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
HR News
Government Policy
Sector specific

General Plans and Information

1. Kirana stores happy to give stores to modern format retailers
Not all kirana store owners are worried about their future, some are quite overjoyed at the rise in real estate prices that the retailing boom has brought about and are all to happy to lease out their premises to modern format stores. One of the biggest problems that the fledgling retail industry is facing is the severe shortage of retail space within cities, especially in central areas, where the kirana stores are already established.

So instead of competing with the organized retailer, kirana storeowners are opting to lease space to them, giving them a readymade market and local customer base. Food and grocery retailers like Subhiksha, Spinach and Spencer’s are signing long leases with kiranas that are over 1,000 sq ft in space.
Monday, February 05, 2007
Source: The Economic Times

2. Kishore Biyani speaks about retail in India at lecture
At the 26th Annual Ayaz Peerbhoy Memorial Lecture, Kishore Biyani CEO of Future Group declared “Retail is not rocket science, its just buying from someone and selling it to someone.” Quite in line with his brands and stores, Kishore Biyani was straightforward and clear-cut in his approach on retail. Emphasizing the role of design in finding solutions to problems instead of only relying on case studies, he pointed out that the Future Group was constantly innovating and coming up with solutions to its problems through design.

It’s own design firm Idiom was responsible for creating 26 concepts of which 24 were implemented and received positive responses. The most prominent of the concepts was of the three-day sale called ‘Sabse Sastha Din’ held around Republic Day. In the sales first year, the company made Rs. 1250 million of sales and had 6 million visitors.
Monday, February 05, 2007
Source: The Hindu Business Line

3. Indian retailers are Asia’s most aggressive in real estate
Retailers in India are said to be the most aggressive in pursuing real estate transactions as a method of expanding operations. According to the 3rd annual Jones Lang LaSalle Retailer Sentiment Survey-Asia, which was conducted in three Asian sub-regions, India, greater China and South East Asia, 45% of Indian retailers were expanding rapidly, followed by 27% in greater China and 6% for South East Asia.

Almost two third of retailers surveyed responded that their overall trading would improve in the course of the year, while only 5% felt their business would weaken. Home furnishing, sports apparel, department stores, jewelry stores and food retailers were the most confident on expansion plans.
Tuesday, February 06, 2007
Source: Business Standard

4. Apparel brands face HR shortage
With the growing interest in apparel brands by upwardly mobile and brand conscious consumers, apparel companies are expanding and are facing a severe shortage of front-end staff. The quality of the staff is of great concern to international brands such as Benetton. According to Gagan Singh, managing director of Benetton India, “Companies are not finding the right frontline staff who suit the brand’s profile. There is a need to adopt smart business practices to maximise every rupee on each square feet.”

The retail industry is competing with the BPO industry that offers freshers good job positions and salaries. According to Reetika Dalal, executive at Forbes Gokak, “The youngsters are opting for careers in BPOs and aspire for better treatment and respect at the workplace. They don’t want to be called salesmen. The companies should work on the human resource practices to promote the frontline staff as store managers or area managers depending on their capabilities.”
Wednesday, February 07, 2007
Source: Business Standard

5. New partnerships in retail
Manufacturers and retailers are looking to form partnerships and create brands by working together on promotions, packaging and margins. Co-branded labels have been the basis of discussions between retailers such as Food Bazaar and Magnet, who have stated discussing options with FMCG companies.

According to Kishore Biyani, MD of Future Group, “Collaboration is the way forward. Retailing is an opportunity which both manufacturers and retailers have to explore together.” Food Bazaar has tied up with Ruchi Soya and Dynamix dairy so far and is in talks with other manufacturers in edible oils, food and dairy products. Magnet is also looking to form co-branded products in food, which they feel will be a bit hit in the future.
Thursday, February 08, 2007
Source: The Economic Times

6. Retail majors face pressure to improve margins
The top six retail companies in the country reported an increase in net sales by 46% for the quarter, while net profits only rose 29% for the period. Top line growth was 59% for Pantaloon, 29% for Shoppers’ Stop, 28% for Trent and 43% for Titan, but profits were not as impressive due to rising staff and real estate costs.

