Latest news from the Indian Retail Sector

Weekly Retail News from India

General Plans and Information
Big players – plans and investments
International
Support Industries
HR News
Government Policy
Sector specific

General Plans and Information

1. Retailers high on the Christmas season
Indian retailers such as Shoppers’ Stop, Westside, Ebony, Pantaloons are all cashing in on the festive season and are making the most of bringing in Christmas festivities to the stores. Some retailers have shown increases in sales of up to 35% over last year’s sales figures. Lalit Kumar, CEO of Ebony Retail Holding, said that “These interactive marketing initiatives entail meticulous planning and cost. But it does translate into higher conversions.”
Tuesday, December 26, 2006
Source: The Economic Times

Big players – plans and investments

1. Crossword and Mothercare open standalone stores
Two of Shoppers’ Stop divisions, Crossword and Mothercare launched standalone store in Hyderabad. With these stores, Crossword’s tally goes up to 40 stores and Mothercare’s total goes up to 2 in the country. The total sq ft of both the stores is 10,000 sq ft and the store is located in Banjara Hills locality of Hyderabad.
Sunday, December 24, 2006
Source: The Hindu Business Line

2. Bharti and Wal-Mart fine tune agreement
Bharti Enterprises and Wal-Mart will be forming a 50:50 venture for a cash and carry business and have agreed to dilute stake equally if any strategic or financial investor is brought in at a later stage. Sunil Mittal, MD of Bharti Enterprises, added that "Our JV with Wal-Mart is a 50:50 venture. This equity structure, where both are equal partners, will continue even if a stake dilution occurs in the future."

The two companies will also be forming a franchise agreement for front end retail besides their JV for the cash-and-carry business. The first store is likely to open on August 15, 2007, India’s 60th Independence Day.
Monday, December 25, 2006
Source: The Economic Times

3. Big Bazaar opens in Chennai
Big Bazaar opened its first standalone store in Chennai, making the total number of stores in the country to 40. Rohit Malhotra, Pantaloon Retail head operations south, said, "This is our tenth store in south India and we plan to take it to 33 by the end of this year. In Chennai alone, we would be adding close to five to seven Big Bazaars by 2007." The store is spread over 50,000 sq ft of space and has been set up with an investment of Rs. 150 million.
Thursday, December 28, 2006
Source: The Economic Times

International

1. Max Retail opens in Hyderabad
Max Retail, the Landmark Group’s value retail division, launched its first store in Hyderabad. The store is located at the City Centre Mall and is spread over 16,000 sq ft of space. This is the company’s 6th store, of its 100 planned stores in India. Of the Rs. 850 billion apparel segment in India, an estimated Rs. 400 billion is the value segment.
Sunday, December 24, 2006
Source: The Hindu Business Line

2. Will Landmark and Tesco form a deal?
The Dubai based Landmark Group is now in talks with UK’s Tesco for setting up a hypermarket format chain for stores in India. According to sources, the Landmark Group is considering 2-3 international partners, with Tesco being at the top of the list. The top management denied any formalization of plans although did admit that an ‘introductory meeting’ had taken place with Tesco some time back. Landmark has 12 Lifestyle department stores, 6 Max stores and 2 Home Centre stores in India at present.
Friday, December 29, 2006
Source: The Hindu Business Line

3. French retailer Decathlon scouting for Indian partner company
Sports goods French retailer Decathlon is reportedly scouting for an Indian company to partner with to enter the Indian retail market. It has already mapped out its strategy for India in anticipation that the Indian government would allow FDI up to 49% in multi brand retail for sports goods. The company had recently withdrawn from the US market making its entry into India even more critical.

The company will be entering the Indian market in a phased manner, first setting up a warehouse in Gurgaon, for which it has already begun negotiating with real estate consultants. Once this is set up then it will enter a partnership with an Indian company, although if it will go for a franchisee model or a joint venture is not yet clear. Some sources suggest that the company is in talks with Sierra Industrial Enterprises, whose retail arm, Sports Station India introduced Nike brought Nike to the Indian market.
Saturday, December 30, 2006
Source: The Economic Times

Support Industries

1. Railways keen on retail
The rail ministry will probably be leasing its free land to retailers such as Reliance, Bharti and the Birlas to set up retail networks and logistic parks. According to CNN-IBN, the rail ministry has already held talks with several major retailers to give details of 43,000 hectares of free land. The railways are keen on setting up at least 4 parks in the country as supply hubs. Each park is likely to cost around Rs. 50 billion. Cities such as Delhi, Mumbai, Chennai and Kolkata are on the radar currently.
Thursday, December 28, 2006
Source: CNN-IBN

2. Visual Merchandising is where the emphasis is
Visual merchandising is receiving a lot of special attention as retailers try to differentiate themselves from each other and build their brand. According to Prathish Nair, Head Marketing of RAMMS India, a retail consultancy based in Bangalore, visual merchandising will see record spending this year, with department stores spending Rs. 300,000-400,000 per season and malls investing Rs. 150,000 on each seasonal change.

