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. Critics say the Reliance Retail model is very risky
With the Reliance Retail model almost off the ground, global management guru Prof, Mohanbir Sawhney, director of Center for Research in Technology & Innovation at the Kellogg School of Management has criticized its plans. Prof. Sawhney, who was named as one of the 25 most influential people in e-business by BusinessWeek once, said “The capital intensive business model of companies like Reliance Retail makes their ventures very risky. Three years down the line we may see these ventures going in for a spin-off (stake sell out).”
Navneet Saluja, CEO of Reliance Retail Delhi countered saying that “In India, there is space for everyone to flourish. The retail industry may adopt the cash-and-carry model for villages and small towns. Local kiranas will be allowed to source from large retail stores in such places.”
Bharti’s expansion plans are also being scrutinized by analysts, especially its plans to have trials, cultivating crops and storing products in its own cold storage facilities before sending them to retail stores. Prof. Sawhney added that, “In the medium to long run, Bharti and Reliance may be forced to outsource non-core functions like cold storage and logistics and concentrate on its core competency. Overall, I see the outsourcing model trickling down to all sectors in the future.” Monday, October 09, 2006
Source: Financial Express
2. RIL chairman keen on opening retail sector to retail giants
Mukesh Ambani, chairman of Reliance Retail is keen on the Indian government allowing international retail giants such as Tesco, Wal-Mart and Carrefour to the Indian market, both for their contribution to the economy as well as keeping domestic retailers ‘on their toes’. He added, “Every company has a home market and a foreign market. We are in India, so we don’t need any (help from) regulation to get a head start. Tesco would add value to India. Foreign direct investment should be open.”
Reliance Retail will be opening its first store, a food and grocery format store, in Hyderabad on October 18, 2006. The company plans to have 784 supermarkets in some of India’s smallest cities before opening in the country’s 10 largest metros. Monday, October 09, 2006
Source: Daily News & Analysis
3. Tesco should target wholesale market
Ahead of the UK-India investment conference, Amit Mitra, secretary general of India’s Chamber of Commerce, said then Tesco should target India’s wholesale market initially, so that it can understand the Indian market. He added that, "Tesco has to be bold enough to go into cash and carry. This is where Tesco has to go in; because if Metro is already there with its feet on the ground, when India's overall retail market opens they will be able to spurt." Monday, October 09, 2006
Source: BBC News, Nasdaq.com
4. Realizing their clout, malls raise rentals
Malls are realizing their clout and that they don’t have to rent anchor spaces at throw-away rates just to get the big names in the mall, and so are now raising rents. While earlier a mall’s success depended on at least one big name as a tenant, it is not the case anymore. Abijit Das, head of Ansal Plaza Mall Management Company says that, “Low rental offers by anchor stores have also forced developers to try their luck through revenue share agreements where they may earn more.”
Increasingly, malls are realizing the importance of creating a strong brand for themselves, and therefore are not depending on only big retailers to pull in customers to the mall anymore. Raman Mangalorkar, a principal at AT Kearney, adds, “Earlier, the presence of retail chains was the key factor that determined footfalls in a mall. Not any more. Now malls are independently recognized and are marketing themselves aggressively.”
Contrasting to malls focus on big anchor tenants, now many developers now prefer a more varied mix of stores, including department stores and small format stores rather than only large retailers. Ajay Khanna, executive director of DLF Retail Developers says, “New innovative mid-sized formats are becoming popular as they take less space and cater to everyone’s needs.” Thursday, October 12, 2006
Source: The Economic Times
Big players – plans and investments
1. Future Group to make special formats targeting women
The Future Group will soon be launching two new specialty formats targeting women, as part of its plan to be a major player in the fashion apparel and accessories segments. The new concepts, named Top 10 and Ethnic City, will be aimed at both working women and students.
Kishore Biyani, CEO of The Future Group, said that “There’s a huge potential for such specialty stores. By bringing some of the best-selling youthful brands under one roof, we will be able to cater to the needs of youth who are key drivers of fashion. Our research shows college-goers have different fashion needs and prefer a store that understands their requirements. This will be Top 10's core brand value.” These stores would range from 5,000-8,000 sq ft.
