Latest news from the Indian Retail Sector

Weekly Retail News from India

General Plans and Information
Big players – plans and investments
International
Regional Trends
HR News
Unique formats
Sector specific

General Plans and Information

1. Lepakshi looks to go overseas
Andhra Pradesh’s government has been conducting talks through the Indian embassies in the US, UK, Italy, Malaysia, Singapore and Dubai to set up showrooms to sell handicrafts from Andhra Pradesh. The announcement was made by Dr J Geeta Reddy, Minister for Major Industries, Exports, Commerce and Tourism.

The AP Handicrafts Development Corporation (APHDC) which runs the showrooms also plans to open showrooms in Mumbai, Chennai and Bangalore. At present it has 14 showrooms, with one each in Delhi and Kolkata and a second outlet opening soon in Delhi.
Tuesday, January 02, 2007
Source: The Hindu Business Line

2. Retailers on the looking for more space
With the continued expansion of retailers, the operational retail space is likely to reach 100 million sq ft by 2008, with an estimated 500 malls across India. Retailers are however, still hungry for more space and the high cost of real estate is becoming a serious handicap in their plans. Reliance alone is expected to have 30 million sq ft of space by 2010 with its range of hypermarkets, supermarkets, convenience stores in 784 cities and 6,000 rural mandis.

Other big players such as Pantaloon have signed for space in over 100 malls that are still in development stages, Max Retail and Provogue have secured 800,000 sq ft and 1 million sq ft of space. According to Pranay Vakil, chairman of Knight Frank, “There will be a significant gap between supply of retail space and demand over the next two years.”
Friday, January 05, 2007
Source: The Economic Times

3. Domestic retailers keen on global sourcing
Domestic retailers are fast following the ways of the global majors and are keen on setting up global sourcing methods to increase margins while still offering the best prices to customers. Retailers such as Big Bazaar, Shoppers’ Stop, Ebony, Westside and even Subhiksha, are looking to set up a sourcing offices in Hong Kong and China.

According to Kishore Biyani, CEO of the Future Group, “For retail chains across the globe, the world is becoming a single market. We are looking at markets across the world from where one can source merchandise at the lowest price. We have opened our global sourcing offices in Hong Kong and China a few days back.”
Saturday, January 06, 2007
Source: The Economic Times

Big players – plans and investments

1. Pantaloon plans to dilute stake in divisions
Pantaloon Retail’s Kishore Biyani is planning to dilute stake in some of his subsidiaries to take on the new entrants in the retail field. The divisions that will be diluted are Future Media, Future Capital, Future Logistics and Central, although the method of dilution is not clear whether it would be via IPOs, preferential allotment or a strategic sale.

Edelweiss Securities has estimated that PRIL requires Rs. 45 billion, of which Rs. 10 billion is likely to come from equity dilution. Another Rs. 23 billion would come from external sources. ICICI Ventures, and Kotak SEAF India have already bought 15% and 6% of Home Solutions, another PRIL subsidiary.
Monday, January 01, 2007
Source: The Economic Times

2. Pantaloon to buy stakes in travel portals
Pantaloon Retail India Ltd (PRIL) announced that it is negotiating with several travel portals to buy substantial equity so that it can be part of the boom in online travel business. According to Sankarson Banerjee, CEO of PRIL’s e-tailing division futurebazaar.com, “We are looking to partner, preferably with an equity participation with an existing player in India and are talking to several potential companies.”
Tuesday, January 02, 2007
Source: DNA Money

3. Birla Group to invest Rs. 6,000 for its retail venture
The Aditya Birla Group will reportedly be investing Rs. 50-60 billion into its retail venture in the initial phase. Birla TMT Holdings will be partly financing the investment with the balance to be raised through debt. So far, Birla TMT has raised $980 million by selling 33% stake of Idea Cellular to 6 private equity firms. The company will also leverage on its retail reach via Birla Sun Life and Idea Cellular with its 11 million users and 11.5% share of the GSM market.
Wednesday, January 03, 2007
Source: The Economic Times

4. Future Group likely to divest some of its Planet Retail stake
Kishore Biyani is considering part of his 49% stake in Planet Retail Holdings Ltd (PRHL) to its Indonesian promoter from whom he had purchased it from. PRHL retails brands such as Marks & Spencer, Guess, Body Shop, converse and Speedo and is likely to bring in Starbucks by mid 2007.

