Latest News from the Indian Retail Sector

Weekly Retail News from India

The categories covered in this report are: (Click to view)

General Plans and Information
Big players – plans and investments
International
Government Policy
Sector specific

General Plans and Information

1. ‘Indian retail industry likely to emerge the largest’
At an international conference organized by the Confederation of Indian Industry (CII) on ‘Private Labeling in Food – Gaining Shelf Space and Market Share’ along with Agro Tech 2006 in Chandigarh, experts agreed that the Indian retail industry is likely to emerge as the largest in the world.

According to Amit Vaishnav, Managing Director of Mega Food Company, a Chennai based company, "Modern retail started in India a decade ago and now accounts for 35 per cent of the retail industry. By 2020, this may surpass 70 per cent and the 10,000 new retail stores in the pipeline would cover over 2.5 lakh sq feet."
Monday, December 04, 2006
Source: The Hindu Business Line

2. Average consumer spending increasing
Organized retail is changing the way Indian consumers shop and is providing the perfect setting for global retail giants to enter the Indian market. Average ticket values at lifestyle stores such as Shopper’s Stop and Lifestyle have doubled in the past two years.

At Lifestyle, the average customer spend is between Rs. 1,500-1,600 which increases by 40% during the festival seasons. Two years ago this amount hovered around the Rs. 800-900 mark. At supermarkets, the average ticket value has risen from Rs. 250-300 a few years back to Rs. 600.
Tuesday, December 05, 2006
Source: The Hindu Business Line

3. Farmer’s retail revolution
With several states permitting retailers to purchase produce directly from farmers, there is a new kind of revolution going on in the rural areas. Farmers are taking special care of produce to garner higher prices, selling to retail companies such as Reliance and ITC, and finally making money after nine years. More than 2,000 small farmers are benefiting from organized retailing in Andhra Pradesh, are dealing directly with companies without middlemen or intermediaries.

According to Harsh Bahadur, MD Metro Cash & Carry India, "Between 30 - 40% of fresh fruits and vegetables in the country get wasted because they rot before they reach the customer. What we do is build a collection centre at the farm gate. This is cooled, then we put all vegetables and fruits in cooled trucks and we bring them here."
Friday, December 08, 2006
Source: Moneycontrol.com

4. Retailers unveil new marketing plans
Indian retail chains are all stepping up marketing activities to invigorate their brands. Pantaloon, Ebony, Shopper’s Stop and Trent have all begun to increase their marketing budgets to compete with Wal-Mart and Reliance Retail. While until now, most of the activity was limited to below-the-line (BTL) marketing initiatives such as customer loyalty, direct mailers and in-store programs, now retailers are looking to newer ways to reaching customers.

According to Gibson Vedamani, CEO RAI, “…now since retail chains have attained a certain level of operation, the focus will shift to above-the-line (ATL) marketing. Each store will now want to communicate their brand differentiation to their consumers.” The Future Group will be varying its marketing mix based on its formats, with its flagship store Pantaloon receiving more ATL spending and Big Bazaar chain using a mix of ATL and BTL. Ebony and Shopper’s Stop will also be increasing their marketing budgets.
Saturday, December 09, 2006
Source: The Economic Times

Big players – plans and investments

1. Reliance acquires Adani Retail
Reliance Retail made its first major acquisition in the domestic market by buying Gujarat based Adani Retail for Rs. 1-1.10 billion. Reportedly, other companies such as Subhiksha, Trinethra and Tata’s were also interested in purchasing the company. The purchase will give Reliance access to 54 stores in a variety of formats such as neighborhood stores, supermarkets and hypermarkets in 9 cities in Gujarat. The company’s infrastructure and sourcing facilities are an added advantage for Reliance.
Tuesday, December 05, 2006
Source: The Economic Times

2. Reliance looking to acquire Suhbiksha, Landmark
Reliance Retail is believed to be interesting in acquiring several small retail chains to compete with the Bharti-Wal-Mart franchise deal. The company is interested in taking over Subhiksha, a south based food retailer and Landmark, a book and music chain owned by Tata’s retail arm Trent.
Thursday, December 07, 2006
Source: The Economic Times

3. Reliance keen on acquiring Maratha Stores
Reliance Retail is looking to build its portfolio and is keen on acquiring Maratha Stores, a Mumbai based cooperative chain store. According to source, Reliance is interested in the company due to the large amount of real estate space that it owns in Mumbai, besides the 20 outlets it operates.

