Ajay Singh-led low-cost carrier SpiceJet will shortly foray into India’s highly competitive retail space with plans to set up a string of physical stores, online e-tail gateways, and in flight merchandise, selling a range of consumer goods from fashion products, gadgets and electronic items to, eventually, food.
The company will sell its own brand of products sourced from hundreds of vendors across the country and overseas, top sources, who did not wish to be identified, told Moneycontrol.
A special line of brands have been created for each product category under the umbrella “Spice” brand, which the company is currently finalising.
A separate subsidiary of airline’s holding company is being created for the retail venture, which will be run by a completely different team maintaining arm’s length distance with the airline’s operations, sources indicated.
A formal announcement on the retail venture is expected within a month.
A company spokesperson declined to comment for this story.
The physical stores, which will initially come up in airports, will be completely owned and run by the company, selling hundreds of products under the single umbrella brand.
The online stores will function on “e-tail” principles, where the company will hawk products directly to consumers through a dedicated portal.
The airline’s retail venture will not be an aggregator like Flipkart, Amazon or Snapdeal, where third-party sellers sell directly to shoppers through online portals.
For instance, while customers can choose from different television brands through Flipkart, Amazon or Snapdeal, the airline’s online retail store will offer its own brand of televisions across multiple price ranges. This model will apply for all its products.
“This will bring it in direct competition, not only with the online retail aggregators, but also with all major retail brands and direct selling companies,” the source said.
Under current norms, India doesn’t allow FDI in retail e-commerce but allows it in market places. Several Indian companies such as Flipkart have moved to a marketplace model to avoid flouting norms.
Singh, who oversaw the BJP’s high-octane 2014 Lok Sabha campaign and is credited with coining the now- famous slogan “Ab ki baar, Modi Sarkar,” co-founded Spicejet in 2005, sold it and later bought it back from the Maran family two years ago and quickly turned it back to profits.
The airline was on the verge of shutting down in 2015, cancelling thousands of flights, defaulting on payments to oil firms, airports, vendors and lessors.
SpiceJet’s retail foray comes at a time when the government is examining plans to allow limited sale of beauty and personal care products in global giants’ food retail outlets as part of plans to ease rules for multinationals to open stores in the country.
Inter-ministerial consultations are currently on for writing the new rules to partially open up the non-food sector to transnational deep-discount retailers.
Prime Minister Narendra Modi will take a final view on the matter and a decision is expected after the second part of Parliament’s Budget session ends in March.
India’s retail market is expected to nearly double to USD 1 trillion by 2020 from USD 600 billion in 2015, driven by income growth, urbanisation and attitudinal shifts. While the overall retail market is expected to grow at 12 percent per annum, modern trade would expand twice as fast at 20 percent per annum and traditional trade at 10 percent, according to a report ‘Retail 2020: Retrospect, Reinvent, Rewrite’ by The Boston Consulting Group and Retailers Association of India.
According to India Brand Equity Foundation (IBEF), a government-backed research body and think-tank, India is expected to become the world’s fastest growing e-commerce market, with sales expected to reach USD 120 billion by 2020 from USD 30 billion in 2015-16.