2009 the
company set up a fully automatic second unit for switchgear manufacturing at Baddi. They made
Global consolidation of CFL manufacturing plant at Neemrana for domestic and export purposes.
They launched India's first HPF CFL and first BEE 5-star Rated Fan.In the year 2010 the company
set up second unit for Fan manufacturing at Haridwar. They acquired 100% interest in Standard
Electricals. They set up World's First New Generation CMH Lamp Plant at Neemrana. They entered
into Electric Water Heaters business. Also they launched Havells brand in US & Mexico.During the
year 2009-10 the company acquired Seven Wonders Holidays Pvt Ltd to facilitate the transfer of
electrical business of Standard Electricals Ltd. As per the scheme of arrangementthe electrical
business of erstwhile Standard Electricals Ltd (SEL) a company under the same management was
de-merged and transferred to Seven Wonders Holidays Ltd a 100% subsidiary of the company. Also
the name of Seven Wonders Holidays Ltd was changed to Standard Electricals Ltd.In the year 2011
the company launched a new range of Control Gear Cosmic Star series. They set up a new
Industrial Switchgear Plant in Sahibabad. They launched domestic appliances. They entered into a
joint venture agreement with Shanghai Yaming Lighting China.During the year 2010-11 the
company ventured into 'Home Comfort Products' with their foray into a new generation Electric
Water Heater business. They set up a state-of-the-art plant in collaboration with Havells Sylvania
Belgium for production of Ceramic Metal Halide lamps.In September 2011 as per the scheme of
amalgamation Standard Electrical Ltd a 100% subsidiary of the company was amalgamated with
the company with effect from appointed date April 1 2011.In 2015 Havells India Ltd has launched
the country's first most energy efficient fan - ES 40. The company has launched India's first
brightest LED lamps range 'LUMENO' at its lighting fixtures plant in Neemrana Rajasthan. The
company also adds first 'Made in India' MCB to its portfolio. The company has got hold of a 51 per
cent stake in Promptec Renewable Energy Solutions at an enterprise value of Rs 65 crore. The
company has launched a world class range of MCBs and RCCBs under EURO-II series in Odisha
market. During the year the company also launched world class products in Switchgear segment in
the Eastern Region and also inaugurated a new office in Haldwani Uttarakhand.On 10 December
2015 Havells India Ltd. announced that it has received intimation from its wholly owned subsidiary
Havells Holdings Limited that it proposes to enter into definitive agreement with Shanghai Feilo
Acoustics Co Ltd (Feilo) to divest 80% stake in Havells Sylvania Malta BV subject to shareholders
and related approvals. Feilo is a leading listed company with key shareholding held by Inesa
Limited a State Owned Enterprise (SoE) of Shanghai Government. Havells Holding Limited Isle of
Man would continue to hold remaining with exit options in next 3-5 years. Further Havells India
proposes to divest 80% stake in its wholly owned subsidiary Havells Exim Limited Hongkong. The
combined equity value for 100% stake for both companies is Euro 186 million (about Rs 1340
crore) subject to adjustments if any. Havells cumulative investment value stands at Rs 980 crore.On
2 February 2016 Havells India announced the launch of its first Made-in-India MCBs and RCCBs
under EURO-II series in Uttar Pradesh. These are the company's first MCBs and RCCBs that are
designed developed and manufactured in-house conforming to international standards. On 14
February 2016 Havells India Limited announced various initiatives and its preparedness for
achieving next phase of growth. The company announced that it would start offering products and
solutions in the space of solar energy; it will venture in the business of automation & control and
internet of things so that it could participate better in upcoming smart cities projects and will widen
its product offerings to garner larger market share across all its business segments. On 6 May 2016
Havells India Limited announced its foray into the fast growing segment of Integrated Automation
and Control Solutions under its premium brand Crabtree in association with one of world's leading
automation company HDL Automation. In June 2016 Havells India Limited announced its foray
into a new product segment with the launch of innovative and premium range of air purifiers in the
domestic market.On 9 November 2016 Havells India announced that it has further strengthened its
presence in the North East region with the launch of world's most advanced Made in India range of
water heaters under the Adonia brand in the state of Mizoram that uses colour changing LED
technology to communicate different temperature levels.On 8 February 2017 Havells India Limited
announced its foray into personal grooming segment with the launch of an array of high quality
personal care product like Electric Shavers Beard Trimmers Grooming kit - Precision nose and ear
Trimmer Hair Straighteners & Dryers Bikini Trimmer. The company also for the first time in the
country launched baby hair clippers.On 14 February 2017 Havells India Limited announced the
launch of many new variants of world-class stylish fans to cater to today's contemporary homes.
The company targets to be a strong No 2 brand in fans in the southern Indian market.On 19
February 2017 Havells India Limited announced that its board of directors has approved the
acquisition of Lloyd Consumer Durable Business Division (Lloyd Consumer). The acquisition is
proposed to be executed at an enterprise value of Rs 1600 crore on a debt free cash free basis
subject to closing adjustments. The company has signed an agreement with Lloyd Electrical and
Engineering Limited and Fedders Lloyd Corporation Limited for acquiring Lloyd brand and the
consumer durable business that is engaged in sourcing assembling marketing and distribution of
consumer durables including airconditioners TVs washing machines and other household
appliances. The proforma revenues of consumer durable arm Lloyd Consumer for 9 months ended
31 December 2016 stood at Rs 1242 crore and EBDITA of Rs 75 crore.On 8 May 2017 Havells
India Limited announced the successful completion of its acquisition of Lloyd Consumer Durable
Business Division (Lloyd Consumer). The acquisition has been executed at an enterprise value of
Rs 1600 crore on a debt free cash free basis. The company has financed the transaction through
internal accruals and cash balances. Havells has acquired the consumer business infrastructure
people distribution network including and not limited to absolute exclusive ownership and right to
all intellectual property of Brand Lloyd logo trademark goodwill and attendant rights. Through this
acquisition Havells marks a foray into consumer durables industry.On 14 March 2018 Havells India
Limited announced an agreement with South Korean major Hyundai Electric & Energy Systems
Co. Ltd for manufacturing of Magnetic Contactor (MC). Under the agreement Hyundai Electric will
provide technology know-how and grant a license to manufacture and market Magnetic Contactors
under Havells brand. Havells India would also manufacture MC for Hyundai Electric. As per the
previous MoU signed between both the companies in November 2017 Hyundai Electric will supply
low and medium voltage protection and switching devices to Havells as Brand labeling and will
also grant manufacturing license for ranges of Magnetic Contactors (MC) and Molded Case Circuit
Breakers (MCCBs) to Havells. Also Havells will supply equipment such as Miniature Circuit
Breakers (MCBs) & Magnetic Contactors (MC) to Hyundai Electric. Havells is leading player in
Switchgear market.

