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. Old economy sectors such as retail, mining and power transmission to cross IT sector
Old economy sectors such as retail, mining and power transmission are showing faster growth than software service in the past three years. Software companies have been growing at a three year compound rate of 33% and retail, mining and power transmission are growing at a much faster pace.
Of the three, retail is the fastest growing sector, growing at a three year compound rate of 46.64%, mining sector at 44.8% and power transmission at 36.6%. Pantaloon Retail has an impressive growth rate of 57%. Tuesday, October 31, 2006
Source: Business Standard
2. Rumors of Bombay Rayon entering retail ups share prices
Rumors of Bombay Rayon entering the retail segment are increasing the company’s stock, which has gone up 31% month on month and 11% week on week. According to industry sources, the company is likely to tie up with a real estate development company. Thursday, November 02, 2006
Source: The Hindu Business Line
3. India’s retail revolution gets started
The Economist writes about India’s retail revolution that has started with 11 Reliance Fresh stores opening in Hyderabad. Domestic operators are speeding up expansion plans and foreign retailers are figuring out a way to get in the market. At present, FDI is permitted only in single brand retail with 51% ownership, so several foreign retailers are coming in the back door, selling to the wholesale market or tying up with an Indian partner.
Australia’s Woolworths recently tied up with Tata, India’s second largest firm to set up Croma, selling electronic goods. Tesco, Wal-Mart and Carrefour are all reportedly working out their strategies on how to enter this profitable market. Thursday, November 02, 2006
Source: The Economist
4. Some quick facts on the Indian retail industry
India’s retail sector is estimated to be worth $350 billion, of which organized retail accounts for only $8 billion. This organized part of the retail industry is growing at 30% annually.
Market Data:
New entrants: Reliance Retail and Bharti Enterprises
Established retailers: Pantaloon Retail, Shoppers’ Stop, Spencers, HyperCITY, Lifestyle, Trent.
An estimated $412 billion is likely to be investing in the retail sector over the next five years.
Food, beverages and tobacco make up 40% of the retail sector.
The organized food retail sector is estimated to be worth $666 million and likely to reach $33.3 billion by 2015.
Branded apparel segment is estimated to be worth $422 million and is growing strongly at 20% annually.
Major metro’s such as Mumbai, Delhi, Chennai, Kolkata, Bangalore and Hyderabad is where 68% of organized retail is located.
There will be an estimated 220 malls by 2007, a significant rise from 30 in 2003. Current lease rates in major cites vary from Rs. 88 – 120 per sq ft per month.
India’s retail industry is the 2nd largest employer, after the agriculture sector, employing 21 million people, roughly 6% of the country’s total workforce and contributes 13% of the GDP.
Foreign Investment:
Foreign companies are permitted to hold only 51% of equity in a single brand format only, whose products are sold under the same brand internationally.
Friday, November 03, 2006
Source: Reuters
Big players – plans and investments
1. Mothercare expansion may exceed targets
The UK based Mothercare brand was founded in the 1960s and has come to be known as trusted and reputable. The company is now in 36 countries and is keen to push further into the Indian retail market with its tie up with Shoppers’ Stop. In the UK, growth has been barely 1.5-2%, while in international markets the company is growing at a rate of 28%.
In an interview with The Economic Times, Ben Gordon, Global CEO of Mothercare, said that the main drivers for the company are the Middle East, Russia and Greece. India and Indonesia feature as probable growth markets after the current ones. Products in Indian Mothercare stores were priced lower than in the UK but now they are priced at a similar value.
The company currently has 8 stores in the past five months that it has been in India and although it had originally planned 40 stores in five years; Mothercare is keen on opening up to 100 stores. At present, there are 4 Mothercare stores in Mumbai and one store each in Pune, Hyderabad, Bangalore and Chennai. Tuesday, October 31, 2006
Source: The Economic Times
2. Shoppers’ Stop profit up
Shoppers’ Stop has reported an 81% rise in net profit, a rise from Rs. 40.8 million to Rs. 73.9 million for the quarter that ended September 30. Its sales have increased 39% from Rs. 1405 million to Rs. 1956 million. Wednesday, November 01, 2006
Source: The Hindu Business Line
Reliance Fresh
1. Reliance Fresh to open on November 03, 2006
Reliance Retail’s much anticipated foray into the retail sector will finally see its fist store opening on Friday, November 03, 2006 in Hyderabad’s posh neighborhood Banjara Hills. The store is a food and grocery small format store and will be followed by 15 more stores in other cities in Andhra Pradesh. Besides fresh fruits and vegetables, the store will also stock packed tapes such as lentils and flour and general merchandise products.
