The need to mitigate their exposure to the Asian supply chain after the health crisis, the slowdown in economic growth in China, where consumption is shrinking, as well as the reshuffling of geopolitical alliances linked to the conflict in Ukraine require brands to take a closer look at India’s growth. There, the retail market is expected to grow from $690 billion in 2021 to $2 trillion by 2032. A spotlight on this multicultural country with a decentralized economy, where brands are nevertheless moving forward slowly.
The star of the signs in China shines a little less brightly. An article of the world of July 12 highlighted the difficulties encountered by Ba&sh, the women’s fashion brand riding the wave of the trend of a “ affordable luxury clothing “. It is not alone in having to face the vagaries of the Chinese market. A group like SMCP, owner of Sandro, Maje and Claudie Pierlot, has thus ” closed around ten stores during the quarter and has planned 100 closures mainly in China over the next two years”also teaches us about everyday life The world.
Partnerships with key players in local distribution
Faced with the slowdown in China, whose economic performance disappointed in 2023 with exports down for the first time since 2016 (-4.6%), brands are taking a closer look at the Indian market. Reliance Brands Limited and SMCP thus concluded an exclusive partnership at the end of November 2023 allowing Maya et Sandro to enter the dynamic Indian fashion landscape. This collaboration marks a significant milestone in SMCP’s global expansion strategy, with Reliance Brands being the exclusive distributor of Sandro and Maje in India. By the end of 2023, the luxury footwear brand Louboutin has partnered with Aditya Birla Fashion and Retail Limited (ABFRL), an Indian fashion group operating a network of 3,500 stores. The goal? To create a joint venture, allowing the French brand to expand in this high-potential market. Another example is the high-end clothing and accessories brand Tory Burch opened a new flagship store in Mumbai with Reliance Brands Limited last April. This is the second store for the brand. It is located in the Jio World Plaza, a shopping complex that also serves as a cultural and commercial landmark in the Bandra Kurla Complex (BKC), one of the main business districts of Mumbai. Hermes which opened a store in the same location in spring 2024 and is enjoying great success.
« In 2023, the increase in mall space in India was the highest ever recorded in a year and exceeded the cumulative value recorded in the previous three years. “, he points out from the outset Laure de Carayon, founder of the consulting firm Asia Loopers. In India, two-thirds of GDP is driven by domestic demand. The digital economy is expected to account for 20% of GDP by 2025. One in five Gen Zers worldwide live in India and by 2047, it will be home to 20% of the global middle class. According to the report Decoding India’s Shopping Frenzy (1)developed by Asia Loopers, Retail e-commerce penetration rate expected to reach 10.7% by 2024. A digital market that is expected to welcome nearly 700 million buyers by 2032. India is the 2e country in the world where online retail sales are growing the fastest. Despite these dizzying figures, we must keep a cool head. E-commerce represents just 7.8% of total retail while it is 46.3% in China, so we are only at the beginning of livestream commerce ” nevertheless confided Kishore Thota, director, customer experience and marketing at Amazon India, in 2022 to The Revue du Digital. India, like China or the USA, has its “shopping festival” (Single’s Day in China, Cyber Monday and Black Friday in the United States): Diwali (“festival of lights” in Hindi), the equivalent of Western Christmas, whose sales are good indicators of the health of the Indian economy.
Read also: Paris 2024 Olympics: Retailers ready to provide a plurality of payment methods
One thing is for sure, according to the Asia Loopers report, the current decade will be one of massification and greater loyalty, thanks to the evolution of consumer profiles and geographies, business models, logistics and payment methods. Digitalization in the payments universe is favored by key public services, such as IndiaStackwhich will move India from a “prepaid” economy to a “postpaid” economy, UPI instant payment system (Unified Payments Interface) ou l’ONDC (Open Network for Digital Commerce) for e-commerce, in order to accelerate the growth of rural India, which already constitutes the bulk of its economy. In France, on July 12, the Galeries Lafayette have officially announced the acceptance of the UPI payment method, through a partnership with Lyrato facilitate purchases for Indian consumers passing through Paris.
