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News and Events

Weekly Retail News from India

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

	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. US cites RIL entry to make case for foreign retail chains
The entry of Reliance Industries Ltd in the retail sector has led to the US pushing for the entry of foreign retail chains into the market. This discussion reportedly came up at the meeting of Indian and US officials at the CEOs Forum. India has been against the entry of foreign retail players saying that local vendors would be hit by such large scale operations, but US officials are countering this issue, that Reliance and Bharti Enterprises will affect local businesses just the same as Wal-Mart would.

A Commerce Ministry official said that “It is true that there is no way we can regulate the Indian companies which have turned retailers but given the political opposition we are not in a position to allow the foreign chains to enter the Indian market.” While the government is open to allowing foreign retailers to set up shop in India, the Left and BJP are opposing the move on the grounds that it will cause widespread job loss in certain communities.
Monday, November 06, 2006
Source: The Economic Times

2. Who will be India’s Wal-Mart and Kmart?
India’s retail sector is soon to have another mega launch announcement, with The Aditya Birla Group who plans to establish more than 6,000 stores in the next three years. The company plans to invest more than Rs. 150 billion, second to only Reliance’s investment of Rs. 250 billion to set up 11,000 stores by 2011. These two companies are trying to set up retail chains at levels that global retailers such as Wal-Mart or Kmart established in 3-5 decades.

While Reliance and the Birla’s are working their way from cities and urban areas, Wal-Mart got started in the rural areas in the south, and Kmart and Target got started in larger cities. Wal-Mart established itself as a national chain over a period of 30 years and became the number one retail chain in the world and Kmart became a national chain in 8 years, becoming the 29th largest retail chain in 2005.
Monday, November 06, 2006
Source: Financial Express

3. Organized retail majors record over 50% growth in Q2
The top five retailers in the organized retail sector have had a phenomenal performance this past quarter, with a combined net sales growth of more than 50% for the quarter than ended September 2006. The top five retailers, Pantaloon Retail, Shoppers’ Stop, Trent, Titan Industries and Provogue, have combined net sales growth of 52% and net profit growth of 22%.

Pantaloon Retail had the highest net sales growth at 65%, its value segment increasing by 78% and lifestyle segment increasing by 50%. Value retail accounts for close to 72% of the company’s turnover.
Wednesday, November 08, 2006
Source: The Economic Times

4. India’s retail entrepreneurs
India has the fastest growing retail market in the world, ranking above Russia and is classified as a ‘Priority 1’ market for international retailers. With over 12 million retail outlets, India is often called the “nation of shopkeepers”. Interestingly, over 80% of these retail outlets are run as small family businesses, using household labor.

Due to this fragmentation, the retail industry is as a very nascent stage. While the target consumer base for retailers is only 405 million, India’s total population is 1.07 billion. Of India’s consumer base, only 30 million are considered to have a combined purchasing power of $230 billion, and the 6 million ‘rich’ populations spend $28.36 annually.

India’s GDP currently is $690 billion and is expected to reach $740 billion by end 2006. The country is the 4th largest economy in terms of purchasing power parity of GDP and will likely become the 3rd largest by 2010, ranking after the US and China.
Thursday, November 09, 2006
Source: The Economic Times

Big players – plans and investments

1. Reliance Retail plans to strengthen supply chain mechanism
Reliance Retail’s newly launched Reliance Fresh is only the first step of the company’s retail plans. The next format to be launched will be Reliance Fresh Plus, a larger format store. The company plans to completely secure its supply chain from the farmer to the store, and has been aggressively purchasing property to set up its own fruit and vegetable mandis.

Hyderabad has the first of these Reliance Mandis, which is selling around 15-20 tonnes of vegetables. With these mandis, the company will be able to control the entire distribution channel and make commission agents and other intermediaries redundant. Reliance Mandis will sell all basic fruits and vegetable at 50% of the current price to vendors.

According to sources, Reliance will also be using its Special Economic Zones (SEZs) as distribution and stocking hubs, with each one specializing in different commodities. Along the Western Freight corridor, RIL will develop SEZs in Haryana, Jamnagar and Mumbai at an estimated cost of Rs. 250 billion.
Monday, November 06, 2006
Source: The Economic Times

2. Reliance Retail worries small vendors
With Reliance Retail launching its food and grocery venture and several domestic players tying up or planning to tie up with foreign firms and retail experts, small vendors are showing their concern on whether their businesses will be able to bear the brunt of these large scale retail entries.

