Buy our Omnibus edition featuring 4 reports covering the fast growing retail scene in India. Updated March 2008. The reports begin with an overview of Retail in India. Your purchase includes 3 additional reports on:
1. Grocery and Food Retail
2. Growth of Malls in India
3. Growth of Single Brand Stores in India
General Plans and Information
1. Expand with caution is the mantra for branded apparel firms
Branded apparel companies are a cautious lot. Even though the segment is growing at 20% a year, high property prices and rentals at malls are placing expansion plans on the back burner. According to Bela Gupta, CEO of Kewal Kiran Clothing, “In the past two years, the mall rentals have increased 40 per cent, affecting the profitability of the brands and their margins. Despite taking calculative risks, no brand would be able to survive beyond a certain limit with a weaker business viability.”
While rentals have increased substantially, sales are not increasing in the same proportion, leading to small and medium sized retailers and manufactures to delay their expansion plans and shift their focus elsewhere such as smaller and newer cities for the time being. Subrata Siddhanta, business head for Cottons by Century, explains that, “Real estate prices in Mumbai have shot up from Rs. 60 per sq ft to Rs. 250 per sq ft. Mall rentals, too, have risen by about 50-60 per cent. Currently, rentals constitute about 30 per cent of the gross margins. And sales are not expected to rise dramatically.”
While malls and shopping centers are coming up in the larger cities in the north, the high prices are sure to put lots of retailers off from taking space there. Several retailers are looking to smaller towns, but these towns don't always have any good high street locations to invest in, which could lead to delays in the reach of the retail industry. Tuesday, January 16, 2007
Source: Business Standard
2. Organized retail giving farmers incomes a big push
Farmers in Punjab are expected to significantly increase their incomes with the arrival of large retailers on the agri-scene, who are creating a huge demand for fresh fruits and vegetables. Several companies such as ITC, Reliance and Subhiksha have signed agreements with farmers to source products directly from them. According to an official at Subhiksha, “As there are less intermediaries between us and the farmers they get higher returns on their produce.”
Around 70 farmers in Sangrur, Hoshiarpur, Fatehgarh Sahib and Ropar have turned to net-house cultivation to produce high-value and off-season crops that are in high demand with the retailers, with technical help from the Punjab farmer’s commission and financial help from the State Bank of India. In Nawashahar and Jagraon, Centurion Bank of Punjab has teamed up with Chambal Fertilizers to finance 200 farmers to grow potatoes. Wednesday, January 17, 2007
Source: Business Standard
3. NRF honors Kishore Biyani
The National Retail Federation (NRF) announced its list of honorees of its annual retailing awards at its annual convention. Kishore Biyani, founder and managing director of Pantaloon Retail (India) Ltd was awarded the International Retailer of the Year award. The NRF is the leading body of leading retailers of the world. Tracy Mullin, president and CEO of NRF, said, “Retailers who can keep pace with consumer demand deserve all the credit in the world.” At the convention, Kishore Biyani ruled out talks with fast food chain Burger King, as has been reported in the media. Wednesday, January 17, 2007
Source: Display and Design Ideas, CNN-IBN
4. The reality or retail in India
Even though everyone is going crazy about the retail boom in India, just as there are several Indias, there are also several sides to the retail boom. While specific segments such as the value and discount retail are thriving, other segments such as middle to high end retail are not doing so well. Walk into any mall during the week and you will see stores with barely any customers at all, while stores such as Big Bazaar are busy at all times of the day.
This is the paradox that is India. While real estate developers have been going crazy setting up malls, there aren’t enough takers as yet, and definitely not enough buyers. A great shake-out awaits the Indian retail industry. According to Deepankkar Sanwalka, KPMG’s executive director, "If the spending power of consumers is high in a locality, it could sustain two-to-three large players."
