Visual Merchandising and Store Design | VMSD.com

Though it still restricts foreign investment and ownership, the country also has a strong economy, a progressive government and a massive middle class.

By Steve Kaufman

Mysterious India: an economy booming on the strength of its technological sophistication, and an infrastructure that can’t produce a reliable glass of drinking water.

But boom it does. The Asian sub-continent of 1.1 billion people continues to be the favorite of international companies outsourcing their IT, call-center and back-office functions. It has a huge and emerging consumer class; a stable banking system; a rising credit card industry; a pro-growth government; and a taste for Western goods. And it seems to be riding out the current worldwide recession. After all, the Indian outsourcing industry grows most when the rest of the world tries to save money.

So it could be the land of expansion for U.S. retailers and brands. The Indian retail market, the fifth-largest retail destination globally, was ranked “the most attractive emerging market for investment in the retail sector,” by A. T. Kearney’s annual Global Retail Development Index (GRDI), in 2009.

“Many other factors make India a better opportunity for expansion-minded U.S. companies than other foreign markets,” says Dawn Clark, principal at NBBJ (Seattle). “It’s a democracy; its media are open and uncensored; and its citizens speak English.” But it’s also a country with a strong 62-year history of protectionism and laws that forbid direct foreign investment of local businesses. Those laws include – in fact, emphasize – the inability of Western retailers to own and operate stores in India.

“India was born into independence in 1947 with the pledge that ‘no foreigners will ever control us again,’ ” says Mortimer Singer, senior vp of international retail consulting firm Marvin Traub Associates (New York).
But Singer notes that some U.S. brands, such as Levi’s, Samsonite and Tommy Hilfiger, have developed licensed partnerships to produce their goods locally, while creating franchises to open branded stores. And he sees a particularly strong market for Gap and other moderate-priced American chains if they’re able to do the same.

Walmart has entered into a joint venture with the giant Indian conglomerate Bharti Enterprises to roll out a chain of Best Price Modern stores, with plans to open at least 15 outlets across the country in the next three years. But those are wholesale stores that will sell to restaurants and owners of small shops, a restriction imposed by the Indian government.