Delhi based Dev Bhumi Cold Chain has appointed Dutch national Robert Blokker as its President (operations) to plan and oversee increase in cold storage operations from 10,000 tonnes to 40,000 tonnes. The company will be investing Rs. 600 million towards this venture. Another Indian company, Suri Agro Fresh has formed an equal partnership joint venture with Irish company, Fyffes to use their expertise in improving crop management matters such as harvesting and packing.
Monday, November 06, 2006
Source: Rediff Money, Business Standard

3. Birlas ready a Rs. 150 billion retail rollout
The Aditya Birla Group has planned its retail rollout at an estimated cost of Rs. 150 billion, making it the second largest investment in the retail industry after Reliance Retail’s investment of Rs. 250 billion earlier this year. The Birlas plan to start operation by mid 2007, opening 6,000 stores in three years eventually and will be focusing on the food and grocery segment for half of its revenue. Lifestyle segments will account for approximately 22% and the balance will be from all other segments.

The Birla Group plans to set up retail stores in a similar manner to how Reliance is doing, by not entering into any tie-up with a foreign partner, following a carpet-bombing approach to opening stores in a variety of formats such as neighborhood convenience stores, supermarkets and hypermarkets and also on its focus on food and grocery.
Tuesday, November 07, 2006
Source: Financial Express

4. ITC will invest Rs. 12 billion in West Bengal
One of India’s largest companies, ITC announced that it will be investing Rs. 12 billion in the state of West Bengal to expand its hotel and cigarette business there, and also to start a new fresh food retail chain. According to sources, the company has earmarked approximately Rs. 3 billion for setting up a food and logistical hub for its retail chain.
Thursday, November 09, 2006
Source: The Economic Times

International

1. George Soros sets his sights on Indian retail sector
The Indian retail industry has caught the attention of George Soros, world famous investor and one of the richest people in the world, who is keen on investing in the agro-based industries, retail and real estate sectors. He will be visiting India in mid December, when he also has plans to meet Prime Minister Manmohan Singh, and most likely be announcing which companies he is interested in.

Eddy Zuaiter, chief of Soros Fund Management, was in the country earlier to meet senior corporate and government officials, has already done the initial groundwork. Ashwani Kumar, Minister of state for commerce, is the coordinator between the Indian government and Soros, said, "It signals that India is a good investment destination especially when people like Soros are investing their personal wealth."
Friday, November 10, 2006
Source: The Economic Times

2. Raymond signs agreement with Italian fashion company, Grotto
Raymond has formed an equal partnership joint venture with Grotto SpA, an Italian fashion company, to launch its Italian fashion brand GAS in India. The brand will be available at its flagship and exclusive stores as well as large format and multi-brand outlets, creating a total of 600 points-of-sale in three years. The companies are targeting a turnover of Rs. 1250 million in three years.

The first GAS store will be opening in early 2007. According to Aldo Palmeri, vice chairman and member on the board of Grotto SpA, "Right now, we are looking at distribution in the Indian market. In the future, we will look to manufacture in India as well."
Saturday, November 11, 2006
Source: Business Standard

Regional Trends

1. India’s new retail hotspot: Hyderabad
Hyderabad has been receiving a lot of attention on the retail front lately. With Reliance Retail choosing the city to launch its retail venture, several other retailers are also focusing on the city. There is a million sq ft of space under construction which is expected to increase to 3 million in the next two years.

Besides Reliance, other new entrants in the city’s retail scene are Landmark’s Max Retail, which will be setting up the city’s first hypermarket, and IVRCL, Lanco, Divyashree Construction and GVK are building malls. Raheja’s will be taking both their ventures Inorbit Mall and Mindspace IT Park to Hyderabad.
Monday, November 06, 2006
Source: CNN-IBN

2. Bangalore shoppers still want more
While new stores and malls seem to be opening at a quick pace in Bangalore, shoppers there are still keen on many more malls and shopping centers. While certain areas of the city have several malls, others areas don’t have enough. Also, which The Forum and Garuda can be classified as malls, others like Bangalore Central, Eve Mall, Sigma Mall and The Pavilion are simply shopping complexes and not malls.