Ethnic City will carry Indian garments along with accessories such as bangles, stoles and footwear. The growth of this segment has come from the company’s experience of selling ethnic clothes in both Pantaloon and Big Bazaar. Monday, October 09, 2006
Source: The Economic Times
2. Bharti, Tesco close to announcing a deal
India’s Bharti Enterprises and UK retail giant Tesco are likely to announce their alliance for the Indian market. Sources estimate that this deal could generate close to $2 billion in investments in the next five years, to open a chain of supermarket stores across India.
The announcement is likely to be made at the one day India –UK investment Summit to be held in the UK on Tuesday, October 10, 2006. The venture is likely to have Tesco veteran Gary Sargent as its head. Chairman Sunil Mittal said that they were “in the final stages of choosing a partner.” Monday, October 10, 2006
Source: Daily News & Analysis, Reuters
International
1. French footwear company Homme enters Indian market
French footwear company Homme Global will be entering the Indian market, offering its premium brand and looking to achieve a turnover of over Rs. 200 million in its first year of operations. The company has tied up with East Face Footwear Pvt. Ltd, as its licensee to market its products in India.
The company will have two brands, Homme and Maco for sale in India. The footwear industry is estimated to be more than Rs. 40 billion and is likely to grow at 12-15% per annum. The premium segment of the footwear market, where Homme will be entering, is growing faster at 20% per annum. Sunday, October 08, 2006
Source: Daily News & Analysis
2. Welspun to bring UK brand Christy to India
With its purchase of UK towel brand Christy in July 2006, Welspun will now be bringing it to the Indian market. According to Deepali Goenka, Director of Welspun India Ltd., “People are demanding products that deliver value in terms of their usage and not really the pricing. Adding colour to the market is the booming housing sector which is more about selling lifestyle than just a house. Brands are finally making inroads into people’s minds in the home textile market as well.”
Welspun currently retails its products at Welspun Homemart, a factory outlet format, and at Spaces which has exclusive stores as well as shop-in-shop locations. Now the company is considering opening one more level of stores after Spaces.
At present there are 8 Spaces stores and the company is keen to increase these to 60 as well as have 150 Welspun Homemarts by 2008. The company aims to become a Rs. 5 billion company by 2008. Sunday, October 08, 2006
Source: Daily News & Analysis
3. Disney to open stores in India
Disney has announced that it will be entering the Indian market through a license agreement with an Indian partner, Ravi Jaipuria by the end of October. The company plans on having two stores only in Delhi at first, before expanding to other metro cities.
The Jaipuria Group is the leading bottler of Coke in India and has a wide range of business interests including apparel, accessories, footwear, toys, food, health and beauty products, consumer electronics and stationary items. The company’s subsidiary Devyanni International has the license for UK company Costa Coffee. Disney recently bought Hungama, an Indian TV channel for children for $30.5 million. Monday, October 09, 2006
Source: The Economic Times, Reuters
4. Lulu Hyper to set up shop in Kerala
UAE based Emke Group’s Lulu Hypermarket is all set to enter the Indian retail market with its first store in Kochi in Kerala. The new outlet at Kochi will be spread over 180,000 sq ft in space and will become India’s largest hypermarket. At present HyperCITY at 100,000 sq ft is the country’s largest hypermarket. The company will also be looking to open hypermarkets in Chennai, Bangalore and Hyderabad after its Kochi store.
According to Yusuffali MA, managing director of Emke Group, the company is “…looking at India and now is the right time to enter this market with the booming economy and positive government policies.” Lulu Hypermarkets have been a hit with customer’s right from the start. The company offers several additional services in its stores, such as play area for children, food courts, money exchange centers and bank counters. Tuesday, October 10, 2006
Source: Business Standard
5. International fashion and lifestyle magazines make a beeline for India
Several international fashion and lifestyle magazines are realizing the potential of the Indian market and are heading to launch Indian editions. In the past few months, OK! and Marie Claire have been launched and Vogue and GP will soon be launching.
