Retail changing fast in India

The Indian retail market is changing fast, with a rapid consumer move to buying fast moving consumer goods (FMCG) via major retail outlets. This is happening across India but is fastest in urban centres.

India’s first major store was Big Bazaar which opened in Kolkata in 2001.  For the first time, following demonetisation and implementation of the goods and services tax (GST), modern trade has touched the double-digit mark, accounting for 10% of the overall revenue of the FMCG sector, according to market research and insights provider The Nielsen Co.

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Modern trade’s growth stood at 25% during the April-June quarter, compared with 16% in the July-September quarter last year.

According to Nielsen, stores that stock FMCG products, operate on a self-service business model and provide shopping baskets or carts to customers are classified as “modern trade” stores.

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Stores include names such as Big Bazaar and DMart.

For Marico Ltd, the maker of Saffola and Parachute oils, channels such as modern trade comprise 11% of India sales, and are growing at 39%. On the other hand, e-commerce, comprising 1% of India sales, is growing at four times the overall growth rate, according to recent report by SBICap Securities Ltd.

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Urban retail is growing due to rising urban household incomes and increasing penetration of organised retail in urban centres. The share of urban retail is expected to grow from 49% in 2015-16 to 52% by 2019-20, according to a May 2018 report by Firstcall Research.

Modern retail is seeing retailers launch new stores and consolidate their footprints. For instance, in 2017-18, Avenue Supermarts Ltd, which runs DMart chain of stores, added 24 stores, taking its total count to 155.

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Over the last few years, Kishore Biyani’s Future Retail Ltd has strengthened its footprint in western India with the acquisition of Hypercity Retail India Ltd. In the north, the company acquired Easyday chain from Bharti Enterprises and Big Apple. In South India, the retailer bought Nilgiris and Heritage Foods chains.

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How “culture” can divide the west and India – and how to overcome it

Every country has a culture – the way things are done, how people think and more. To succeed with another country, it makes sense to first understand their culture – that way, we can adapt to it.

Cultural misunderstanding is at the core of our lack of trade and diplomatic connectivity with India.

The importance of cross-cultural understanding is not about focusing on “difference” – it is about knowing what those differences are, so we can then ADAPT our behaviour. Further, cross-cultural analysis is not claiming one view to be right and the other wrong.multicult

Consider what the academics call “absolutism vs relativism” – we in the west are absolutist so we place all our energy on contracts, project plans and we never like surprises. India is a relativist culture, so it knows things can only be defined relatively, and whatever we decide upon will change as life inevitably changes. You can see how these two differing world views create problems for us.

The absolutist thinker puts rules above relationships – while the relativist thinker places relationship way above rules. Knowing this, we can adapt.

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Also look at western “individualist” culture and compare with India’s “collectivist” culture. The west empowers individuals to make decisions, whereas in a collective culture, decisions are made by the group and can take more time. Not such a problem when you understand it.

Plus consider that the west is called a “specific” culture while India is “diffuse”. What does this mean? The westerner is direct, open and always in a rush – cannot stay for dinner. The Indian prefers to be indirect, works around an issue rather than confronting it, takes time, wants you to stay for dinner and never says “no” even when that is the right answer, preferring the often misunderstood “I will try”.

With these differences and many more, whether we are Indian or western, if we train to understand and ADAPT to the difference, we face much better prospects of success.Tourists1

7 reasons India is the key to global economic growth

India is a source of growth for the global economy for the next few decades and it could be what China was for the world economy, the IMF said today, as it suggested the country take steps towards more structural reforms. Here are my 7 reasons India is the key:

  1. India now contributes, in purchasing power parity measures, 15 per cent of the growth in the global economy (IMF figures) – just behind China and USA.
  2. India has three decades before it hits the point where the working age population starts to decline. About 600 million people – half of India’s population – are under the age of 25. The next three decades is India’s window of opportunity in Asia.
  3. The IMF has forecast India’s growth to rise to 7.3 per cent in FY2018/19 and 7.5 per cent in FY2019/20, on strengthening investment and robust private consumption.
  4. The Indian economy is recovering surprisingly well from the two shocks that started from late 2016: demonetisation and then the implementation issues related to the GST. Long term, the GST is the biggest regulatory game changer in India.
  5. Reformed insolvency and bankruptcy codes are another big achievement of the Modi Government.
  6. The Reserve Bank of India is now formally and actively involved in inflation targeting – India has seen the benefits of that have lower inflation and inflation expectations.
  7. In the pipeline of Modi reforms are more changes to improve the business climate and further steps to liberalise Foreign Direct Investment (FDI).And then there are some of the key smaller steps like things to improve the business climate, steps to further liberalised FDI.

