Market entry opportunities for UK companies in India's fashion & beauty sector
Updated: Aug 29, 2014 03:13:35pm
New Delhi, Aug 29 (KNN) UK India Business Council (UKIBC) has come out with a white paper which highlights the growth potential of the fashion and beauty sectors and informs potential UK entrants about options to tackle regulatory and operational challenges.
“The retail sector in India is delicately poised. On the one hand the socio-economic indicators show enormous growth potential. On the other hand, the convoluted regulatory environment, complex taxation system, and ambiguous political climate have deterred foreign entrants,” the UKIBC report said.
Among the key findings of the report are – “The organized Fashion and Beauty and Personal Care products markets are expected to experience dynamic growth. These sectors are forecast to grow at a CAGR of 16 per cent and 15 per cent over the next decade to reach GBP 36 billion and GBP three billion respectively.
“As companies seek new avenues of growth Tier II and Tier III cities are expected to be the new engines of growth, both in terms of mall development as well as new consumers. E tailing will grow in importance with deeper Internet penetration and faster smart phones sales. Such ‘asset light’ business models will expand consumer reach,” it said.
The report also said that the rationalization of the tax regime and relaxing of FDI norms will allow foreign brands to calibrate their business models to exert greater control over their operations.
It also said that the business environment for fashion and beauty and personal care products in India is fairly mature. “The variety of stakeholders, including JV partners, contract manufacturers, and real estate developers has considerable experience working with local and global brands. They are equipped to help new entrants set up operations in the country,” it said.
The report summarises that India has great opportunity but is by no means an easy market to crack. It said that foreign brands that have succeeded have shown tremendous patience and determination to tailor their strategies to the changing business dynamics in the country.
“The market has tremendous growth potential and the sheer scale of demand offsets the potential obstacles and challenges. In this retail sector in India, in the long run, perseverance pays,” it said.
In his foreword of the report, Chief Operating Officer, UKIBC, Richard Heald said, “India is currently experiencing a revolution in how consumer goods are marketed, sold and used. At the cutting edge of these changes is India’s Fashion and Beauty Sector, which is currently growing at around 15 per cent per annum, with personal care products such as deodorants achieving exceptional growth of over 40 per cent per annum and demand for western outfits and readymade garments growing at 40-45 per cent annually. What’s more a large proportion of this growth is in high value goods, with luxury retail growing it at 20 per cent last year putting it on track to reach GBP 9.5 billion by 2015.”
The report attributes the surge in India’s Fashion and Beauty Sector to a burgeoning middle class – particularly from a young aspirational professional urban class with growing disposable incomes. In fact, over the next two decades India’s middle-class will grow to over 40 per cent of population, creating the world’s fifth largest consumer market.
In general, retail is one of the largest and most dynamic sectors in India. Encouraging reforms to India’s single and multi-brand retail sectors, the accelerating growth in e-commerce, and a shift from small and localised street markets to modern shopping centres and malls, Indian’s are spending more on fashion and beauty than ever before, it said.
“As a result India’s organised retail sector presents immense opportunities for UK Fashion and Beauty companies, which benefit from India’s continuing love affair with British brands and belief. In the minds of Indians, UK brands represent style and quality. As such, UK companies have a unique window of opportunity across India,” the UKIBC report said.
So, to help UK companies make sense of this transition, the UK India Business Council, together with Cluttons, have produced this report on the opportunities and challenges in India’s Fashion and Beauty sector, and how companies such as Burberry, Lush, Pavers England and the Body Shop have accessed the emerging Indian opportunities securing rewards along the way. (KNN/ES)
“The retail sector in India is delicately poised. On the one hand the socio-economic indicators show enormous growth potential. On the other hand, the convoluted regulatory environment, complex taxation system, and ambiguous political climate have deterred foreign entrants,” the UKIBC report said.
Among the key findings of the report are – “The organized Fashion and Beauty and Personal Care products markets are expected to experience dynamic growth. These sectors are forecast to grow at a CAGR of 16 per cent and 15 per cent over the next decade to reach GBP 36 billion and GBP three billion respectively.
“As companies seek new avenues of growth Tier II and Tier III cities are expected to be the new engines of growth, both in terms of mall development as well as new consumers. E tailing will grow in importance with deeper Internet penetration and faster smart phones sales. Such ‘asset light’ business models will expand consumer reach,” it said.
The report also said that the rationalization of the tax regime and relaxing of FDI norms will allow foreign brands to calibrate their business models to exert greater control over their operations.
It also said that the business environment for fashion and beauty and personal care products in India is fairly mature. “The variety of stakeholders, including JV partners, contract manufacturers, and real estate developers has considerable experience working with local and global brands. They are equipped to help new entrants set up operations in the country,” it said.
The report summarises that India has great opportunity but is by no means an easy market to crack. It said that foreign brands that have succeeded have shown tremendous patience and determination to tailor their strategies to the changing business dynamics in the country.
“The market has tremendous growth potential and the sheer scale of demand offsets the potential obstacles and challenges. In this retail sector in India, in the long run, perseverance pays,” it said.
In his foreword of the report, Chief Operating Officer, UKIBC, Richard Heald said, “India is currently experiencing a revolution in how consumer goods are marketed, sold and used. At the cutting edge of these changes is India’s Fashion and Beauty Sector, which is currently growing at around 15 per cent per annum, with personal care products such as deodorants achieving exceptional growth of over 40 per cent per annum and demand for western outfits and readymade garments growing at 40-45 per cent annually. What’s more a large proportion of this growth is in high value goods, with luxury retail growing it at 20 per cent last year putting it on track to reach GBP 9.5 billion by 2015.”
The report attributes the surge in India’s Fashion and Beauty Sector to a burgeoning middle class – particularly from a young aspirational professional urban class with growing disposable incomes. In fact, over the next two decades India’s middle-class will grow to over 40 per cent of population, creating the world’s fifth largest consumer market.
In general, retail is one of the largest and most dynamic sectors in India. Encouraging reforms to India’s single and multi-brand retail sectors, the accelerating growth in e-commerce, and a shift from small and localised street markets to modern shopping centres and malls, Indian’s are spending more on fashion and beauty than ever before, it said.
“As a result India’s organised retail sector presents immense opportunities for UK Fashion and Beauty companies, which benefit from India’s continuing love affair with British brands and belief. In the minds of Indians, UK brands represent style and quality. As such, UK companies have a unique window of opportunity across India,” the UKIBC report said.
So, to help UK companies make sense of this transition, the UK India Business Council, together with Cluttons, have produced this report on the opportunities and challenges in India’s Fashion and Beauty sector, and how companies such as Burberry, Lush, Pavers England and the Body Shop have accessed the emerging Indian opportunities securing rewards along the way. (KNN/ES)
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