Indian retailers aim to expand global presence

At home, most Indian retailers maybe trying to resist 100% foreign investment in the retail sector, but abroad many of them are on the offensive, expanding their global reach by setting up shops and through acquisitions.

A host of niche India retailers including watchmaker Titan Industries, Himatsingka Wovens fine furnishings store Atmosphere, Marico s Kaya Skin Clinic, ethnic wear firm Fab India, beauty and wellness company VLCC, coffee retailer Cafe Coffee Day and designer leather goods maker Hidesign are turning to international markets for the next leap of growth.

While Indian consumer product makers such as Tata Tea, Wipro Consumer Care, Godrej Consumer Products, Dabur and Marico have been snapping up brands and companies abroad for some time, the country s retailers are relatively new to cross-border play.

Most these retailers are focusing on markets with a significant presence of non-resident Indians such as Middle East Asia as well as Southeast Asian countries that are culturally closer to India.

Wherever there are non-residential Indians within a desired income profile, an Indian retail brand is most likely to grow, says Sunil Chainani, director of ethnic wear retailer Fab India, which operates exclusive stores in Rome, Nepal and Dubai. Also, the Asian economy is relatively more vibrant with its increasing middle-class population and operationally less expensive than the US and Europe.

Rentals as a proportion of store revenues in the Middle East and South-East Asia are lower, making operations relatively more profitable there, says Raghav Gupta, president of consultancy firm Technopak Advisors.

In 2008, watchmaker Titan Industries drew up a strategy to catapult from a market leader in India to a pan-Asian brand by 2015. At the same time, the management also decided to narrow its overseas focus to a basket of 10 countries including Dubai, Saudi Arabia, Singapore, Malaysia, Sri Lanka and Vietnam, despite having a distribution network across 26 Asian countries.

We intend to be one among the top three watch brands across these countries by 2015, says Harish Bhat, COO watches at Titan Industries. And it seems on target. Over the past two years, Titan has grown more than 75% in Vietnam, where it is now chasing Seiko and Casio as the third largest watch brand by market share.

Clearly, while Middle East remains the main focus for Indian retailers exploring abroad, South-East Asia is emerging a key target. The Rs 550-crore VLCC has set up 18 centres predominantly in the UAE. It intends to boost this with 10 centres this fiscal year across Qatar, Bangladesh, Sri Lanka, Malaysia and Singapore, among others.

Some players such as Marico s Kaya Skin Clinic, Caf Coffee Day and Fab India have taken acquisition and strategic investment routes to grow market share overseas.

Marico acquired the skincare business of Derma Rx Asia Pacific, a Rs 50-crore aesthetics business in Singapore, in May. This gives Kaya ready access to markets such as Singapore and Malaysia.

At present, Kaya has 19 outlets across the Middle East and Bangladesh, where it found it easier to penetrate because of the similarity of skin type.

Amalgamated Bean Coffee Trading Company s retail arm Cafe Coffee Day acquired Czech Republic-headquartered Cafe Emporio in June to add to its presence in Vienna and Pakistan.