News, Views and Events from India’s Booming Retail Sector

Weekly Retail News from India

General Plans and Information
Big players – plans and investments
International
Support Industries
HR
Unique formats
Government Policy
Sector specific

General Plans and Information

1. Eleven retailers gearing up for IPOs
It is estimated that 11 retailers are gearing up to offer IPOs this year, raising approximately Rs. 20 billion. According to market monitoring firm, Prime Database, retailers such as Vishal Retail, Ebony Retail, Great Wholesale Club, Hidesign, Hotspot, Koutons, Landmark, Maheshwari Mega Ventures, Multiple Zones, Radhakrishna Foodland and Talwalkars are all planning IPOs.

The domestic retail sector is so attractive and full of opportunity that retailers just cannot afford to give it a miss. In the 2006, besides Gitanjali Gems and Kewal Kiran Clothing, there weren’t any major IPOs. In 2005, there were several mega IPOs including Shoppers’ Stop, Provogue, Piramyd, Bombay Rayon Fashions and Celebrity Fashions.

According to Arvind Singhal, Chairman of Technopak Advisors, “Smaller players now have to compete with bigger players entering the market. When they realise their own funds and bank credit is insufficient for expansion, they go for IPOs. The existing retail companies are giving handsome returns. That would be another driving factor.”
Tuesday, January 23, 2007
Source: Business Standard

2. Retailers upbeat on profits
In its third annual Retailer Segment Survey-Asia, Jones LaSalle reports that retailers are upbeat due to economic growth and rising incomes in Asia and are planning to expand aggressively. Over 95% of retailers in India believe that their turnovers will increase in the coming year and over half expect improvements in profit margins.

Over 92% of retailers surveyed said that they have aggressive expansion plans in the next year, with increasing the number of stores being the first choice and increasing product and service range as the second favorite option.
Tuesday, January 23, 2007
Source: The Hindu Business Line

3. Retailers seek winning fashion formula
Industry leaders feel that domestic retailers are overlooking the immense talent that India’s fashion industry has, in a quest to go global. The overall feeling is that retailers should look to establish their own identity and connect with local consumers instead of focusing on the west.

At the Images Fashion Forum, Hem Chandra Javeri, co-chairman of Fashion Alliance and president of Madura Garments, “It is a challenge for all retailers on how the industry can drive the economic growth and make it relevant to Indian consumers.” Instead of following global fashion seasons, we need to focus on what is relevant to the Indian consumer.
Wednesday, January 24, 2007
Source: Business Standard

4. Adaptation critical to global retailers’ success in developing countries
Speaking at a discussion on “Innovation at Retail” at the World Economic Forum, the Secretary for the Commerce and Industry ministry, Ajay Dua said that global retailers must adapt different business models to be successful in developing countries. He added that each country required a “unique country characterization” instead of using the same strategy that has worked elsewhere.

On the peaceful co-existance of organized retail and mom and pop stores, he said, “While organised retail formats in all the emerging markets are growing, given the rise in disposable incomes and rapid additions to the middle class, they will have to co-exist with the traditional mom-and-pop stores which have their own place.”
Saturday, January 27, 2007
Source: The Economic Times

5. S Kumar’s retail division to be listed in 3 months
S Kumar’s retail venture Brandhouse Retail will be going public in the next 3-4 months. The S Kumars Nationwide Ltd (SKNL) board has approved that Brandhouse will be acquired and then demerged into a separate entity. The company had decided to buy BrandHouse Retail, which was priced at Rs. 129.5 million, earlier this month.
Saturday, January 27, 2007
Source: The Economic Times

Big players – plans and investments

Bharti Enterprises

1. Bharti aims to start operations by August 15, 2007
Bharti Enterprises is well on its way to set up things to start operations by August 15, 2007 and has started looking for property across the country. At the World Economic Forum, Sunil Bharti Mittal, Chairman and managing director of the Bharti Group, said "Our desire is to start the retail trade and cash-and-carry business by August 15, but it will definitely be done before the end of this year."