Organized retail only accounts for 3% of the total retail industry as yet and is estimated to grow to $64 billion by the year 2015. As a result, the retailing space in the country will also rise by 15-20% by 2010. Friday, January 19, 2007
Source: Rediff Money
Big players – plans and investments
1. Government finds no fault in Bharti, Wal-Mart tie up
The Bharti and Wal-Mart deal has been examined by the Indian government who has found that it conforms to all FDI policy norms. According to a high level source in the commerce and industry ministry, "We have examined the Bharti-Wal-Mart joint venture and everything is in conformity with the existing policy on FDI in retail." The government had earlier allowed FDI in wholesale cash & carry and therefore the companies are not required to seek government approvals.
Now that the tracks are clear, other international retailers such as Tesco and Carrefour are likely to speed up with their plans to tie up with Indian retailers to enter the Indian market. In this JV, Bharti will take care of the front end requirements dealing with opening outlets, while Wal-Mart will handle back end needs such as logistics, supply chain etc. Monday, January 15, 2007
Source: Rediff Money
2. Pantaloon on the lookout for European partners
With its tie up with Starbucks almost complete and talks on with US fast food giant Burger King, Pantaloon is now keen on forming some joint ventures in the apparel segment. The company is looking to establish joint ventures with European firms for the menswear and kids wear segments. If a JV deal cannot be reached at, then a licensing deal will be explored with the companies who are all well established brands.
The company has already formed a JV with French retailer ETAM to form ETAM Future Fashions India for the 22-30 age bracket women’s wear segment. The company will be opening 42-50 standalone stores in the next 18 months with the company. In the meantime, Pantaloon has launched its lingerie line in three of its stores.
According to Susil Dungarwal, a retail analyst, Pantaloon is possible going to become the leader in multi-segment retailing, adding that, "In the last 2-3 years, Pantaloon has tried every option in multi-segment retailing either directly or through acquisitions. Before FDI was allowed in single brand retailing, the company was lobbying with the government to give higher preference to domestic retailers. After that, they are trying to form JV with foreign brands in every possible category. They are already present in more than 25 categories. Multi-segment retailing will definitely add to their topline and bottomline growth." Tuesday, January 16, 2007
Source: Rediff Money
3. Reliance Retail makes major investments in Delhi realty
Reliance Retail has made purchases of close to Rs. 10 billion on commercial properties in Delhi. According to sources, the company acquired a property in Vikaspuri from around Rs. 2.8 billion and 7 properties, one in Rohini and 6 in Dwarka, for Rs. 7 billion. The total size of the acquisition so far is over 500,000 sq ft. The company will continue its purchasing spree with 2 acquisitions coming up in Vasant Kunj, which are valued at Rs. 250 million. All properties acquired by the company were part of the Delhi Development Authority (DDA) auctions. Wednesday, January 17, 2007
Source: Business Standard
International
1. Costco could come to India as well
The world's fifth largest retailer, Costco Wholesale Corp. could be coming to India after Wal-Mart's successful tie up with Bharti Enterprises. The Washington based company has 504 warehouses where it sells national and regional brands as discounted prices. Its main competitor in the US is Sam's Club, which is Wal-Mart's wholesale format store. According to industry sources, Kishore Biyani's Pantaloon could be one of the possible companies that Costco is interested in tying up with for operating in India. Monday, January 15, 2007
Source: The Economic Times
2. Starbucks to focus on Delhi and Mumbai
Starbucks will be focusing on Delhi and Mumbai as its starting points for its India operations with Pantaloon. A company official said that Starbucks will be opening outlets by the end of 2007 either in Delhi or Mumbai. While media and other reports have said that Starbucks has already tied up with Pantaloon, there is yet to be a confirmation from either of the companies. Starbucks will be targeting young adults in the metros and hope to catch the trend of coffee drinking in a traditionally tea drinking country. Monday, January 15, 2007
Source: Business Standard
3. UK to increase investments in food and agri retail sectors
UK companies that are part of a 150 member business delegation have committed to invest in the food processing, agri-retail and manufacturing. The delegation was led by Karan Bilimoria, chief of Cobra Beer, and met several high leaders of the government including Finance Minister P. Chidarmbaram and Planning Commission deputy chairman Montek Singh Ahluwalia.