According to Ankur Srivastav, managing director of DTZ Debenham Tie Leung, a global property consultancy, "There is an under supply of quality retail malls in the city.” The company recently conducted a survey that showed that about 10 malls in the 500,000 to 1 million sq ft range will be coming up in Bangalore in the next three years.
Monday, November 06, 2006
Source: Financial Express

3. RIL looks to Pune to establish agri hub
Reliance is keen on acquiring approximately 100,000 acres of farm land in Pune to grow vegetables, flowers and other items to supply its stores. The company submitted a proposal to the Maharashtra government seeking permission to take the land for a 50 year lease.

The company emphasized that it does not want to take the land that belongs to the farmers, but instead wants to take the land on lease, paying a fixed price of Rs. 4,451 per acre per year. Reliance will also pay the market price to the farmers for their produce.

This contract farming act was brought in by Harshvardhan Patil, state minister for agri-marketing in Maharashtra. According to the contract, corporate clients are permitted to take farm land and forge a buyback agreement with the farmers for their produce by paying market prices. With the system, farmers will get better prices and companies can bypass the middlemen. According to Harshvardhan Patil, “Reliance is the first major player to have shown interest in getting into contract farming after the Act was passed.”
Tuesday, November 07, 2006
Source: The Economic Times

Support Industries

1. Retail rentals in India rising but still lower than global standards
Khan Market in New Delhi is the most expensive retail location in the country. Cushman & Wakefield’s study on retail rates on high street locations has brought some interesting findings. According to Sanjay Dutt, of Cushman & Wakefield, as branded companies are looking for quality space that has high conversion rates from footfalls, rates in high street locations such as Khan Market and South Extension in Delhi and Linking Road in Mumbai are increasing.

Khan Market is placed at 24 on the global list and is the top location in India, compared to Mumbai’s Linking Road which stood at 41 last year. New York’s Fifth Avenue was in the top position, followed by Causeway Bay in Hong Kong and Avenue des Champs Elysees of Paris in the third position.
Monday, November 06, 2006
Source: The Economic Times

HR News

1. Reliance Retail suffers its first major HR casualty
Reliance Retail lost its first high profile executive, with Rajeev Karwal, president and CEO of the consumer durables division. Incidentally, he was also the first to join the Reliance Retail venture. Reliance Retail has named Ajay Baijal, former group head at Reliance Infocomm, an Anil Ambani owned company, as his replacement.

Rajeev Karwal was earlier CEO of Electrolux and before that with LG Electronics, where he was widely credited as being responsible for the company’s gaining a foothold in the Indian market.
Thursday, November 09, 2006
Source: The Economic Times, Business Standard

Unique formats

1. Mumbai Airport set to become a shopper’s paradise
The Mumbai airport will soon become a shopper’s paradise, with modern shopping arcades, food courts and shops of famous international brands. Global property consultancy firm, Jones Lang LaSalle (JSL) has been given the job of identifying potential tenets. GVK Reddy, chairman or the Mumbai International Airport, said that, “The shopping area will sport the best known international brands and restaurant chains.”

There will also be new lounges that passengers can use after going through security clearances. At present, only Indian and Jet Airways have lounges at the airport and soon Kingfisher and Sahara will also be allocated space for their lounges.
Monday, November 06, 2006
Source: Daily News & Analysis

2. Highway malls increasing in number
Real estate developers are reportedly developing malls on the highways in record numbers, following an international trend. Somdatt Builders, division Collage India Pvt. Ltd, will be developing 10 malls along highways in the next 3-5 years and Majestic Properties Pvt. Ltd plans to develop 5 malls in the next 2-3 years.