The company has so far denied that any such move was being planned. Planet Retail is the licenser of several high profile global brands and will soon be foraying into department stores via a tie up with UK based Debenhams. Currently the company has 55 stores in various formats with a total space of over 100,000 sq ft.
Wednesday, January 03, 2007
Source: The Economic Times

5. Shoppers Stop opens in Lucknow
Department store chain Shoppers’ Stop opened its first store in Lucknow, making it the company’s 21st store in the country. Covering an area of 45,000 sq ft, the store is spread over three floors and required an investment of an estimated Rs. 100 million. The company already had 200 members from the store loyalty programme First Citizen that have been shopping at other cities.
Thursday, January 04, 2007
Source: Business Standard

6. Big Bazaar to open 60 new stores
At the launch of the second Big Bazaar in Hyderabad, Pantaloon Retail announced that it will be aggressively increasing its stores, adding 60 new stores in the next eight months. According to Rohit Malhotra, Operations Head for South Zone, “Our aim is to have 100 Big Bazaars this year.” Twenty two of the new stores will be located in the south of which close to half will be in tier II cities.
Saturday, January 06, 2007
Source: The Economic Times

7. Pantaloon to form new company for mall division
Pantaloon is keen on spinning off a mall division, from its in house Central Mall, to create a new company. The new company will most likely go in for an IPO in end 2008. According to Rakesh Biyani, director of Pantaloon Retail, "Currently, Central is a division under the Pantaloon Retail, and there are only four Central malls in the country — Bangalore, Hyderabad, Pune and Vadodara. We will be coming up with a new company for the same and will list it on the stock exchange.”
Saturday, January 06, 2007
Source: Business Standard

International

1. Tesco to join with Tata’s
UK based retailer Tesco is reportedly holding advanced talks with the Tatas, with whom they are planning to open hypermarkets. The partnership is likely to be similar to Tata’s tie up with Australian retailer Woolworths.
Tuesday, January 02, 2007
Source: Moneycontrol.com

2. Bharti-Wal-Mart to open in Hyderabad
Hyderabad seems to be gearing up for the next mega retail entry, after Reliance and landmark’s Max Retail stores as Bharti-Wal-Mart is reportedly looking for land to set up 2 hypermarkets. Sources say that the hypermarkets will cover 80,000 sq ft of space and will be on the outskirts of the city. In total the company is looking for 3 acres of land.
Wednesday, January 03, 2007
Source: Moneycontrol.com

3. Pantaloon and Staples form JV for office supplies
US based office supplies giant Stapes has reportedly formed an agreement with Pantaloon Retail to set up operations in India. Staples is the world’s largest office supplies company, worth an estimated $16 billion. Staples will likely hold 35% of the new company and is considering a cash-and-carry format to be used in India. The company will also be investing $6 million in the venture. Staples is already present in China and Taiwan and has 1,800 stores in the US, Canada and 20 other countries.
Thursday, January 04, 2007
Source: Moneycontrol.com

4. French salon Jean Claude Biguine to open in India
Jean Claude Biguine, a EUR 150 million hair and beauty salon announced that it will be setting up salons in India, initially opening 3 in Mumbai and 2 in Delhi. Eventually the company plans to have 50 salons in the top 22 cities by 2010. the total investment will be around Rs. 150 million.
Thursday, January 04, 2007
Source: The Hindu Business Line

5. Shing to enter Indian retail market
As Watson, a subsidiary of Hutchinson Whampoa, Li Ka Shing’s flagship company is all set to enter the organized retail sector in India. Sources report that plans are being made to launch Watson’s Your Personal Store, a health and beauty format retail chain in India. The launch has been delayed since FDI regulations do not allow for direct entry of multi brand retailers.

Watson is presently located in 13 countries with approximately 1,400 stores and is part of the $12 billion ASW group which has 7,600 stores located in 34 countries. Other brand of the company are ParknShop supermarket, Taste food galleria, Gourmet boutique style fine food hall, Fortress electrical equipment, Watsons wine cellar and Nuance-Watson airport duty free stores.
Friday, January 05, 2007
Source: The Economic Times

6. Burger King will probably use the franchise model in India
Burger King is planning its strategy for the Indian market and to take on its old rival McDonald’s who has already created a market for itself in India. According to an industry analyst, “In the short term, McDonald’s would lose some customers to Burger King out of the sheer curiosity factor. However, this would happen only if both are located in the same catchment area.”