The delegation was accompanied by UK trade and industry secretary Alistair Darling and is a precursor of the UK Chancellor of the Exchequer and future Prime Minister Gordon Brown's visit to the country. The delegation also met with Bhupinder Singh Hooda, the chief minister of Haryana on investing in some Special Economic Zones (SEZ) in the state. Wednesday, January 17, 2007
Source: The Economic Times
4. Argos keen on coming to India
The UK's Home Retail Group is looking to coming to India via its Argos chain of stores. According to Richard Ashton, Finance Director of the Home Retail Group, "India is a possible area we'd consider in the future. We're not active there, but we're keeping an eye on it." There have been reports in the media that the company was tying up with the K. Raheja Corp, which runs one of the leading departmental chain stores Shoppers' Stop as well as the country's leading hypermarket, HyperCity. Wednesday, January 17, 2007
Source: Reuters
5. Pantaloon Retail ties up with Staples
Pantaloon Retail announced that it has formed an equal partnership joint venture with Staples, Inc, the leading US based office products company, and has formed a new company called Staples Future Office for operations in India. Ron Sargent, chairman and CEO of Staples, said that “India represents a great opportunity for the company” as it expands in the global market.
According to Kishore Biyani, MD of Pantaloon Retail, "The office products business in India presents tremendous opportunities for growth. Through our partnership with Staples, the industry leader, we can become the office products provider of choice for businesses throughout India.”
Staples Future Office will cater to business of all sizes, with a delivery format and cash-&-carry locations. Future Office had recently acquired office products company, Officedge, a B2B company and will be expanding operations to Delhi, Mumbai, Bangalore, Hyderabad, Chennai, Kolkata, Pune, Ahmedabad, Indore and Chandigarh. The office products segment in India is estimated to be worth $10 billion. Thursday, January 18, 2007
Source: The Economic Times, The Hindu Business Line
6. Starbucks to enter via single brand format
Starbucks coffee will be entering India via a partnership with New Horizons Retail Pvt. Ltd, a newly formed Indian company, where Kishore Biyani, MD of Pantaloon Retail will hold 49% of stake. The remaining stake will be held by P T Mitra, Chief Executive of Indonesian specialty retailer Adiperkasa. The JV states that the company would develop and manage a chain of Starbuck Cafés in India.
Starbucks will form a JV via its Singapore based division, Starbuck Investor and initially hold only 18% stake in the company. The company has applied for approval from the FIPB to invest $1.12 million, for the 18% stake, with an option to increase its state to 51% at a later time. Thursday, January 18, 2007
Source: The Hindu Business Line
Support Industries
1. Logistics: the next growth segment
With the rapid growth of the retail sector in India, logistic companies in India are looking for significant investments to increase their services. At present, this is one area that is lacking in infrastructure and chain components. According to Edelweiss, the 6 main companies in this area: Concor, Gateway Distriparks Ltd (GDL), Allcargo, SICAL, Transport Corporation of India and Gati, are likely to spend more than Rs. 34 billion in the next three years to gear up for the opportunities.
Concor and SICAL are focusing on cold chain logistics, GDL and SICAL are looking towards container trains and TCI and Gati are focusing on warehousing. Edelweiss estimates that the container train segment will receive Rs. 16 billion in the next three years, while warehousing will get Rs. 2 billion, offshore logistics will get Rs. 2.5 billion and trucking will get Rs. 3.8 billion. Monday, January 15, 2007
Source: The Hindu Business Line
2. Unorganized manufacturing units could benefit Indian and international corporates
In an unexpected twist, small manufacturing units of the unorganized sector could benefit domestic and international corporate houses looking to be a part of the Indian retail market. According to research by Research & Information Services (RIS), an External Affairs ministry think tank, the trade sector will account for 11 million jobs and employ an additional 16 million in the sector of export manufacturing over the next three years.