Bharti Enterprises will be setting up a retail chain under a franchise agreement with Wal-Mart. It will also be setting up a cash-and-carry business with Wal-Mart it has set up a new equal partnership company has been formed, which will take care of transportation, cold chain and back end work.
Wednesday, January 24, 2007
Source: The Hindustan Times

2. Bharti not affected by high real estate prices
While most retailers’ expansion plans have been affected by high real estate prices, Bharti Group’s chairman and managing director, Sunil Mittal said that the high cost factor of real estate will not impact its plans. While he admitted that the rising salaries and real estate costs had been discussed even during talks with Carrefour and Tesco, the company will work around it. The company has already started its back-end operations, such as setting up transportation, supply chain and warehousing aspects.
Thursday, January 25, 2007
Source: The Times of India

Future Group

1. Kishore Biyani receives fashion icon award
Kishore Biyani, the founder and chairman of Pantaloon Retail (India) Ltd, was awarded an Image Fashion Retail Icon of the Year at the Lycra Images Fashion Forum 2007. The awards are one of the foremost awards for the Indian fashion and retail industries. The Most Admired Fashion Company of the Year was given to Madura Garments, for its brands Van Heusen, Allen Solly and Louis Philippe. The Fashion Retailer of the Year award was once again awarded to Shoppers’ Stop. The Fashion Brand Professional of the Year was given to Sanjiv Mohanty of Benetton India.
Thursday, January 25, 2007
Source: Yahoo News

2. Big Bazaar’s annual promotion brings in the crowds
The Future Group’s hypermarket division, Big Bazaar is pulling out all the stops for its annual ‘Sabse Saste 3 Din’ promotion from Jan 26-28. Products from categories such as apparel, furniture, electronics, food etc will be sold at their lowest possible prices. The company netted Rs. 430 million from 24 Big Bazaar outlets during its three day sale last year. This year the company is expecting one million footfalls in the Big Bazaar and Food Bazaar stores.

Due to the large number of customers who come for the sale, Big Bazaar will be getting some help in crowd control by the police. To ensure that no one is waiting in lines at cash counters, the company has set up 250 cash counters in each of its 43 Big Bazaar stores. It has also widened the aisles to de-congest them and moved certain products that are not on special offer.
Friday, January 26, 2007
Source: The Hindu Business Line

Reliance Retail

1. Reliance Retail to tie up with international sportswear companies
Reliance Retail will be forming agreements with international sports brands such as Nike, Reebok and Adidas, to sell sports apparels and footwear under the Reliance brand name. Its brand will be targeted at different customers so as to differentiate from the established brands and also to not compete with them. Reliance will also supply functional yarns to the vendors of the international sports brands to produce the Reliance brand. This co-branded strategy is likely to boost sales of these footwear companies, from $50 million to $75 million.
Tuesday, January 23, 2007
Source: The Financial Express

2. Reliance Retail opens in Chennai
Reliance Retail opened 12 Reliance Fresh stores in Chennai, its third city after Hyderabad and Jaipur. The company is marketing its Fresh stores as neighborhood stores, which will stock fresh fruits and vegetables, food staples and grocery and dairy products. Fresh stores will stock roughly 150 products and target approximately, 3,000 households in the immediate vicinity of 1-2 kms.

At the opening of the stores, Gunender Kapur, Head of Reliance Retail addressed a press conference, where he said that, "We are developing the Reliance Fresh chain as a neighbourhood food store, with each store coming up between 2,000 sq ft to 4,000 sq ft of space. We will be relevant for all income groups in a neighbourhood." The company is also introducing its own private label products under the Reliance Select brand, which is at present only for stapes and will be added for other categories too.

In total, the company now has 40 stores in three cities. Reliance Retail will be opening stores in Vijaywada and Vishakapatnam also this week. Procurement centers have been established in Thiruvallur, Maduranthakam, Oddanchatham and Kodaikanal for agricultural produce such as vegetables, which are then taken to its processing centre at Puzhal, which is located north of Chennai.
Wednesday, January 24, 2007
Source: The Economic Times, Nasdaq.com

3. Reliance Retail to open in NCR
Reliance Retail will be opening it’s much anticipates stores in the NCR (National Capital Region) on Monday, January 29, 2007. The company will be opening 9 Reliance Fresh stores in areas such as Ghaziabad, Faridabad, Gurgaon and Noida. Of its total investment of Rs. 250 billion, Reliance Retail is earmarking Rs. 8o billion for stores in the NCR, where it plans to open 400-600 stores, covering a total of 50 million sq ft of space. Earlier in the month, the company had spent around Rs. 15 billion acquiring more than a dozen commercial locations in the area.
Saturday, January 27, 2007
Source: Business Standard

Birla Group

1. Birla’s rope in former Carrefour executive to head its hypermarket business
The Aditya Birla Group has brought in Russell Berman, formerly with Carrefour to head its hypermarket business. Barman has been hired from a state run Chinese retail company, which he joint after a long stint with Carrefour. He is on the growing list of expats that are now coming to India to work with retail companies.