Burger King will be using the same strategy that it used for Japan, using franchises and making smaller, less expensive restaurants that fully use available space. Burger King has 11,129 restaurants of which 1,240 are company owned and 9,889 are franchisees and is currently located in the US and 65 countries.
Friday, January 05, 2007
Source: The Economic Times

Regional Trends

1. Regional chains could hold out for more
With the purchase of Trinethra, the Aditya Birla Group has leapt ahead of Reliance in retail space. The food and grocery segment is key to the Indian retail market, an estimated 55% spend of a total of $300 billion each year. Bangalore based Nilgiris was sold to Actis due to differences in the family that ran the company. Another company on the lookout to sell is Jaipur based Bardiya Group who is looking to either sell or form a strategic association for its 4 Big Shopper stores in the city.

Market sources estimate that the Birlas paid an estimated Rs. 1.47 billion for the company which has 172 stores and is spread across the southern states. Comparatively, Reliance’s purchase of the Adani Group which has 54 stores for Rs. 1.1 billion seems more expensive.
Wednesday, January 03, 2007
Source: DNA India

HR News

1. Searching for talent
The three biggest challenges of the organized retail industry will be managing manpower, real estate and the supply chain, of which manpower looks like it will be the critical factor in determining the competitive edge in the long term. With the boom in the retail industry to continue for the next five years, at an expected compounded average growth rate (CAGR) of 30-35%, finding the right middle and senior management will become increasingly difficult.

Of the total employment generated by the retail industry, estimated to be 2 million, of which 500,000-600,000 will be in the organized sector. Higher management executives are likely to be poached from industries such as FMCG, banking and telecom.

Many companies are looking overseas for talent. Reliance in currently hiring approximately 100 senior managers from overseas, around 50-60 of which who have already joined the company and have 15-20 years of experience with major players such as Wal-Mart, Best Buy, Tesco, ASDA and Kroger. The Aditya Birla Group is also looking fro 30-40 persons from overseas to build its leadership team.
Friday, January 05, 2007
Source: The Economic Times

Unique formats

1. Gujarat opens ‘rural malls’
There are several fair price shops that have opened in Gujarat, which the government has christened as ‘micro rural malls’. These shops are part of a programme to de-regulate the services of fair price shops by permitting them to offer a variety of products and services. There are an estimated 15,000 such stores in the state.

At present there are 512 such malls and 508 are in the planning stage. The Gujarat state government plans to open 1,000 such malls each year. Local villagers can purchase items such as grains, four, oil, gas cylinders, cosmetic items, recharge vouchers, fertilizers, seeds and packaged goods at these stores.
Wednesday, January 03, 2007
Source: The Economic Times

Sector specific:

Apparel & Footwear

1. Nahar to open 100 outlets
Nahar Industrial has planned an aggressive expansion plan to open 100 stores by the end of this financial year. Kamal Oswal, managing director of Nahar International added that “We have 170 Cotton County stores at present and plan to take the number to 250 by March next year.” The company will be focusing on smaller cities such as Kanpur, Lucknow and Ludhiana for its expansion. In the long term, the company plans to have 1000 stores by 2010 and also add women’s and kids wear to its portfolio.
Sunday, December 31, 2006
Source: DNA Money

2. Apparel firms target working women
The working woman is the target of several company’s marketing plans. At the higher end are Allen Solly, Arrow and Wills Lifestyle, several new players are keen to enter the mid and lower price segments. According to a IMAGES-KSA Technopak study, the women’s apparel market has grown by 50% in the past three years.

According to Anurag Khurana, chief executive officer of Sleepins Apparels, “Women’s formals, as a segment of the apparel industry, have been growing steadily over the last few years. But the present situation is marked by a shift from generic to branded formalwear.” The company recently launched a new brand called Bia, which has a selection of formal wear for women.

The target customers are those who work in sunrise sectors such as IT, BPO, banking and financial service, travel, tourism and hospitality. Branded garments at a high end store might cost around Rs. 2,200 but newer entrants are offering close to 50% lower prices.
Tuesday, January 02, 2007
Source: Business Standard

3. SF Jeans sets up store in Sri Lanka
SF Jeans, an Aditya Birla owned Madura Garments brand, has opened its first overseas store in Colombo in Sri Lanka. The value of the brand is estimated to be Rs. 250 million. The company also has plans to expand in the domestic market to compete with Levi and Pepe.
Wednesday, January 03, 2007
Source: DNA India

4. Kewal Kiran Clothing plans JV with international brand
Manufactures of the Killer brand of denim, Kewal Kiran Clothing has indicated that talks are on with an international watch brand. According to company executives, the move is to expand its portfolio to add watches and fragrances for the Indian market to reduce the dependence on the Killer brand that currently contributes to 50% of the company’s revenues.

