Latest News and Events from the Indian Retail Sector

Weekly Retail News from India

General Plans and Information
Big players - plans and investments
International
Regional Trends
Support Industries
HR News
Unique formats
Government Policy
Sector specific

General Plans and Information

1. Industry status unlikely to go through
The Indian retail sector’s demand for industry status is unlikely to be cleared, since the government is still considering how such a move would affect the economy and those employed in the retail sector. According to Ashwani Kumar, Minister of state for Commerce and Industry, “Several representations on this matter have been made and we are studying the implications of granting industry status to retail as there are a host of issues involved including labour laws and other legal implications.”

The retail sector has been wanting to be recognized as an industry for over two years, as being classified as an industry would make it eligible for fiscal benefits and concessions and also make it easier to get organized financing.
Monday, February 19, 2007
Source: The Economic Times

2. FAM protests Wal-Mart’s entry
Another protest against the entry to US retail giant to the Indian market, this time by the Federation of Association of Maharashtra (FAM), an organization that represents all retailers in the state, including co-operative stores, hawkers and trade unions. The FAM protest is based on the social impact that such retail chains will have on the local stores. One of the well-known co-operative stores, Apna Bazaar is also part of the FAM. The group has planned a protest on February 21 in both Delhi and Bangalore against the arrival of the Wal-Mart CEO Michael Duke.
Tuesday, February 20, 2007
Source: The Economic Times

3. Mandis lose out but farmers are the winners
With organized retailers such as Reliance and ITC bulk produce in bulk directly from farmers, the old-fashioned fruit and vegetable markets or mandis are the losers. Unfortunately, the result of lower supplies at the mandis has resulted in a sharp increase in prices there. Organized retail is also squeezing out the middleman so that they can offer lower prices and increase their efficiency by having fewer intermediaries.

Asia’s largest fruit and vegetable mandi, Azadpur mandi in Delhi has already seen a drop of 37% during the period of January 1 and February 18, 2007. Himachal Pradesh sold roughly 40% of its 273,000 tones of apples to organized retailers and in Nashik, onion farmers are selling 5,000 tonnes directly to Global Agrisystems, a trading company. In Ratnagiri and Sindudurg areas of Maharashtra, Reliance Retail and ITC will be buying large amounts of mangoes.

The sudden rush for food and grocery retail has brought about this change in the way fruits and vegetables reach the consumer, who is paying lower prices now than before. The last two years has seen 8 new food and grocery chains start, such as HyperCity, Spinach, Nature’s Basket and Reliance Fresh being the prominent ones.
Wednesday, February 21, 2007
Source: The Economic Times

4. Kirana stores keen on brands too
The Indian Institute of Packaging is making a cluster branding strategy that would help kirana storeowners compete effectively with large format organized retailers like Big Bazaar and Reliance Retail. The chairman of IIP, BS Kampani said that the institute was “…evaluating an alternative model for kirana shops” that would benefit both customers as well as shop owners.

By clubbing neighborhood kirana stores under a single brand, they could sell packaged rice, pulses and other items under a brand name. Packaging for such an initiative could be taken care of at a minimal cost. Customers would get some sense of quality assurance by purchasing a “branded” product. So far, the institute has already contacted 800 such stores in Mumbai and more than 250 in Ahmedabad.
Wednesday, February 21, 2007
Source: Business Standard

5. Small business owners protest Wal-Mart’s entry to India
Wal-Mart’s business delegation that will be arriving on February 22 is causing lots of concern among small business owners, who organized a protest against its entry to the Indian retail sector. The Federation of Associations of Maharashtra (FAM) said they were against the entry of the US based retail giant as it would negatively impact their livelihood.
Thursday, February 22, 2007
Source: Business Standard

Big players - plans and investments

1. Future Group likely to split business to raise funds
The Future Group is planning to split it business and hive off one of its most popular formats, Big Bazaar, to raise funds separately for each type of format. According to sources, the procedures for the split are in the last stage. The Future Group is focusing on the metros and is aiming to dominate the markets of the top eight metros of the country. By the end of 2007, the company hopes to have 11 Big Bazaar stores in Bangalore, eight in Mumbai and seven in Kolkata. New Big Bazaar stores will have private label products. Currently, there are 41 Big Bazaar outlets, with nine stores having opened in the past two months.
Monday, February 19, 2007
Source: DNA India

2. Bharti to invest up to $2.5 billion by 2010 for retail venture
The Bharti Group announced its plans for its retail venture for which it has tied up with Wal-Mart. The company will be investing up to $2.5 billion by 2015 to open stores across all major cities in India. According to Bharti Enterprises JMD Rajan Bharti Mittal, "After revolutionising the Indian telecom sector, retail will be the next big focus area for Bharti... the investment would be $2-2.5 billion.” He added that the company would be opening multi-format stores in cities with populations of around 1 million.

