No Frills, All Thrills ; It's Not Just in Aviation or Automobiles That Businessmen Are Seeking Out Low-Cost Solutions. From Housing to Gyms, From Entertainment to Banking, a Clutch of Canny Entrepreneurs Is Seeing Big Opportunity at the Lower Rungs of the Proverbial Pyramid.

Business Today › September 22, 2008

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Summary

It is said that Mumbai fulfils aspirations of most people who come to the city. Jobs, a lifestyle, an entry into Bollywood... you dream it, work hard enough, and Mumbai can give you the lucky break. But one thing that people in Mumbai really prize and yearn for but find the toughest to get is a home of their own, which remains a dream for many.That aspiration may soon become more reachable. By early 2009, 300-500 sq. ft flats will be up for grabs on the outskirts of Mumbai (like Karjat) at an unbelievable price of Rs 3.5- 5 lakh. The going rate currently for such homes in these regions is at least Rs 8-10 lakh (as most decent flats are a minimum of 600 sq. ft)

Opportunity: EntertainmentEntrant: Essel Group, with Talkie Town and Bioscope brands of cinema theatres and multiplexesOffering: Cinema theatres and multiplexes in small towns with tickets priced between Rs 65 and Rs 100Competitive edge: Multiplex tickets in such regions begin at Rs 120Welcome to the world of lowcost housing. It's a realm that has exclusively belonged to government bodies like slum redevelopment boards, which specialise in building ill-lit, cramped hovels. Perhaps no longer. A number of developers across the country see an opportunity in low-cost housing.Affordable houses are set to spring up across the country, not just in metropolises like Mumbai or Bangalore but also smaller cities like Ahmedabad. There is a huge deficit in urban housing of about 24.7 million units, most of it amongst the poorer segments of society, says Ashish Karamchandani, CEO, Monitor Group, India, a Massachusetts- headquartered consultancy, which is working closely with developers on this concept.It's not only in housing that companies are seeing a big market nearer the bottom of the pyramid (although not at the very bottom, not yet). Across service categories like organised retail, entertainment, fitness and banking, marketers have begun training their sights on consumers for whom the buzzword is affordability. And the target audience in this high-volumes play is not necessarily just rural folk, but also that set of the urban working class whose monthly take-home may not run into five figures.Cut to Kishore Biyani's Future Group, which runs the Big Bazaar chain of hypermarkets, amongst other formats. If you thought Big Bazaar is the place to go for mouthwatering discounts, you obviously haven't been to Biyani's no-frills KB Fair Price Outlets. Customers are expected to get their own carry bags. These outlets are not airconditioned.Local brands are stocked and there are no complicated schemes. Only 300 items are stocked in a store. And there's no home delivery. These outlets are typically located in high-volume residential areas. It started from an insight that a large number of people instinctively reject mall offerings because they fear there is a catch somewhere, says Damodar Mall, CEO, Innovation, Future Group. The cost per sq. ft of the KB Fair Price Outlet is Rs 387 compared to a neighbourhood supermarket that has costs in the region of Rs 2,000 per sq. ft, adds Mall. Capital employed is a fifth and operational costs are half of those of neighbouring supermarkets.

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No Frills, All Thrills ; It's Not Just in Aviation or Automobiles That Businessmen Are Seeking Out Low-Cost Solutions. From Housing to Gyms, From Entertainment to Banking, a Clutch of Canny Entrepreneurs Is Seeing Big Opportunity at the Lower Rungs of the Proverbial Pyramid.

The low-cost attractionWhy marketers are veering towards the bottom.Over 80 per cent of Indian households earn less than Rs 10,000-12,000 per month.Marketers are looking for new markets as urban centres come closer to saturationBy 2015-16, a little more than half the households in the Top 20 cities (as identified by NCAER and Future Group Research) will...

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