The company has 4 menswear brands, Killer, Easies, Lawman and Integriti and will soon be introducing women’s wear under the Killer and Easies brands. At present, there are 41 K-Lounge outlets and will be opening 140 medium and large retail outlets by next year.
Thursday, January 04, 2007
Source: Business Standard

5. Cottons by Century to launch ready to wear for women
The BK Birla’s readymade garment brand, Cottons by Century will be launching its women’s wear line by March 2007, which will be followed by a range of denim wear for men and women for the festive season. The company will be opening stores called Denim Studio, where the entire range of denim would be available.
Friday, January 05, 2007
Source: The Economic Times

6. Mohan Clothing expanding its range
Gurgaon based manufacturer of the Blackberry range of clothing, Mohan Clothing Pvt. Ltd plans to expand to the south. According to Badal Chaudhry, General Manager for sales and marketing, the company has made plans to expand to Chennai, Bangalore and Hyderabad. At present the company has 25 exclusive stores in 11 cities.
Friday, January 05, 2007
Source: The Hindu Business Line

7. S Kumars plan to demerge retail companies
S Kumars is making plans to be part of the retail boom. The company has already confirmed international brands for which it will be opening stores and manufacturing garments and is now planning to demerge its retail business to form a Strategic Business Unit (SBU). The company will be setting up 1000 outlets for its brands in the next three years, a significant increase from its 90 stores at present.
Saturday, January 06, 2007
Source: Business Standard

Luggage

1. Witco aims expand brand
Chennai based luggage brand Witco is hoping to cash in on the travel boom by exiting the economy baggage segment and moving to the premium baggage category. The company is looking to build a national footprint focusing on holiday and business travelers in the domestic segment. In the international segment, the company will be focusing on the student luggage travel segment which is growing at 25% per year. Witco stores are currently located in Chennai, Bangalore, Cochin and Calicut with 15 showrooms.
Tuesday, January 02, 2007
Source: The Economic Times

Bookstores

1. Oxford Bookstore looks to smaller towns
Oxford Bookstore is looking to expand across India and is focusing on tier I and tier II cities and towns over the next 5-10 years. New stores would be franchise models and would have a mix of small stores of less than 400 sq ft and large stores of around 6,000 sq ft.

According to Rajiv Chowdhry, chief executive officer of Apeejay Oxford Bookstore, "We plan to open 6 more Oxford Bookstores in India by March 2007, besides the existing 10." New stores will be opening in Shillong, Guwahati, Mysore and Coimbatore. Another focus area would be its junior section, which accounts for 20% of sales.
Wednesday, January 03, 2007
Source: Business Standard

E-retailing

1. Pantaloon launches its e-retailing portal
Pantaloon Retail India Ltd (PRIL)’s subsidiary Future Bazaar India Ltd, launched its virtual retail venture, futurebazaar.com. The e-tailing site will offer a wide range of apparel, books, electronics, home décor, kitchen appliances, mobile phones, watches and other accessories all available with the manufacturer’s guarantee and home delivery.

According to Sankarson Banerjee, chief executive officer of Future Bazaar, "Leveraging the tried and tested 'brick and click' strategy, futurebazaar.com is the only e-commerce portal with a strong offline presence, quite different from the current e-commerce players who have adopted a 'marketplace' model. Backed by our end-to-end supply chain and the ability to source nearly a million products, our economy of scale gives the customers the lowest prices."
Wednesday, January 03, 2007
Source: Business Standard

Consumer Durables

1. Viveks holding talks with private equity firms
Chennai based consumer durable retailer, Viveks is on the lookout for private equity firms to fund its expansion plans. According to company executives, private equity firms will be selected before the company goes for an IPO at the end of the next financial year. Viveks has 54 stores in Tamil Nadu and Karnataka and is keen on expanding to other southern states of Andhra Pradesh and Kerala.