At the unveiling of the store for the press on Sunday, October 29, 2006, Mukesh Ambani CMD RIL said that, “This is the first small step in our attempt to build and forge strong and enduring bonds with the millions of farmers and transform our relationship with the consumers to a new level. We are starting on a pilot journey of listening to customers and learning from them. We still strive to continuously delight them.” The Hyderabad store is one of 11 pilot stores that will “listen and learn from consumers” according to Mukesh Ambani.
Other cities that Reliance Fresh stores will be opening in are Vijaywada, Vishakapatnam, Chitoor, Tirupathi, Adilabad and Karimnagar. In other states, the stores will open in Ahemdabad, Mumbai and Delhi. The company plans to open stores in 1,500 cities to generate around $2 billion by the year 2010. Reliance will follow three price points, based on the quality of the product: premium, middle and lower. The company’s in-house brand Reliance Select for grocery items was also launched.
Reliance hopes to change one of the major problems of retail in India, having a smooth supply chain in place. By linking farms and stores with a high-tech cold storage and transport system, both farmers and consumers will gain. A senior Reliance official said that the company hopes to “reach out to more than 60% of the population in four years time”. Monday, October 30, 2006
Source: The Economic Times, The Hindu Business Line, Yahoo News
2. Reliance opens its first retail store
Reliance Retail’s first store, a food and grocery format store called Reliance Fresh open its doors today and now that the company’s first store is off the ground, Reliance will be rapidly expanding. The company will be investing $5.6 billion to establish a chain of hypermarkets, supermarkets, discount stores, department stores, convenience and specialty stores across the country.
Raghu Pillai, President (operations) of Reliance Retail, said that there will be lots of action in the second quarter of next year, when stores will open in several formats across the country. He added that the company was likely to post a turnover of $22 billion by the end of the 2010/2011 financial year. Reliance plans to be in 784 cities and towns in India by the year 2010/2011. Friday, November 03, 2006
Source: Reuters
3. Reliance Retail’s Fresh start
The launch of Reliance Fresh in Hyderabad marks the beginning of the company’s in house brand Reliance Select, under which the company will sell staples such as pulses and rice. The stores, product selection and the prices have been designed keeping the average Indian housewife in mind and appropriately, the store will be inaugurated by them too.
Nita Ambani, wife of RIL’s CEO Mukesh Ambani, has been deeply involved in store design, branding, customer experience and staff selection for the company. Reliance plans to have close to 1,000 stores in 10 states operational by March 2007. Most stores will be in the 2,000-5,000 sq ft range.
The company wants Reliance Fresh to be the neighborhood store, with a store for every 3,000 families or approximately a store for every 2 km. Friday, November 03, 2006
Source: Business Standard
4. Reliance Fresh not to be a threat to small vendors
The opening of 11 Reliance Fresh stores in Hyderabad marked the formal entry of Reliance in the retail industry. Officials assured small traders that Reliance Fresh stores would not be a threat to them. Raghu Pillai, President and CEO (operations and strategy) said that kirana store owners and small vendors can benefit by purchasing their stocks from the company’s wholesale stores, Ranger Farms at lower prices.
He added that Reliance was "…not harming small retail players... the market is growing by 8 per cent which is 24-25 billion dollars (nearly Rs. 1125 billion) every year... we are aiming at revenues of only 25 billion dollars in four years... even if the market grows by 100 billion dollars by 2015, organized retail would be still less than 10-12 per cent of retail trade.” Friday, November 03, 2006
Source: The Economic Times
5. Reliance Retail aims to link farm to fork
As the first Reliance Fresh opened in Hyderabad, the company is keen to use its resources to create a profitable link from farm to fork. Raghu Pillai, President and CEO (operations and strategy), emphasized that the company will be opening stores in the 70 top cities in several formats, including hypermarkets, music and entertainment, pharmacy, specialty stores and lifestyle products.
