Despite Mamata, Cal is where the action is for big retailers

12 Sep,2012

By Writankar Mukherjee

 

So what if West Bengal Chief Minister Mamata Banerjee fights tooth and nail against foreign investment in retail, Kolkata has emerged a true city of joy for big retailers and fast-food chains since she came to power.

 

Kolkata has become one of the highest revenue-grossing markets nationally for Future Group, Spencer’s, KFC and Pantaloons among others over the past 12-8 months, much to the surprise of several marketers.

 

Check this out. Spencer’s Retail, Pantaloons and Future Group’s Home Town have their top-selling outlets in Kolkata, and it’s the top-performing market for American chicken fries-and-burger chain KFC despite Delhi and Mumbai having double the number of outlets.

 

“Kolkata has been one of the best kept secrets in modern retailing,” says Kishore Biyani, CEO, Future Group. “Consumption in Kolkata is much more stable than in other metros where it goes through ups and downs. And there is high level of festival-linked purchases throughout the year,” he says.  The retail baron is so impressed that he has decided to debut all new retail formats in Kolkata.

 

Tarun Lal, general manager at KFC India, says Kolkata has also taken a liking to its Zinger burgers and chicken fries, and the chain plans to expand its presence in the region significantly.

 

Analysts attribute the Kolkata retail phenomenon to the growth in employment in sectors like BPO, IT and services sector, and the consumer’s rising aspirations.

 

Recent employment surveys have shown comparatively robust employment growth in Kolkata. A recent Manpower employment survey, for example, highlighted maximum employment growth in the East, while it declined in the North and South.

 

Devangshu Dutta, CEO of retail consultancy Third Eyesight, says the perception that consumers in Kolkata are more price conscious than others has changed completely. “Consumers have evolved with high aspiration level,” he says.

 

“Another factor which is creating such high sales per outlet is the lower penetration level for some of the retailers in Kolkata as compared to other cities,” he adds.

 

Retailers say adoption of modern trade in Kolkata is rising at the fastest pace across India. Spencer’s Retail Executive Director (Marketing) Sanjay Gupta quotes Nielsen data to say modern trade adoption in Kolkata has grown by 21% over last year. The share of modern trade in FMCG sales is 12.5% in Kolkata against national average of 9.2%, he adds.

 

Chains such as Home Town and Mainland China say the average billing size or purchase value in the city is 6-10% higher than other places.

 

Anjan Chatterjee, managing director at Speciality Restaurants, which operates Mainland China, says consumers in Kolkata tend to order higher value cuisine like whole Bhekti and tiger prawns, which pushes up the average billing. “Eating out has become a ritual with the younger consumers in the city,” he says.

 

Vikram Bakshi, McDonald’s joint venture partner for North and East, rues Kolkata has only five McDonald’s outlets. “A lot of our growth plan got delayed due to slower mall development. Hence, we are now looking at high streets locations with plans to grow our presence 4-5 times in next couple of years,” he says.

 

Source:The Economic Times

Copyright © 2012, Bennett, Coleman & Co. Ltd. All Rights Reserved

 

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