According to B A Kodandaraman Setty, Chairman and managing director of Viveks, "In the next three years, the company plans to open 100 stores in south India and the group is in talks with some private equity firms to raise funds for the same." Viveks currently has 3 brands, Viveks, Jainsons and Premier.
Wednesday, January 03, 2007
Source: Business Standard

Food & Grocery

1. Aditya Birla Group acquires out Trinethra
The Aditya Birla Group has bought the controlling stake in Trinethra Super Retail Ltd, which has over 100 food and grocery retail stores in south India. Trinethra recorded a turnover of Rs. 1.7 billion and has 83 stores in Andhra Pradesh, 26 in Bangalore, where it operates under the Fabmall name, and 15 in Chennai. A few new stores are also coming up in Kerala and other smaller Tier II cities in south India.
Tuesday, January 02, 2007
Source: The Hindu Business Line

2. Barista goes for a new look
Barista is undergoing a change of its look to move from café to lounge. The company will also be expanding its premium line, Barista Crème in an effort to compete with Starbucks, who is planning to enter the country. These stores will be larger than the regular Barista Espresso outlets, along with high end furniture and fixtures. The company is hoping to achieve its target of reaching 220 Espresso bars and 10 Crèmes by the end of this financial year.
Tuesday, January 02, 2007
Source: Rediff Money

3. Reliance Fresh to open 75 agro-retail outlets in Madhya Pradesh
Reliance Fresh announced that it will be opening around 75 outlets in MP, in cities such as Indore, Bhopal, Gwalior and Jabalpur. Farmers would be able to take their produce directly to Reliance instead of relying on commission agents at local mandis.
Tuesday, January 02, 2007
Source: The Economic Times

4. Adani Group begins process of selling to Reliance
The Adani Group has begun the process of selling its company to Reliance and its employees are being interviewed by Reliance for integration into the company. According to a company source, “Reliance is interviewing the executives and will retain the efficient candidates.” Both sides have not yet spoken about the value of the deal, although sources suggest it could be around Rs. 2 billion.

Adani operates 54 stores in nine cities in the state of Gujarat. The company is in the process of clearing its existing stocks and has introduced special schemes to attract consumers. All stores will be renovated by Reliance which will be completed in the next 2-3 months.
Wednesday, January 03, 2007
Source: The Economic Times

5. Café Coffee Day launches its private label
India’s largest coffee chain has launched its private label with an offering of premium priced bottled water. The company also sells products such as cookies, wafers, mints and related merchandise under the Café Coffee Day brand at its outlets. Next on the anvil are a range of flavored water drinks to be launched before summer.
Wednesday, January 03, 2007
Source: DNA India

6. Trinethra acquisition gives Birlas the upper hand
With its purchase of Trinethra Super Retail, the Aditya Birla Group has the upper hand in the food and grocery section and will strengthen its position ahead of its actual entry into the retail sector. According to Susil Dungarwal, a retail analyst, “The Birla group can leverage the acquisition of Trinethra, a well established player, in its expansion in south India. The buyout will give the group a headstart among all the new entrants including Reliance that has already started its operations.”

Sources in the Birla Group said that Trinethra CEO Pranab Barua and MD George Thomas would carry on in their respective positions and would continue to maintain the company’s southern focus. The company had posted a turnover of Rs. 2.4 billion in 2005-06 and has 83 outlets in Andhra Pradesh, 26 in Bangalore (which operate under the Fabmall name) and 15 in Chennai.
Thursday, January 04, 2007
Source: Business Standard

FMCG

1. Emami Group to enter retail industry
FMCG major, Emami Group plans to enter the retail industry after it has cut ties with Chennai based retail firm Landmark, and plans to open 7 stores in the next 18 months in Kolkata and the eastern region. The total investment for the new venture is estimated to be around Rs. 300-400 million. The Emami Group is holding talks with international companies for a strategic tie up but nothing has been finalized as yet.

At the purchase of Landmark brand by Tata’s last year, the company has bought out the Kolkata store from the Chennai Group and has renamed its stores as Starmark and has changed the name of its retail division from Emami Landmark Store Pvt. Ltd to Emami Retail Pvt. Ltd.

The company hopes to expand its stores and formats in the near future. According to Gautam Jatia, chief executive officer of Starmark Store Ltd, "We have three store formats -- the large stores that are upto 20,000 square feet in area and sell the entire product line of books, stationery, gifts, toys and music. The big format stores, upto 10,000 square feet in area, have gifts and stationeries merged into one section. And then we have the express stores varying between 1,000 to 3,000 square feet in area and having a boutique feel about it with soft lighting, chairs and wooden furnishings."
Wednesday, January 03, 2007
Source: The Economic Times, The Hindu Business Line, Business Standard