While all international magazines will have world class paper, photography and international content, having in localized Indian flavor is seen as the key to success in the publishing world. Wednesday, October 11, 2006
Source: Business Standard
6. RJ Corp signs deal with Disney
RJ Corporation signed a licensing deal with Disney consumer Products, giving it exclusive franchise rights for India and the South Asian market for the ‘Disney Artist’ brand. According to the agreement, RJ Corp will be investing between Rs. 800 million-1 billion over the next 3-5 years to establish 150 specialty stores ranging from 700-2,000 sq ft in India for Disney. The first of these stores will open in Delhi and the NCR, and then in Mumbai.
Disney Artist products include greeting cards, stationary and arts and crafts materials will Disney characters. Rajat Jain, India CEO for the Walt Disney Company emphasized the role that India would be playing in the company’s marketing strategy saying that, “Globally, India is one of the most strategic markets for the company. At a later stage, we will be introducing various other brands from Walt Disney’s international portfolio as well.” Thursday, October 12, 2006
Source: The Economic Times, Daily News & Analysis
7. Will Tesco enter Indian retail market before Wal-Mart?
India is attracting the world’s largest retailers with its population of 1.1 billion that is steadily increasing and a retail industry in its infancy. While at present FDI regulations do not permit foreign retailers such as Wal-Mart and Tesco to set up shop on their own, Tesco could be close to finalizing a joint venture deal with Bharti Enterprises.
FieldFresh Foods, a subsidiary of Bharti Enterprises is said to be in the final stages of closing a deal with Tesco to bring the UK retailer to India. The Indian government has only permitted single brand retailers to enter the market, thus making global giants enter either the wholesale market or form joint ventures to get access to this gigantic market. Friday, October 13, 2006
Source: Forbes
Regional Trends
1. Mall mania in smaller cities now
The next rush in retail is to smaller cities which are seeing a rush to build malls. Property consultancy Knight Frank, estimates that 35% of new retail space being developed in India is located in roughly 50 tier II and tier III towns. In the next two years, these towns will have almost 42 million sq ft of retail space.
The growth of population in the rural areas along with an increase income has made it a viable area for modern retail formats, according to Knight Frank. Small town customers are more involved in their towns as compared to larger cities. Harish Bijoor, a retail consultant adds that with the lack of entertainment options in smaller towns, the mall becomes an entertainment and hangout place.
At present the retail growth has been restricted to only 7 cities in India, which have 65% of the new retail space coming up in the next two years. Of the 361 malls under development, 227 are in these top 7 cities and the remaining 134 are in tier II and tier III towns. Sunday, October 08, 2006
Source: Daily News & Analysis
Support Industries
1. Food Processing industry likely to get Rs. 500 billion investment
The Indian government is planning to invest Rs. 500 billion in the food processing industry. The investment will take place during the 11th Five Year Plan. According to Subodh Kant Sahai, minister for state for food processing, the government is focusing the investment on building strong backward and forward linkages of the supply chain, creating testing facilities and setting new abattoirs. He added that the government’s share of this investment would be 10%, the industry’s share 40% and banks and private institutions share 50%. Wednesday, October 11, 2006
Source: The Economic Times
2. Retail companies vie for air cargo space
Retailers are lining up to purchase cargo aircraft to backward integrate their supply chain logistics. With this model, both retailers and airline companies would benefit as retailers would be able to transport perishable goods quickly and efficiently, and several low cost airlines, such as Air Deccan and Go Cargo are making plans to expand their cargo infrastructure.
While Reliance and Bharti are already in talks to set up long term alliances with international and domestic cargo companies, other retailers such as the Tata Group, Birla Group and RPG are considering their options. Air Deccan MD Capt. Gopinath, said, “We have already taken steps in this direction and are in talks with some well known retail companies. We will soon come out with something really formidable.” Friday, October 13, 2006
Source: The Economic Times
3. Understanding the consumer
Retailers are realizing the importance of understanding their customer on their own terms rather than relying on market research data and are making a greater effort to study customers in their stores.
