Market Watch
Despite FDI relaxations,
Single Brand Retailers
choose Local Partners
for India
The Department for Promotion of Industry and
Internal Trade (DPIIT) recently clarified that single
brand retailers, owned by foreign companies, can
fulfil their local sourcing requirements by procuring
goods produced in units based in special
economic zones (SEZs). It also clarified these
goods to be sourced by the single brand retailers
that needed to be manufactured in India.
India allows 100 per cent FDI for single brand
retail. However, till 2018, these firms needed
DPIIT’s permission to invest 49 per cent in this
sector. In 2019, the government amended the
policy to allow single brand retailers to set up
online operations without having a physical store
in the country.
Regardless of these new amendments, foreign
retailers are not too keen to invest in India as
the government does not support them in either
procuring land and local sourcing or setting up
manufacturing facilities. Lack of skilled labour
and weak infrastructure also dissuade them from
investing in India’s single brand retail sector.
The Indian retail sector has been attracting foreign
investments through such
intermittent relaxations in
the last five years. This
has enabled globally
known retailers like H&M,
Starbucks, Walmart,
Nokia, Sony and IKEA to
establish and reinforce their
presence in India.—
www.dfupublications.com
Indian Fashion Brands eye
e-commerce, but Buyer
sentiment low
As lockdown continues across the
country with very low buyer sentiment
for garments, Indian fashion brands
are focussing on e-commerce.
Fashion shows have been cancelled
and supply chain management
has been severely affected. Many
start-ups are hoping the government
comes out with some relief measures
to compensate for their business
losses. Sarah and Sandeep’s focus
has shifted towards its e-commerce platform
and its international clients with whom it consults
over Skype, according to co-founder and director
Sandeep Gonsalves, who said the internal rules
are changing daily depending on the scenario.
A few trunk shows and client engagement
events across India also had to be postponed due
to the pandemic. The company has also extended
delivery periods for earlier orders. It expects to
break even at least for the coming month as it
has cut all unnecessary costs, Gonsalves told
Fibre2Fashion. — www.fibre2fashion.com
From V-Mart to V-Bazaar,
Citykart – here’s how
Retailers are testing the
waters in Tier IV Markets
Having established a strong foothold in Tier II and
III markets — which contribute over 75 per cent
to their revenues — value retailers such as V-Mart,
V-Bazaar, 1-India Family Mart and Citykart are
testing the waters in Tier IV markets. According to
industry experts, the value retail market in India is
estimated to be worth R400 crore, with organised
players commanding merely 12.5 per cent share.
However, these players have seen robust growth
in recent years. V-Mart, for instance, grew its store
presence from 108 in FY15 to 214 in FY19.
Value retail chains target customers at the
bottom of the pyramid — typically those with
monthly incomes in the R10,000-25,000 range.
The average bill size recorded by these players is
R750, while that of players such as Pantaloons
and FBB is around R1,800. —
www.financialexpress.com
APPAREL I August 2020 I 13