Entry and Expansion Strategies for the Indian Retail Industry
With the global retail sector growing at a rapid pace, companies should consider expanding their operations to prospective nations that have significant growth potential. In this regard, India is an exceptional choice due to its rising population, increased urbanization, improved spending capacity, etc. However, organizations must know the entry and expansion strategies for the Indian Retail Industry to succeed in their endeavors.
As an after-effect of the pandemic, the global retail industry has been growing at an exponential pace to cater to rising demands. This is mostly due to factors such as the rise of digital retailing platforms, changing consumer trends and behavior, etc. Major retail giants around the world are riding the growth and are in intense competition with each other for market share and expansion.
To benefit from the exponential growth, it is high time for global retail industry players to think of entry strategies for the Indian retail industry. India’s retail industry is projected to grow at 9% CAGR over 2019-2030, from USD 779 billion in 2019 to USD 1,407 billion by 2026. It is quite evident that capturing India’s retail market can offer global retail companies significant growth in the years to come.
Why is India an Attractive Destination for Retail Businesses?
The retail industry in India is currently in a developing phase. It is the 4th largest in the world, and according to market experts, this sector has the potential to reach USD 2 trillion by 2032.
By entering the Indian retail industry, global businesses can diversify their risks and gain commercial traction. Moreover, it will also assist in boosting competitiveness and occupy a share of the Indian market that is currently experiencing massive growth.
There are numerous reasons why India has developed as an attractive destination for retail business.
India has experienced a constant rise in demand for consumer goods. As per industry reports, by September 2021, the retail industry had already reached 96% of its pre-COVID sales. This is due to the rise of middle-class income, rapid urbanization, increasing individual income, growth in disposable income, etc.
Moreover, globally, India has the 3rd highest number of online shoppers. Experts predict that in the next 10 years, the penetration for online card transactions will grow by 9 times.
The government has taken several measures that will help foreign investors enter the Indian retail market seamlessly. Recently, in April 2022, it gave approval for a Production Linked Incentive (PLI) scheme for textile-based products. It includes an outlay of more than USD 12,00,000 for a time period of 5 years. This will help foreign companies established in India to increase their export potential.
According to industry experts, in 2021, India was ranked second in growth in the retail sector. By 2030, this sector is expected to create 25 million new jobs, creating a demand for commercial real estate across major Indian cities.
In addition, by 2030, the Indian e-commerce market is expected to reach a Gross Merchandise Value (GMV) of USD 350 billion, thereby keeping up the growth of this sector.
Top 5 Entry Strategies for the Indian Retail Industry
Here are some entry strategies that organizations can follow for successful entry into the Indian market:
- Localising Offerings as per the Indian Audience
India’s population consists of various people coming from various religions, cultures, ethnicities, etc. Thus, before making a game plan to enter the Indian market, companies should consider localizing their products. This will make their offerings suitable to the Indian customer’s needs.
For example, textile manufacturers thinking of entering this market should keep in mind India’s climate. They should opt for materials and styles that are preferred by the locals. Doing so will help them connect with the people and establish their presence in the market.
- Composing an Excellent Pricing Strategy
A significant thing that organizations must remember before entering the Indian retail market is to create an effective pricing strategy. This is because, in spite of the rising number of middle-class families, most people belong to the low-income group who spend limited resources on purchasing retail products. For a retail company to grow in India, it is crucial for it to set a price that resonates with the Indian population.
- Using Social Media and Influencer Marketing
Indians generally spend a lot of time on social media platforms. Leveraging these platforms for advertising products is an excellent way to grab the attention of the masses. For example, Crocs India uses Facebook to locate prospective buyers and improve their methods for targeting the right ones.
Influencer marketing is also an effective strategy for the Indian market. This is because people in India trust word-of-mouth recommendations and reviews. Thus, using influencers to promote products can be an excellent strategy for this specific market.
Taking the help of influencers allows a brand to gain access to a new audience. In addition, this also facilitates their promotion via unique content.
- Making Brick and Mortar Stores
According to a survey, more than 80% of the Indian population prefers to shop at offline brick-and-mortar stores. This is because most Indians love the idea of entering a store and purchasing something after a physical inspection. It allows them to check out the products and enjoy the shopping experience. Thus, physical stores hold great potential to boost the sales of a company, especially if it is in a premium location.
The success of this strategy has been tested by international retail brands like H&M, Louis Philippe, Van Heusen, Hackett London, Ted Baker, Polo Ralph Lauren, etc.
- Partnering With the Right Consulting Firm
Now, there are multiple legal and regulatory challenges that a foreign organization can face while trying to enter the Indian retail market. In such a scenario, it is advisable to enter a partnership with a management consulting firm to reduce unnecessary hassles.
Doing so will help companies gather deep insight into the Indian market and gain access to tried and tested Entry and Expansion Strategies for the Indian Retail Industry that will help fulfill their expansion goals. Firms like Tecnova can help retail firms in this regard.
With Tecnova Global, companies can avail adaptive strategies to enter the Indian retail market successfully. With over 1700 clients across 35 countries, they are experts when it comes to customizing products and services to make them more India-centric.
Reference
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