The company will be covering an estimated 10 million sq ft of retail space, and would employ 60,000 people in the next few years. Its first store will be opened in the first quarter of 2008. The company was yet to decide a brand name for its stores, which would be decided based on consumer research.
Monday, February 19, 2007
Source: CNN-IBN, Financial Express, The Economic Times

3. Bharti, Wal-Mart conforms to govt policy
Bharti Enterprises insisted that their joint venture with Wal-Mart conformed to all government norms and policies and was similar to businesses started by domestic companies such as Reliance, Birlas, Tatas and the Future Group. Rajan Mittal, JMD of Bharti Enterprises, said that the company had given the full details of the joint venture plan to the government.
Monday, February 19, 2007
Source: The Economic Times

4. Bharti’s JV with Wal-Mart might get delayed
Michael T Duke, CEO of Wal-Mart comes to India form February 22, for less than 24 hours and has several meetings lined up with Kamal Nath, the commerce and industry minister and officials from the Planning Commission. Industry speculation is that there are still lots of details to be worked on as yet and the actual finalization of the agreement might be delayed.
Monday, February 19, 2007
Source: DNA India

5. Bharti Retail likely to add telecom and insurance to its kitty
Bharti Enterprises is looking to add telecom and insurance service in its retail stores. The company already has interests in both fields with its Bharti Airtel telecom that has over 490,000 outlets and Bharti Axa Life Insurance Company. According to Vinod Sawhney, head of Bharti Retail, “There is definitely a thinking to synergise activities of group companies, which relates to direct interaction with customers.”
Wednesday, February 21, 2007
Source: Business Standard

6. Bharti aiming for launch in August
In a letter last week, Bharti informed the Ministry of Commerce and Industry that it would be starting operations in August-September. The company hopes to finalize its plans with Wal-Mart and have all operations in place. Wal-Mart’s CEO Michael T Duke who was in India the past few days, met Montek Singh Ahluwalia, the deputy chairman of the Planning Commission, Sharad Pawar, the Union Minister for food, agriculture and consumer affairs, and Kamal Nath, the Commerce and Industry Minister. It is expected that a joint venture agreement will be signed in the next few weeks.
Saturday, February 24, 2007
Source: Business Standard

International

1. Wal-Mart not to use its name for retail stores?
In an interesting development, it seems that Wal-Mart stores in India might not carry the famous ‘Wal-Mart’ name since Bharti Enterprises will be taking care of the front end retail operations and Wal-Mart focusing on back-end operations such as logistics and supply chain. A spokesperson for Wal-Mart said that branding of the front-end stores was up to Bharti to decide.

Bharti has been conducting consumer research and weighing its options on finalizing a brand name. According to sources, the US retail giant was open to the idea that its name would not feature on the stores, especially in regards to fueling further political opposition to foreign owned companies setting up shop in India.
Sunday, February 18, 2007
Source: CNN-IBN

2. Sephora to open stores in India
LVMH’s brand Sephora has made plans to enter the Indian and Chinese markets and will be opening 50 stores in India over the next five years. LVMH will be forming partnerships with leading Indian retail companies for the Sephora brand. The company sees India as one of the most promising markets for premier goods but is concerned about the lack of the right kind of retail environments to market them from. At present most high end stores are located in five star hotels, which get a very limited number of visitors, although they might spend higher ticket amounts.
Wednesday, February 21, 2007
Source: Indiaretailing.com

3. Wal-Mart’s team surveys Indian retail formats
Michael T Duke, CEO of Wal-Mart and a team of executives arrived in Mumbai to survey its current retail stores and conduct meetings. The Wal-Mart executives will also be meeting key ministers and its JV partner Bharti Enterprises in the capital on Friday, where they would discuss its plans for cash-and-carry format stores, which were permitted by the government.
Thursday, February 22, 2007
Source: The Economic Times

4. Wal-Mart faces HR upheaval at the top level
Wal-Mart is facing difficulty after difficulty in setting up stores in India, this time concerning the HR division. Senior executive Randy Guttery has left due to differences in opinion with Wal-Mart CEO designate for India, Raj Jain. Also leaving the company is Lance Retig, who has reportedly returned to America after completing his assignment with the company. Industry sources report that Randy Guttery might be joining Metro, the German cash-and-carry company, whose CEO Harsh Bahadur left to join Reliance Retail’s hypermarket division.
Friday, February 23, 2007
Source: The Economic Times