R AND D

Consumer electrical goods and appliances maker Havells India plans to double its R&D spend in
the next couple of years as part of its strategy to transform itself into a technology-driven company.
It is working on establishing a state-of-the-art design studio and expanding its R&D team.

Havells recently roped in Siemens’ former senior executive Mukul Saxena as its Chief Technology
Officer and Executive Vice-President to spearhead these efforts. He was involved with establishing
and leading the Siemens Corporate Research & Technologies’ India Lab.
Saxena told BusinessLine, “We plan to double investments inR&D in the next 1-2 years. On an
average, the company currently spends about 1 per cent of its turnover on R&D, and we will ramp it
up to 2 per cent.” Last fiscal, the company spent about ₹80 crore on R&D.

Re-skilling team
“We are looking at re-skilling some of the people in our R&D team and adding more people. We are
targeting top- notch institutions and talent that has global exposure,” he added. Currently, its R&D
team is about 330 strong based out of the corporate headquarters and at various manufacturing
facilities. Havells is planning to align its product specific R&D teams spread across 18 verticals.
Havells India last year said it is targeting ₹20,000 crore in revenues in the next 4-5 years and it
believes the R&D focus will be the key to achieving this target.
“Our vision is to transform Havells into a proactive, technology-led and a customer-centric
organisation. We want to focus on innovations and bringing in disruptive technologies that will
enable us to translate the latent needs of consumers into products,” he added.
As part of this strategy, the home-grown company is establishing a design studio at its corporate
headquarters in Noida, which will showcase futuristic concepts to its customers and distributors to
aid innovation.
“We want to adopt the solution-based approach of “design thinking”, which is all about co-creating
or co-innovating with the customers,” he added. The company will also collaborate with think tanks
and research institutes for the design studio.
Havells is working on a slew of products which will be IoT and AI-enabled in various categories
such as ACs, washing machines and LED TV. It will also look at AI-based smart living product
concepts for futuristic homes.
“This is a huge cultural shift which is being driven from the top. It is a conscious decision taken by
the management. We want to transform the company to ensure that technology becomes a key pillar
for future growth,” Saxena added.