Sure, more reform is needed in labour laws, overall improvement in ease of doing business, more infrastructure activity and dealing with the banking and corporate sector balance sheet issues.

But current evidence is that India will avoid the trap of “growing old before it becomes rich”.

There is such a thing as “Indian Time”

Different cultures can perceive time in different ways. In the west we see time as sequential, a straight line, whereas India sees time as synchronic, they see the past, present and future as interrelated.

Why do we need to know this? Knowledge of the culture of others is not about making judgments of others – rather, it helps us adapt to differences.

In a nutshell, this western approach to time explains why we are always rushing about, completing one meeting and rushing on to the next, while your Indian host seems relaxed, not in a rush, dealing with many other things while meeting with you and so on.

The Indian view of time partly explains the seeming “chaos” of Indian conferences – people constantly leaving or entering the room, private meetings can distract your attention and of course mobiles will ring and will be answered. All of this can be confusing for westerners, yet for the Indians, this is just a normal situation.

In a business meeting, the Indian you are talking to might also be signing letters, taking messages from staff, handling calls and seemingly not paying attention – but in fact knows exactly what you are saying despite what westerners would see as interruptions.

It is important for the visitor to adapt to this difference – especially on business visits. For example, filling your day with meetings could mean you miss the real opportunity, such as towards the end of a long meeting, your Indian host might want to introduce you to a superior or a friend in another company – this is a sign of your acceptance, the meeting has gone well, and they are honoring you. Without understanding this difference, you rush off and miss the opportunity.

Australia’s ‘An India Economic Strategy to 2035’ No. 5 – what are competitor countries doing to succeed in India?

The Australian trade and investment relationship with India is stagnating – even declining.

Part of finding the solution should be to look at what others are doing to succeed there – especially Japan, Singapore and Canada.

Much more competitor analysis would have added real value and real world outcomes to the “An India Economic Strategy to 2035” report.

For example, in the area of India’s plans for 100 Smart Cities, how have competitor countries won contracts?

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Research among Japan, Singapore and Canada would show that when the projects are large, these countries have gone to India with a total and coordinated solution – the finance, the designs, construction, equipment, ongoing administration and maintenance – and more. These have been offers too good to refuse.

Can Australia build a more collaborative approach to India? Can we identify projects and take a total solution across? Doing this would be one step to creating better levels of trade and investment.

Current fragmented approaches are not working.

Australia’s ‘An India Economic Strategy to 2035’ No. 4 – more focus needed on cross-cultural understanding

It is true that the “An India Economic Strategy to 2035” did acknowledge the importance of culture, but I would have liked to see much more focus on it. There is nothing bigger keeping us apart.

Cultural misunderstanding is at the core of our lack of trade and diplomatic connectivity with India.

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The importance of cross-cultural understanding is not about focusing on “difference” – it is about knowing what those differences are so we can then ADAPT our behavior, further, cross-cultural analysis is not claiming one view to be right and the other wrong.

Consider what the academics call “absolutism vs relativism” – we in the west are absolutist so we place all our energy on contracts, project plans and we never like surprises. India is a relativist culture, so it knows things can only be defined relatively, and whatever we decide upon will change as life inevitably changes. You can see how these two differing world views create problems for us.

The absolutist thinker puts rules above relationships – while the relativist thinker places relationship way above rules. Knowing this, we can adapt.

Also look at western “individualist” culture and compare with India”s “collectivist” culture. The west empowers individuals to make decisions, whereas in a collective culture decisions are made by the group and can take more time. Not such a problem when you understand it.Holi3

Plus consider that the west is called a “specific” culture while India is “diffuse”. What does this mean? The westerner is direct, open and always in a rush – cannot stay for dinner. The Indian prefers to be indirect, works around an issue rather than confronting it, takes time, wants you to stay for dinner and never says “no” even when that is the right answer, preferring the often misunderstood “I will try”.

