Latest News and Events from the Indian Retail Sector

Weekly Retail News from India

General Plans and Information

1. Malls will not harm mom-and-pop stores
Shopping malls seem to be opening on every corner, but contrary to most people’s assumptions, these retail formats are not likely to harm local mom-and-pop stores, as they too are upgrading their stores. Most kirana (mom-and-pop) stores have already begun upgrading their stores to be more professional and organized.

Last week, Reliance Retail announced its intentions of giving out franchises of its Reliance Fresh stores to certain kirana stores or taking over their stores to convert them into small supermarkets. Most retailers feel that there is enough opportunity for all formats to survive, just as long as they offer some additional or localized service that other stores do not.
Monday, February 26, 2007
Source: The Economic Times

2. Domestic retailers: Wal-Mart, Tesco are different
With so much media attention and the PMO asking for the impact of larger retailers is studied, whether they are international or domestic, several large Indian retailers are pointing out that they are not like Wal-Mart or Tesco. Kishore Biyani, MD of the Future Group, said that the comparison was not apt and that, “The implication needs to be understood in the long term. In terms of size, Wal-Mart is bigger than the total consumption in India. Operating at this scale, puts the company in such a commanding position, that it can even manipulate consumption patterns, something which is obviously not in the best interest of India.”
Monday, February 26, 2007
Source: The Economic Times

Big players - plans and investments

1. Bharti-Wal-Mart plan to start stores by September
The Bharti Group informed the government that it’s joint venture agreement with Wal-Mart would be starting operations in August or September this year. The company has begun hiring people, negotiating with potential customers and conducting market surveys. The company will first set up its back end infrastructure, such as logistics, cold chains, sourcing and merchandising.
Monday, February 26, 2007
Source: The Economic Times

2. Bharti researching using Wal-Mart name
Bharti Enterprises is currently conducting market research on the benefits and negatives of using the Wal-Mart brand name for its retail stores. Bharti and Wal-Mart are in the process of finalizing a joint venture deal where Bharti will look after the front end of the stores and Wal-Mart will take care of its supply chain and logistics support.
Friday, March 02, 2007
Source: Reuters

International

1. International retailers to account for 40% or retail investors
The ICICI Property Services-Technopak Advisors white paper has some interesting figures for the retail industry. International retailers such as Wal-Mart, Tesco, Metro and Carrefour will account for 40% of the $30 billion estimated investment in the next 4-5 years in organized retail. The balance of the investment is shared by leading Indian retailers and upcoming retail companies. An estimated 94% of the $30 billion investment will be taking place in urban markets, with over 60% going to the top 25 cities of India.

As expected, food and grocery will get the maximum investment in hypermarket, cash-and-carry and supermarket formats. Besides malls, it will be high street locations that will play a major role in the apparel category. Furniture and consumer durable categories are likely to lead to specific real estate developments such as specialty stores.
Sunday, February 25, 2007
Source: The Economic Times

2. Louis Vuitton to open corporate office in India
Luxury goods firm Moet Hennessy Louis Vuitton (LVMH) will most likely be opening a corporate office in India in an effort to monitor its existing operations as well as to explore new options in the Indian retail sector. The company currently has 2 offices each in Mumbai and Delhi. Last week, the company announced that its makeup brand Sephora will be coming to India.
Sunday, February 25, 2007
Source: DNA Money

3. Home Retail to expand to India and Ireland
UK’s Home Retail Group announced that it will has signed an agreement to develop the Argos brand in India via a franchising arrangement. In a separate deal, the company will be buying stake in Home Store + More, a retailer in Ireland. For its India expansion, the company has tied up with Shoppers’ Stop and HyperCITY Retail India Pvt., to set up a brand called HyperCITY-Argos, for home and housewares. The first store will be opened in Mumbai by the end of the year. Argos is one of the leading Internet retailers in the UK.
Monday, February 26, 2007
Source: The Economic Times

4. Carrefour on the verge of signing deal to come to India
Carrefour announced that it had been holding talks with several potential partners in its effort to open retail stores in India and is likely to sign a deal in a few months time. One of the most prominent potential partners that the company has met is the Bombay Dyeing Group.
Tuesday, February 27, 2007
Source: Yahoo News