Factors for Success:

Strategic Alliances:

The company has formed strategic alliances andpartnerships with

many leading players operating in the end-to-end solutions in the
powerdistribution equipment industry.Havell’s hasentered
manufacturing alliances with several leading electrical companies
such as Electrium,Geyer AG, DZG, etc., which has assisted
thecompany to leverage the technical expertise anddeveloping quality
products in the electricalproducts segment.Havell’s has efficiently
leveraged alliances to gain an entry into global markets, developing a
strongproduct portfolio to capture them.The companyhas developed
efficient partnerships to increase itsmarket penetration in the EU.

Leading the Way through Innovation:

Havell’s has focussed on research and developmentto produce novel

products, at the same time,reducing cost and upgrading the quality of
itsproducts.The company has a skilled workforce thatworks on its R&D
projects. It has also entered intoalliances with several companies,
thereby facilitatingsharing of technology. It has developed a
goodbrand name by introducing innovative products inthe market,
which has enabled it to penetrate themarket

FUTURE PLANS
Future PlansAs a part of its growth strategy, Havell’s is
takinginitiatives to tap potential markets in the EU.Thecompany has
developed a strong brand presencethrough alliances with and the
acquisition of leadingelectrical equipment manufacturers in the
region.It has also initiated various segment-wise growthplans to drive
growth in its overall operations.The company has identified the
housing and powersectors as future growth drivers and plans to
tapthese spheres.Havell’s has plans to diversify its product portfolioby
venturing into the electrical motors and powercapacitors space. It also
aims to leverage itsestablished brand presence in these segments.The
company expects to increase its exports byapproximately 100 per
cent from 2005-07.Havell’salso plans to increase its capacity to ward
off costpressures and reduce development costs.The company has
plans to increase its brandpresence and reach in the EU through
strongacquisitions. It has plans to expand its operations in the EU in-
organically and enhance itsinternational presence

Objectives of Conducting SWOT analysis at Havells India for Misc. Fabricated Products Segment

SWOT analysis is one of the most widely used tools for strategic analysis. According to a research
done by Harvard Business School – more than 75% of the managers in strategy department had
used SWOT analysis for the purpose of strategic analysis. Strategists at Havells India can utilize
SWOT for following objectives -

Using SWOT for Strategic Planning at Havells India

Over the years the nature of the strategic planning has changed in the Misc. Fabricated Products.
managers utilize SWOT not only for short term planning but also for long term strategic planning. It
will provide the managers with a better understanding of market, organization, and competitors.

Using SWOT for Performance Improvements

In the short term SWOT is an effective tool to improve business processes, part of business, or both
together. SWOT helps Havells India managers to identify areas of weakness in operations in the
organization. Managing and eliminating these weaknesses can drive future growth of Havells India.

Using SWOT analysis for Venture Feasibility, New Project Viability & New Product Launch

Project management and feasibility analysis have become more specialized. SWOT analysis can
still help managers at Havells India to work out the pros and cons of new project, initial viability
and long term scope keeping in the competitors’ strategy and macro environment development.
Using SWOT to Thwart Competitive Challenges

Often managers neglect trends in macro environment because of the narrow focus on the industry. It
can happen to Havells India in the Basic Materials at the present moment. To manage these
competitive challenges and macro environment trends managers at Havells India can use SWOT to
pinpoint specific threats and allocate requisite resources to deal with those threats.

Using SWOT Analysis to Set Corporate Goals & Key Objectives

The easiest objective for which SWOT analysis can be used by Havells India is for setting strategic
goals, defining key objective areas and desired results. This can lead to a time based SWOT
analysis exercise where Havells India leaders conduct SWOT at a fixed interval and assess what it
needs to tinker to achieve the stated goals.

Havells India SWOT Analysis

Below is the Strengths, Weaknesses, Opportunities & Threats (SWOT) Analysis of Havells India.
Strengths are:

STRENGTHS
1. Strong global distribution network
2. Great investments in fast-growing emerging countries
3. Very good acquisition history
4. Amongst top three players in most its products with aggressive building
5. Broad range of products and good advertising through TVCa
6. Global presence with many diverse product lines in 50 different countries
7.First FMEG Company to offer door step service
8. High investment in R&D has helped it to deliver innovative solutions to its customers

Strengths of Havells India

What are "Strengths" in SWOT Analysis?