HyperCITY found this out firsthand when it opened in May 2006 that market research data was not correct and reliable. According to market research, cut vegetables and fruits would not be high priority on housewives lists, but once the store opened HyperCITY noticed that it was the first thing that housewives bought and continually out of stock. The retailer now has 8 workers in the section, up from its initial 2 workers.
When Food Bazaar was going to launch its own in-house brand Fresh and Pure, it decided to test out its products in its stores rather than rely on test marketing with focus groups. The company used a variety of different packaging and placements for the same product line to come up with the winning formula. Saturday, October 14, 2006
Source: The Economic Times
HR News
1. HR outlook
The TeamLease Employment Outlook Survey for the months of October-December 2006 says that retail, media and FMCG will be the main drivers of hiring activity in the quarter. The survey was conducted in 8 cities across India, Delhi, Mumbai, Kolkata, Hyderabad, Bangalore, Chennai, Pune and Ahmedabad, with 490 private sector companies.
According the survey, companies in retail, media and FMCG and to a lesser degree IT and financial services, will be hiring at a faster rate than the growth of their industry. Bangalore has the most optimistic business outlook, then Mumbai and Delhi, mostly due to retail, media and FMCG. Thursday, October 12, 2006
Source: Business Standard
Government Policy
1. Assocham opposes 100% FDI in retail
Assocham has opposed a proposal of 100% FDI in retail, saying that domestic players were not prepared to face the competition as yet. The chamber added that organized retailers in India were against the idea of 100% FDI in retail as they would require 2-3 years to prepare for the competition from international companies such as Wal-Mart, Tesco and Carrefour. Most companies do favor the 49% FDI in retail that the government approved earlier this year. Monday, October 09, 2006
Source: The Economic Times
Sector specific News:
Apparel & Footwear
1. Raymond opens its first Zapp! store
Raymond opened its first Zapp! store, its new apparel brand for children from the ages 4-12. The brand hopes to connect to kids with its own cartoon characters, Zion, Ashley, Posh, Pixel and a pet dog named Jambo. The company has also set up a website for the store along with its own customer loyalty program called Zapp! Club. Sunday, October 08, 2006
Source: The Hindu Business Line
2. Reebok and Nike gear up for the cricket season
Reebok and Nike will soon be marketing cricket related equipment such as bats, balls, pads and gloves soon. According to Subhinder Singh Prem, MD Reebok India, “Cricket equipment business certainly has the potential to be one of our highest growth businesses in India. Cricket is an important determinant of sports performance in this country. Hence, it is natural for us to focus on this category and emerge as the market leader.” Reebok has tied up with some of India’s leading cricketers such as Mahender Singh Dhoni, Irfan Pathan and Mohammad Kaif.
Nike will be bringing out a line of Yorker and Opener shoes for bowlers and batsmen. According to Sunil Gangopadhyay, marketing head for Nike, “When we get into a game we get really deep into it. Sporting equipment helps athletes take their performance to a higher level, and that’s precisely our business.”
The cricket equipment market in India is largely unorganized, based out of cottage industries in Meerut and Jallandhar, and is estimated to be worth around Rs. 5 billion. Almost 90% of the bats and cricketing accessories sold across the world are manufactured in India. Tuesday, October 10, 2006
Source: The Economic Times
3. Reid & Taylor plans to open 150 new outlets
S Kumars suiting brand, Reid & Taylor will be increasing the number of its stores to reach 150 stores by March 2007. The company plans to open 120 of these stores in non-metro areas and through a franchise format. Reid & Taylor currently has 26 stores in India. Wednesday, October 11, 2006
Source: Business Standard
4. Madura Garments plans to enter footwear segment
Apparel manufacturer Madura Garments, a division of the KK Birla Group, has announced that it will be entering the branded footwear business with a brand of footwear for each of its clothing labels. Madura Garments manufactures well-known brands such as Peter England, Louis Phillipe, Allen Solly and Van Heusen. For its footwear venture, the company has tied up with Sierra Industrial Enterprises to manufacture, market and promote its footwear brands.
