Modern Retail Industry in India Estimated to Touch $175-200 Billion by 2016

Retailing News:

India retail industry is the largest industry in India, with an employment of around 8% and contributes to over 10% of the country's GDP. Retail industry in India is expected to rise by 25% yearly being driven by strong income growth, changing lifestyles, and favorable demographic patterns.

It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion. India retail industry is one of the fastest growing industries with revenue in 2007 to amount US$ 320 billion and is increasing at a rate of 5% yearly. A further increase of 7-8% is expected in the industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural consumption. It has further been predicted that the retailing industry in India will amount to US$ 21.5 billion by 2010 from the current size of US$ 7.5 billion.

And Shopping in India has witnessed a revolution with the change in the consumer buying behavior and the whole format of shopping also altering as a result a great demand for real estate is being created. Retail Industry in India has become modern and can be seen from the fact that there are multi- stored malls, huge shopping centers, and sprawling complexes which offer food, shopping, and entertainment all under the same roof.

India has one of the largest numbers of retail outlets in the world. Of the 12 million retail outlets present in the country, nearly 5 million sell food and related products. Thought the market has been dominated by unorganized players, the entry of domestic and international organized players is set to change the scenario.

Organized retail segment has been growing at a blistering pace, exceeding all previous estimates. According to a study by Deloitte Haskins and Sells, organized retail has increased its share from 5 per cent of total retail sales in 2006 to 8 per cent in 2007. The fastest growing segments have been the wholesale cash and carry stores (150 per cent) followed by supermarkets (100 per cent) and hypermarkets (75-80 per cent). Further, it estimates the organized segment to account for 25 per cent of the total sales by 2011.

In the Indian retailing industry, food is the most dominating sector and is growing at a rate of 9% annually. The branded food industry is trying to enter the India retail industry and convert Indian consumers to branded food.

E-tailing -the online version of retail shopping has tremendous scope over the internet. As the increase in the PC and internet penetration along with the growing preference of Indian consumers to shop online has given a boost to e-tailing. An estimated 10 per cent of the total e-commerce market is accounted by e-tailing.

With today’s, net-savvy Indians making online purchases like never before, both the number and variety of products sold online has grown exponentially in the retail industry. 

FMCG Keen on Mobile Marketing - Future of Mobile Marketing

Marketing on a mobile phone has become increasingly popular ever since the rise of SMS (Short Message Service) in the early 2000s in Europe and some parts of Asia when businesses started to collect mobile phone numbers and send off wanted (or unwanted) content.

Over the past few years SMS has become a legitimate advertising channel in some parts of the world. This is because unlike email over the public internet, the carriers who police their own networks have set guidelines and best practices for the mobile media industry (including mobile advertising). The IAB (Interactive Advertising Bureau) and the Mobile Marketing Association, as well, have established guidelines and are evangelizing the use of the mobile channel for marketers. While this has been fruitful in developed regions such as North America, Western Europe and some other countries, mobile SPAM messages (SMS sent to mobile subscribers without a legitimate and explicit opt-in by the subscriber) remain an issue in many other parts or the world, partly due to the carriers selling their member databases to third parties.

Future of Mobile Marketing:

According to a survey conducted by a mobile marketing provider, approximately 89% of major brands are planning to market their products through text and multimedia mobile messaging by 2008. One-third is planning to spend about 10% of marketing budgets through mobile marketing. Also, in about 5 years over half of brands are expected to spend between 5% and 25% of their total marketing budget on their mobile marketing. Already, 40% of the firms that responded have implemented this feature for their audiences.

What will and already has given mobile marketing's attraction are: the ability to reach a specific target audience; information about how the user responded to a marketing message; and proof that a message has been received by the user's handset.

Recognizing the prevalence of mobile text messaging, 40% of brands have already deployed text messaging campaigns, and 18% have deployed multimedia messaging (MMS) campaigns. Despite enthusiasm to adopt mobile marketing, growth is still inhibited by the lack of supporting information to manage and optimize marketing programs. More than half (55%) of responding brands are unsure how to reach specific target audiences via mobile campaigns, 58% are unsure about how to implement and measure an SMS campaign, and 61% unsure how to implement and measure a multimedia message (MMS) campaign.

