Friday, March 23, 2012

It Now Requires The E-com Touch To Boost Indian Consumer Market

The Indian consumption story still continues to excite investors as they look at new sub-segments and back entrepreneurs, helping them gain leadership positions.
“I think there are still a lot of white spaces in the Indian consumer space, with a lot of small, fragmented players around. If you build leadership positions in these sub-segments, it may lead to high value creation and be satisfying for entrepreneurs,” said Vikram Nirula, Partner at India Value Fund Advisors, at the VCCircle Consumer Investment Summit 2012, held in Mumbai on March 21.
Nirula added that these sub-segments would emerge as stand-alone industries, citing the example of IVFA’s investment in a multiplex chain in 2000 (Fame India) and also in a grocery retail chain (Trinethra).
Moreover, the country’s young demography and the rise of women as consumers are the trends to be watched for. Also, e-commerce is likely to play an increasingly important role in core strategies of consumer businesses.
Scaling up would be a major issue for consumer businesses, noted Shahdadpuri, adding that some investments might take almost twice the time. Retail real estate continues to be the biggest challenge but according to Dalal, outlets in airports and malls have turned out well for his company.
IVFA’s Nirula also warned that one would need to tweak the business model and investment pattern for rural markets, where the urban model could not be replicated. Getting returns from those markets would be tougher. Shahdadpuri added that several consumer businesses that Beacon has looked at over the years, have come back to him with e-commerce strategies.
Dalal of Bombay Stores added that the company had started selling products online and e-commerce would be an important part of its channel strategy. “We need to learn e-commerce well because if we don’t, business will become tough for us in future.”
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