Latest News and Events from the Indian Retail Sector

Weekly Retail News from India

Big players - plans and investments
International
Support Industries
HR News
Government Policy
Sector specific

Big players - plans and investments

1. Bharti-Wal-Mart might use different brands
Bharti Enterprises’ highly anticipated retail launch with Wal-Mart is likely to use three different brand names for operations in India. The cash-and-carry venture will carry the Bharti and Wal-Mart name while the Bharti operated supermarkets and franchise stores will have two different identities and brand names. The company is likely to open its first stores in early 2008, as opposed to its earlier time frame of September 2007.
Wednesday, March 07, 2007
Source: The Economic Times

2. Kishore Biyani increases stake in Pantaloon Industries
The founder and major promoter of Pantaloon Industries, Kishore Biyani consolidated his stake to more than 6%, with a purchase of 360,000 equity shares.
Wednesday, March 07, 2007
Source: The Economic Times

3. Reliance Retail plans to focus on large format stores
Reliance Retail is looking for land in the Chennai area to set up its large format stores. The company is also looking for suitable locations in other locations such as Madurai and Coimbatore where it will be opening Reliance Fresh stores. There are more than a dozen stores in the Chennai area, which receive over 12,000 visitors every day.

Reliance has set up 10 collection centers for grading and processing fruits and vegetables. M. Balachandran, Chief Mentor for Reliance Retail, dismissed claims that the company would put local fruit and vegetable vendors out of the market, stating that their stores have a turnover of Rs. 120,000 per day, while the total retail market for fruits and vegetables for Chennai was for Rs. 180 million a day. He added that the Reliance Fresh stores are only a test project to understand the market and the main focus of the company will be large format stores.
Wednesday, March 07, 2007
Source: The Hindu Business Line

4. RPG Group makes major retail plans
The RPG Group announced that it will be making an investment of Rs. 25 billion to expand its Spencers’ retail chain, setting up an additional 1,000 stores by the year 2009. The company will be expanding the Spencers’ brand in two phases, the first completing by 2009 will see an investment of Rs. 10 billion to increase the number of stores to 1,000 from the current 125. During this period the Spencers’ brand would also be made the company’s premier brand. From 2009 to 2011, RPG will be investing another Rs. 15 billion to expand its operations.
Thursday, March 08, 2007
Source: The Economic Times

5. Spencers’ looking for international retail partners
The RPG Group’s retail chain, Spencers’ Retail is reportedly searching for international retail partners that it can form alliance with in the luxury retail and consumer electronics sectors. According to a source, the company is keen on being part of the rapidly growing consumer electronics and luxury retail markets.

The Spencers’ brand has announced a major expansion plan for the next 4 years where it will take its stores from the present 125 to 1,000. New stores will be opened in Chandigarh, Jaipur, Lucknow and Kolkata in the next 5-6 months. Spencers’ eight hypermarket opened in Gurgaon this week, in a 62,000 sq ft retail space.
Friday, March 09, 2007
Source: Business Standard

International

1. Carrefour talks with HDFC for retail tie-up
French retailer Carrefour is reportedly in talks with the HDFC Group to tie up for its retail venture, which is likely to happen with one of the private equity arms of the company. While both companies refused to divulge any details, industry analysts say that the tie-up would have to include a third party as RBI regulations do not permit HDFC or HDFC Bank to enter into retailing as the FDI restrictions do not permit Carrefour to operate stores on its own in the country.

It is possible that HDFC might float a holding company such as a PE fund that would tie up with a third party to allow it to work with Carrefour in India. The French retailer will be handling all the back-end wholesale operations and has been interested in HDFC due to real estate considerations.
Tuesday, March 06, 2007
Source: The Economic Times

Support Industries

1. Retail sector to set off boom in realty
Organized retail will be the trigger behind the rising demand for real estate, according to a study by ICICI Property Service and Technopak. The survey estimates that India’s retail sector will grow from its current value of US $330 billion to US $500 billion by the year 2011, which will create the need for an additional 500 million sq ft of retail space.

There are only 137 malls in the country at present, which the study estimates that it can actually support 1,000 malls and shopping centers in more than 500 towns and cities. There is likely to be investment of over US $30 billion in the next 4-5 years from major companies such as Reliance, Aditya Birla Group, Metro, Carrefour, Auchan, Wal-Mart and Tesco.

Most of the investment will take place in the top 25 cities. Hypermarkets and supermarkets will be the format of choice, especially those that are food focused. An estimated 4.5 million jobs will be created in direct employment in the organized retail industry in the next five years.
Wednesday, March 07, 2007
Source: DNA Money

2. Reliance Retail keen on FCI facility
Reliance Retail is reportedly keen on hiring the government-owned Food Corporation of India (FCI) storage facility to supplement its capacity for stocking foodgrain. FCI is planning to rent its 300,000 tonne storage facility located outside of Lucknow, which Reliance Retail is interested in renting.
Friday, March 09, 2007
Source: Business Standard

3. Percept Holdings to increase it presence in fashion events
Sports, celebrity and fashion event management company, Percept D’Mark (PDM) which is a division of Percept Holdings, plans to launch a series of new initiatives such as a talent hunt for designers and starting a fashion retail week. The concept has been gaining strength, especially with Pantaloon launching a reality TV show that will focus on designers in the making.
Saturday, March 10, 2007
Source: The Economic Times

HR News

1. Food Bazaar merchandising head resigns to join AV Birla Group
Shiv Murthy, the head of merchandising of Food Bazaar, part of the Pantaloon Group, has put in his papers to join the Aditya Birla Group’s retail initiative as COO of its supermarket venture. The AVB Group had hired Russell Berman to head its hypermarket venture from Carrefour and now has heads for both its supermarket and hypermarket divisions in place.

