BOMBAY — Nowhere is the rise of India’s new consumer class more evident than in the sparkling new malls springing up around the country.

People of all classes initially flocked to the massive steel and glass structures for the sheer novelty of a Western world experience and air conditioning. But a growing number of visitors are now coming armed with credit cards and an urge to spend.

Kunal Kapur, a 28-year-old call center supervisor, was browsing through the racks in the Tommy Hilfiger store at the Metropolitan Mall in Gurgaon, a suburb of New Delhi, contemplating whether to spend 4,000 rupees — about $90, a quarter of his monthly salary — on a sweater. But, after trying it on, Kapur whipped out his credit card. “It’s not something I had to have, but it’s great quality, and you can’t beat Tommy,” he said.

Kapur is part of India’s burgeoning middle class, which is driving a retail revolution.

Just a few years ago, India was completely dominated by bazaars full of mom-and-pop shops. Spending was done out of necessity, not impulse. But increased exposure to international media has made consumers more brand-conscious, disposable income is on the rise because of the growing number of dual-income urban families and interest rates are at their lowest in more than three decades, making buying on credit more affordable.

Throughout India’s cities, developers are rushing to put up malls. State governments are offering tax breaks, land and even loans at discounted rates. By 2008, there will be over 375 malls and shopping centers across the country.

For global retailers, India represents one of the few remaining large-scale expansion opportunities. Although 97 percent of the country’s total retail sales still come from small independents, chain stores are catching up. According to the Federation of Indian Chambers of Commerce and Industry, chains will make up 30 percent of India’s total retail market by 2010.

India is an attractive retailing destination also because it is becoming a major manufacturing and sourcing hub. Companies that already have offices in the country, such as Wal-Mart, Gap, J.C. Penney and H&M, are seriously considering opening stores in the market.

This story first appeared in the March 13, 2006 issue of WWD. Subscribe Today.

Success for international brands in India means adapting to local conditions. Benetton, one of the first foreign brands in India, has done so successfully. “We cater to Indian preferences and styles in that we will always choose color palettes, necklines and hemlines that work with India,” said managing director Gagan Singh. “But we will not go into ethnic wear.”

Hugo Boss opened its first store in India in 2003. Now it has four stores, in Delhi and Mumbai. Lars Peter Larsen, director of Hugo Boss Hong Kong Ltd., said the Indian market is very different from those in the West and even in the rest of Asia. “We first entered China in 1994, and today we have 64 stores across the country [China]. The biggest problem for our expansion in India is finding the right retail space,” Larsen said.

At the moment, Hugo Boss retails only in high-end shopping arcades at luxury hotels because, added Larsen, “it is the only place that has the right ambience.”

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