AUGUST 18, 2002
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Durable Defiance
The Indian consumer market for durables has defied the direst predictions of market cassandras. Category after category, from CTVs to refrigerators, is showing buoyancy in an otherwise gloomy scenario. Is this a market trend-or just the result of some smart marketing by a few players? An investigation.


Question Of Reliability
Foreign tour operators are fed up with India, and are fast deleting 'India'-specific pages from their websites and brochures. Could this be happening? Well, passenger traffic is down, and could fall further. The reasons are many. Among them, what's seen as an uninviting stance of the Indian authorities.

More Net Specials
Business Today,  August 4, 2002
 
 
Oh, Kolkata
Cal... sorry, Kolkata. A grand old city in a time warp? Guess what, the city is changing faster than you think. It's time for marketers to wake up and smell the Kol-coffee.

Time was when time just was. It didn't move much. Not in Calcutta, anyway, a city too devoted to intellectual rigour to do anything physically dynamic. The cliches were true, of course. Cabbies knew big words (like 'bourgeoisie'); raising prices was almost a capital offence; and shopkeepers gave every paisa of change back-in slow motion.That was then. The city is now called Kolkata, and its wallets are not what they used to be. They are being thumbed open with far greater frequency than any of those fat books on assorted struggles.

It's the triumph of consumerism. Ask Randy Shockley, Vice President (Marketing), Ford India. Bijay Bothra, Ford's Kolkata dealer, tells him that the city is selling some 50 Ikons every month. If that's not enough to kill the stereotype of the bank-stuffing scrounge, take a walk around the retail spaces. And savour the jingle of cash registers. The city doesn't quite compare with other metros on lifestyle indicators (See Indicator), but it certainly doesn't want to be left behind any more.

Pizza Hut, for example, records an average daily footfall of 700. "It's truly amazing," says master chef Sanjeev Kapoor, who has opened his own restaurant Grain of Salt in the same complex. "Never before had I thought it was possible to do business of Rs 1.25 lakh-plus on a Saturday night in Kolkata."

EXPLAINING THE BOOM

Sitting tight on wallets is no longer the done thing; Kolkatans have turned consumerist.
An entire generation of small and medium enterprises is spewing money for quick spending.
Falling interest rates have hurt the incentive to save, which translates to a new spend-happy existence.
The city is attracting hinterland Bengalis, North Easterners and even Bangladeshi shoppers.

Visit Incognito, Tantra of Park, Big Ben or any other hangout, and watch. "For years," says Rahul Saraf, 35, a builder, "we were told that nothing can be done here because people are not willing to spend, and then came Pantaloons with their store in Gariahat. We rediscovered the consumer." Saraf wants to galvanise the city's retail scenario by putting up modern malls and the like.

Almost every builder wants a piece of the action. Ambuja group's Harsh Neotia and CMG Group's Sumit Dabriwala are putting up two 100,000-sq-ft-plus malls in the city's Eastern suburbs. "There has been a major attitude change in the city and its people," observes Neotia, "The growth of the credit card culture and people's aspirations are driving retail growth."

There's Life Outdoors

You wouldn't guess it, but Kolkata already boasts Raymond's topselling store. MusicWorld, RPG Group's music store chain, has also declared its Kolkata store the best performing in India. Pantaloons, which opened its second city store last year, notched up sales of Rs 21 crore in 2001-02, and is expecting at least a 25 per cent jump this year. "Kolkata is definitely a major opportunity for us," says Kishore Biyani, Managing Director, Pantaloons. Other retail successes include Westside, a Tata Enterprise, Landmark, an Emami group effort, and Charnock City, the city's version of Selfridges.

A recent survey by Jones Lang LaSalle showed that around 27 per cent of the Kolkatans spend around Rs 1,000 per visit to a shopping mall and around 12 per cent spend upwards of Rs 5,000-a major jump from four years ago. That was when Kolkatans would balk at big restaurant bills. Now, Rs 800 on dinner-for-two has become customary.