While these small scale units and workers play an essential role in the supply chain, they are compensated at a very minimal level, due to presence of middlemen and archaic labour laws. Friday, January 19, 2007
Source: The Economic Times
HR
1. Reliance hiring on a wholesale basis
Reliance Retail is hiring for its retail venture on a war footing. At present the head count stands at 6,000 and it is hiring 100 persons every day. According to its plan, employees will add up to a million persons by 2010. The company’s HR team is 500 people strong, along with a research team that tracks best practices from Fortune 500 companies to incorporate into its own processes.
Reliance is also relying on its employee retention program that gives incentives to employees to recruit 10 new employees. The emphasis of the HR department has been on recruitment, training, retaining and sustainability of employees. It has hired Susan Bloch as its chief cultural and diversity officer for HR, in an effort to create leadership skills within the company so that employees can move up the corporate ladder. Thursday, January 18, 2007
Source: The Economic Times
Unique formats
1. Pantaloon and Alpha to open their first duty free shop this week at Delhi's IGI Airport
The Alpha-Pantaloon JV will be opening its first duty free shop at Delhi's Indira Gandhi International Airport this week. The store will be fully operational by 18-20 January, 2007. The company decided to open its first store in Delhi as the city has higher international arrivals and the amount spent is also of a higher amount. The duty free store at the airport will be located at the arrival terminal and will cover 2,000 sq ft initially, expanding to 7,000 sq ft in a month's time. A store will also be opened at the departure terminal by the end January 2007.
Alpha Airports Group Plc has designed over 140 retail stores in over 40 locations in UK, Europe, USA and South Asia. Alpha runs three duty free stores in Cochin Airport. Its store in Delhi will feature some of the leading brands of the world, such as Gucci, Armani, Christian Dior, Calvin Klein, Nike, and Swatch among others. Monday, January 15, 2007
Source: Indiaretailing.com
Sector specific
Apparel and Footwear
1. Creative Group to focus on domestic market
The Creative Group announced that it will be launching new lines of clothing for the domestic market. The company also exports garments to the US and Europe. According to Rahul Mehta, partner in Creative Casuals, “This year, the company plans to introduce menswear and ladieswear brands in different segments such as pret, mid- and mass-market segments with respective retail expansions.”
The company is making this move due to several factors, including the "booming economy, emergence of organized retail and changing awareness about fashion" that are leading to the rising demand of branded garments in the country. The company will also be considering opening another venture for a new fashion line, with a leading Bollywood actor as the brand ambassador. In another venture, Creative has tie up with two Ahmedabad based designers, Rahul Mishra and Samar Firdos for their couture brand.
Creative's first brand 109F, an upscale women’s wear brand, was launched in November 2006, and the company plans to have 10 more stores initially, then another 35 over the next three years. Most stores will be opened in metros and tier I cities. 109F is also available at department stores such as Pantaloon and Piramyd. Its home furnishings brand is the well known Portico brand. Wednesday, January 17, 2007
Source: Business Standard
2. Pearl Fashions might acquire brand overseas
Ready-to-wear apparel brand House of Pearl Fashions is looking to acquire either a retail chain or fashion brand overseas, most likely in the US and UK markets. Company sources said that an investment of Rs. 400 million would be made by the end of the year.
Pearl Fashions is specifically looking for a high-end unisex brand for the 15-30 age bracket, something that would compete effectively against Wills Lifestyle or Color Plus. If it does not find the right fit in a apparel brand, then Pearl Fashions would acquire a retail chain in the US or UK, a company that has 50-150 stores, which it plans to run for two years internationally before bringing it to India.
Its own exclusive store, Forever New will be opened by end 2007, in cities such as Delhi, Chennai, Kolkata and Mumbai. Locations have yet to be finalized and both high street and mall locations are been studied. Pearl Fashions will stock its DCC and Koolhearts brand in its own stores. DCC is an apparel and accessories brand for women in the 30-45 age group and Koolhearts is for young women from the ages of 15-25. Wednesday, January 17, 2007
Source: Business Standard
Bookstores and Office products
1. Landmark plans expansion in Kolkata market
Landmark, which had recently cut its ties with the Emami Group, is busy planning its strategy for the Kolkata market. The books and gift retail chain announced that it will be opening at least 3 large format stores and several smaller format stores in the city. According to Himanshu Chakrawarti, Landmark's chief operating officer, "We are looking to launch three stores, each spread over some 25,000 - 30,000 square feet. Total investment for these three stores is estimated to be about Rs. 150 million."