The Birla’s retail venture is headed by Sumant Sinha and more than a 100 executives have already been hired, including heads of several sections. The company has hired several top level management from Shoppers’ Stop and is now hiring other staff from rival retailers. Some of the entrants include Darshan Mistry, who joined as vice-president (projects) from Lee Cooper International and Vijay Kashyap, who joined from Planet M.
Monday, January 22, 2007
Source: The Hindustan Times

Tata Group

1. Tata’s Star India Bazaar to be transferred from Trent to Infiniti Retail
In an effort to restructure its retail business, the Tata Group will be transferring its hypermarket chain, Star India Bazaar from Trent to Infiniti Retail. The signals the company’s intention to expanding its tie- up with Australian retailer Woolworths with which it has formed a JV for Croma which focuses on consumer durables retail. With this move, Trent will only run its 24 Westside department stores and Landmark, where it has a 76% stake. Landmark is one of the largest books and music retailers in the country.
Friday, January 26, 2007
Source: The Financial Express

International

1. Argos, K Raheja Corp close to signing deal
The UK’s leading catalogue retailer, Argos is reportedly on the verge of signing a deal with the K Raheja Corp to set up a chain of stores in India. Argos was founded in 1973 and sells general merchandise and products for the home from over 670 brands via catalogue in the UK and Ireland.
Tuesday, January 23, 2007
Source: The Economic Times

2. Carrefour chief on the lookout for partners, AVB group might be possible partner
France’s largest retailer, Carrefour’s chairman and CEO Jose Luis Duran is currently in India and will probably meet possible partners to tie up with in India. According to reports, the company could be meeting the Aditya Birla Group to discuss possible partnerships, although its company spokesperson denied any such thing.

Carrefour’s chief also met the commerce and industry minister, Kamal Nath and industry secretary Ajay Dua, possibly to understand the government’s rules pertaining to FDI. Like several other international retailers, Carrefour is looking to India to provide the growth in the company. At present, its international divisions only account for 8% of its $9 billion revenues. The retailer recently opened its 90th hypermarket in China.
Wednesday, January 24, 2007
Source: The Economic Times

3. Wal-Mart starts its hiring process
Wal-Mart has started hiring for its much anticipated retail venture and its head Raj Jain has started the picking executives from his former firm, Whirlpool India. So far four executives have been hired, and more are likely to join from the white good major. Besides Whirlpool India, a senior executive, P Murali Krishnan, the head of the foods department of Metro Cash and Carry India has been hired.

Wal-Mart has still not made any official announcement if Raj Jain will be heading its operations in India as head of its cash and carry business, while Bharti has announced that Vinod Sawhney will be its CEO of the front-end operations.
Thursday, January 25, 2007
Source: The Economic Times

4. Carrefour in talks with ADAG
French retailer Carrefour is reportedly in talks with Anil Ambani’s Anil Dhirubhai Ambani Group (ADAG) to set up its operations in India. Carrefour has shown keen interest in coming to India and has met several of the country’s leading industrial groups, including Bharti Enterprises, which later tied up with Wal-Mart, Bombay Dyeing, Godrej, and Dubai based Landmark Group.

ADAG declined to comment on the reports but if this tie up were to happen, it would lead to direct competition between the Anil Ambani and his brother Mukesh Ambani who has already started on retail venture with great gusto, opening 40 stores in Hyderabad, Jaipur and Chennai and opening another 9 stores in the NCR on 29th January 2007.
Saturday, January 27, 2007
Source: The Economic Times

5. Carrefour interested in ‘tactical acqusitions’
Jose Luis Duran, CEO of Carrefour announced that the company was looking for “tactical acquisitions” in India and Russia. The French retailer has been keenly looking for a partner for its operations in India but has not been successful as yet. The CEO is wrapping up a three day tour to India and his visit could mean that it has been scouting for companies to target for acquisition.
Thursday, January 25, 2007
Source: DNA Money

Support Industries

1. Provogue to establish 6 malls
Provogue India announced that it will be setting up 6 malls in India through its JV Prozone Liberty. The malls will require an investment of Rs. 15 billion all together. The JV has decided on the location of malls in Aurangabad, Mysore, Indore, Jaipur and Hyderabad. The company will be developing them as a large complex with hypermarkets, specialty stores, supermarkets, multiplexes, book stores, exclusive brands etc.