Reliance hopes to utilize its investment in its supply chain and will be starting Ranger Farms, a wholesale format store to cater to fresh fruits and vegetables to small vendors and stores. Ranger Farms will open earlier in the mornings and will have different prices than the Reliance Fresh stores. Reliance is also utilizing its supply chain to source fruits and vegetables from specific crop belts in the country. For example, the apples come from Himachal Pradesh, onions come from Karnataka and green leaves come from close by districts of Andhra Pradesh. Saturday, November 04, 2006
Source: The Economic Times
International
1. Raj Jain to be Wal-Mart President and CEO designate for India
Wal-Mart has appointed Raj Jain as its President and CEO designate for its India operations. Wal-Mart already has an office in Delhi from where it is deciding its entry strategy. Raj Jain is the former regional director of marketing and product delivery for Whirlpool Asia and was selected earlier this year to be the president for the company’s emerging markets in Asia, excluding China and Japan.
Raj Jain is currently in Shanghai undergoing training and when contacted by ET, only said that he was the president and CEO of Wal-Mart’s emerging markets, refusing to comment on any position related to the company’s India operations. Wednesday, November 01, 2006
Source: The Economic Times
2. Wal-Mart stepping up efforts to start operations in India
US retail giant is reportedly stepping up efforts to gain entry to the Indian retail market. Raj Jain president (emerging markets, excluding China and Japan) is currently in India to hire senior managers for its India operations. The company is also looking for a legal head and operations head for its India operations.
Arvind Singhal of Technopak said that although Wal-Mart is keen to enter the market soon, the process would take at least 15 months since its business policy was not clear. Wal-Mart is reportedly looking for an Indian partner to set up its business here, and its wholesale model of operations, Sam’s Club is one of the likely access routes to enter the market. Friday, November 03, 2006
Source: Daily News & Analysis
3. Benetton to increase outlets
Benetton plans to double its outlets in India in the next three years. At present the company has 80 outlets in 40 cities and plans to have 100 stores operating by early 2007. The company expects its sales to increase by 30-35% in the next few years. Friday, November 03, 2006
Source: The Hindu Business Line
HR News
1. Simone Tata steps down
Simone Tata stepped down as Chairman of Trent Ltd., the Tata’s retail division. The new chairman will be Farrokh Kavarana. Simone Tata has guided Trent right from the start, establishing it in 1998, by acquiring Littlewoods and expanding the Westside chain. Monday, October 30, 2006
Source: The Hindu Business Line
Unique formats
1. Shoppers’ Stop plans on making ‘fun centers’ for families
Shoppers’ Stop is picking up 45% stake in Time Zone Entertainment Pvt. Ltd.’s India operations to connect with families and young adults via entertainment. BS Nagesh, CEO of Shoppers’ Stop, told DNA Money that, “The board has just approved of the company’s decision to synergize our existing business with entertainment facility. To this effect, we will be acquiring 45% stake in this family entertainment centre (FEC) company operating under the brand ‘Timezone’.”
At present Time Zone Entertainment operates three family entertainment centers (FECs) in India, Inorbit Mall in Mumbai, Gallops Mall in Ahmedabad and Salt Lake City Centre in Kolkata. According to industry sources, the company is planning to increase their operations to have 100 such outlets. Sunday, October 29, 2006
Source: The Economic Times
2. Aer Rianta and Flemingo tie up for duty-free retailing
Ireland’s duty free major Aer Rianta, a subsidiary of Dublin Airport, is entering the Indian market in a tie up with Flemingo India to bid for setting up duty-free retail outlets at the Delhi and Mumbai airports. Flemingo is the only major duty-free company operating at Indian airports besides the government owned ITDC, whose lease for space at Delhi airport expires this December. Tuesday, October 31, 2006
Source: The Economic Times
3. NIFT launches its own rural based fashion label
The National Institute of Fashion Technology has tied up with the Ministry of Rural Development’s Swarnjayanti Gram Swarozgar Yogna (SGSY) to launch a fashion label, “i.m.”. Asha Baxi, senior professor and dean of academics at NIFT, said, “The attempt is to get our budding fashion designers to understand and involve Indian craft and fabric, generate a perpetual employment mode for traditional craftspeople and, finally, of course, establish a sales point that will market the end-product.”
NIFT will retail i.m. products at the Rajiv Gandhi Hasta Kala Bhawan in New Delhi. In this regard, 10,000 craftspeople have been already been identified in 5 states of Madhya Pradesh, Karnataka, Gujarat, Kerala and West Bengal, which will be handled by NIFT students in Delhi, Bangalore, Gandhinagar, Chennai and Kolkata.