Strengths are the firm's capabilities and resources that it can use to design, develop, and sustain
competitive advantage in the marketplace
- Brands catering to different customers segments within Misc. Fabricated Products segment -
Havells India extensive product offerings have helped the company to penetrate different customer
segments in Misc. Fabricated Products segment. It has also helped the organization to diversify
revenue streams.
- Strong brand recognition - Havells India products have strong brand recognition in the Misc.
Fabricated Products industry. This has enabled the company to charge a premium compare to its
competitors in Misc. Fabricated Products industry.
- First mover advantage in the increasingly crowded market place. The new products are rapidly
increasing Havells India market share in the Misc. Fabricated Products industry.
- Diverse Revenue models - Over the years Havells India has ventured into various businesses
outside the Basic Materials sector. This has enabled the company do develop a diversified revenue
stream beyond Basic Materials sector and Misc. Fabricated Products segment.
- Talent management at Havells India and skill development of the employees - Human resources
are integral to the success of Havells India in Misc. Fabricated Products industry.
- Wide geographic presence - Havells India has extensive dealer network and associates network
that not only help in delivering efficient services to the customers but also help in managing
competitive challenges in Misc. Fabricated Products industry.

WEAKNESS

Here are the weaknesses of Havells India :

1.High Debt ratio

2. Globally small market share
3.Slowdown of real estate
4.Slowdown in global markets will effect moreadversely after a series of acquisitions

Weaknesses of Havells India can either be absence of strengths or resources of capabilities that are
required but at present the organization doesn't have. Decision makers have to be certain if the
weakness is present because of lack of strategic planning or as a result of strategic choice.
- Gross Margins and Operating Margins which could be improved and going forward may put
pressure on the Havells India financial statement.
- Low investments into Havells India's customer oriented services - This can lead to competitors
gaining advantage in near future. Havells India needs to increase investment into research and
development especially in customer services oriented applications.
- Declining market share of Havells India with increasing revenues - the Misc. Fabricated
Products industry is growing faster than the company. In such a scenario Havells India has to
carefully analyze the various trends within the Basic Materials sector and figure out what it needs to
do to drive future growth.
- Extra cost of building new supply chain and logistics network - Internet and Artificial
Intelligence has significantly altered the business model in the Basic Materials industry and given
the decreasing significance of the dealer network Havells India has to build a new robust supply
chain network. That can be extremely expensive.
- Niche markets and local monopolies that company’s like Havells India able to exploit are fast
disappearing. The customer network that Havells India has promoted is proving less and less
effective.
- High turnover of employees at the lower levels is also a concern for the Havells India . It can
lead to higher salaries to maintain the talent within the firm.
OPPORTUNITIES
Following are the Opportunities of Havells India :

1. Globally emerging markets

2. Weak cycles of the sector
3.Acquisition of Chinese firms for low costmanufacturing
4.Vertical integration into Havells retail outlets
5. Leveraging upon motor business in IndiaUnorganized

Opportunities are potential areas where the firm chan identify potential for - growth, profits, and
market share.
- Lowering of the cost of new product launches through third party retail partners and dedicated
social network. Havells India can use the emerging trend to start small before scaling up after initial
success of a new product.
- Increasing government regulations are making it difficult for un-organized players to operate in
the Misc. Fabricated Products industry. This can provide Havells India an opportunity to increase
the customer base.
- Lower inflation rate - The low inflation rate bring more stability in the market, enable credit at
lower interest rate to the customers of Havells India. This will increase the consumption of Havells
India products.
- Customer preferences are fast changing - Driven by rising disposable incomes, easy access to
information, and fast adoption of technological products, customers today are more willing to
experiment / try new products in the market. Havells India has to carefully monitor not only wider
trends within the Misc. Fabricated Products industry but also in the wider Basic Materials sector.
- Opportunities in Online Space - Increasing adoption of online services by customers will also
enable Havells India to provide new offerings to the customers in Misc. Fabricated Products
industry.
- Trend of customers migrating to higher end products - It represents great opportunity for
Havells India, as the firm has strong brand recognition in the premium segment, customers have
experience with excellent customer services provided by Havells India brands in the lower segment.
It can be a win-win for the company and provides an opportunity to increase the profitability.