Pantaloon Retail reported sales growth of 63% for its value retail segment and 37% for its lifestyle retailing segments, adding Rs. 270 million with its home furnishings concept segment. Interestingly, the growth came from new stores, while older stores growth rates stood at 14% for value retail and 15% for lifestyle retail.
Friday, February 09, 2007
Source: The Economic Times

Big players - plans and investments

1. Aditya Birla Group to operate its retail venture alone
The Aditya Birla Group announced that it will be operating its retail business on its own and not tying up with any international retailer, as was being speculated. The company recently acquired south based supermarket chain store Trinethra, giving it a head start on its competitors. Kumara Manglam Birla, Group chairman said that the company would be announcing its detailed plans in the next two months.
Monday, February 05, 2007
Source: The Economic Times

2. UTV and Future Group in talks to create youth entertainment brand
UTV Software Communications and the Future Group have been talking to jointly launch a retail venture, entailing opening Café Lounges that would be a brand extension of UTV’s youth centric channel that will be launched in June 2007. The company plans to target youth for entertainment, gaming and relaxing atmosphere of a lounge. UTV will use its experience in entertainment and broadcasting, while the Future Group will use its retail experience, to create winning combination.
Wednesday, February 07, 2007
Source: The Economic Times

3. Future Group will now focus on lifestyle and non-food/grocery segments to retain higher margins
The Future Group is fine-tuning its strategy to increase profit margins, by focusing more on the high-margin lifestyle segment. At present, food and grocery contributes to 60% of the total business and lifestyle retail contributes towards 40% of the business. In effect, Future Group is staying clear of Reliance Retail’s ambitious plan for food and grocery retailing.

Margins in the food and grocery segments are usually around 12-15%, while lifestyle product margins are 45-50%. Future Group plans to make the non-grocery segments the bulk of its business in the future. Kishore Biyani, CEO and MD of the Future Group, said, “We are looking at business margins at the end of the day. We have to be in grocery retail which is a significant part of consumer spends, but the business will be clearly coming in from lifestyle retail. Food and groceries get the footfalls.”
Friday, February 09, 2007
Source: The Economic Times

International

1. Euroset, Russia’s largest mobile handset retailer gets ready to come to India
Russia’s largest mobile handset retailer will be opening its outlet in India by end of February. Euroset plans to set up 5,500 retail stores across Indian in the next two years. The company is reportedly in talks with real estate development company Ansals to partner with for its operations in India, although Ansals spokesperson declined to confirm any finalization of agreement between the companies.
Sunday, February 04, 2007
Source: The Telegraph

2. Metro Cash & Carry to open in Mumbai
German retailer Metro AG announced that it would be opening a cash & carry store in Mumbai later this year in Bhandup, an eastern suburb of Mumbai. The company has acquired a 175,000 sq ft area for Rs. 845 million in Magnet Mall. Metro currently has 2 outlets in Bangalore, one in Hyderabad and one scheduled to open in Kolkata in June, making its Mumbai outlet the fifth store for the company in India.
Monday, February 05, 2007
Source: CNN-IBN

3. Wal-Mart CEO Michael T Duke to visit India on Feb 22
Michael T Duke, CEO of Wal-Mart will be coming to India on February 22 to finalize and seal its cash and carry wholesale agreement and a front end retail venture with Bharti Enterprises. So far, the two companies have signed a MoU to explore retail opportunities jointly. Details on the number of stores, locations and long-term strategy of the company for India will be revealed.
Wednesday, February 07, 2007
Source: The Economic Times