In total Maratha Stores has close to 75,000 sq ft of space, a majority of which is in prime commercial areas. Maratha Stores has small neighborhood stores of 500 sq ft and larger outlets of 7,000 sq ft. Reliance is looking to use the 500 sq ft stores to enter the corner store format and the 7,000 sq ft stores as Reliance Fresh outlets.
Thursday, December 07, 2006
Source: The Economic Times

International

1. Landmark Group to set up hospitality business
Landmark Group, which operates the Lifestyle retail stores in India, announced that it will be setting up a chain of three-star hotels, food courts, restaurants and amusement parks under a new entity Citymax Hotels. According to Ravi Saxena, Managing Director of Citymax Hotels India Pvt Ltd, "We plan to set up a total of 12 three-star hotels within the next three years across all the major cities in the country."

Landmark will be investing approximately $30 million to set up a chain of 30 amusement zones called ‘Fun City’. The company will also be setting up food courts in several malls across tier I and II cities and has short listed 15-20 brands which it would like to tie up with.
Sunday, December 03, 2006
Source: The Hindu Business Line

2. Lotte Mart likely to enter Indian market
The company that was responsible for Wal-Mart’s exit from South Korea, Lotte Mart is now likely to enter the Indian market. The company has set up an office in Delhi to study the domestic market. Lotte Mart was in the running to acquire Wal-Mart’s stores in South Korea, which eventually went to its rival and the leading retailer of Korea, Shinsagae.

Lotte Mart is looking for an Indian franchise partner to establish its discount stores. The company is interested in entering malls initially and then work at stand alone formats. Lotte Mart stores usually are over 3,000 sq ft and stock fresh and processed foods, home appliances and apparel. The company is part of the Lotte Group, Korea’s fifth largest conglomerate, with interests in confectionary, restaurants, retail, construction and petrochemicals.
Tuesday, December 05, 2006
Source: The Economic Times

3. Tesco likely to enter via cash & carry route
UK based Tesco is likely to enter the Indian retail market via the cash & carry route, although it has not closed options for a full retail presence in the country either. According to sources, the company will be setting up cash & carry outlets by mid 2007, and also form a franchise deal with a domestic chain for its front end format.

At present, the tow major companies in the cash and carry business in India are Germany’s Metro and African chain Shoprite. According to Euromonitor, a UK based market intelligence firm, “When the restrictions on the retail industry in India are lifted, international retailers will be in a prime position to easily convert their cash-and-carry stores into highly profitable supermarkets and hypermarkets.”
Saturday, December 09, 2006
Source: The Economic Times

Government Policy

1. CPM’s trade union arm Citu in talks with US labour group AFL
The trade union arm of the CPM, Citu, is reportedly holding talks with the American Federation of Labour (AFL) to collaborate and tie up with their counterparts. In this regard, Citu has asked for AFL’s cooperation in organizing and implementing a nationwide campaign against Wal-Mart’s entry into the Indian market.

According to MK Pandhey, Citu President, “AFL delegates will attend our national conference in New Delhi in January 2007. They will make presentations highlighting instances of Wal-Mart’s anti-employee stance across its retail chain in the US."
Wednesday, December 06, 2006
Source: The Economic Times
  
2. Bharti, Wal-Mart agreement to be checked out by PMO’s office
The Prime Minister’s Office (PMO) will be looking into the Bharti-Wal-Mart deal due to the concerns of the Left parties. In response, the Commerce Industry will be preparing a detailed note, which is likely to be discussed in Parliament. In response, the department of Industrial policy and promotion (DIPP) under which FDI takes place has given the deal a clean chit.
Wednesday, December 06, 2006
Source: Business Standard

Sector specific:

Apparel & Footwear

1. Pantaloon to set up standalone stores for its private labels
Pantaloon Retail is planning to set up exclusive stores for its in-house brands such as John Miller, Bare, Ajile and Rig. According to Bina Mirchandani, Head (Category Management) for Pantaloon Retail, "Today our private labels generate between 75 per cent and 80 per cent of our revenues. Some of these brands have taken a natural level of growth in certain areas and we are thinking of exclusive stores for them."