5. Office Depot reportedly holding talks with Reliance Retail
Office Depot and Reliance Retail are reportedly holding talks to launch around 250 standalone stationary stores. If the agreement goes through, the retail chains will open the stores by 2010. Rival firm Future Group has already formed a joint venture between its subsidiary, Future Office and Stapes for a B2B and cash-and-carry operations.
Wednesday, February 28, 2007
Source: Kamcity News

Regional Trends

1. Kerala retail is booming, but where are the large retailers?
Consumers in Kerala are flush with money, with high amounts of forex remittances, stores everywhere are full of people spending money, but there is no sign of the large retail groups. Small towns in Kerala are booming, growing faster and faster, thanks to money coming in from the gulf, but there are still very few organized retailers in the State.

The most prominent retailers are Varkeys in Kochi and Spencer’s in Thiruvananthapuram, and the Margin Free Markets. While Varkeys and Spencer’s are supermarkets, medium sized stores at best; and Margin Free Market is a discount store chain. The potential of growth in the consumerist state is simply huge, although consumers here are very focused on price as the deciding factor in making a decision.
Wednesday, February 28, 2007
Source: The Hindu Business Line

Support Industries

1. Retail boom pushing up prices of warehouses
The retail boom in India is not just pushing up prices of malls and high street retail spaces, but also for warehouses, which are seen as a rising business opportunity, since all international retail firms that are planning to come to India are interested in doing both retail as well as wholesale trade. Several realty firms such as DLF, Unitech, Ansals, TDI, Omaxe etc have already started talking to retail chains for this purpose.

As the industry gets more organized and systemized, it is estimated that warehouses and cold storages of close to 5 million sq ft will be needed by the year 2010. According to Kamal Taneja, MD of TDI, “Warehousing and logistics are clearly the backbone for the growth of organised retail in the country and will throw up huge business opportunities, particularly in tier II and III cities. Owing to very limited space in larger cities, retailers will be able to keep the lowest possible stock on shelf.”

Industry sources report that prior to even the signing of the Bharti-Wal-Mart deal, representatives of the companies have been scouting for warehouse locations. While Tesco and Carrefour have not made definite plans for their front end retail, they are both planning to enter the Indian market via the cash-and-carry route, since it is the only way to bring equity when they enter the market. When the FDI restrictions are eased, these retailers will be in a position to easily switch to regular retail formats such as hypermarkets and supermarkets, having already taken care of supply chains and logistical issues.
Tuesday, February 27, 2007
Source: The Economic Times

HR News

1. Top retail executives leaving wholesale
There’s another major upheaval going on at several retail firms as executives leave before or get poached, before even their retail operations have got off the ground. Some of the executives who have left companies include COO of Pantaloon Ved Prakash Arya, HR Head of AVB Retail Vijay Kashyap, who is relocating to Australia, a senior VP at Subhiksha Abhijit Sanyal and V Nagaprasad, both of whom will be joining Reliance Retail.

At Wal-Mart, Randy Guttery, cash-and-carry operations head and Lance Retig, senior executive left the company last week. Other high profile resignations include Rajeev Karwal who left Reliance Retail several months ago and G Shankar, CEO of Lifestyle International left late last year.
Monday, February 26, 2007
Source: The Economic Times

Unique formats

1. Reliance to offer car servicing
Reliance is planning to start offering servicing for automobiles at its hypermarkets and supermarkets. The company has been in advance stages of talks with Corghi SpA, although a Reliance spokesperson did not comment on the plan. Corghi is a leading manufacturer of tyre changers, wheel balancers, wheel aligners, lifting and testing equipment.
Sunday, February 25, 2007
Source: The Economic Times

2. DSCL plans to tie up with retailers
DCM Shriram Consolidated Ltd is planning tying up with several retailers to source fruits and vegetables. The company has already sourcing produce to Food Bazaar, Subhiksha and Spencer, and is interested in tying up with additional retailers. According to Ajay S Shriram, chairman of DSCL, “We are working at strengthening the supply chain so as to achieve scale in this segment.” The company has set up a warehouse in Kota, Rajasthan.

