Fit to deliver the Goods!

The Indian Retail Market is growing at a CAGR of 12% India with organized retail surging ahead at a CAGR of 32% (PwC report “Building retail businesses for tomorrow today”). This growth is owing to the combined increase in the market of both the online and offline channel. This growth in the offline space has impacted the increase in the demand of fit-out elements. The demand is not just for more quantity but also for quality to keep the new-age consumer inspired, engaged and loyal. With more international brands coming in, the bar has been raised and the Indian fit-out industry has indeed stepped up to ‘deliver the goods’!

VM&RD had looked at the main fit-out categories (comprised of Mannequin, Lighting, Graphics & Signage, Fixtures and VM Props) with focussed special editions in the past six months with insighful chats with over 100 top Retail Service Providers (RSP) who manufacturers and supply fit-out equipment in India. We now take an overall look at the overall Fit-out Industry to get a snapshot of trends and performance based on compilation of data and information from the last financial year of 2016-17.

Some of interesting highlights of the compilation and analysis is as follows:

1. The average age of the fit-out industry is about 15 years with the oldest being Mannequins at 18 years and the youngest being VM Props at 11 years. The rest seem to have been born almost together averaging at 14 years.
2. The overall spend by the organized sector of the top 100 RSPs is about 1550 Cr Rs with an average CAGR of about 24%. The highest average turnover is that of the Lighting category at 337 Million Rs (33.7 Cr Rs) followed by Fixtures at 186 Million Rs (18.6 Cr Rs).
3. A major portion of the 3600 clients that are services are from the traditional retail segment. They contribute in number of projects to about 50-80% but the average billing from each is less than one fourth of that of clients from the Organized retail segment. The highest number of clients is that of the Mannequin Industry at over 1250 in total followed by VM Props at about 900 owing to the demand of these categories from the Traditional Retail Segment.
4. The overall operating space occupied for Fit-Out manufacture is about 3.2 Million square feet with the highest average operating space occupied being that of the Fixture category at 63,700 square feet followed by Lighting at 34,500 square feet.  Interestingly, the Mannequin category requires the least area despite managing the highest number of clients.
5. The overall manning of the tope 100 RSPs in the fit-out industry is over 9000 skilled staff with the highest average employed by the Lighting category at 138 followed by the Fixtures category at 120. Again, the Mannequins category is the lowest at 33.
6. Finally, in terms of revenue productivity on operating space, the highest is the  Lighting category which is close to Rs 10,000 per square foot followed by the Graphic & Signage category at close to 9000 per square feet. Lighting leads again in people productivity at a high of about 2.43 Million Rs (24.3 Lacs Rs) per person employed! This is followed by the Fixture category at 1.55 Million Rs (15.5 Lacs Rs).
7. Overall data shows that Lighting leads in turnover, growth and productivity. It is not surprising that it monopolizes the supply for Indian and international retailers operating in India which indicated that it has achieved global standards earlier that the other categories. The Fixture category flows closely with a close to monopoly of supply in India with Chinese suppliers still being serious competition in terms of quality. The other categories too are seen to be improving steadily.

Overall, from the RSP’s perspective it’s been a good CAGR of revenues, more opportunities, growing revenues, increasing efficiencies of operations (in terms space and people). From the customers’ perspective it been the availability of globally comparable quality, better price and choice. So, we can confidently conclude that the Indian fit-out Industry is poised in an encouraging win-win position for both the Buyer and the Seller.

In-store Asia 2018 features all the top RSPs in the fit-out categories featuring many new ideas that will substantiate the findings. Look forward to seeing you there at the largest retail trade fair in the Indian sub-continent that focusses on retail fit-out and in-store marketing.