5. Wal-Mart CEO checks out the local competition, faces protests
Wal-Mart’s CEO Michael Duke, who is visiting India, went to several local stores and malls in Mumbai with a team of executives. The team visited Inorbit Mall, Big Bazaar, Spencers, Crossword and HyperCity, in an effort to understand how the Indian market functions in its varied complexities and nuances. He told reporters that he had come to India “to see how the market works” and added that the Indian market was a very exciting spaces, thanks to the consumers. While there were no protests in Mumbai, in the capital city demonstrators protested against the company and its intentions to open stores in India.
Friday, February 23, 2007
Source: The Economic Times

6. Wal-Mart, Bharti close in on a deal
Wal-Mart Stores and Bharti Enterprises are closing in on a deal, although neither party is willing to fix a definite time frame on the actual date, which could be in the next few weeks. Sunil Mittal, MD of Bharti Enterprises said that the legal agreement regarding the cash-and-carry store was being studied. When asked by reporters on whether there were any regulatory issues impeding the agreement, he said there were none.
Friday, February 23, 2007
Source: Reuters

7. Tesco and Tatas on the verge of a retail venture tie up
UK based retailer, Tesco is reportedly in final stage talks with the Tatas. The company is very keen on entering the Indian retail sector and was earlier in talks with Bharti Enterprises, who eventually tied up with Wal-Mart. According to sources, the Tesco-Tata tie up is being done in such a way that it does not cause a conflict of interest with its other partner for consumer durables retail, Woolworths, with which it has tied up for setting up Croma stores.
Friday, February 23, 2007
Source: Rediff Money

Regional Trends

1. Luxury brands all heading to Chandigarh
The city of Chandigarh is seeing all the too end brands come due to the high number of affluent citizens, standard of living and connection to overseas markets which has led to its residents to have a high level of knowledge of international products and services. The recent expansion of the corporate and IT sector has been the driving force that has brought in consumerism in the market. Sachit Passi, owner of Krishna Automobiles will be the new dealer for BMW and although they have not even started their marketing campaign, they have already had 19 bookings.
Thursday, February 22, 2007
Source: Business Standard

Support Industries

1. Pyramid Saimira to set up malls, multiplexes
Pyramid Saimira, a Chennai based movie theatre company announced that it will be partnering in a Special Purpose Vehicle (SPV) with realty companies to set up 200 malls and multiplexes in the next four years. The proposed cost of these malls and multiplexes is estimated to be Rs. 200 billion. Around 100 malls and multiplexes will be located in the south and the remaining 100 in the rest of the country.
Tuesday, February 20, 2007
Source: The Economic Times

HR News

1. Countrywide’s CEO joins Reliance Retail
Vasu Ramaswami, CEO of Countrywide Financial Corporation (CFC) has left to join Reliance Retail, where he will head operations and customer service areas for the finance division. He has been with CFC in February 2005 and led the company to grow from 450 to 1000 employees n India.
Tuesday, February 20, 2007
Source: The Economic Times

2. HR chief at Aditya Birla Retail might be leaving
Vijay Kashyap, the HR head of Aditya Birla’s Retail division is said to be leaving before even the first store is opened and barely completing 6 months into his job. Before joining Aditya Birla Retail he was VP or HR at Shoppers’ Stop. While the official statement from the company is that he has not left his job at the company, and has only accompanied his wife to Australia who has moved there. He will also be moving there eventually, although when exactly is not known.
Thursday, February 22, 2007
Source: The Economic Times

Unique formats

1. Reliance hoping to convert local kirana stores into its own stores
Reliance Retail is planning to take local kirana stores and make them their own in a new initiative that combines kirana with organized retail. While the concept is not new, with Hindustan Lever Ltd having already launched the ‘Super Value’ stores, by helping the stores in redoing the stores, it has not made a very strong impact as yet.

Reliance Retail is now inviting small retailers and individuals to become franchises for their store. According to a senior Reliance executive, “Reliance will revamp these outlets. But, they will be run by the small retailers on a revenue sharing model.” The company will be encouraging people who have strategically located land and would like to become a franchisee for the company.
Friday, February 23, 2007
Source: The Economic Times

Government Policy

1. FIPB blocks Alpha’s duty free plans
The Alpha and Future Group tie up for setting up duty free shops at airports has run into trouble with the Foreign Investment Promotion Board (FIPB). The problem is in the form of a letter from former Union minister Jagdish Tytler on Alpha’s dealings with the Cochin International Airport (CIAL) for its duty free trade. Tytler has alleged that the company had not disclosed its relationship with CIAL when getting FIPB approval last year.
Friday, February 23, 2007
Source: The Economic Times

Sector specific

Apparel & Footwear

1. Max Retail readies for major expansion to tier III cities
The Landmark Group’s Indian division, Lifestyle International announced that it will be making major expansion moves for its value retail chain, Max and will be targeting tier III cities. The Landmark Group runs the Lifestyle retail chain, an exclusive department store format chain; Max, a hypermarket value retail chain; and also has several international brands such as Bossini and Kappa.

