Fireside Ventures (a consumer focussed fund) closed their second fund worth $118 Million three days ago. This comes at a time when people in India (my parents included) are willing to try out new products and give challenger brands a try. As India's retail market evolves, modern trade (likes of LeMarche) is set to account for 15% (from 8%) of the overall distribution whereas online retail is expected to account for 5% (currently at ~ 3%). A few questions that I had in mind while observing this upsurge were why now? What has changed? Why is it so easy to start a consumer brand? I read a number of reports and spoke to 60+ founders in my quest to find the answers. This blog post is to detail out my findings :
India will have 500M+ millennial consumers (age 22-37) by 2021 with a total consumption expenditure of $350B+. Millennials bring strong brand affinity, seek instant gratification, are not averse to change and are risk takers while purchasing. They want new experiences, a sense of individualism and nonconformity. They spend an average of 17 hours per week online across various mediums. Majority of millenials are first time employees and are more financially independent than their predecessor generation. With significant shift towards millennials, the consumer brand landscape is expected to change in favour of new-age challenger brands.
As millennials do not wish to commit and own things, they are spending the residual income to try out newer brands, seek new experiences. The desire to get that 'like', 'comment' on Facebook, Instagram and be amongst the early adopters is one of the strongest driving forces behind this behaviour. 'Access trumps ownership' - this seems to be the motto of millennials and Gen - Z.
Channels such as e-commerce, modern trade, assisted commerce, direct-to-consumer are providing more power to the consumers who are now able to access goods & services from remote locations. With a reach of more than 19,000 pincodes in India, most large consumer brands have adopted online distribution. I remember speaking to an ambitious founder who is currently running 100+ Cr apparel business along with his wife and most of their sales come from E - commerce platforms.
While building the sectoral thesis, I was so fascinated by the concept of building brands that I strongly considered building one on my own in the footwear category. One of my friends is a huge fan of Vibram Furoshiki shoes and we both wanted to make more people try it out. Upon locking the concept, finding contract manufacturers who could build the product out was extremely easy. Indiamart was the answer! It has a huge database of manufacturers who can manufacture the product based on your specifications. The hardest part was negotiating for MOQs as most manufacturers were looking at 10,000 units as the first lot size and this required a significant upfront investment :(
Looking back, I'm glad that we did not decide to go forward and didn't give into our naivety as we were not aware about certain challenges within this segment. You can read more about them here.
Out of all the vanilla parameters, one that stood out in majority of the brands was their story. Brands such as Tailor and Circus and Sleepy Owl have done a phenomenal job at building a story around their products. They have a story that they communicate to their fans and make sure that they stick to it across all communication channels. How do they communicate these stories? Social Media! Nobody could have imagined getting such a loyal following and quantifying it a decade ago. But because of the adoption of social media platforms (especially Instagram), the new age brands have arrived!
<aside> 📌 Brand Categories
</aside>