As of now, the malls will be under the Prozone name and will lease property in its malls instead of sale. Provogue will also be starting is discount retail format to be called Promart, which should start by year end and reach 20 stores by 2009. These discount stores will sell close to 70 brands in apparel alone. Promart’s will primarily be in tier II and III cities, with each store averaging 50,000 sq ft of space. Promart’s first store will be coming up in Ahmedabad, and then in cities such as Pune, Jaipur, Kohlapur and Nasik, where the company is still looking for properties.
Friday, January 26, 2007
Source: Business Standard

HR

1. Former Yum! Executives plan new venture
Ajay Bansal, the former Business Development Director at Yum! Restaurants has hinted that he might be starting a new venture with a couple of top executives who have also left the company recently. According to him, a new venture in the restaurant business might be started along with Sandeep Kolhi, India Head of Yum! Restaurants and Anupam Bhattacharya, CFO of Yum! Restaurants.
Monday, January 22, 2007
Source: The Hindu Business Line

2. Whirlpool loses three executives
Whirlpool is facing severe HR shortage all of a sudden with several of its senior executives putting in their papers for rival companies. Four executives from Whirlpool will be joining Wal-Mart India, with Rakesh Tiwari, a senior manager at the company joining as head of administration at Wal-Mart. According to sources, the former head of Whirlpool India and now Wal-Mart’s head for emerging markets, Raj Jain has been instrumental in recruiting executives that have worked with him. Raj Jain’s former executive assistant will be joining Wal-Mart in the operations training wing, along with another former Whirlpool executive.

Once the Bharti-Wal-Mart tie up begins to hire in earnest, another round of poaching will take place. Several key posts in Wal-Mart have been filled by international retail executives, such as Randy Guttery who is the taking care of operations. Lance Rettig will be in charge of the entire administrative area for India. The company is yet to find its CFO and heads for sourcing and merchandising departments.
Thursday, January 25, 2007
Source: The Economic Times

3. Piramyd CEO to join Future Group
Bipin Gurnani, CEO of Piramyd Megastore has reportedly joined Future Group as CEO of its Business Development Joint Venture. He became CEO after Kris Iyer left the company in early 2006. Bipin Gurnani joined Piramyd in 2001 and became COO in 2005, with responsibilities of operations, buying, merchandising and logistics for Piramyd Megastore, its department store format and TruMart, its supermarket and convenience store format.
Wednesday, January 24, 2007
Source: DNA Money

Unique formats

1. India’s dollar stores
As major retailers such as Wal-Mart, Tesco and Carrefour make plans to come to India, a US retailer My Dollarstore is already in India and is doing unexpectedly well. While US dollar store chains are located in low-rent strip mall, My Dollarstore lets up shop in prime locations and targets big spenders. Prices at My Dollarstore are higher at $2 instead of $1charged at US stores.

My Dollarstore opened in Mumbai in 2004 and is run by Sankalp Retail Value Stores. Its customers are people who are already familiar with American brands, from bringing home products such as Alberto VO5 hair conditioner, Kellogg’s Pop Tarts and Doritos chips.
Tuesday, January 23, 2007
Source: The Wall Street Journal

2. Domestic firms look toward rural retail segment
Domestic retailers are planning huge investments to set up rural retail chains. Over 60% of India’s 1.09 billion population lives in rural area, so it only makes sense to market to these customers. Several companies had made their initial foray into rural retail in 2002-03 and have been pleased by the success of their test models.

DSCL opened its first Hariyali Kisan Bazaar in 2002 and has seen its revenues climb from Rs. 15-20 million per store then to Rs. 50-60 million now. Another pioneering company in the rural sector, ITC has seen its Choupal Saagar grow to 12 stores in Madhya Pradesh, Uttar Pradesh and Maharashtra.
Wednesday, January 24, 2007
Source: Business Standard

Government Policy

1. ‘Retail FDI will not cause unemployment’
At Retail Summit 2007 in Bangalore, Vikas Garg, Senior Consultant with Technopak Advisors Pvt Ltd, said that the retail revolution is going on, no matter if FDI in retail is approved or not. The two day summit was organized by the MATS School of Business and had industry experts, retailers and academy related participants.

Speakers emphasized that retail FDI will not lead to unemployment or closure of smaller store keepers, as is thought of by most small kirana store owners. Vipul Parekh, Vice-President of Merchandising at Indiaplaza.in, added that customers are now looking to buy the cheapest and biggest products in the quickest manner possible. Consumers are switching to organized retailers due to major advantages such as lower prices and more standardized services and products.
Sunday, January 21, 2007
Source: The Hindu Business Line

Sector specific

Apparel & Footwear

1. Provogue raises Rs. 1.46 billion
Provogue India Ltd announced that it had raised Rs. 1.46 billion in preference shares with 6 investors at Rs. 450 a share. The six investor companies are New Vernon, Blackstone, Fidelity, Genesis Capital, Artis Capital and Liberty International, who have bought 3.25 million shares of the company. According to a statement released by the company, the shares will be locked in for a year.