An Indian subcontinent that requires in-depth approach work
But be careful, India (2) will not be the next China. It will not follow its economic trajectory, nor its dazzling “golden decade (digital)”. The large Indian retailers, which are coming to digital, have not been pure players like Tencent or Alibaba have been. But some players, particularly on the service provider side, have also worked in China for many years like the founders of Fugumobile, agence de marketing digital. « Indians, with their culture, particularly in the field of Ayurveda, have a lot to offer to the cosmetics and beauty sector, as we have seen with the success of “K-Beauty” (Korean beauty). Moreover, L’Oreal Bold, Estée Lauder New Incubation Ventures (NIV), responsible for investments of the eponymous groups, or even players such as the Puig group, have taken stakes in India very early on, before doing the same in China. “, notes Laure de Carayon.
“There are also specific barriers to entry »recalls Laure de Carayon. « Few brands are still talking about India, they are very demanding of information. There is work in progress on pitching and selecting partners on site. Things are starting to come together, as we see with the partnership between Reliance and Sandro, for example.”she adds. An international fashion brand agrees. India is a unique and high potential marketI am thinking in particular of the dress codes for celebratory occasions (…) Although Ermenegildo Zegna approaches the market with distinct clothing models and materials, I admit that a “foreign” brand may come up against certain limits that prevent it from properly assessing and responding to some of these specific requests. », observe Gildo Zegna, CEO of Zegna about the local market.
In India, everything remains to be done, but there is no shortage of talented leaders who have already “rolled their hump” abroad elsewhere. Founded by former Pumathe Capsul brand is an on- and offline multi-brand streetwear retailer. It has three stores (Ahmedabad, Mumbai and Bangalore) ” with price positions that one could see in the Marais district of Paris “, underlines Laure de Carayon. In terms of sales channels, social networks such as Instagram, Facebook and more particularly WhatsApp Shopping, also exert significant traction. » Social commerce and live commerce are also developing strongly, with Indians having already developed 3 or 4 equivalents of TikTok Chinese.
China 10 years ago…
Ykone is part of the influencer marketing agencies who have acquired some experience in onboarding brands in the APAC region and particularly in India. To operate on the Indian market, we chose to acquire a local player and the Ykone India office was opened in 2021 in Mumbai. “, explain Julien Gaubert-Molina, partner and CEO Asia of Ykone. Ykone India counts among its clients Veuve Clicquot and Laliquefor example. Julien Gaubert-Molina comes from the world of luxury. After working for Hermes in New York and Paris and participated in the launch of the first Hermès e-commerce sites, He joined the world of agencies. He notably worked at Same same but different, advertising and digital creation agency specializing in luxury and premium brands, founded in 2010 by Michel Campan, a former CRM, internet and e-commerce marketing director, who worked at Hermès, Lancôme and Dior Couture and acquired in 2015 by Dentsu Aegis Network. A little over three years ago, in January 2021, he was recruited by the influencer marketing agency Ykone (300 people and 15 offices worldwide) to launch its activities in Asia. As a reminder, Ykone’s controlling shareholder is the Saudi group BinDawood Holding, specializing in mass distribution in Saudi Arabia.
partner et CEO Asia d’Ykone
It is difficult to predict the investments of large groups in India. There will certainly be lessons for them to learn from the mistakes made in China to avoid repeating them in India. They will also depend on how the Indian government facilitates and encourages these investments.. Infrastructure will also need to be improved and construction sites will need to move forward quickly (e.g. the aerial metro project in Mumbai). Compared to China, which has grown cities like Shenzhen in five to ten years, India still has a long way to go. China, it is true, has a governmental organization, which means that when decisions are taken, they are implemented immediately. », observe le CEO Asia d’Ykone.
Read also: Galeries Lafayette rolls out UPI payment for its Indian customers
« These last two years, going to India, I had the impression of rediscovering the China of 10 years ago. The new generations of Indians are completely free in terms of creativity, they express themselves. In addition, they have the advantage of having an entertainment culture, through Bollywood but not only, extremely festive, positive and colorful. In the consumer world, in my opinion, this can only work. “, he concludes.
(1) To learn more about India and decipher its market, click ICI
(2) Asia Loopers organized in June the China//India Conferencean expanded version of 10 years of China Connect supplemented by 3 years of analysis of the Indian market
Source: www.ecommercemag.fr