Pantaloon has 20 private label brands at present and its ladies ethnic wear brand Akkrruti is likely to grow over 50%. One of the main advantages of private brands is higher margins and greater control.
Tuesday, December 05, 2006
Source: The Hindu Business Line

2. Indian Terrain will make a new brand for Reliance Retail stores
Menswear brand Indian Terrain has tied up with Reliance Retail to create an exclusive brand for the company. The new brand called Spirit will only be sold through Reliance Retail outlets. Indian Terrain is a Rs. 750 million company owned by Celebrity Fashions Ltd.

According to V Rajgopal, Chairman and Managing Director of Celebrity Fashions, "Reliance, as it rolls out, is going to bring a great retail experience to all the smaller cities. It has identified us as a partner to develop a sub-brand for them which will grow along with Reliance's roll out." Celebrity will incur no marketing or branding costs, since it will be exclusively a Reliance brand. Reliance is believed to be setting up partnerships and developing 2-3 brands in each price and fashion category of apparel such as casual wear or denim.
Thursday, December 07, 2006
Source: The Hindu Business Line

Toys

1. Toy industry to benefit from retail industry boom
The growth of the retail industry is set to benefit Indian toy manufacturers due to the entry of several large business groups and collaborations with international companies. The upswing in the economy was so far limited to “priority” sectors such as automobile, real estate and consumer durables, but now the toy industry is set to benefit from this boom too, due to increased visibility at large format retail stores, who have the space to display games.
Tuesday, December 05, 2006
Source: The Hindu Business Line

Bookstores

1. Landmark to open in Pune
Book and music chain store, Landmark will be opening its first store in Pune. There are 8 other Landmark stores in Chennai, Bangalore, Kolkata, Mumbai, Vadodra and Gurgaon. Next of the list is a store in Lucknow, due to open in February 2007.

According to Ms Hemu Ramaiah, CEO Landmark, the company is focusing on expanding in the west and north. Since the company is already located in all the metros, it will also be focusing on mini metros and other smaller locations.
Thursday, December 07, 2006
Source: The Hindu Business Line

Food & Grocery

1. Vishal Retail files for IPO
Vishal Retail Ltd has filed for an IPO to raise up to Rs. 1.1 billion to help it expand. According to Ram Chandra Agarwal, Managing Director of Vishal Retail, "The IPO is a significant milestone in realising our larger corporate vision. It would help us further scale up in the emerging retail landscape."
Tuesday, December 05, 2006
Source: The Hindu Business Line

2. HyperCITY in expansion mode
HyperCITY, the hypermarket chain of the K Raheja Group is embarking on a major expansion spree, investing close to Rs. 3 billion to open 20 HyperCITY outlets by early 2009. Currently, there is only one outlet in the country, which is located in Mumbai, although the company is planning to open outlets in Lucknow and Aurangabad besides metro cities.
Wednesday, December 06, 2006
Source: The Hindu Business Line

3. Spencer’s Retail to open more stores
Spencer’s Retail will be opening 15 new stores in 10 cities this month, taking the total to 88 stores. New stores will be opened in Madurai, Kochi, Gurgaon, Delhi, Coimbatore, Tirupur and Bangalore.
Friday, December 08, 2006
Source: The Hindu Business Line

Jewellery & Watches

1. Christmas diamonds from India at Wal-Mart
Wal-Mart will be selling a premium line of Christmas jewelry designed by a Mumbai based jeweler who will be supplying the company with 25,000 X’mas rings, which cost $249 each. According to Rajeev Sheth, chairman and MD of Tara Jewels, as $150 million company that is one of the largest suppliers of diamond and gold-studded jewelry to Wal-Mart.

This year, Indian jewelers have received record number of orders for Christian themed jewelry such as crosses, from retailers such as K-mart, JCPenney and Angus & Coote. The order for religious jewelry has apparently significantly increased since hurricane Katrina hit the US last year.
Friday, December 09, 2006
Source: The Economic Times