Franchise Opportunities
WHAT IS PRE-SCHOOL INDUSTRY?
The preschool education market in India has evolved rapidly over the recent past. The preschool provides pre-primary education to children generally in the age group of 2-5 years to stimulate the child's physical, intellectual, social and emotional development. This phenomenon has gained significant popularity and is familiar not only with the high-end income groups or rich affluent, but rapidly growing middle class households are finding it more affordable.
2. THE EXPANSION NETWORK & PLAYERS ALREADY IN THE INDUSTRY & THE GROWTH PROSPECTS
The concept of preschool education has emerged as a most lucrative segment of Indian education market. Preschool education generally refers to organized and well-structured pre-primary education programs for toddlers, particularly in the age group of 2-5 years. The current market structure remains highly unorganized and thus continues to gain considerable traction among industry players, attracting investments from new as well as existing players over the recent past. According to a new research report, "Indian Preschool Market Forecast", the preschool market is set to thrive in India, with market revenue anticipated to grow at more than 21% during 2009-2011.
PRESCHOOL MARKET: MULTIFOLD GROWTH
Increasing awareness among parents about the benefits of a quality preschool education has been driving penetration levels and price discovery in the segment. Led by these factors, the market is expected to expand by more than 3x in size by 2012. While the market is currently highly fragmented and unorganized in nature, increasing prosperity is driving a shift towards the organized segment. A largely urban phenomenon, there has been rapid proliferation of organized preschool chains beyond metros and tier 1 cities in the last five years.
..Getting more organized
Households with annual income in excess of Rs 2,00,000, which form an estimated 8% of India's total population is the primary target customers for preschools. We estimate a target market of 5.5m preschoolers, of which 12% are currently enrolled.
Considering an average annual spend of Rs 18,000 per student (price discovery still in initial stages), we estimate the segment to be $300m in size. Going forward, we expect the preschool market to grow on the back of low penetration, increasing paying propensity and organized supply creating awareness about the importance of preschool education. We expect the total preschool market to touch $1bn (on a low base of ~1,700 schools and 200,000 students) by 2012. Interestingly, the organized market is likely to grow faster, at a CAGR of 50% over.
Market to expand 3x to $1bn by 2012
- A high growth market, we expect a shift from unorganized to organized (50% CAGR over FY08-12E)
- With a host of players crowding the space - we expect to see scalability in a dominant player like Euro Kids and players using innovative models like Kangaroo Kids, KidZee, Euro Kids, Apple Kids, Shemrock, Kangaroo Kids, Tree House, Bachpan, Mother's Pride
- Target audience is limited to a 2 km radius
- Under high lease rentals, economics can be challenging for standalone preschools
- Growth has been largely using the franchisee route - low upfront investment by franchisee
- Highly underpenetrated market; 1 out of every 100 preschool-aged children enrolled
