Second episode briefing you about Russian welcoming call, ban on plastic usage, shopping mall expansion and D2C brand moves.
Hello and welcome to This Week in Indian Retail - a podcast dedicated to the major events, news and stories that impacted the Indian retail industry in the last week.
This is June 26th 2022 and I’m your host Prateek Malik from New Delhi.
Let’s get started!
Summary of Week 25 of 2022 :
Russia welcomes Indian retailers During an address at the BRICS forum, Russian president Vladimir Putin mentioned that the engagement between Russian business groups and BRICS business communities is being activated. Negotiations are on the table to open Indian retail store chains in Russia. Russian IT companies are also increasing their activities in India. This move seems to be a strategic move in the current situation of Western sanctions, where a majority of the foreign brands have left the Russian retail market under the looming economic uncertainty. It could be a decent opportunity for the Indian brands to leverage the cultural ties and harness the best of the regional markets in Russia.
Ban on the usage of single-use plastic across Indian retail stores from July 1 This will impact the operations of all FMCG and F&B retail locations across the country as single-use plastic items like plastic straws, lids, polibags, etc. would be neither procured nor provided any of the store. The market has prepared itself with more bio-friendly alternatives like paper straws, paper glass lids, wooden cutlery, paper carry bags and more. However, certain beverage companies are worried as they are sitting with loads of inventory that was already packaged with a plastic straw or a similar item. Several companies have also planned to start their own manufacturing units for the alternative items.
Expansion of shopping malls across Tier 2 cities After touching the threshold zone of success in the Tier 1 metro cities; shopping malls groups are now expanding their reach to Tier 2 cities like Ahmedabad, Lucknow, Indore, Udaipur, Chandigarh and allied zones. Certain management members of these groups quoted several key reasons for this move. One is that brands are following the crowd and naturally setting base where the customers are. The disposable income and awareness under Tier 2 and Tier 3 zones have also led to the growth. As a substantial part of the population continues working from home, both national and international brands are eyeing the newer pastures. Another factors like the growth driven by the rising young retailers in these zones, along with the strong will to experiment is giving their groups and their hosted brands equal confidence. Realty developer groups like Omaxe, Bhumika, Trehan Iris, Phoenix, Unity, Lulu and Sushma are leading the pack in this new exploration.
D2C brands following retail store expansion as their next move Under the current wave of omni-channel expansion, existing offline strong retail brands have already gained huge success online to match up with the new age D2C brands. However, D2C brands are also catching up to this action with equal and opposite reaction. Brands like The Man Company, Nykaa, Sugar, MamaEarth, Wakefit are some of the prominent names that are consistently launching new retail stores across India and abroad. Currently the Indian market is home to 600+ D2C companies that size the market at 2 Billion dollars and expected to zoom to 20 Billion dollars by 2025. This seems to be great news for all consumers who engage with these brands, along with other partner vendors who empower this ecosystem.
Liquor retailers in Delhi criticizing the new excise policy of the Delhi Govt. In November 2021, the Govt. of Delhi implemented a new policy that shifted the retail rights from govt. Owned outlets to private retail vendor groups. In this new policy, the city was divided into 32 zones with 27 outlets in each zone. With an average reserve price of 225 crores per zone, it provided the govt. much beyond the expected number at 9000 crores. Now that almost two quarters have passed, retailers have realized the gaps including different offers by the liquor manufacturers to selected retailers through large wholesalers, while denying the same to the others. This was limited in the earlier policy, however, the new policy waived this condition, hereby causing a huge uproar in the liquor retail market of Delhi. This predatory pricing has led to the smaller retail groups being forced to a condition where they have to surrender their licenses to avoid further losses. While liquor manufacturers denied such claims to the media groups who tried reaching out, retailers have filed a large number of petitions in the Delhi High Court. While the govt. Planned this policy to be an operational refresh, for some retailers it turned out to be something else.
That’s a quick wrap for this week.
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