Provogue has recently tied up with Liberty International to set up a retail infrastructure venture, where Liberty had bought 25% of Prozone, a division of Provogue, for Rs. 2.02 billion. According to Mark Rubin, CFO of New Vernon Capital, “Provogue with its brand strengths and the knowledge and experience from its strategic partners is ideally poised to lead growth in the branded retail and shopping mall development space.”
Monday, January 22, 2007
Source: The Economic Times

2. Technocraft Industries to tie up with major retailers
Technocraft Industries announced that it will be tying up with several major retailers such as Wal-Mart, Brand Factory and Reliance to market its Haute Chilli apparel brand. The company is also hoping to bring in at least 100 franchisees by next year for Haute Chilli and its other brand. The company is looking to see a turnover of Rs. 1 billion this year, of which Rs. 15 million would be profit.
Tuesday, January 23, 2007
Source: Business Standard

Consumer Durables

1. Small consumer durable retailers unite to fight competition from big retailers
Consumer durable retailers such as Viveks, Vijay Sales and Kohinoor are gearing up to face the competition from firms such as the Tata Group’s Croma and upcoming consumer durable focused formats from both Reliance and Pantaloon. According to Mazyar Kotwal, Senior Manager, Advisory Services at KPMG, "Big players bring with them purchasing power. They have the ability to negotiate better prices with the manufacturers, they have more volume and therefore sell at the best price to the end consumer."

Smaller retailers are now uniting to form a nationwide network. Nilesh Gupta, MD of Vijay Sales, describes the arrangement as sharing ideas, buy products from manufacturers as a group and have a common in-store brand that is common across the country. Retail margins are as low as 10% in the consumer durable segment, so it is crucial to be extremely competitive at sourcing products.
Wednesday, January 24, 2007
Source: CNN-IBN

Food & Grocery

1. Nirulas to open outlets in new formats
Delhi’s most famous fast food chain, Nirula’s is shaking things up. The company that has long been the leader for fast food in north India, will be launching three new formats to connect with niche customers. Nirula’s Express will be its takeaway format and will be in outlets of 200 sq ft, located in airports, railway stations, malls and metro stations. The first of these outlets opened at the Delhi Airport earlier this month.

Nirula’s food courts will on average be 400 sq ft and will be located in malls, movie complexes and large commercial complexes. The first of these is slated to come up in Gurgaon soon. The third new format are Nirula’s ice cream kiosks that will be located in air-conditioned locations and would sell sundaes, shakes, sodas, tea and coffee, besides ice creams.

Nirula’s currently has 42 outlets, all in north India. The company was acquired last year by Navis Capital Partners, a Malaysian based private equity firm, and Mr. Kuckreja. The company also operates hotels and restaurants under the Nirula’s name and casual dining outlets under the Pot Pourri name.
Monday, January 22, 2007
Source: The Economic Times

2. Private labels bring in the big bucks
Supermarkets and hypermarkets such as Food Bazaar, Spencers and HyperCity have been pushing their private labels, leading to these lesser known brands to become acceptable by the consumers and even preferable to some consumers. Retailers are now keeping 20-40% of shelf space for private labels. Once only in the food section, private labels are now appearing on other aisles for items such as jams, sauces, soaps, home ware among other items.

Subhiksha has private labels only for its food and grocery section, where it accounts for 20% of its total sales. Another south based retail chain, Trinethra Super Retail, on the other hand, has 70% private goods for goods such as apparel and home linen.
Thursday, January 25, 2007
Source: The Hindu Business Line

Jewellery & Watches

1. Titan plans a prescription eyewear brand
Titan Industries announced that it will be testing an eyewear and prescription glasses format by March 03, 2007 at some of its World of Titan stores. Titan currently already has a range of sunglasses and frames under the Fastrack brand. The company is yet to name its proposed eyewear brand. Titan will be going at the venture alone and not partnering with any company to make its glasses, frames or lenses.
Monday, January 22, 2007
Source: The Hindu Business Line

2. De Beers to open top end store in India
The De Beers diamond company announced that it will be opening an exclusive store in India and also expanding its Nakshatra brand that is currently being promoted by the Diamond Trading Company, a marketing division of De Beers. According to Jonathan Oppenheimer, head of De Beers producer relations in Africa, 'We have a 50:50 venture with Moet Hennessy Louis Vuitton to retail exclusive diamond jewellery. We have these stores in six countries from the US to Japan. We now have plans for one in India.'
Saturday, January 27, 2007
Source: Yahoo News