4. Bharti, Wal-Mart JV to be formalized by end February
Bharti Enterprises will be going ahead with its joint venture with Wal-Mart, despite getting mixed signals from the government on account of Congress President Sonia Gandhi’s letter of caution an FDI in retail to the Prime Minister. According to Sunil Mittal, Group Chairman of Bharti, “Bharti’s retail venture has no plans for FDI… Current policy allows wholesale and we are following it.”
Wednesday, February 07, 2007
Source: DNA India

5. Wal-Mart, Tesco may lose due to political confusion
Congress leader Sonia Gandhi’s letter cautioning the Prime Minister on opening retail FDI too soon, might have deep repercussions on the retail industry in India. Reportedly formulation of rules and policy consultation on FDI in retail in specific sectors such as stationary, sports goods, building equipment and electronics has now been halted for the present. A senior government official said that until there is further communication from senior leaders, additional sectors will not be added.
Thursday, February 08, 2007
Source: The Economic Times

Regional Trends

1. Ludhiana hops onto the mall bandwagon
Shopping malls and multiplexes are catching on at a fast pace in Ludhiana, which has so far been known for its hosiery and auto parts industries. There are approximately 24 malls being planned and constructed in the city, with a total investment of Rs. 48.75 billion. It is estimated that the average per person monthly consumption is Rs. 1,182.90 in urban Punjab, higher than the national average of Rs. 1,149.52. The key categories of consumption in the state are food and beverages, garments, footwear and communication.
Friday, February 09, 2007
Source: Business Standard

HR News

1. RAI to train educated unemployed youth
The Retailers Association of India (RAI) and the Maharashtra government will be setting up a program to train educated unemployed youth in Maharashtra, belonging to SC, DTNT, OBC and those who are registered with employment exchanges. Starting in February 2007, the association will commence its training of candidates who will be placed with retailers on completion of the course.
Sunday, February 04, 2007
Source: The Hindu Business Line

2. Reliance Retail reworks its HR clauses
Reliance Retail has reportedly reworked its restrictive HR clause due to complaints by senior executives in the company. The company has been hiring top executives at Rs. 30-35 million packages but has placed several severe penalty clauses such as executives cannot join a retailer, supplier, retail client, advertising company or training institute on leaving Reliance Retail. The penalty for disregarding the clause would be two years of gross salary. The company has now changed its rule to put in a two-year limit when executives cannot join rival firms.
Tuesday, February 06, 2007
Source: The Economic Times

3. Reliance hires senior executives from top international retailers
Reliance Retail has hired 30 senior executives specializing in store operations and loss prevention from Wal-Mart. Three executives have been hired for its training team and the remaining 27 are for operations, logistics, distribution, IT in all verticals. Reportedly, the company has been aiming to hire Wal-Mart’s executives and had searched in several countries that the company operates in such as Brazil, Mexico, France, Israel, Thailand, Hong Kong, UK, and the US. Besides hiring from Wal-Mart, the company has also hired senior executives from Tesco, Carrefour, Best Buy and Circuit City.
Thursday, February 08, 2007
Source: The Economic Times

4. Retailers look for talent in rural areas
The search for retail talent is making retailers look deep in the rural areas of the country. While there are no specific figures on the number of people required, the requirement is huge. An average 50,000 sq ft store requires a minimum of 250 people to run it, while at least 10 are required to run a food and grocery supermarket format store. Reliance Retail is planning to have 100 million sq ft of space by the year 2010-11 and the Future Group is planning to double its 30,000 headcount by next year. Future Group prefers to select local population due to knowledge of language and consumer preferences. For its operations in Delhi and Mumbai, the company is looking for talent in the North-East, where knowledge of English is good.