This segment in India is estimated to be worth around Rs. 30 billion. Hemchandra Jaberi, President of Madura Garments said that, “We saw the footwear foray as a logical extension to get a step closer to providing complete dressing solutions to our customers. With these footwear brands, we would be able to give them the same quality as they get from our apparel brands.” Thursday, October 12, 2006
Source: Business Standard
5. S Kumars’ retail division likely to introduce its own economy brands
S Kumars’ retail division, Brand House Retails (BHR) will possibly be introducing its own economy brands in the ready-to-wear and western casual-wear categories. Tarun Joshi, BRH CEO, said the company was looking to fill the inadequacies in its brand by filling these areas.
S Kumars’ currently have a mid-price brand, Belmont and a premium brand, Reid & Taylor. The company has also signed an agreement to sell Stephens Brothers, for the super premium segment and Dunhill for the luxury segment. The economy segment is where the company’s portfolio is lacking and the company is keen on creating its own brand rather than bringing in an international one since its not viable. Friday, October 13, 2006
Source: Business Standard
6. Children wear retail to boom
The children’s wear segment of the Indian retail sector is set to boom with international brands such as Monalisa from Italy, Disney from the US and MotherCare from the UK already in the country. The children sweat market in India is estimated to be worth Rs. 130.85 billion, and is 15% of the total apparel market of India, showing the potential of its growth. With 30% of Indians under the age of 15, consumer outlooks changing to spending more on children, the segment is sure to see a growth. Friday, October 13, 2006
Source: NDTV.com
Home Furnishings
1. Bombay Dyeing plans to open 10 exclusive stores
Bombay Dyeing announced that it will be opening 10 high end exclusive stores for its collection of bed sheets and towels. The company will be spending Rs. 300-400 million on advertising its new ‘Country Romance Collection’. Sunday, October 08, 2006
Source: Daily News & Analysis
2. KK Birla Group’s subsidiary Sutlej ties up with leading global brands
The KK Birla Group’s subsidiary, Sutlej Textiles & Industries (STIL) announced that it had tied up to supply readymade garments and home furnishing material to leading global brands, JC Penney, Gap and Marks & Spencer. C S Nopany, chairman of Sutlej Industries and vice-chairman of STIL, said that the company is keen on entering the premium export market. Wednesday, October 11, 2006
Source: Business Standard
3. House Full plans country wide expansion
Home improvement retailer, House Full International (HFIL) plans to expand its operations across the country by March 2009. House Full recently opened its third store after Pune and Surat, in Nashik, spread over 40,000 sq ft, and will be opening its next outlet in Hyderabad. In this financial year, the company plans to open stores in Chandigarh, Kolkata, Bangalore and Aurangabad. Wednesday, October 11, 2006
Source: Business Standard
4. Bombay Dyeing to open exclusive outlets
At the launch of its new line of home textiles the Country Romance line, Bombay Dyeing announced that it will be expanding its retail presence in the country, by increasing the number of exclusive outlets it has for its bed and bath products. Arun Bhawsingka, Head of Domestic Business, Bombay Dyeing, estimates that the company is likely to open 10 outlets in the next year.
The goal is to become the market leader with close to 50% share of the organized market for home textiles. The company has been seeing a 25-30% growth compared to the industry average of 15-20%. Bhawsingka estimates that the organized sector of India’s home textile industry is Rs. 3 billion, while the unorganized sector is Rs. 65 billion. Thursday, October 12, 2006
Source: The Hindu Business Line
Bookstores
1. Oxford Bookstore plans expansion
Apeejay Surrendra Group’s chain of bookstores, Oxford Bookstore, will be expanding across the country. The company recently opened its first store in Chennai and has plans to open large format stores in all the major cities. Moving forward with only franchise stores from now on, the company will be opening franchised outlets in Coimbatore, Patna, Shillong and Mysore.