Due to rising prices and unavailability of land in the city limits, builders are now trying to capitalize on highway locations that have lower rates and still have the potential of attracting high number of footfalls.
Tuesday, November 07, 2006
Source: The Hindu Business Line

Government Policy

1. Fashion Council to form partnership with clothing association
The Fashion Design Council of India (FDCI) and the Clothing Manufacturers’ Association of India (CMAI) have both signed an agreement of co-operation, which will focus on highlighting fashion as a central part of the clothing and fashion industry. In this regard, FDCI will open an office in Mumbai. On the agreement, director general of FDCI, Rathi Vinay Jha said that, “With this agreement the two organizations want to strength the manufacturing and technical services to benefit the fashion industry."
Thursday, November 09, 2006
Source: Business Standard

Sector specific:

Apparel & Footwear

1. VF Arvind opens its third Kipling store
VF Arvind launched its third Kipling store in India, at the Galleria Leela at Leela Palace in Bangalore. Kipling, a Belgium based company that specializes in women’s casual handbags is part of the VF Group. Its other two stores are in Delhi and Mumbai, and plans to open six exclusive stores and twelve shop-in-shops by mid 2007.
Monday, November 06, 2006
Source: The Hindu Business Line

2. Woodland plans expansion
Indian footwear company Woodland will be expanding its production capacity and opening 60-70 new stores in the next two years. According to Harkirat Singh, Managing Director of Woodland Shoes, "Demand for our products has grown in the past few years. We would invest about Rs. 10 crore (Rs 100 million) to set up three new facilities in Uttaranchal to cater to the increased demand."

The company has a capacity to produce 6,000 shoes per day at present and by 2007 end will be able to increase it to 10,000-12,000 shoes per day. Woodland will be opening 60-70 new stores in metros and tier I cities. The company is also looking to increase its apparel and accessories brands, doubling production capacities from 3,000 pieces to 6,000 pieces per day.
Monday, November 06, 2006
Source: Financial Express

3. Reebok plans large exclusive stores
Reebok India is carrying forward its aggressive policy to expand its market share in India, by opening exclusive large format stores that will increase visibility of the brand. According to Subhinder Singh Prem, managing director of Reebok India, the large format stores allow the company to showcase the entire collection together. The latest of these large format stores was opening in Kolkata this week and another one will be opening later this week in Hyderabad.

Reebok plans to have 600 exclusive stores by 2007 across India. Currently the company has 375 standalone stores, which it is planning to increase to 1,100 stores by 2010. An estimated 30% of stores are currently located in Tier II cities.
Tuesday, November 07, 2006
Source: Business Standard

4. Hakoba plans expansion
Embroidery textile and apparel manufacturer Hakoba Lifestyle will be planning several brand extensions in the next year, including lines for menswear, home textiles and lingerie. The company will also be expanding its network of stores from its current 50 to 200 by the year 2009. Multi brand outlets will be increased from the current 200 to 800 also.

Hakoba is a Rs. 220 million company and Rajkumar Sekhani, director of Hakoba Lifestyle plans to increase revenues to Rs. 150-175 by 2009. At present the company is located in 26 cities and will be focusing on tier II and tier III cities for its expansion. Hakoba also plans to enter the Middle East market in the near future.
Tuesday, November 07, 2006
Source: The Economic Times

5. Indus Fila likely to acquire international brand
Bangalore based textile manufacturer and exporter, Indus Fila is in the process of purchasing an international brand. It has started a due-diligence process in this regard. Once it goes through, the company will enter the domestic market. According to Nitin Mandhana, vice chairman and managing director of Indus Fila, “We have realized that acquisition of an established fashion apparel brand is the best way to enter the domestic market.”

Indus Fila has been supplying garments to brands such as Mexx, Armani, Levis, Nike, Tommy Hilfiger, Philip Van Heusen, Haggar and Wal-Mart. The company had a turnover of Rs. 850 million in the last financial year.
Tuesday, November 07, 2006
Source: Business Standard

6. Provogue plans to set up a discount chain
Provogue India Ltd announced that it will be setting up a multi-brand clothing and accessories discount chain store, in an effort to increase revenues and reduce reliance on its Provogue brand. According to plans, revenues from this discount chain and the Prozone mall management development will account for half of the company’s total revenue in approximately three years. The discount chain to be called Promart will be starting in January and will sell excess stock, seconds and lower priced brands at 20-60% less than regular prices.
Tuesday, November 07, 2006
Source: Reuters

7. Adidas to select local golfer to endorse products
Taylormade-Adidas Golf, a division of Adidas, will be selecting a local golfer to endorse its golf wear products which it will be introducing in India next year. The company already has signed Virender Sehwag to endorse certain Adidas products. Adidas plans to promote golf in India and has started a pilot project at two schools in Delhi and Bangalore where it provided students with free equipment and coaching.
Thursday, November 09, 2006
Source: The Economic Times

8. Oswal Group looks to private equity funding to finance expansion
The Ashok Oswal Group is likely to use private equity funding to finance its retail expansion plans. The company has two retail ventures, Straps, a lingerie chain and AO’S, a casual wear chain. Adish Oswal, managing director of Oswal Retail, told ET, “As of now we have been utilizing funds internally but by next year when we attain a bigger size and require funds we may look at a private placement. If it happens it would be at least 10% of the equity. However, right now we are not talking to any fund or discussed valuation.”