One popular source of talent has been the Livelihood Advancement Business Schools (LABS) that are run by Dr Reddy’s Foundation, which train poor rural high school students in employable skills. McDonald’s, Big Bazaar and Reliance Fresh have all hired manpower from here. Another source of talent is call centers where middle level employees who have good customer service and English skills and do not want to work night shifts.
Saturday, February 10, 2007
Source: The Economic Times

Government Policy

1. Congress President Sonia Gandhi cautions PM on retail FDI
In an unprecedented move, Congress President Sonia Gandhi has reportedly sent a letter to the Prime Minister Manmohan Singh cautioning him on opening the foreign direct investment (FDI) for retail. The main reason for the concern is based on small-scale operators who are likely to be affected by large international retail firms entering the market. So far, the government has been planning to ease restrictions in FDI in specific sectors, such as sporting goods and electronics.
Tuesday, February 06, 2007
Source: Telegraph, Reuters, The Economic Times

2. Congress party, Left party welcome Sonia Gandhi’s letter of concern
Sonia Gandhi’s letter of concern regarding easing FDI regulations in retail has got support not only from other congress workers but also from the Left party. The primary concern is that opening FDI in retail would render millions of small shopkeepers and their employees as jobless.
Tuesday, February 06, 2007
Source: The Economic Times

3. FDI to carry on, despite mixed signals from Congress President
The Indian government will be continuing opening up FDI in retail, despite Congress President Sonia Gandhi’s letter to the Prime Minister, giving mixed signals about easing FDI restrictions. A commerce ministry official said, "The FDI policy is not frozen and we are going ahead with our plans." The ministry has reportedly circulated a draft note to increase FDI to 51% for certain categories, such as consumer electricals and electronic goods, sports good and accessories.
Friday, February 09, 2007
Source: Rediff Money

Sector specific

Apparel & Footwear

1. Raymond launches new brand Notting Hill
Raymond Apparels announced the launch of its new brand for men, Notting Hill, which will be targeting the ready to wear segment in the popular price bracket. Notting Hill will be launched first in Pune, followed by other cities in Maharashtra and then all over India.
Monday, February 05, 2007
Source: The Hindu Business Line

2. Reliance Industries re-launch Vimal stores
Reliance Industries announced that it would be re-launching its Vimal brand in 20 pilot stores, which would sell textiles, ready to wear apparel and offer custom tailoring services. The company has tied up with a tailoring consultant and fashion coordinator Maurizio Bonas, who will guide tailors on contemporary designs, accessories and suit cuts.
Tuesday, February 06, 2007
Source: Business Standard

3. Cottons by Century to increase brand presence
BK Birla’s men’s apparel brand Cottons by Century will be expanding its presence across the country. The brand is for the mid to premium range of garments. There will be 400 new stores opening, taking up 700,000 to 800,000 sq ft of space by 2007-08. There are very few Cottons by Century stores in the eastern regions of India and the company will be opening 70-80 exclusive stores, in cities such as Cuttak, Bhubaneswar, Rourkela and Berhampur.
Friday, February 09, 2007
Source: Business Standard

Food & Grocery

1. Reliance Fresh does better than some kirana stores
Reliance Retail has won over many kirana store owners, with several shop owners doing their shopping at Reliance Fresh stores to resell the products such as edible oil, rice and other items at their own stores. With Reliance Fresh selling fresh vegetables at less than 50% of the price than mandi rates. In less than 10 days that Reliance has been operating in a Delhi suburb, one store has over 3,000 customers a day and sales of over Rs. 400,000.

According to a Reliance Retail executive, “Collection centres for various commodities (potato in Uttar Pradesh and West Bengal, onion in Nasik and so on) are being set up across the country, where we procure directly from the farmers. Cold storage facilities are in place for grading and sorting. Thus, the farmer’s produce, which is local, reaches to national consumers. While ensuring better price to farmers, this also offers value to consumers in terms of quality and price.”
Thursday, February 08, 2007
Source: Business Standard

Pharma

1. Fortis to open health stores
The Ranbaxy Group will be opening 1,000 Fortis health stores across the country over the next five years, with an investment of Rs. 8 billion. The stores will be called Fortis HealthWorld, which will run as 24hr health pharmacies and stores. HealthWorld stores will provide all health related products and services, including prescription and over the counter drugs, allopathic and ayurvedic medicines, health foods, supplements, and health books.
Tuesday, February 06, 2007
Source: The Hindu Business Line