Students will take artisans on educational trips to places such as Fab India, Anokhi, Dilli Haat, where they can see the various interpretations of their craft. This venture will see an investment of Rs. 30 million, on training, sourcing material, skill upgradaton, marketing and product development and is likely to change the lives of the over 2,000 craftspeople. Thursday, November 02, 2006
Source: Business Standard
Sector specific:
Apparel & Footwear
1. Uzazi Fashions brings out new range of maternity wear
Pune based fashion company Uzazi Fashions Pvt. Ltd has launched a range of maternity wear. Minal Joshi, managing director of Uzazi Fashions said that the maternity brand was the result of detailed research and study over two years to understand consumers’ needs and selecting the right fabrics and patterns. The company hopes to provide consumers with “stylish, modern and affordable maternity wear” according to Minal Joshi. Thursday, November 02, 2006
Source: Business Standard
Consumer Durables
1. Essar Group plans retail launch
The Essar Group will be soon launching its own retail stores selling mobile phones. According to reports, the Virgin Group is likely to provide technical support and store design. The probable name for the venture is Mobile Shop and it is to be a one stop shop for all mobile phone and accessories needs. The stores will be in the range of 300-600 sq ft in space and will open in the next 4-6 months.
Initially only the major cities in India will have these stores, but the company hopes to have 2,500 stores by 2008. India is seen as one of the hot markets and is already the second largest market for mobile phones. The industry is estimated to reach Rs. 300 billion by 2007. Tuesday, October 31, 2006
Source: Moneycontrol.com
2. Great Eastern Appliances in Kolkata plans national level launch
Kolkata based Great Eastern Appliances chain of discount stores announced that it was planning to launch its ‘Technocity’ brand across India. The company plans to have open format stores so customers can try products before purchasing them using the ‘experiential marketing’ retail model.
The company is targeting the aspirational segment and its stores will be spread over 20,000 sq ft offering home and kitchen appliances, music systems, gaming and IT products in brands such as Samsung, Electrolux, Kleche, Dennon, Sanyo, Sony, Pioneer, Yamaha, Hitachi and Sharp. Thursday, November 02, 2006
Source: The Economic Times
Food & Grocery
1. Trinethra plans Rs. 1 billion investment
Trinethra Super Retail (TRSL) announced that it will be focusing more on the supermarket format and plans to grow to 220 outlets by March 2007. At present Trinethra has 150 stores in southern states, Andhra Pradesh, Tamil Nadu, Karnataka and Kerala. The new stores will also be located in the same region.
The company launched its new retail format, called the Trinethra Quick Shop. These Quick Shops will focus on stocking the main 3,000 SKUs that make up 70-80% of store sales. TRSL is a Rs. 2.4 billion company that operates stores under the name Trinethra in Andhra Pradesh and Chennai and under the name Fabmall in Bangalore. Monday, October 30, 2006
Source: The Economic Times
2. Pizza chains targeting small towns
Multinational pizza chains are all turning towards the potential market in the smaller towns and cities of India. Menu offerings are also being localized to suit the palette of the small town customer. Cities like Vapi, Guwahati, Jamshedpur, Meerut are all on the list of pizza chains soon to be opening list.
According to Arvind Mediratta of Yum Brands and promoters of Pizza Hut, "The organized pizza market, which comprises MNC chains and big brands is worth Rs. 700 crore (Rs. 7 billion) and is growing at a rate of 30 per cent annually. Innovation and localization are the key to growth in the pizza industry."
Pizza is not seen only as fast food any more and the demand for pizza is growing due to consumers changing lifestyles and eating habits. The major multinational players in the pizza industry in India are Pizza Hut, Domino’s, Papa Johns and Pizza Express. Delhi based Nirula’s is the most well known Indian pizza brand. Monday, October 30, 2006
Source: The Economic Times
3. Illycafe plans to promote gourmet coffees in India
Due to the rising consumption of coffee in India, illycafe S.p.A. is planning to promote gourmet coffee culture and open an outlet of its ‘University of Coffee’ in Bangalore. Illycafe is the producer and marketer of a single blend Arabica and operates the Universita del Caffe in Italy at Trieste.
Andrea illy, chairman and CEO of illycafe, said that the University of Coffee will be functional in January 2007 and will be training Indian coffee growers and baristas, organize food and beverage courses, train managers etc. Monday, October 30, 2006
Source: The Hindu Business Line
4. Heritage Foods to open pilot stores in November
Heritage Foods announced that it will be opening its pilot stores in Hyderabad in the second fortnight of November. The company’s total income was Rs. 902.5 million for the second quarter against Rs. 773.7 million for the same duration last year. Monday, October 30, 2006
Source: The Hindu Business Line
5. Pulse Foods to open outlets overseas
The food retail division of Poddar Heritage Group, Pulse Foods India said that it will be opening outlets in the US, Muscat, Jeddah, Dubai, Saudi Arabia and other cities in the next three years. The restaurant chain will be investing Rs. 520 million for these expansions.
