Global Brands Shake Off Pandemic Blues To Chase India's Digital Boom

After a pandemic-induced pause, global brands are again queuing up to launch in India, banking on the surge in online demand.As many as 50 mid-rung global retailers are poised to enter India this year, according to data by Franchise India Holdings Ltd., which helps companies find partners in India. These include brands from the U.S., the U.K. and Australia. They are expected to cumulatively invest about $100-150 million.Among brands looking to set up shop are BarBurrito, a chain of Mexican food; Quiznos, American fast-food restaurants; French bakery chain Le Macaron; U.S.-based restaurant company Wingers; the Brazilian eyewear company Chilli Beans; and Australian fitness chain inLIFE Wellness.The mid-sized, single-brand retailers are drawn by growing online demand for pizzas and pastries to digital learning as Asia’s third-largest economy recovers from the pandemic’s shock. And it dovetails with the country’s eased 2019 rules that, instead of mandatory physical stores, allow overseas retailers to start with e-commerce operations before launching brick-and-mortar outlets within two years..These brands have a target of opening 500 new stores in five years, with most of them eyeing an omnichannel model, Venus Barak, chief executive officer, international business at Franchise India Holdings, told BloombergQuint over the phone. “Covid-19 initially affected investor sentiment with many even cancelling their deals. However, the brands are now back.”“The second wave came as a tailwind on the back of a surge in online demand,” Barak said.Franchise India assisted the 159-year-old French bakery Laduree to open its first store in Delhi in August.About 60% of new entrants are restaurant and food companies, followed by edtech and consulting. Fitness, wellness and lifestyle brands, too, plan to launch in India via franchising or licensing route.Chilli Beans will launch in early 2022, while the Dubai-based quick service restaurant brand JJ Chicken will open an outlet in Delhi in the first quarter of this year. The Hong Kong-based organic and vegan brand cafe Spice Box will start operations next month in Hyderabad. iCode, a Dallas-headquartered coding school for children and adults, is running a pilot in Mumbai. Barak said they are now looking for a master franchisee for its launch this year.Others eyeing an India entry this year also include Germany's fitness brand Cleverfit, British luxury fashion brand Barbour, U.S.-based casual dining restaurant chain Romano's Macaroni Grill, French fast-food chain O’Tacos, and U.S.-based premium boutique fitness brand Barry's, Russian car rental brand Anytime Carsharing, among others.BloombergQuint awaits a response on queries emailed to Barbour, Chilli Beans, Clerverfit and iCode. Other brands couldn't be reached. Anytime's website mentions that India is a target market..Covid No BarWhile the emergence of the Omicron variant may deter store-opening plans if strict lockdowns are imposed, it is unlikely to stop the brands from catering to consumers online as e-commerce remains a preferred channel.The pandemic has changed the process of setting up a new business. “In the past (pre-Covid), we had to hold 20 physical meetings,” Barak said. “Now, we are doing 30 Zoom calls and closing the deals in equal time.”.India A Lucrative MarketIndia’s retail market is estimated to be worth $1.1-1.3 trillion by 2025, from $0.7 trillion in 2019, growing at an annualised rate of 9-11%, according to the Boston Consulting Group. It will be driven by urbanisation, growing middle class, rise in nuclear families, and shift in consumer preference towards e-commerce.The country is likely to bounce back rapidly, and the future of retail in this promising market will be defined by a multi-channel approach, Rajat Wahi, partner at Deloitte India, told Bloomberg Quint. Footfalls in malls and high streets have almost returned and even exceeded pre-pandemic levels just after the second-wave restrictions were lifted. “Average bill values and conversions generally are higher than pre-Covid levels.”Wahi expects the online retail sector to grow the fastest, possibly reaching 18-20% of the overall retail pie by 2025, depending on the impact of Covid-19, as people choose to shop online. “...if there are major economic consequences of Covid-19 in 2022 and beyond, we could see this growth being exceeded.”.Low-Cost, Yet PremiumThe success of global low-cost retailers in India such as the China-headquartered Miniso, Korean lifestyle brand Ximiso, and the Japanese fashion retailer Uniqlo is also pulling other brands to the country.Uniqlo, the world’s third largest fashion brand behind Spain’s Zara and Sweden’s H&M, reported an 86% jump in sales to Rs 239 crore for FY21, according to its filings with the Registrar of Companies. Net loss fell 43% to Rs 36 crore. In July, Uniqlo also rolled out its e-commerce webstore in India. Still, according to Wahi, carrying forth the mass-market and low-cost positioning from their home countries to India will remain a challenge. “Most international brands tend to have a premium tinge in India because the average household incomes in India are far lower than those in markets like Europe.”

Global Brands Shake Off Pandemic Blues To Chase India's Digital Boom

Brands such as Bar Burrito, La Macron, Icode, Cleverfit, Chilli Beans, Barbour are among those looking to enter the country

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