New stores will be opening using the franchisee model in cities such as Kozhikode, Mysore, Hubli, Manipal, Rajkot, Nasik, Vashi, Thane and many others. Stores will be around 22,000 sq ft in size with each store receiving a Rs. 50 million investment. Max’s company owned stores will be located in tier I and tier II cities. At present there are 6 Max stores, with 65% of its revenues coming from apparels and the remaining 35% from footwear and accessories.
Monday, February 19, 2007
Source: Business Standard

2. Nike targeting sales of $1 billion for next five years
Nike announced it was targeting sales of $1 billion in the country in the next five years. At an investor meet, Nike executives said that although sales had grown by 40% in 2006 in India, the brand was still trailing behind Reebok and Adidas in the country. The bulk of the growth was related to cricket initiatives and branding. The company looks to India as becoming one of the new billion dollar markets along with Russia and Brazil.

Nike will be focusing on building its brand around premier customer experiences, product innovation and increasing its retail presence to newer areas. The company has also been focusing on making its marketing and promotional strategy local to India, by winning a 5-year BCCI sponsorship for the Indian cricket team.
Tuesday, February 20, 2007
Source: Business Standard

Consumer Durables

1. Organized retail chains likely to drive PC growth
Personal computers are likely to see a significant growth due to the number of organized electronic stores opening up. PC vendors have been tying up with retail chains such as Big Bazaar, eZone, HyperCity and Croma to sell their products. According to Shuchi Sarkar, head marketing, Personal Systems Group, HP India, "The large format retail chains have emerged as an additional sales channel for us to reach customers."

While at present most vendors are not seeing a growth in sales, the potential of additional sales is immense, especially in the next 5-10 years. According to Anil Philip, Director of Transaction Business, Lenovo India, "Retail has definitely been a growth driver for us. Currently, we see over 60 per cent of Lenovo's sales come from our exclusive and multi-brand stores in the transaction space."
Sunday, February 18, 2007
Source: The Hindu Business Line

Food & Grocery

1. Subhiksha makes plans to go to Nagpur
Food and grocery retailer, Subhiksha is reportedly making plans to open around 24 outlets in Nagpur. Eleven stores are expected to open by end of March, according to several owners of commercial properties in the city. Nagpur has been attracting a lot of big name retail chains lately and Subhiksha will be the fourth such chain to come to the city, after Westside, Big Bazaar and Piramyd.

Most Subhiksha outlets will range from 700-800 sq ft to a maximum of 2,000 sq ft. The company is looking to open outlets in commercial areas in the city. In the state of Maharashtra itself, the company plans to open 180 stores and once complete will move to Phase II of its expansion drive to open stores in the northern and eastern parts of the country in Chandigarh, Punjab, Madhya Pradesh, Uttar Pradesh, Haryana and West Bengal.
Tuesday, February 20, 2007
Source: Business Standard

2. Subhiksha facing stock shortfall due to rapid expansion
Subhiksha Trading Services is facing a severe shortfall of stocks in its stores due to rapid expansion plans. The company has set up around 80 stores in and around Mumbai in the past three months and is not able to keep up with keeping the stores fully stocked, in key categories such as soaps, detergents and certain foods. R Subramaniam, MD of Subhiksha Trading Services, admitted that the company has been facing a shortage of around 20-25% in certain categories in Mumbai stores, as they had underestimated their demand.

Industry sources instead feel that the company who usually only stocks 750-800 SKUs (stock keeping units) for each of its stores, needs to carry a minimum of 1,500 SKUs. The company stocks its stores from its distribution hub at Bhiwandi, outside of Thane.
Thursday, February 22, 2007
Source: The Economic Times

Jewelry & Watches

1. Damas plans 100 new stores by 2008
Damas Jewelry a UAE company plans that has more than 285 stores in 16 countries, said it would be focusing on India in an aggressive manner and would open 100 stores by the end of next year. The company will open 21 of these stores by the end of this financial year. The total cost of the expansion will cost Rs. 1 billion. Damas currently has 10 stores in India. According to Anaggh Desai, CEO of Damas India, “The company plans to aggressively focus on Indian and Saudi Arabian markets this year. The company has already opened ten outlets in India and we plan to add about 21 operational showrooms by the end of the current financial year.”
Friday, February 23, 2007
Source: Business Standard