THREATS

The threats of Havells India are as mentioned :

1.Unorganized markets
2.Delays in execution of power projects
3. Highly regulated electrical sector
4. Environmental legislations on industrial wastes

5.Intense competition in the sector

Threats are factors that can be potential dangers to the firm's business models because of changes in
macro economic factors and changing consumer perceptions. Threats can be managed but not
controlled.
- Competitors catching up with the product development - Even though at present the Havells
India is still leader in product innovation in the Misc. Fabricated Products segment. It is facing stiff
challenges from international and local competitors.
- Shortage of skilled human resources - Given the high turnover of employees and increasing
dependence on innovative solution, companyname can face skilled human resources challenges in
the near future.
- Trade Relation between US and China can affect Havells India growth plans - This can lead to
full scale trade war which can hamper the potential of Havells India to expand operations in China.
- Changing political environment with US and China trade war, Brexit impacting European
Union, and overall instability in the middle east can impact Havells India business both in local
market and in international market.
- Changing demographics - As the babyboomers are retiring and new generation finding hard to
replace their purchasing power. This can lead to higher profits in the short run for Havells India but
reducing margins over the long run as young people are less brand loyal and more open to
experimentation.
- Saturation in urban market and stagnation in the rural markets - For Havells India this trend
is an ongoing challenge in the Misc. Fabricated Products segment. One of the reasons is that the
adoption of products is slow in rural market. Secondly it is more costly for Havells India to serve
the rural customers than urban customers given the vast distances and lack of infrastructure.
Introduction

With revolutionary changes taking place in the worldwide economy and the growing importance of
24/7 operation of the business, the retail sector has been undergoing a paradigm shift across the
world. The world of today has turned into a global village; consumerism is having a huge impact on
the contemporary retail business, and technological advancements have created opportunities as
well as several challenges for the retail industry. With the advent of the internet, the growth in the
retail industry has been impressive due to the benefits of the economies of scale and also the
expansion of business across the geographical boundaries at B2B (Business to Business) and B2C
(Business to Consumer) levels.

EVOLUTION

Several studies have proven that the Indian Retail Market is one of the top emerging markets in the
world. For Indian Economy, the retail sector is one of the pillars, which contributes towards a
growth rate of approximately 10% of the total GDP and towards the total employment
around 8%. According to the latest studies, Indian retail market is ranked amongst the top 5
retail markets worldwide estimated around 600 Billion US Dollars.
Indian Retail industry is expected to have a bright future and offers numerous opportunities for
progress and growth. According to GRDI reports, some favorable factors which support the growth
of retail business are: rise in fashion loving and brand conscious young population, extensive
urbanization, and expansion of opportunities for new investment in retail sector. As per the report of
FICCI (2011), a positive trend in the Indian retail sector can be attributed to a sharp rise in the
Middle-Income segment and growth in domestic consumption. Moreover, studies suggest that with
changes in the consumer buying preferences, demographics composition and increasing preference
for mall culture, there has been a transition from the traditional retail formats to a more organized
form of retailing, as a result of which the Indian Retail market is expected to witness an optimistic
trend in future as well.
The retail sector in Indian context can be subdivided into Organized and Unorganized retail sectors.
Organized retailing constitutes licensed retailers registered under sales and income tax, involved in
carrying out their day-to-day trading functions. This may include large hypermarkets, large-scale
owned retail ventures owned privately or the retail chains as well. On the other hand, unorganized
retailing comprises of a sizeable proportion of small retailers operating their own Kirana, paan,
beedi shops, general stores, chemists, hawkers, etc. In developed economies, organized retail enjoys
a predominant share of around nearly 75-80% as against traditional retailing, while in developing
economies; unorganized sector enjoys a predominant share in the retail market.
The retail sector in India is highly fragmented or distributed. Unorganized retail constitutes a
significant share of over 90%, while the organized retail segment is just in a start up stage and has
witnessed an impressive growth over last few years. Retail in India originated with the Mom and
Pop Stores and Kirana Stores, which used to cater to the requirements of the local population. Over
a period, the government encouraged rural retail and provided support for establishing Khadi &
Village industries. During 1980’s, the retail scene in India changed further with the opening up of
the economy, as a result of which leading retail chains in textile sector were established like
Raymond’s, S Kumar’s and Bombay Dyeing. Subsequently, Titan launched its retail showroom, and
the organized retailing started strengthening its grip in the Indian market. By 1995, major retail
outlets such as Food World, Music World, and Planet M, Crossword entered the Indian retail
market. Large retail formats and stores like shopping malls, hypermarkets and supermarkets came
into operation for providing best of the class experience to the customers. The retail sector evolution
witnessed improvements in the distribution set up, supply chain management, technological
innovations, back end operational support and excellence and increase in business alliances in the
form of collaborative ventures, mergers, acquisitions, joint ventures, etc.
Major players in the retail industry like Tata Group, Future Group, Bharti, and Reliance, etc. have
stepped forward with aggressive and ambitious investment plans in the retail sector as a part of their
business expansion strategy across various verticals. Moreover, with the introduction of retail
reforms by the Government of India which allows FDI of 51% in multi brand stores in India,
organized retail sector is expected to capture a major share of the market in the upcoming future.
According to Assocham study, factors such as globalization and liberalization of economies,
increase in the purchasing power of the consumers, changing lifestyle and infrastructural
developments, have revolutionized the Indian retail market. Studies reveal that organized retail
market which was just at 7% of the total retail market share in 2011-12, is expected to attain a total
share of over 10% across the retail sector by 2016-17. The estimated growth rate of traditional retail
is expected to be around 5% while for organized retail it is expected to be around 25% by 2020.
Food & Grocery is the major contributor in the entire retail market in India with a total contribution
of almost around 60% of the total retail sector in 2012. This is followed by Clothing (8%) and
Telecom & Mobile (6%) and many others. In organized retailing, Apparels is the major contributor
which accounted for a total contribution of 33% in 2012 to the retail industry followed by food and
grocery (11%). Though, the share of Food & Grocery segment in organized retailing has shown an
impressive growth since last few years. E Commerce and E Tailing in recent years have redefined
the retail landscape and offer a lot of opportunities to various stakeholders.

