FROM enthusiastic to guarded, the Government's decision to allow up to 51 per cent foreign direct investment (FDI) in single-brand retail has elicited mixed reactions. The major concern across various sectors, be it grocery, garments, lifestyle stores or luxury goods, however, is the definition of single-brand retailing. Speaking to
Business Lineon the sidelines of the Images Fashion Forum in Mumbai, Mr Bijou Kurien, Chief Operating Officer (Watches), Titan Industries, said, "What do they mean by single brand? A multi-brand retailer such as Harrods is also a single brand, while an Omega is a single brand in itself."
Mr Raghu Pillai, CEO, Home Solutions India Ltd, says while the policy signals the Government's intention, its interpretation will be awaited. For instance, would a Tesco selling all its products under its own brand constitute single brand retail?
Mr Kishore Biyani, Chairman, Pantaloon Group, says he won't be able to comment till he gets to see the fine print. "However, we are concerned about the opening up of the wholesale trading business. The category has no regulations and its opening will lead to anyone and everyone entering the Indian market. In the garb of being a wholesaler, anyone can enter the market and set up their retail business," he adds.
Mr I.S. Narula, President and CEO, Ishanya, the speciality mall, says, "It is definitely a good move, but too small to actually make an impact on the industry. The Government shouldn't take such half-hearted measures, and should instead introduce FDI across all categories."
Mr Yogesh Samant, Chief Executive Officer, Inorbit Malls, says it is a positive sign that the months-long stalemate on this issue has been broken. "The move will especially boost luxury retailing, and as a mall developer, it is good news for me as there will be more takers for mall space," he says.
Mr Ravi Thakran, President & CEO of LVMH Group Watches & Jewellery Division for Asia Pacific, says the step is definitely a positive one, especially for a company like his. "However, it would not result in any major changes in strategy as the larger constraints of high import tariffs (making it difficult to operate profitably) and lack of quality retail space (with most luxury brands setting up outlets in five-star hotels) are not being addressed. We would consider investing in setting up single-brand outlets for brands such as Tag Heuer and maybe even boutiques for our jewellery brands." However, when asked whether the company would introduce larger retail formats such as beauty retail chain Sephora, Mr Thakran said that the company would further need to study what single-brand retailing encompasses. Mr G. Sankar, CEO, LifeStyle, says, "We would like to have premium international brands in our stores and FDI would boost this segment in a big way."
However, quality of retail space is a problem. "There is terrible paucity of space," says Mr C. K. Venkatraman, Chief Operating Officer, Tanishq. "One can't have a Bvlgari next to a Bata. What will eventually happen is the springing up of more luxury malls, as finding space on the high street would definitely be a challenge."
Most retailers think that retail brands like Tesco would have a case but R. Subramanian, Managing Director of discount chain Subhiksha says retailing giants are unlikely to enter food and grocery retail. Even if they sell products under their own brands, they would still need to stock brands of prominent FMCG companies, he explains.
Krish Iyer, CEO, Piramyd Retail, says it will help a lot of global brands which did not want to be present through franchisees. "There could be a flood of imported brands in a more legitimate way now and the Government can also capture what it is entitled to as import duties," he says. Ultimately, as he explains, policy decisions like this which fuel consumption can have a multiplier effect.
Mr Arvind Singhal, Chairman, KSA Technopak, says "it's not a very big deal." "Also, the logic of taking this step was so as not to displace the
kiranastores. There is no fear of that even if 100 per cent FDI in single-brand retailing were allowed," he added. Mr G. Kannan, Country Manager, Swatch Group India, says, "It will usher in more good-looking shops." Another natural consequence will be an increase in jobs."
The Retailers Association of India hails it as a welcome move. "This will pave the way for many joint ventures to emerge. Such investments will help organised retailing in India grow too," says Mr Gibson G. Vedamani, CEO, RAI.