Oswal Retail is likely to bring in Rs. 250 million this year, Rs. 150 million from Straps and Rs. 10 million from AO’S. The company will also be launching a third brand in the next couple of months. The Straps brand is located all across India, while the AO’S is only in north India and will be going national in the next eight months.
Saturday, November 11, 2006
Source: The Economic Times

9. Raymond to launch more brands for women
Raymond will be bringing out new brands for women to balance its product mix and not be known only for its ‘complete man’ products. Shreyas Joshi, president (group apparel) for Raymond, told ET, “So far, we have been a men’s apparel-dominated brand while women’s wear is an interesting market, with not too many organized players in this segment. We are seriously looking at this segment, which we should be able to announce by January 2007. Yes, we could look at Jvs with international labels, too, or acquire existing brands.”

Currently, Raymond has 16 Be: stores, a women’s brand which features some of India’s top designers, and will be adding four more by March 2007. There will be multiple brands for women, including an ethnic wear brand. It’s other brands Manzoni has 2 stores at present and will add three by March 2007, Park Avenue, has 12 stores now and will be 25 stores by March 2007, Parx has five stores now and will have 12 stores soon, Zapp!, its children’s’ wear brand has two stores now and will add another 10 by March 2007.
Saturday, November 11, 2006
Source: The Economic Times

Home Furnishings

1. S Kumars board to approve US textile firm acquisition
S Kumars’ board will meet on November 9, 2006 to approve the company’s acquisition of US textile firm Christy. S Kumars has reportedly evaluated the company at Rs. 4.5 billion. If approved, the acquisition will give S Kumars access to retail outlets in the US where it can retail its own brands. Christy is a San Francisco based company that supplies home, bed and bath products to brands such as Liz Claiborne, Nautica and Dockers, and retails under its own brand as well.
Monday, November 06, 2006
Source: Business Standard

2. Thai home furnishings chain Index Living Mall plans to come to India
Thailand’s Index Living Mall, a home furnishing and furniture chain has made definite plans to come to India. The company is likely to choose a franchise model and will probably start operation in Mumbai in 2007. Index Living Mall is Thailand’s largest specialty mall and its foray into India will be its second overseas location.
Wednesday, November 08, 2006
Source: Daily News & Analysis

Food & Grocery

1. Tea Board of India plans to set up Tea boutiques in metros
The Tea Board of India will be launching a chain of tea boutiques in some of the metros in the next year. At present, the Board has tea centers in Mumbai and Ahmedabad and the Board plans to refurbish them. New boutiques will be opening in Kolkata, Bangalore and Delhi. These Tea Boutiques will use a public-private partnership format.
Sunday, November 05, 2006
Source: Daily News & Analysis

2. International breakfast brands heading to India
The organized breakfast cereal market in India is estimated at Rs. 5 billion is expected to grow with the imminent entry of international brands such as Nestle, Godrej and ITC Foods. Nestle is known to be launching a wide range of breakfast cereals, while Godrej Foods and ITC Foods are testing products in the health and breakfast segments.

PepsiCo recently launched Quaker Oats and Kellogg’s has extended its breakfast cereal range to include muesli. Domestic companies Haldirams and Cremica are also planning to enter this segment.
Monday, November 06, 2006
Source: The Economic Times

3. McDonald’s to open 15 outlets in next three years
McDonald’s is making aggressive plans targeting eastern India with its proposed launch in Kolkata. The company will be opening its flagship restaurant next year and will be setting up 15 restaurants in the city in the next three years, investing approximately Rs. 1 billion. McDonald’s will also be setting up a regional distribution centre in the city.
Tuesday, November 07, 2006
Source: Daily News & Analysis

4. Subhiksha to enter north Indian markets in two months