The company sees sourcing and supplying produce to retailing stores as an extension of its work in its rural retail initiative, Hariyali Kisaan Bazaar, where the company provides a meeting and learning ground for farmers and a place for them to purchase agricultural goods and services.
Monday, February 26, 2007
Source: The Economic Times

Government Policy

1. ICRIER will study the impact of large retailers on kirana stores
The Prime Minister’s Office (PMO) request that the impact of large retailers be studied has led the commerce and industry ministry to appoint ICRIER to study its effects on the domestic retail industry, with special emphasis on the impact on small mom-and-pop stores. The study will focus on both the effects of large domestic retailers as well as the likely impact of international firms like Wal-Mart and Tesco will have on the market.

The depth of the study will be studied with regard to farmers, employment, dislocation, prices as well as the small-scale industry. Kamal Nath, the commerce and industry minister emphasized that the study was for understanding the impact of large vs. small retailers and not foreign vs. domestic retailers.
Wednesday, February 28, 2007
Source: The Economic Times

2. Increase on service tax-education cess will hurt retailers’ profit
The new Budget has increased the service tax and education cess, which is likely to affect retailers’ profit earnings by approximately 1 %. Larger retailers will probably see their profit margins dip by 0.75% will medium and small neighborhood stores will see a dip of 0.25%. The impact will vary from retailer to retailer and also on the location of the store.
Saturday, March 03, 2007
Source: The Economic Times

Sector specific

Apparel & Footwear

1. Puma launches denim line
German sports brand Puma and its Indian division Puma Sports India, launched a line of jeanswear in India. The Puma-Evisu line is in collaboration with the Evisu designer denim brand and will offer a denim wear for both men and women. Besides being a sports brand, Puma has been expanding its product offerings to include several lifestyle and apparel items such as trousers, cargos and t-shirts. The company is one of the newer entrants to the Indian market, having started in 2006, but aims to become a desirable sports-lifestyle brand in the Indian market. There are 8 exclusive Puma stores at present, in Chennai, Bangalore, Delhi and Mumbai, and will be setting up stores in Kolkata and other cities in the North-east by the end of 2007.
Wednesday, February 28, 2007
Source: Business Standard

2. Brand Factory to open additional stores
Future Group’s discount apparel division, Brand Factory will be opening 6 stores in the coming 3-4 months. The company has stores in Bangalore and Hyderabad at present and will be opening in Ahmedabad, Pune, Kolkata and a second outlet in Bangalore. Brand Factory specializes in offering branded products such as Reebok, Levi’s Pepe, Wrangler, Provogue, Van Heusen, Esprit, Arrow and more at factory-discounted rates. The value retail segment is estimated to be worth between Rs. 350-400 billion and is said to be growing at 20% per year.
Friday, March 02, 2007
Source: The Hindu Business Line

Food & Grocery

1. Café Coffee Day considering expanding using cluster model
India’s most popular café chain, Café Coffee Day (CCD) which is owned by amalgamated Bean Coffee Trading Company is considering expanding using a cluster model, where it would open 3-4 stores in a locality, a method that would increase visibility. The company plans to open 20 stores to its international locations as well this year. It currently has 2 stores in Vienna, Austria and one in Karachi, Pakistan and is looking to enter markets in West Asia, Bangaldesh, Switzerland and the Czech Republic, along with additional stores in Austria.

Monday, February 26, 2007
Source: Business Standard

2. Café Coffee Day likely to become a separate identity
Amalgamated Bean Coffee plans to spin off its café division, Café Coffee Day, to become a separate entity altogether. According to reports, the company is being segregated to set it up from becoming a listed company in three years time, by when it is expected to reach more than Rs. 8 billion.
Tuesday, February 27, 2007
Source: Business Standard

3. Reliance Retail to increase number of stores in Andhra Pradesh
Reliance Retail started its Reliance Fresh retail venture in Hyderabad in December and announced that it will expanding its business in Andhra Pradesh, increasing its stores with four new stores making the total number of stores in the city 25. The company opened stores in several tier II cities such as Vijaywada, Vishakapatnam and Guntur last month.

With these new stores, Reliance Retail will have a total of 63 outlets in the country, with 35 stores in Andhra Pradesh, 9 in the NCR area, 7 in Jaipur and 12 in Chennai. The company has also been busy creating backward supply chains and had tied up with farmers in various parts of the country for supply of produce.
Friday, March 02, 2007
Source: The Economic Times