The company is initially focusing on high end and high visibility properties, such as those in the Camac Street-theatre Road and Salt Lake area. At a later stage the company will look to open stores in malls. Tuesday, January 16, 2007
Source: The Economic Times
Food and Grocery
1. Vishal Retail to open 15 new stores
Vishal Megamart retail chain will soon be opening 15 new stores in the western areas of the country by March 2007, investing a total of Rs. 1-1.15 billion. Locations will include suburbs of Mumbai such as Mulund and Dahisar and other locations such as Pune, Solapur, Nagpur, Kohlapur, Surat and Ahmedabad. The company is also looking for two locations in Mumbai itself.
Each store will be spread over 30,000-40,000 sq ft and will sell approximately 7,000 products, including household goods, garments, food, footwear, home decor items, toys and games, sports and fitness related merchandise, cosmetics, gifts and other lifestyle items. At present the company has 47 outlets in 36 cities with a total retail space of 1.12 million sq ft. Its turnover for the last financial year was Rs. 3 billion and it has set its target as Rs. 6.5 billion for the current financial year. Wednesday, January 17, 2007
Source: Business Standard
2. Trinethra launches its first hypermarket FabCity in Mysore
Trinethra Super Retail Ltd (TSRL) opened its first hypermarket, FabCity in Mysore. The hypermarket is spread over an area of 50,000 sq ft and stocks a huge variety of categories, including food and grocery, apparel, home furnishings, footwear, beauty products and accessories, stationary, toys and games, household appliances and consumer durables. Most products have been sourced from India as well as South East Asia and are a mix of branded and private labels.
At the launch of the store, Pranab Barua, CEO of Trinethra Super Retail Ltd, said that, "Mysore has emerged as a key destination for several large companies, leading to a change in lifestyle, consumer outlook and buying behaviour. Recognizing this change, and, in order to bridge the need gap arising from it, we have decided to launch our first hypermarket here." Wednesday, January 17, 2007
Source: The Hindu Business Line
3. Small grocery firms fight back against takeovers from larger firms
Several small and independent supermarket and grocery stores are fighting back against being taken over by larger retail chains. One of the early entrants to the organized food and grocery retail phenomenon, KD’s Loprice Supermarket in Andheri (W) has noticed the difference in traffic since Food Bazaar and Spinach have opened within a 1 km radius. Once the lowest prices in the region, the standalone store has felt a serious threat to its USP.
By reducing their catchment area from 4km to half a kilometer, the store began to target their immediate neighbors as customers. KD’s also increase their stock of high-margin items from 65% to 72% and saw an increase from Rs. 300 to Rs. 375 per customer ticket in just a year. In Maharashtra, there are a number of retailers who have set up standalone organized retail stores that are neither kirana stores nor wholesalers.
Sarvodya Supermarket, located near Dadar station redid its entire format, from store layout to investing in technology when Magnet Hypermarket opened nearby in Matunga in 2005. The store has seen customer sales increase 10% per customer despite the proximity of Magnet. Friday, January 19, 2007
Source: The Economic Times
4. Reliance Fresh opens more outlets in Jaipur
Reliance Retail increased its stores by opening two additional stores in Jaipur this week. Including these new stores, Reliance Retail now has 7 stores in the city. The new stores are located in prime spots of the city and attracted large crowds of customers as soon as they opened their doors. Each store has an average of 20 sales associates. Friday, January 19, 2007
Source: The Economic Times
e-commerce
1. Fabmall.com acquires online shopping firm in US
Fabmall.com, a leading e-tailing firm has acquired Indiaplaza.com, a US based e-commerce company, and will now re-brand itself under the new name Indiaplaza.in for India and Indiaplaza.com for the US market. Fabmall.com was one of the first e-commerce sites in the country when it was set up in 1999. Thursday, January 18, 2007
Source: The Hindu Business Line
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