Column: Of 'dahi bhalla' and organised retail

(HBL 12/04/2006) Mumbai - How transferable are Western ideas, products, and business models to emerging markets like India?

Ravi Poonen, Chennai

Ravi, at the very beginning, I do believe markets are about consumers and money. Both these aspects largely hold the same dimensions in most markets. Consumers are essentially mavericks and their minds and moods change dramatically. Money, however, is limited, and the splurge of money is dictated by an approach that is reasonably rational. Marketers vie for the attention of the consumer and her money. Having said that, this does not mean that all markets are level.

Markets in developed countries depict a pattern that is different from what we see in developing or emerging markets. Developed markets speak of an ability to absorb anything and everything international that has succeeded in a market quite like it.

Developing markets, however, have a habit of rejecting clonal marketing strategies that have worked elsewhere. They demand a unique and individual understanding of local reality, desire, aspiration and passion.

India, for one, is a very different kettle of pomfret altogether. It is as `aclonal' a market as it comes. Our diversity patterns are huge. This market demands customisation. Acute customisation! The Western idea is welcome, but it needs to adopt an avatar that is completely acceptable to the local mind and mood of the consumer. Early MNC entrants in the category of footwear realised this to their utter surprise. What worked beautifully in Singapore and Kuala Lumpur was not working as well in India.

There is an exception, though. The premium category. In categories such as a Swarovski, premium cars and high-end perfumes, the market is entirely different and more accepting of the global thought, the global marketing campaign and even the blonde model who will ask you to own a Gucci! The mass market is different. It is more about customisation and local tweaking.

Can you think of some Indian brands that are poised to make a mark globally?

Swati Menon, Mumbai

Swati, let me think. Take yoga. It is doing well. I can't think of too many brands from the manufacturing sector though.

For the past 60 years, we have flogged the `Made in India' line that has not delivered at all. I believe we need to focus on the `Served out of India' line and most certainly the `Grown out of India' line in the future. We are great at service, and our agri-practices are ancient and time-enduring. We need to package these for the future.

India and BPO is a brand that is clicking well. The services sector can offer hospitality and Indian holistic healing systems that will make a truly global Indian brand.

I believe we can create a truly Indian offering in aviation space. Jet Airways can surely compete in this space. And so can Kingfisher in the future.

I am just about to join a savoury snacks major which has big ambitions for India. Can I have some inputs this market?

Rajeev Reddy, Hyderabad.

The savoury snacks market has evolved over the years. Every new MNC entrant is actually upgrading from local taste profiles. The bhujia market is largely sewn in by Haldirams and Bikanerwala and a host of local players much smaller than these two.

Some insights:

Snack food upgrades need to largely keep in tune with the existing market and its taste. Even a Lay's chip has to have the profile of chaat as a taste variant if it is to attempt to be relevant to the local consumer.

There is a generic possibility of upgrading from wet snacks in the market like chaat, dahi bhalla and even medium-wet snacks such as kachoris and samosas in the market to dry. packaged versions.

These snacks will need to keep taste intact but can offer product variants that are different. For instance, hard dough items that taste like chaat, but last longer. The USP of this category is all about hygiene and consistency in taste delivery.

There is a possible market for a baked savoury, just as long as it is not advertised to be baked. The moment you do that, there is alienation in the market.

Health is an issue and a non-issue in the market at the same time. Consumers know a low fat crispy is good for the heart, but really don't prefer it, unless advised by the doctor with a threat.

Retail is a growing industry. What's real and what's hype?

Shiny George, Mumbai

Shiny, good question and good timing. We are just about going through the birth pangs of organised retail in this county. This is really the nascent stage. At this stage, every player is out to create all the hype that is necessary. Organised retail has a larger-than-life image in the country as of now.

The media is engrossed in this category as well. The reality is that the size of retail needs to be defined before we get excited about it or put off by it.

The secret lies in the numbers. India is a big retail market. The world churns out a business of $6.8 trillion in the retail segment. India is a $2.8-billion retail market. However, the important point is that in India, trade is largely disaggregated. Of all trade in this country, 98.3 per cent is handled by the small shopkeeper. Only 1.7 per cent of businesses are with the large chains.

The prognosis for this industry is as varied as the vested interests in the category touting the growth percentage. There are numbers that are pessimistic and put organised segment retail growth at 4 per cent per annum. And then there are numbers that predict an 18 per cent growth per annum!

Whatever happens, the fact of the matter lies in the reality that small retail will not get swept out of this country in the next 25 years for sure. The `small is beautiful' model works well for this country.

By Harish Bijoor, branddomain specialist and CEO, Harish Bijoor Consults Inc.