At present the company has stores in Kolkata, Mumbai, Bangalore, New Delhi and Goa and plans to double its outlets each year. Besides large format stores, the company is also experimenting with opening smaller ‘express’ stores in Bangalore and Mumbai. These smaller stores will be spread over 200-700 sq ft. Monday, October 09, 2006
Source: The Hindu Business Line
Consumer Durables
1. Woolworths considering long term retail plan for India
Australian retailer Woolworths Ltd. is considering a long term plan for India once the government opens the country to foreign investment. The company recently formed an agreement with the Tata Group, called Inifiti Retail to open consumer durable stores called Croma in India. While Inifiniti Retail will be fully owned by The Tata Group, Woolworths will supply products to it.
Roger Corbett, Woolworths consultant and a former CEO, said the company was interested in exploring its options when the government eases FDI restrictions. He added that, "If they were to open up, yes certainly Woolworths Australia would be very interested in looking at opportunities in India, but those opportunities would be in partnership with Tata." Tuesday, October 10, 2006
Source: Reuters, The Economic Times
2. Tata-Woolworth promoted venture, Croma opens in Mumbai
The first store of Croma, the consumer durable retail partner ship between Tata’s Infiniti Retail and Woolworths opened in Juhu, a suburb of Mumbai on Monday, October 10, 2006. Ratan Tata, Chairman of Tata sons, Ajit Joshi, CEO of Infiniti Retail Ltd and Roger Corbett, Independent Consultant and former CEO of Woolworths were present for the launch. Tuesday, October 10, 2006
Source: The Hindu Business Line
3. Viveks holding talks to divest 25% stake to private equity firms
Consumer durables retailer from Chennai, Viveks is holding talks with three private equity firms to divest 25% of its stake to raise around Rs. 1.5 billion. Viveks CMD Kondadrama Setty, said, “We are gearing up for a private placement and talking to three PE firms. The money raised would help finance our first phase of expansion in South India.”
Viveks strong hold is the south where it has 54 outlets in Karnataka and Tamil Nadu. In its expansion, the company plans to open 60 new stores in the southern states that do not have any of Viveks stores as yet. Wednesday, October 11, 2006
Source: The Economic Times
4. Haier to produce locally
Haier Group’s Indian subsidiary, Haier Appliances India Pvt. Ltd is planning to produce its products in India to gain a larger share of the domestic consumer electronics market which is estimated to be worth Rs. 180 billion. The company out sources its production currently, plans to maintain its relationship with its manufacturing partners while getting into manufacturing itself. Friday, October 13, 2006
Source: Business Standard
Food & Grocery
1. Heritage Foods get a new head
S Jagdish, former Business Head of Trends-in-Vogue, CavinKare’s salon business division, has joint as Head of Heritage Foods, the Hyderabad based retailer. Monday, October 09, 2006
Source: The Hindu Business Line
2. Actis buys 65% stake in Nilgiris
UK based Actis, a private equity firm has bought 65% of stake of Nilgiris Dairy Farm for an estimated $65 million. The remaining 35% of the company is held by member of the family. The new management team will be headed by N C Venugopal, who was earlier with Lotte India Corporation as its Managing Director.
Nilgiris is the best known food brand in south India, with 30 stores mostly in cities like Bangalore, Chennai, Coimbatore and Erode. The company is now planning to increase its stores in the next three years by franchising stores out. Newer stores are also likely to be smaller format stores, based on convenience stores. Friday, October 13, 2006
Source: The Hindu Business Line
Jewellery & Watches
1. Titan counting on its sub brands
Titan is counting on its sub-brand to further drive growth in the future. Its women’s range of watches, Raga has been recently repositioned and will now contribute around 40% as compared with 25% last year. Other niche brands such as Edge and Nebula are also likely to grow at a faster pace this year. Ajoy Chawla, business head (Titan) said that even though Edge will grow ‘on a small base’, the company expects it to do business worth Rs. 500 million this year and Rs. 1 billion in the next 3-4 years. Tuesday, October 10, 2006
Source: Business Standard
www.india-reports.com: A Chillibreeze Website - Focusing on niche, value added epublications covering Indian business, economy, industries and government policy.
Stay abreast of the fast moving economic super-power — India!
| 
| 