For its warehousing and storage requirements the company had tied up with UK based Iglo. Pulse Foods is also negotiating for opening a food court outlet in the US and UK. Wednesday, November 01, 2006
Source: Daily News & Analysis
6. Illycaffe to target high end market for its Espresso blends
Illycaffe is keen on tapping the high end market for its Espresso coffee blends. The company has seen already great success in its business in five-star hotels in India. Andrea Illy, Chairman and CEO of illycaffe, said that the company will be targeting premium homes for their own brand of Express coffee that is likely to enter the market in 2007. The company had tied up with Fresh & Honest Café Ltd. for the five-star segment and now wants to extend that to other locations such as cafés, restaurants and corporate offices. Thursday, November 02, 2006
Source: Business Standard
7. Café Ritazza to open at airports
RKHS, formerly known as Radha Krishna Hospitality Services, has tied up with Select Service Partner (SSP) to set up travel concessions and eateries at airports and railway stations in India. Under the agreement, RKHS will be launching Café Ritazza, which is owned by SSP, at airports in India. At present these cafés are located at 120 airports in 23 countries.
Sunil Nayak, CEO of RKHS said that while this was the company’s first venture into the retail of travel concessions, in the next 2-3 years this division would be contributing up to 8% of the total turnover of the company, reaching Rs. 10 billion by 2010. Jude D’Cruz, vice-president (strategy and new business) for RKHS added, “Privatization of airports and a rapid growth in air traffic in the country will increase the demand for food offerings of international standard and service at airports.”
The company already has 2 functional outlets in Mumbai, one at the international airport’s departure terminal and the second at Lilavati Hospital, more outlets are expected to open in Delhi, Bangalore and Hyderabad. Sunil Nayak emphasized that concepts would be Indianized to suit the local palette. Thursday, November 02, 2006
Source: Business Standard
8. HLL shelves plans for T Place chain of tea parlors
The Hindustan Lever Ltd has for now shelved its plan to promote tea through its chain of tea parlors to compete with coffee chains, Barista and Café Coffee Day. The company closed T Place, its first tea parlor in Bangalore and is now not going to enter the branded tea chain business. The T Place was located in Koramangala in Bangalore. Friday, November 03, 2006
Source: The Hindu Business Line
Jewellery & Watches
1. Apranje Jewelers receives IGI certification
Bangalore based Apranje Jewelers announced that it is the first diamond jewelry store in the city to become certified by the International Gemological Institute (IGI). The International Gemological Institute is an independent testing facility for gemstones and fine jewelry. Wednesday, November 01, 2006
Source: The Hindu Business Line
2. Tanishq to open in the US
Titan Industries jewelry brand Tanishq announced that it will be launching in the US market by next Christmas. Initially the company will be going through a franchisee model, to gauge on how the brand will be accepted in the US market. Tanishq sees a huge potential in the US due to the large number of people of Indian origin settled there.
Besides targeting the Indian customer, Tanishq is considering attracting the average American consumer also. A company spokesperson said that, “We can’t ignore the general American consumer. We are figuring out details and the strategy will be firmed up in the next two months.” Friday, November 03, 2006
Source: Business Standard
3. Timex to diversify to make jewelry, sunglasses and other accessories
Timex announced its plans to diversify to manufacture jewelry, sunglasses and other accessories, although no timeline of this process had been set up. The company also wants to expand its retail outlets in the next 18 months to 120, from its current 32. New stores will have a multi-brand strategy. Saturday, November 04, 2006
Source: The Economic Times
Luxury and Lifestyle
1. Blue Clothing Company to retail luxury brands
Increasing demand for luxury brands is leading to brands such as Versace to relocate from multi brand outlets (MBOs) in five-star hotels to exclusive boutiques to reach more customers. Blue Clothing Company authorized licensee of several luxury brands is now retailing Versace, Corneliani, Cadini and Sisley though exclusive stand alone stores.
Abhay Gupta, Executive Director of BCC, said that "These exclusive brands need an exclusive treatment, and MBOs cannot give the consumer a complete shopping experience when it comes to luxury labels." Sunday, October 29, 2006
Source: The Economic Times
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