With these differences and many more, if we train westerners to understand and ADAPT to the difference, we face much better prospects of success.

Cultural differences (without adapting) are coming between Australia and India – if we change this, we change the relationship for the better.

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Australia’s ‘An India Economic Strategy to 2035’ No. 3 – why creating forums can be a waste of time

I am not a big fan of “CEO Forums” as an instrument of diplomacy or trade. Most of them are a formality, many attendees are pressured to be there and there is no natural energy. Good business arises when there is natural energy.

But the report “An India Economic Strategy to 2035” clearly loves them, and it called for a new CEO Forum and several other top level meetings to be created.

I could not see anywhere in the report where it actually asked if India wants these forums.

Nor could I see much in the track record of the Business Council of Australia (which the report nominates as the organiser of the forum) to suggest they have a deep interest in India at all.

What is the alternative?

Some of my best networking and business experiences in India have happened when I have attended a local Indian event – run by CII, FICCI, various universities and some city chambers of commerce.

In a collective culture such as India, going to a locally run event is your invitation into the collective, you can see first hand how it operates and find your own place. Indians love you turning up and appreciate the respect it shows. Networking becomes dynamic and business doors open to you.

Much better than a formal, imposed Australian CEO Forum idea.

This cultural point is central to my views – an Australian-created CEO Forum occurs “outside of the Indian collective” and although they will turn up, you are missing a key opportunity to be accepted into that collective – which of course is when you really do business.

Where a forum is a natural consequence of a growing trade relationship, then I am all for it – but creating one when there is no natural base for it could be a waste of time.

Let’s create a global Indian diaspora event in Australia

Modern Indians are becoming global tourists and Australia should strive to be in the top four destinations. There was a 10 per cent increase in visa applications from India in 2017 at 4.7 million compared to 4.3 million applications in 2016, according to data compiled by VFS Global.

The top five destinations for which visa applications were processed (in 2016 and 2017) were – the US, Malaysia, the UK, Canada and China, according to the data. The report said visa applications for Thailand witnessed the sharpest increase in 2017 compared to 2016.

Australia has a lot to attract Indian tourists – time to get the message into the Indian market.

Why not start by creating a global Indian diaspora event in Australia? Innovative thinking works, and the Indian diaspora here could be part of the active marketing program.

 

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Australia finally has a strategy to build relations with India – but detail and time will tell

At last! Australia has ‘An India Economic Strategy to 2035’ — let’s hope this will have an impact and lead to change.

The strategy document noted that current trade with India is around $15 billion – it should have lamented this as a pathetic failure of previous initiatives. In contrast, current trade with China is $200 billion.

The report talks about several priority areas but only time will tell if the detail and approaches are right.

It misses on not placing enough emphasis on cross-cultural understanding. This is Australia’s biggest failing and underpins our poor outcomes with India – we just cannot talk to each other in a way we both understand.

The report also misses some strategic points – while it talks about declining US power in the region it could acknowledge that India has never understood our close alliance with the US. Nor does India have Australia’s (US based) global focus that we have to boost democracy etc. India is far more accepting of the world as it is. To know this is to have better diplomatic (and trade) relations.

It is also light on detail about how to benefit from the reach and connections of the 700,000 or so Indians who have migrated to Australia. But further focus and research will no doubt come from the report.

I really like that the report noted the Indian opportunities for Australia “would not fall into its lap and that the government would require a sharper national focus on India, an unambiguous commitment by Australian business and a deeper understanding by both government and business of the magnitude of what is unfolding in an Indian market place which will only get more crowded”.

More to come…

http://dfat.gov.au/geo/india/ies/index.html

Indian economy muscles past France

India has jumped to the world’s sixth largest economy according to figures from the World Bank.

India’s GDP was $2.597 trillion as the economy rebounded from the slowdown caused by demonetisation and tax changes.

India is also poised to become the world’s most populous nation with 1.34 billion people – and still growing fast as one of the youngest nations.

This population is part of the reason for economic success – the so-called “demographic dividend” of a young population is paying off with local consumer demand being the major driver and India has been able to find the skilled workforce for a growing manufacturing sector.Prayer2

This is a huge achievement with India more than doubling its GDP in less than a decade.

The experts believe India will soon overtake the fifth biggest economy, Britain, as the rise to the top continues.