According to Shantanu Saha, CEO of Idiom Design and Consulting Co, a retail design company based in Bangalore, "As purchase decisions are made at the store, design interventions are needed to attract more customers."
Thursday, December 28, 2006
Source: The Hindu Business Line

3. Retailers and real estate developers prepare to battle it out
India’s retail boom is set to create a tug-of-war between larger retail chains and real estate developers, as retailers’ requirements for real estate grows and they seek to reduce margins on real estate. To balance this scenario, developers are forming revenue sharing agreements with retailers. Traditionally, most leases are long term leases, generally up to 9 years with increases of 20% only after 3 years. Newer agreements are for shorter periods and are revised by 10-12% annually.

Raman Mangalorkar, principal, AT Kearney, said that “In the long run, a retailer operating in the value retail business cannot afford its real estate cost to be in the excess of 4-5% of total sales. In fact, globally this standard is just about 3%.” Large retailers are focusing on the suburbs in the larger cities due to high real estate prices. In smaller cities and Tier I and Tier II cities, large retailers will still be able to set up in prime locations.
Saturday, December 30, 2006
Source: The Economic Times

HR News

1. Birla’s retail units to be headed by expats
The AV Birla Group has organized its retail business along two verticals, supermarkets and hypermarkets, both of which will be headed by expats. The head of the hypermarket division has been hired from a large Asian retailer and the company is on the lookout for an expat for its supermarket division. Both divisions will report to Sumant Sinha, the CEO designate of the AV Birla Retail venture.

Sources speculate that the retail business will be launched around Diwali. The company’s entire team of senior executives would be executives from overseas for vital areas such as store operations, IT< store design, merchandise and supply chain. For its HR department, the company has hired Vijay Kashay and Pankaj Bandhe from Shoppers Stop to look after HR and real estate handling.
Friday, December 29, 2006
Source: The Economic Times

Government Policy

1. FDI in select segments likely to get approved
The Indian government is likely to ease up on foreign direct investment (FDI) regulations in certain segments where small domestic players do not function. The department of industrial policy and promotion (DIPP) is making a policy to increase liberalization before the Union Budget. One of the industries market out is sports goods, electronics and building equipment where FDI restrictions might be eased to allow 51% FDI.
Wednesday, December 27, 2006
Source: The Economic Times

Sector specific:

Apparel & Footwear

1. Opus Fashions consider exclusive outlets
Opus Fashions who has already created a niche in designing women’s “lounge wear” under the Maybell brand is considering setting up exclusive outlets to build its brand. Sridhar Venkatesh, Business Executive and Promotor of the company, said, "Our brand stands for ethnic wear. We supply to all multi-brand outlets (MBO) in South India and select departmental stores. The MBO supply is only our secondary network.” The company is also looking to expand to new markets, besides its originally targeted areas of Chennai and Bangalore.
Saturday, December 30, 2006
Source: The Hindu Business Line

Consumer Durables

1. Future Group ties up with Videocon
The Future Group has formed an agreement with Videocon to source its private label brands, Koryo and Sensei, which are sold at e-zones and electronic bazaar. With this agreement, Videocon has become a preferred vendor for the company, so its products will be sold at all the consumer electronic formats of the Future Group.

Kishore Biyani, CEO of the Future Group, said, “Already Koryo accounts of 12% of the total sales at our formats and similarly the offtake for Sensei is increasing. Through the agreement, we will be able to source products from Videocon and introduce them under the Koryo and Sensei brand name.”
Wednesday, December 27, 2006
Source: The Economic Times

2. Infinity Retail forms sourcing pact with Videocon
Tata’s newest retail venture Infinity Retail has signed a sourcing agreement with Videocon to source consumer electronics for its in house label. While Venugopal Dhoot, Videocon Industries, chairman and managing director said that “We have signed an agreement with Tatas to supply them consumer electronics for their private labels, similar to our agreements with Pantaloon and Reliance”, Ajit Joshi Infinity Retail chief executive officer, denied any tie up between the companies.
Saturday, December 30, 2006
Source: The Economic Times

Food & Grocery

1. Fresh@ plans expansion
Heritage Foods, the Hyderabad based dairy company plans to expand its food and grocery chain to 100 stores in Hyderabad, Bangalore and Chennai within the next six months. The company is partly owned by former Andhra Chief Minister N Chandrababu Naidu’s immediate family who has over 30% of share.

Besides its retail operations, the company is also considering a wholesale model, to sell to smaller retailers. Although, Heritage Foods brand name Fresh@ is similar to ITC’s Choupal Fresh and Reliance Fresh, it will differentiate by including the name of the locality, such as Fresh@ Banjara Hills to give it a local feel.
Thursday, December 28, 2006
Source: The Economic Times