Advertising on mobile space set to grow exponentially:

Advertising on Mobile has become a booming business that’s fast catching up with all sorts of advertisers, from FMCG players to retailers to IPL teams to even political parties.

The Congress party in Karnataka, for example, has been using mobile advertisement extensively to win over the voters in the IT capital of Bangalore as well as other parts of the state in the just-concluded assembly elections.

The mobile advertising market is estimated at Rs 40 crore in India and industry players expect it to touch Rs 500 crore by 2010. Already, big-spending advertisers like HUL, ABN Amro, Kerela Tourism, Essar, ITC, Microsoft, Infosys, ICICI Bank, American Express, LIC, Spicejet and Club Mahindra, to name a few are eyeing the smallest screen.

By using the mobile medium is a more cost-effective way of having a one-to-one interaction with the consumer. Any ground activity or advertising through traditional media does not guarantee the kind of interaction that advertising through mobiles can provide.

The industry is tiny still, but marketing wizards are going ga-ga about it. “Looking at the way mobile marketing has grown globally, it has the potential to become a staple for advertisers. Already brands are rounding off their communication through mobile marketing. With the kind of mobile concentration in India, it would be silly not to use the medium. We are working on it,” says O&M executive chairman and national creative director Piyush Pandey.

Advertisers say that the ad-spend on mobile space will grow exponentially, once the technical aspects of the mobile advertising  are in place—that is when telcos move beyond text messages to deliver ads to handsets alongside video clips, web pages, and music and game downloads.

The 250-million mobile users in India make mobile marketing a lucrative communication channel for brands, especially those in the FMCG, financial services, aviation, entertainment, retail and hospitality sectors, they say. The growth estimates range from a conservative Rs 500 crore figure by 2010 to Rs 5,000 crore by the end of 2012. “It all depends on the consumer reaction and technical innovation of the new mobile marketing products,” says one of the marketers.

Catching on the expected boom are mobile ad solution providers like Net CORE Solutions which serves players like Amul, Birla Sunlife Insurance, Future Group (Big Bazaar), ICICI Bank, Kotak Securities, Microsoft, SeventyMM, Shoppers’ Stop and Spykar with its MyToday dailies. The dailies, started a year back, has garnered a subscriber base of 3.5 million voluntary users. Subscribers choose from over 25 different channels of information in six Indian languages. On average, MyToday sends out 10 million SMSs a day. The subscriber base is growing by 15,000-18,000 each day and is poised to reach 2% of the entire mobile user base in India soon. The advertisers are becoming more aware of this medium and have realized that if tapped properly, this medium would help reach out to more masses than the internet.

FMCG Keen On Internet Marketing Online Advertising in Indian

INTERNET`S ENTRY INTO THE ADVERTISING WORLD

HAVING captured one bastion after another, the communication revolution is now all set to change the way people do business. It’s amazing how the business environment has changed dramatically in the last two decades. Who could have imagined the world would become such a small and dynamic marketplace where one can transact Business or receive information with little or no human interface? Who could have imagined that a seller’s market would soon become a well-informed buyer’s market? Who would have expected such tremendous pressure on manufacturers and suppliers to optionally balance costs, quality, price and time, and remain competitive at the same time? The world has moved from an industrial to a service economy, and now to a knowledge economy. In today’s context, information technology and business processes have a truly recursive relationship– with strategy and processes being driven more by the new possibilities that the Internet opens up on a regular basis.

Online advertising in Indian Scenario

The share of India's online advertising in world pie is almost negligible. But developing countries like India; where Internet users are growing very rapidly, it has huge potential. Indian companies are also showing keen interest in promoting their products or services online.

Currently finance sector is most dominating sector in online advertising and accounted about 40% of total online advertising in India. Some of the leading companies from this sector are HDFC, ICICI, Citibank, SBI, and UTI etc. FMCG goods have just started to come in led by companies like Hindustan Lever, Procter and Gamble etc. FMCG accounted about 20% of total online advertisement spending in India. Consumer durables companies are also coming and accounted 15% of total online advertisement. Share of media sector is about 10% and rest comes from other. In India, most popular form of online advertising is banner advertising. The reason, it is easy to create, place and use. E-mail advertising follows it.

