LEAD FEATURE

consumers who are prepared to pay a little more than the mainstream prices. In Vietnam, local sauce producer Masan Consumer grew its market share from just two per cent in 2005 to 36 per cent in 2009, largely by branding its previously unbranded table sauces. This made its products more appealing to the growing Vietnamese middle class.

FEET FIRST 

a day (with the relative costs of goods and services taken into account). There are already 1.8bn people in this bracket and demand from the global middle class will rise from $21trn to $56trn by 2030, economists predict. Where do they live? Asia, mostly: some 85 per cent of the growth in the middle class is predicted to take place in the region. China boasts a middle class that is 157m strong and growing.

CHANGING FORTUNES

OECD economist Homi Kharas set out in a 2010 paper that both India and China had ‘reached a tipping point where large numbers of people will enter the middle class and drive consumption’. Kharas saw Asia, excluding Japan, increasing its proportion of global middle class spending from 10 per cent in 2000, to 40 per cent by 2040.

This change highlights why General Motors is set to sell more cars in China than in its home market. China is also the world’s largest mobile phone handset market, with Nokia selling three times as much there as it does in the US. An increasing number of Chinese consumers cite shopping as their favourite leisure activity – and they want Western products to buy.

India is also changing dramatically, with Goldman Sachs forecasting that 500m people will be added to its cities by 2039. Ten of the world’s 30 fastest-growing urban areas are in India. Kharas predicts that half the Indian population will enter the middle class between 2015 and 2025 – a mind-boggling change in the world’s largest democracy that would see its middle class overtake that of China. It explains why companies like Pavers see such potential in India. Paver himself says the country’s emerging middle class is a business opportunity that should not be left solely to the big multinationals. They are already there in force. Consultants Bain & Company has noted that in China the six major international beer producers raised their share of the market from 25 to 65 per cent in eight years by buying up regional players. In Brazil, categories as diverse as yogurt, processed meats and washing detergents are dominated by two players with more than 50 per cent market share between them. Unilever generates 50 per cent of its revenues from emerging markets and expects that to rise to 70 per cent by 2020. L’Oreal, according to Bain, has expanded its presence in India by targeting the Garnier healthcare brand at

Pavers shows that even smaller companies that spot a niche can tap into this growing demand. It set up Pavers England Footprints in Chennai in 2008 with its joint-venture partner, an Indian family business called Foresight Group, which had previously acted as its agent in the country. “It matches exactly what we are doing in India,” says Paver. “We have moved from just a few concessions with the Indian retailer, Reliance, to owning 25 of our own stores and 60 concessions with Reliance and other department stores. We plan to open 30 this year, building on the initial launch and the undoubted growth in consumer demand. People are growing in wealth.”

Paver says operating in a new market, with an emerging middle class, was different to competing in the UK. “In some ways it’s easier because there are not as many established brands,” he states. “There are lots of people coming into this sector all the time because they are becoming wealthier, more middle class. To take on a customer, we are not having to fi ght them off another brand. They are new to the market – but it’s our job to keep them.”

As Pavers immerses itself in its Indian marketplace, it is evolving the range it offers. Paver initially planned to replicate about 75 per cent of its shoe range sold across its 99 shops and online operations in the UK. But this has fallen to 35-40 per cent – particularly for women’s designs. “We are sticking to our core values of comfort and value, but we are giving them what they value,” he says. “This means alterations in product, colour and price points. India is intrinsically lots of different countries, with different climates and different colour preferences. What sells in one part does not necessarily sell in another.”

springboard | 13