Bijou Kurien
Chairman Retailers Association of India (RAI)
We should see an exciting phase for retail in India in next 2-3 years
A strong advocate for retailing in India, Retailers Association of India (RAI) is a lead trade association representing an entire gamut of retailers, from chain store retailers and department stores to independent emerging retailers, selling a wide selection of products across cities, towns, rural and virtual stores. In a chat with Fibre2Fashion, RAI Chairman Bijou Kurien discusses the Indian retail industry, and its growth and challenges.
What are the performance figures of India’s retail industry pre and post COVID-19?
The overall performance of the retail industry has improved from the depths it had plunged to during 2020 and 2021. The improvement trend seen from October 2021 continues, and we have witnessed growth over the same months in 2019. For the last 6-7 months, the trend indicates growth. In March and April 2022, the growth is in excess of 25 per cent. The numbers monitored by RAI are for brick-and-mortar retail. So, if you add online sales also, the growth in consumption would be even higher.
How is the consumer behaviour post COVID-19? What kind of growth is expected in the next 2-3 years?
Consumers have adapted very well to the new reality of shopping from home. Whether it is online commerce or home delivery from the local store, new fulfilment models have emerged. This is also visible from the increase in usage of new payment mechanisms such as UPI, which has grown tremendously in the last couple of years. Consumers have become more digitally savvy, more amenable to digital payment mechanisms, and grown accustomed to liberal customer policies and delivery systems. We expect these new behaviours to sustain and while we have seen a return to stores, we also expect the secular growth trend of e-commerce to continue.
What are the challenges for the Indian retail industry now, especially apparel retail?
Like in several other industries, our per capita consumption in retail and in the apparel industry are remarkably low, when compared to relatively more developed markets such as China and even more evolved such as the US. The overall retail market consumption is $650 per capita in India compared to $12,000 per capita in the US. Similarly, in the apparel category, it is $40 per capita in India vs. $650 in the US. Even on a purchasing power parity (PPP) basis, there is considerable scope for growth in consumption. Whether it is category development or retail development or market access, there are many challenges which I am confident we will address.
Have Indian consumers moved more to online retail during and post pandemic? If yes, please share a few details.
The initial days of the lockdown enforced post the pandemic in 2020 saw a flight of consumers to e-commerce, but the lifting of restrictions saw consumers returning to stores. However, some behaviours driven by e-commerce practices such as digital payments, delivery expectations, return policies, etc have remained. Overall, it has been a good period for retailers and consumers. While retailers have evolved rapidly to address the new standards of the fast-changing consumer behaviour, the benefits of this change are being embraced by consumers.
What are the recent consumer trends you witness in the Indian apparel market?
With a large majority of India’s formal workforce continuing to work from home, dressing down is more apparent now. Casual clothing, lounge wear and comfort clothing have seen a surge in demand. Similarly, athleisure, driven by an increasing focus on health, has grown significantly. Wedding wear, while initially affected, has resumed its trajectory in the recent past. Overall, the expansion of product categories augurs well for the domestic apparel industry.
What kind of business models are MSMEs opting for in the hybrid retail world? What are the bottlenecks for MSMEs in doing so?
MSMEs, who were the most affected by the COVID-19 lockdowns and disruptions, have begun to emerge from their problems. Digital transformation of processes connecting them with consumers, re-engineering and transforming their internal processes and quick response supply chains are key imperatives for MSMEs to pursue. Boosting their understanding of the change imperatives, improving their capital structures, and guiding that change are the bottlenecks they face.
What is the anticipated growth in retail for the next 2-3 years? Which retail sectors are witnessing higher growth than others? Where does apparel retail stand?
Retail should resume growing at 8-10 per cent that it has traditionally seen pre-pandemic. India should witness a multitude of models – from re-engineered brick-and-mortar to local out-of-store commerce, to online commerce to collaborations between online and offline driven through multi-channel and omni-channel commerce. Delivery systems would also range from quick commerce to in-store. New technology players will enter the retail industry, seeking to disrupt traditional models. We will also see brands connecting directly with consumers, competing with the likes of pure play and category led retailers. Overall, we should see an exciting phase for retail in India, supported by an increasingly prosperous Indian consumer.
In the context of a dynamic market, apparel retail will witness a re-structuring of the brand world, based on wear trends. How the consumer behaves and dresses in the future, and how quickly brands adapt to these changes will define success.
What would be your advice to apparel retailers given the ongoing crude oil crisis and supply chain disruptions?
Inflation has reared its head one again. High single digit inflation, driven by food, fuel and oils, has a multiplier effect on the cost of living. Anticipating changes in consumer spending, protecting your cost structure, especially man-made fibre costing, and your retail, distribution and supply chain costs will be critical to protecting your profitability. Building resilient domestic supply chains will be a medium-term focus, given what we have witnessed in China and with container shipping costs. Power supply will get disrupted and costs will increase, and cost re-engineering is an invaluable exercise. Focusing on your current customers and generating insights of them will be a great tool. Overall, the next couple of quarters are expected to be rocky and we should be prepared to react quickly.
Published on: 01/06/2022
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