This is the second high profile resignation at Pantaloon in recent weeks, with Ved Prakash Arya, COO of Pantaloon Retail who left recently. Interestingly, Mr. Murthy was likely to become the next Food Bazaar President, while the current Food Bazaar President Damodar Mall was expected to become COO of Pantaloon Retail.

Other high profile resignations and appointments include Vijay Kashyap, HR head of Aditya Birla Retail who has put in his papers and Martin Dlouhy who has been appointed as Metro Cash & Carry’s new MD, after the departure of former MD Harsh Bahadur to Reliance Retail.
Tuesday, March 06, 2007
Source: The Economic Times

Government Policy

1. Retailers plan to move court against service tax
Several top retail firms are planning to challenge the government’s decision to charge service tax on rentals. The new Union Budget has imposed a 12% service tax on all commercial rentals and increased the cess on education and services from 2% to 3%, adding up to a total of 12.4%. Service tax on rentals is technically to be paid by landlords; many lease agreements have clauses that state that service tax will be paid by the lessee.

A meeting to discuss the future course of action was conducted with high profile leaders such as Kishore Biyani, MD of Pantaloon Retail (Future Group), BS Nagesh, MD of Shoppers’ Stop, Noel Tata of Trent, Vinay Nandkarni of Globus and others attending. According to Gibson Vedamani, president of RAI (Retailers Association of India), “We are examining ways of tackling the issue. If better sense does not prevail, we will not hesitate to seek legal recourse.”
Monday, March 05, 2007
Source: The Economic Times

Sector specific

Apparel & Footwear

1. Benetton to double its stores in India
Italian chain United Colors of Benetton (UCB) announced that is was planning to double the number of its stores by end 2007. Currently the company has 110 stores in the country and plans to increase its UCB and other branded stores such as Sisley, Play Life and Killer Loop, which will be opening stores in Ahmedabad, Mumbai and several other major cities by next year.

The company will be focusing on its UCB brand, which is for a younger and trendier audience, for its India operations while Sisley is a high-end brand and will be expanding at a slower pace.
Thursday, March 08, 2007
Source: Business Standard

Bookstores

1. Navneet Publications and Pantaloon Retail to tie up
Navneet Publications and Pantaloon Retail are planning to form an alliance where stationary products will be sold at Big Bazaar outlets in a direct distributorship format. Navneet Publications is a Rs. 2.94 billion firm and although its products are available in organized retail stores, it is keen on signing a MoU with Pantaloon to be sold and become known nationwide.

Navneet retails its products in 30,000 retail outlets in the country, although only 7-8% of its sales come from modern retail formats. The brand has traditionally been focused only towards students, but with this move the company hopes to reach executives and other new segments.
Friday, March 09, 2007
Source: The Hindu Business Line

FMCG, Food & Grocery

1. Express Retail to invest Rs. 1 billion for expansion for its Big Apple brand
Express Retail Services announced that it would be investing Rs. 1 billion in its convenience store chain, Big Apple, to expand the chain in Delhi, from 15 to 100 stores by August this year. The Big Apple brand has a chain of stores retailing daily needs such as groceries, fresh fruits and vegetables and FMCG products. The company will be segregating its fresh food business by starting a Big Apple Fresh chain of stores.
Saturday, March 10, 2007
Source: The Economic Times

2. Lavazza buys Barista
Italy’s Lavazza, the sixth largest coffee roaster company in the world, has acquired Barista coffee from Fresh and Honest for an estimated Rs. 4.8 billion. Lavazza is expected to invest $150 million (Rs. 6.75 billion), including the cost of the company, for its operations in India in the next two years. Barista was the first coffee chain to start in India although Café Coffee Day is the undisputed leader at present.
Saturday, March 10, 2007
Source: Business Standard

Jewelry & Watches

1. Gitanjali Group to enter lifestyle segment
The Gitanjali Group, one of the leading diamond and jewelry manufacturers and retailers, announced that it will be entering the lifestyle segment and will be setting up malls, focusing on the luxury aspect. The company’s flagship brand Gitanjali Gems is one of the leading retailers of DTC diamonds and has several brands such as Nakshatra, Asmi, Gili, D’Damas, Collection g, Gold Expression and Vivaha Gold in its kitty.

The company will have the entire range of lifestyle categories, from apparel to accessories. The first phase of this non-jewelry initiative will have an investment of over Rs. 1 billion. Besides its luxury focused malls, the company will also be opening malls that would cater to the mass market.
Saturday, March 10, 2007
Source: The Economic Times