Dubai: UAE-based Landmark Group is close to hitting its $1 billion (Dh3.67 billion) revenue target in India, where it operates its Max fashions, Home Centre and Lifestlye brands, said company director Ramanathan Hariharan.
Landmark Group is targeting 30 to 35 per cent growth in India this year, driven by its hypermarket business after a tie up with the French supermarket operator Auchan Group, he told Gulf News. The Max, Home Centre and Lifestyle brands earned $600 million in India last year and target 30 per cent growth in 2013.
India is the “next great frontier” for global retailers, a $500 billion market growing at 20 per cent a year, according to a Reuters report this month.
The rate at which international brands are entering the country increased in 2012 and could hit a record number in 2013 especially from the US and Europe, a report from global property advisor CBRE stated on Monday.
This follows the approval of the Indian government last September of foreign direct investment of up to 51 per cent in multi-brand retailers and up to 100 per cent in single brand retailers — allowing global giants to partner with local operators and sell directly to Indian consumers.
More than 30 international brands from US and Europe entered in 2012 with giants such as Walmart, Tesco and Ikea expected to target India, the report said.
“The number one reason is that they can scale up business in India in a few years. The number one driver is a growing population and purchasing power over the next 10 years,” Anshuman Magazine, Chairman and Managing Director of CBRE for South Asia, said in an interview.
However, purchasing power is yet to grow in secondary cities in India and developing good quality retail infrastructure is still a problem.
“Infrastructure is a challenge in India but it is certainly improving. Retail is in a nascent stage in India but it’s been growing, quality has improved and competition has increased,” Magazine said.
Asked if international brands will find the current retail offering in India attractive, he said: “Real estate will always be the number one challenge for them. There are new shopping malls coming in but the biggest challenge is availability of quality space at competitive prices.”
Finding the right space in high street or shopping malls will be a problem for the next three to five years, he added.
India could overtake Dubai as a bigger regional hub for retail in the next five years with the sheer size of its market and the number of international brands expected to enter in the meantime, according to Magazine.
There could also be a “marginal impact” on Dubai as Indian consumers consider the increasing choices in their home market, he said.“Indians are shoppers in Dubai and from that point of view there would be some impact. You get almost everything in India and that’s going to change further.”
However, Dubai would remain an attractive holiday destination for Indians and shopping would be a “spillover” of that, he added.
The infrastructure in Dubai would be difficult to find in India and many investors coming to the region are focusing on the emirate, said Eisa Adam, board member of the Dubai Shopping Malls Group.