India has to cover a lot of grounds to come up to the level of online advertising as, say, a country like U.S. There are many stumbling blocks in the growth of online advertising in India like, psychological fears of IT, high cost, low education and above all low awareness level. Still many Indian companies are hesitant, anxious and doubtful about the potential it offers. Unless these are dealt with online advertising can't really take off in India.

The survey estimated that the value of Internet Advertising has been double to Rs 450 crore in2007, and will valued at Rs 2,250 crore by the end of 2010, and thus increasing 10 times from 2006. This means it will overtake spends on radio, cinema and outdoor advertising in two years.

The report adds that of the Rs 210 crore was spent on Internet Advertising in 2006, display advertising contributed Rs 117.6 crore, classified was Rs 50.4 crore and search was Rs 42 crore. It estimates classified advertising to be the key driver of growth with a Rs 900 crore contribution (out of the total Rs 2,250 crore) by 2009, followed by search’s Rs 742.5 crore, and display advertising bringing in Rs 607.5 crore.

This is by far the most optimistic estimate of online advertising in India made by any research agency. The IAMAI estimated in 2006 that Internet Advertising would grow at 40 per cent and reach a value of Rs 750 crore by 2010. The FICCI-PWC reported in March 2007 that puts the figure at Rs 950 crore. Internet penetration in India is estimated to have grown at an average of 60 per cent between 2000 and 2006.

Yet, it is difficult to believe that online advertisers, a reluctant lot, will change their mind enough in two years to multiply their spend by 10.

Internet advertising building FMCG brands

Advertisers forecast that online will represent a growing share of their overall media budgets over the next two years, especially within the FMCG sectors.

The EIAA Marketers’ Internet Ad Barometer, commissioned by the EIAA to understand the role online advertising plays and attitudes towards the Internet amongst key advertisers across Europe, reveals that 42% of those questioned already spend over 5% of their media budgets online and 74% of all those surveyed regard the internet as a vital component of their advertising strategy. According to 80% of respondents, increasing broadband penetration is making the Internet more attractive as a branding medium and online ad spend is forecast to rise by over 65% by 2008.

FMCG Brands

FMCG brands are demonstrating strong signs that they are embracing online. The research showed that the percentage of overall media budgets devoted to online are forecast to rise from 5.6% in 2005 to 9.8% in 2008 - a massive 75% growth rate. Internet advertising expenditure will experience a boost by both the higher and lower spenders of the sector over the next two years, with the higher spenders stating that 64% of this extra spend has come from other media budgets and 57% of respondents claiming the spend has been diverted from TV advertising.

Taking Share from Traditional Media

The research reveals that online is chipping away at the heartlands of the advertising market, especially amongst the higher spenders. FMCG companies are siphoning spend from TV advertising while Entertainment and Consumer Electronics companies are reallocating budget to online primarily from TV and print. Travel is also diverting ad spend from print while Automotive advertisers are taking share from across the media board.

Maturing Attitudes: Higher vs. Lower Spenders

The survey highlighted other marked differences between those who already spend significantly online (6+% of media budget) and those who are catching up (1-5%). The lower spenders are driven primarily by increased use of the Internet while the higher spending online advertisers place greater importance on the medium’s reach and share of voice. Higher spenders are also more than twice as likely to view Internet advertising as essential to their overall advertising strategy and see online as having a greater influence on sales, intent to purchase, profitability and market share.

Key Findings

• Online ad spending expected to grow substantially over the next 3 years by 2010.
• FMCG and entertainment brands planning significant online spending.
• Advertisers diverting spend from TV and print media to online.
• Online terminology and campaign measurement no longer perceived as huge barriers. 

Conclusions:

• Online advertising builds brands!
• When measured in isolation, online advertising has a positive impact on traditional branding metrics like awareness, message association, etc.
• Branding metrics continue to increase with additional exposures
• Online advertising works in FMCG – a category whose adoption of the Internet trails other Industries.
• Online advertising offers potential benefits like target ability, tracking, deliverability, flexibility, etc.