Challenges Faced by the Indian Retail Sector

Even though the retail sector in India has a lot to offer regarding opportunities and prospects of
business growth, still it is susceptible to various impediments/bottlenecks which may slow down the
pace of growth. Several challenges such as infrastructural limitations, rigid or stringent regulations,
political uncertainties, etc, may restrict the growth prospects and pose a lot of hurdles. Some of the
major challenges which Indian retail industry is faced with are:
 Competing with the international standards
 Indian retail industry is exposed to several systemic inefficiencies and problems with the
supply chain framework.
 Indian retail outlets operate in a constrained space of below 500 sq. ft., which is too small as
per the international retail outlet space standards.
 Growth in the retail industry has given rise to real estate related problems with increasing
requirements for setting up hypermarkets and supermarkets across various locations in large
scale.
 Problems related to the shortage or lack of availability of trained or skilled manpower.
 Frauds in the form of thefts, vendor frauds or administrative loopholes in the retail industry,
are a major cause of worry and this has posed several challenges before the management.
  Infrastructural and logistics related issues.

The Indian retail industry has emerged as one of the most dynamic and fast-paced industries due to
the entry of several new players. Total consumption expenditure is expected to reach nearly US$
3,600 billion by 2020 from US$ 1,824 billion in 2017. It accounts for over 10 per cent of the
country’s Gross Domestic Product (GD).

Retail Organizational Structure

Have you ever taken a moment to think about the structure that is around us every day? Structure
can come in many different forms. For example, a sports team without a coach and a game plan is
destined for failure. The same is true for retail stores. Understanding a retail store's organizational
structure is important when creating a business plan to determine its customers and appeal to them.
Many retail businesses rely on a structure that places emphasis on three areas: centralized
operations, store operations, and regional operations.
Centralized operations include duties such as store planning and human resources. Store
operations include merchandising and marketing and are performed daily by retail stores. Regional
operations refer to distribution and warehousing. This organizational retail structure is beneficial
because it encompasses all areas of a business.

Retail Store Management Positions

A major part of the organizational structure of a retail store is that most of them have multiple
management positions. Let's take a look at some of the types of management positions and what
duties are required of them.

1. Manager
The manager is the person primarily responsible for the day-to-day operations of a retail store. It is
the manager who makes key decisions including on who to hire, who to fire, and if a customer is
entitled to a refund or exchange. For most retail organizations, the buck starts and stops with the
manager.

2. Assistant Manager
The assistant manager is responsible for assisting the manager with the daily operations of the
business. In the absence of a manager, an assistant manager is responsible for making the important
decisions for the store. The assistant manager is also tasked with completing any duties as
designated by the manager.