The spending buzz...
Kolkata is turning into a shopper's haven, malls, retail glam-set et al
...And the change of beat
The city is moving to a new beat, less conservative, more peppy
The rise of concrete...
Yuppie Kolkatans want to live the good life, on home-loans if need be
...And the fall of inhibitions
Little black dresses, late night carousals, it's all part of the transformation

"Habits have undergone a sea change in the last couple of years," explains Nilavo Thakur, the man behind two of Kolkata's most sought-after restaurants, Red Hot Chilli Pepper and Tangerine. "The salaried class, backed by the credit card culture, is going out to eat." That the hotel industry had a whiff of this is evident in the new projects coming up. Hyatt's 200-room hotel will be ready by year-end, followed by Welcomgroup's latest. Five-star occupancy rates, says a Hyatt spokesperson, have been rising in the last two years, while F&B sales are brisk.

But where is all this money coming from? Business. That's right. You can feel it in the air. As conservatism begins to lose appeal, the new Kolkata has begun acquiring a whole new language, the businessman's language.

"There is a whole new generation of businesses in the small and medium segment," elaborates Sudhir Jhunjhunwala, owner of Dewar's Auto, a top car dealer, "and that forms the bulwark of the city's wealth creation and spending. These guys are buying big." Maruti's Alto and Zen, he says, have overtaken sales of the old 800.

According to Amit Jalan, 35, a trading partner of Airtel, "Many old business families recognised the potential of branching out of their traditional business and picking up agencies and the like. Today, this is being extended to real estate sector, fashion, retail and related activities." And the cellphone frenzy isn't stopping. "We are amazed at the growth rate. The market must be growing at 20-25 per cent in this city," says Deepak Gulati, Chief of Airtel's Kolkata operations.

A Shopper's Paradise?

There is, of course, a broader economic context in which Kolkata's attitudes are changing. Interest rates are down, and with it the incentive to save. As economist Amiya Bagchi expounds, "West Bengal has traditionally led the country in small savings, but with the falling bank rates, there is a decline in the growth of savings. For the first time, this growth has gone down to well below 10 per cent. Add to this the incentive of tax-saving by availing various loan facilities, and the sum total is a generation of people willing to spend rather than save."

Keynes, of course, would've approved.

Any analysis must also factor in West Bengal's overall growth in agriculture and trading. A large proportion of Kolkata's big spenders are visitors, and not just from the hinterland. North-easterners are pouring in for shopping sprees, and so too are Bangladeshi citizens, who started visiting Kolkata for medical treatment but now see the city as a shopper's paradise. The tags on foreign labels are lower than in Dhaka or Chittagong, says S.K. Bhattacharya of Charnock City.

With a low cost-of-living index (Kolkata was recently rated 72, with Delhi's 100 as the base, and Mumbai topping at 125), the city is a good place to settle, too. Yet, Kolkata still lacks the cosmopolitan work culture of a Delhi or Mumbai, which requires local firms to attract talent from across the country. Can Kolkata do it?

Business is buzzing. You can feel it in the air. As conservatism wanes, the new Kolkata is acquiring a whole new language-that of business

It's not impossible. A flat in upmarket Alipore or Tollygunge can be bought for just about Rs 2,600 per-sq-ft, much less than equivalents in Delhi or Mumbai. Better value-for-money living is available too. An estimated Rs 250 crore is being invested in upscale housing projects, swimming pools et al, much of it along the eastern metro bypass. According to Dabriwala, the younger generation simply wants higher living standards, and is willing to take loans to buy themselves housing with modern lifestyle amenities.

Big investors are watching developments closely. Sums up Sanjiv Goenka, Vice Chairman, RPG Enterprises, "Kolkata has stopped being the backwaters and is emerging as a city of opportunities, and even the government realises that and is creating concessions for the services sector and especially the retail industry." RPG is setting up a hypermarket on the city's eastern bypass.

Most investors have the city's 450,000-odd 'high income' households in mind. But the action is bound to have a ripple effect. The bottomline is that this city of 12 million-plus, with 3.5 million unemployed, doesn't want to brood over its problems anymore. It would rather get out there and make the economy rock.

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