Expansion Analysis

imagesEH5I9N56India is a rapidly growing economy with strong technical talent. In an article on livemint.com, Sapna Agarwal stated that, “By 2020, average household income will increase three times to $18,448 from $6,393 in 2010. This scenario is excellent for future consumer spending levels in India. With this alone, expanding operations to India is highly recommended. The question is raised as to what is brought to India? This decision is based on the risks of doing business there. Store fronts for retail locations are very     Source : (thehindu.com)                    difficult and expensive to implement successfully. In these regards, Agarwal states in the same article,

“Brick and mortar retail challenges remain. For instance, the sales per square foot at Indian retail stores at 1,500 (22 dollars) to 2,000 (37 dollars) Rupee per square foot. Even the gross margins are lower in India by 7-8% than the International standards and the rentals are higher by 1.5-3% on an average.”

The retail market may not be ready for storefronts but online retail is already apparent and gaining momentum. The market strength of India appears to be favorable to e-commerce. There are currently over 35 million people buying online and with the expectation of more flexibility for consumer spending, that number is expected to be closer to 100 million by 2018. In addition, in an article by Amit Misra on dazeinfo.com, it is stated that “Indian consumers’ confidence in online shopping recorded 128% growth compared to 40% in the prior year period. With the online shopping explosion in India, the question is what is being purchased?

e-commerce-industry-india-2012

Source : (Dazeinfo.com)

As can be seen in the above chart, apparel and accessories are doing well in the India marketplace. With the current trend and favorable ecommerce landscape, the opening of an e-commerce store for clothing is likely to grow into a very prosperous business. India’s apparel market is growing at a rapid rate. According to Ireena Vital in an article from McKinsey,

“Rapid growth and rising urbanization have spawned a new class of consumers with more money to spend, and a growing passion for fashion. In India’s high-growth, fast-changing retail clothing market, we see significant new growth opportunities for foreign and domestic players” (Vittal, 2010).

Percentage Growth

The above graph shows the projected growth of India online sales through the DisneyStore.com if implemented. It gives an 18 month projection with the introduction of new more regional fashion at the 6 month mark. In addition, it shows the increase in India regional orders through local vendors and merchandise vs orders through the domestic supply chain. Within two years it can be expected that the India retail apparel segment can increase 30%.

Current Disney branded apparel and accessories would be a fair starting point but eventually the offerings will need to change to match the cultural differences and preferences in India.

References:

Agrawal, Sapna. India’s Retail market expected to double in next 5 years: report. Retrieved September 4, 2015, from http://www.livemint.com/Industry/5Xu8P8GltZk8XEsz7Xk74O/Indian-retail-market-to-double-in-next-5-years-report.html

Brown, Mayer. India: Thinking Outside The BPO: Knowledge Process Outsourcing to India. Retrieved September 3, 2015, from http://www.mondaq.com/india/x/51196/Outsourcing/Thinking+Outside+The+BPO+Knowledge+Process+Outsourcing+To+India

Misra, Amit (2012). E-commerce in India: Consumer Interest went up by 128%. Retrieved September 4, 2015, from http://dazeinfo.com/2013/01/29/e-commerce-in-india-consumers-interest-went-up-by-128-in-2012-report/

Vital, Ireena. (2010). India’s fast-growing apparel market. Retrieved September 4, 2015, from http://www.mckinseyonmarketingandsales.com/indias-fast-growing-apparel-market

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