3. Finance Manager
When working in retail, everyone knows that money is what makes the wheels turn, and the finance
manager is responsible for greasing those wheels. The finance manager makes certain that the retail
store is carefully utilizing the money that comes in and ensures they are aware of how much money
is going out.
4. Corporate Recruiter
Depending on the size of the retail store, there may also be a corporate recruiter position. This
position involves a highly skilled employee with the task of finding top-level employees to work
with the organization. These recruiters are searching for talent to fill management positions
including manager, assistant manager, and finance manager. The recruiter must have a thorough
understanding of what it takes to perform each of these jobs in order to find the right person.

Retailing in India (Recent Trends)

Retailing today is the fastest growing sectors in the global economy and is under transition phase;
not only in South Asian countries like India and China but throughout the world. The increased
popularity of organized retailing is mainly because of the consumers’ changing behavior. This
change has become possible due to double income families, breakup of joint family concept,
changing lifestyles and favorable demographic patterns. Today consumers prefer to shop at places
where they can get grocery, food, entertainment and others daily routine items under one roof. This
has made retailing the most attractive sector of the Indian economy.

Following are the recent trends that have stood out in recent years and continue to grow
further:
1. New retail formats and combinations are emerging and have opened a new world of opportunities
for Indian youth. Due to huge amounts of new investments and decreasing charm for ‘kirana’ stores,
the retail sector is expected to grow. Bank branches, bill counters, saloons, internet cafe have
opened in the malls. The ‘cash and carry’ activities are expected to grab majority of attention.
2. Internet age, increased computer awareness and shrinking usage charges have made people
enabled buy things online resulting in growth of non-store retailing. Retailers are informing about
new arrivals/fresh stock through e-mails, television, SMS and telephones to which anyone can
respond to through toll-free 16 digit numbers.

3. Specialty stores like ‘Reliance Digital’, ‘Music World’ ‘Metal Junctions’, ‘Nokia World’ and
‘Pantaloons’ have their presence in most of the malls in the country. Departmental stores have given
way to malls, having a mixture of large and small retailers offering varied brands for each and every
section of the society.
4. Sales promotion channels are increasingly becoming professional and targeting differently to
different lifestyle groups. Newer and newer promotional techniques are emerging. Event managers
are hired and visual merchandising professionals are consulted.
Today retailers are not sticking to traditional methods of promoting a sale but personal selling door-
to-door selling, free home delivery and payment through plastic money have emerged and is being
widely used. Use of advanced technology is not the matter of affordability but is the reason for
survival. Retailers are using computers, electronic devices, check out scanning systems, tag guns,
vending machines, money counters and digital signage to enhance store’s productivity. CCTVs,
cameras, sensors and theft alarms are being used to prevent store theft.
5. Today retail organizations are not only targeting big cities but are considering tier II and tier III
cities like Jaipur, Pune, Shimla, Karnal, Panipat, Coimbatore, Baroda, Chandigarh etc also. The
South Indian states are one step ahead when it comes to shopping in the supermarkets for day-to-
day needs and also have been influencing other states where supermarkets are being established.

However, the main center of organized retailing is undeniably Chennai, which once was considered
as a ‘conservative’, ‘traditional’ and cost-sensitive’ market. The success of Chennai as retail hub has
surprised all but list of factors contributed to its success. Reasonable real estate prices, double
household income, increased presence of MNCs and industrial boom has led to the emergence of
new residential societies resulting in increased purchasing power and demands for day- to-day
goods under one roof.
6. Use of Plastic Money:
Use of credit and debit cards for buying merchandise is relatively a new phenomenon but is gaining
popularity immensely. Credit and debit cards are commonly known as ‘plastic money’. Today,
especially in metros, retail spending is mainly done by plastic cards, accounting for over 45 percent
and is likely to touch 65 percent over the next five years.
7. Distance – No bar:

Thanks to increased public transportation, better roads, highways and an overall improvement in the
transportation infrastructure that has enabled customers to visit from one place to another smoothly
than ever before. Now for want of quality goods, a customer can travel several kilometers to reach a
particular store.
8. Partnerships and tie-ups among retailers, real estate developers, brands, franchisees, and
financers have become the fashion of the day to spread risk related to huge investments and
uncertainty.
9. The government infrastructure support, relaxation on foreign direct investments further has
accelerated the growth of Indian organized retail sector. Consequently, the shopping malls are
coming up throughout the country in a big way.
10. Sophisticated customers:

Due to Internet revolution, customers are becoming conversant about the products they are
interested in buying. For example, over thirty percent of Indian consumers collect information from
the Internet about prices, features, guarantee/warranty options before visiting any store for the
actual purchase.
This is particularly true in case of automobiles, cell phones, consumer electronics, hotel bookings,
travel packages etc. This suggested the retailers that they need to respond to varying consumer
needs and growing assortment.
11. The gap between organized and unorganized (traditional ‘kirana’ shopping) retailing is coming
close due to mall revolution and increasing Indian middle class in terms of size and income.
According to a study conducted by ‘Deloitte Haskins and Sells’, one of the four largest accounting
firms in the world, Indian retailing is growing at a faster pace as was expected from it and could
constitute 25% of the total retail sector by 2011.
The study further reveals that new malls, increased disposable income and easy access to credit
facilities have led to organized retailing to record all time high rate of growth of 50% per annum in
2007. The traditional ‘kirana’ stores by introducing modern retailing concepts such as self service,
free home delivery system, credit facility and other value added services have been trying to
reshape themselves.

12. Need for retailing skills:

Undoubtedly, retailing in India is still in nascent stage. The success of organized retailing is yet to
be proved. The success will be felt once an equitable stage is achieved. This requires enough store
size, traffic flow, and revenue earned, but besides these factors, retailers have started concentrating
on recruiting qualified and trained retail staff.

Market Size

India's retail market is expected to increase by 60 per cent to reach US$ 1.1 trillion by 2020, on the
back of factors like rising incomes and lifestyle changes by middle class and increased digital
connectivity. Online retail sales are forecasted to grow at the rate of 31 per cent year-on-year to
reach US$ 32.70 billion in 2018.

India is expected to become the world’s fastest growing e-commerce market, driven by robust
investment in the sector and rapid increase in the number of internet users. Various agencies have
high expectations about growth of Indian e-commerce markets.

Luxury market of India is expected to grow to US$ 30 billion by the end of 2018 from US$ 23.8
billion 2017 supported by growing exposure of international brands amongst Indian youth and
higher purchasing power of the upper class in tier 2 and 3 cities, according to Assocham.

Investment Scenario

The Indian retail trading has received Foreign Direct Investment (FDI) equity inflows totalling US$
1.59 billion during April 2000–December 2018, according to the Department for Promotion of
Industry and Internal Trade (DPIIT).

With the rising need for consumer goods in different sectors including consumer electronics and
home appliances, many companies have invested in the Indian retail space in the past few months.

Beccos, a South Korean designer brand is set to enter the Indian market with an investment of about
Rs 1.00 billion (US$ 14.25 million) and open 50 stores by June 2019.

Walmart Investments Cooperative U.A has invested Rs 2.75 billion (US$ 37.68 million) in Wal-
Mart India Pvt Ltd.

Government Initiatives

The Government of India has taken various initiatives to improve the retail industry in India. Some
of them are listed below:

The Government of India may change the Foreign Direct Investment (FDI) rules in food
processing, in a bid to permit e-commerce companies and foreign retailers to sell Made in India
consumer products.

Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in online retail of
goods and services through the automatic route, thereby providing clarity on the existing businesses
of e-commerce companies operating in India.

Road Ahead

E-commerce is expanding steadily in the country. Customers have the ever increasing choice of
products at the lowest rates. E-commerce is probably creating the biggest revolution in the retail
industry, and this trend would continue in the years to come. India's e-commerce industry is
forecasted to reach US$ 53 billion by 2018. Retailers should leverage the digital retail channels (e-
commerce), which would enable them to spend less money on real estate while reaching out to
more customers in tier-2 and tier-3 cities.
It is projected that by 2021 traditional retail will hold a major share of 75 per cent, organised retail
share will reach 18 per cent and e-commerce retail share will reach 7 per cent of the total retail
market.

Nevertheless, the long-term outlook for the industry is positive, supported by rising incomes,
favourable demographics, entry of foreign players, and increasing urbanisation.

Exchange Rate Used: INR 1 = US$ 0.0139 as on Q3 FY19.

References: Media Reports, Press Releases, Deloitte report, Department of Industrial Policy and
Promotion website, Union Budget 2017–18, Consumer Leads report by FICCI and Deloitte -
October 2018