Govind Shrikhande’s Insider View of India

Govind Shrikhande, chief executive officer of India's Shopper's Stop Ltd., kicked off his presentation with a quip about trying to keep the audience awake after lunch. He needn't have worried.

Govind Shrikhande, chief executive officer of India’s Shopper’s Stop Ltd., kicked off his presentation with a quip about trying to keep the audience awake after lunch. He needn’t have worried. The statistics and insight he provided into the Indian market were electrifying.

Shrikhande began with a brief primer on the culture of the country: Comprising 29 different states, with 12 different spoken languages and celebrating 72 different festivals, India should be considered as one does Europe, a patchwork of nations rather than one enormous entity. “Each state has its own culture,” said Shrikhande, likening their differences to those between France, Germany, the U.K. and other countries.

He continued by highlighting the enormous shifts toward modernization that have taken place over the last 20 years, and broke the consumer base into five segments: Global India, or those who know all the ‘in’ things around the world; self-employed India, comprising lawyers, doctors and entrepreneurs who “are driving the growth of consumption”; middle class India, which makes up the “backbone of the IT revolution”; farmer’s India, accounting for 75 percent of the country, and poor India.

Although 35 percent of the population lives below the poverty line, things are changing rapidly, said Shrikhande, noting that 70 percent of the population is starting to consume larger items. For now, though, the Indian market is largely focused on the country’s six largest cities, and it was on the habits of the urban population that Shrikhande expounded.

“They are very well connected to world standards and they demand brands and products,” he said. “But at the core, they always demand more value than anything else.” That fact has resulted in a fundamental shift in buying practices among those with money. “The philosophy is changing from see it now and consume later, to affordable indulgences,” said Shrikhande. “India has one of the highest savings rates in the world at more than 32 percent.”

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Women are playing an increasingly important part in society overall, with about 22 percent in the workforce. Moreover, they have role models to emulate on the global stage, such as film director Mira Nair, model Aishwarya Rai and Indra Nooyi, ceo of Pepsico. What does this mean for marketers? “As women start earning, they know what the good life is all about, what good products are all about and they are going to consume more and more cosmetics,” said Shrikhande.

Currently, the Indian toiletries and cosmetics market is still small compared with global standards — just 0.5 percent of the country’s $330 billion retail pie, or about $1 billion. But that is changing, Shrikhande pointed out, particularly as organized retail channels continue to grow — currently, about 300 malls are under construction across the country. India’s population is also young, with 65 percent under the age of 35.

As everywhere, the market is divided into four primary segments: color, hair care, skin care and fragrance. Prestige brands currently account for about 7 percent of all sales, a number Shrikhande expects to rise to 10 to 12 percent in the next four years. Hair oils are extremely popular, as are skin lightening and whitening products, as in Asia.

High import duties, which can reach 105 percent on international brands, are one of the biggest barriers to growth, said the executive. Distribution options include mass merchandisers, direct sell or the prestige channel. Shopper’s Stop — which operates over 143 stores, including department stores, mass merchandisers and single-branded boutiques for MAC and Clinique — is a key partner for many. Currently, the company has 24 department stores, a number expected to double in the next 48 months.

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