Stay abreast of the fast moving economic super-power — India!
| Stay abreast of the fast moving economic super-power — India!
|
|
Updates on the Indian Retail Sector1. Global retailers take stock Global retail giants are slowing down expansion plans to take stock. Wal-Mart in the mid 1990s expanded wildly, buying the Asda chain in the UK with 229 stores, 122 stores in Canada, 95 stores in Germany and 4 in South Korea and opened its first stores in Argentina, Brazil and China. Contrast it to the past four months, and Wal-Mart has not done any expansion and instead has opted out of South Korea and Germany and is expected to do the same in Argentina. International retailers have had a hard time understanding that opening lots of stores does not work for all international markets and now are focusing on select countries such as India, where its is lobbying for a change in the FDI restrictions; China, the world’s most populous country; and Latin America. Carrefour learnt a similar lesson and pulled out of South Korea, Mexico and Japan and is focusing on China. Tesco pulled out of Taiwan and is focusing on its US entry and on Europe.
2. Barista plans to sell 20% stake to fund expansion Barista Coffee will be adding 100-120 new cafés each year for the next three years and plans to fund its expansion by selling 15-20% of its stake in the company. Barista is also planning to open cafés in Bahrain, Oman and Bangladesh by year end and Qatar and South East Asia next year. Sterling Group, promoters and owners of the Barista chain of cafés will be divesting 15-20% of its equity. According to Partha Dattagupta, CEO of Barista the company will be “…expanding from 25 cities to 40 this year. This apart, we will also be investing in back-end infrastructure as well as renovation of existing stores and facilities.” The company will be investing an estimated $43.35 million over the next three years to open new outlets. The company has appointed Standard Chartered to look for investors and chart their growth plan. 3. Ladies only malls To increase the number of women visiting malls, some retailers are considering the concept of malls that would cater exclusively to women customers. An estimated 12 malls are expected to come up over the next 2-3 years that focus on attracting women, whether they are housewives or working women. These malls would offer only women-centric products and have an all women staff. One of the first developers to make such a mall is Suncity developers who have begun work on their first such mall and plan to make 5-6 more women focused malls. Aerens Group who have developed the Goldsouk and Wedding Souk malls are also likely to build a woman centric mall. Delhi’s Ansals Plaza, one of the capital’s first malls is also working to create special zones for women related products. 4. The Future Group hires McKinsey as consultant The Future Group will be relying on McKinsey to systemize its future growth plans and recommend a model for the company to achieve its targeted turnover of $7 billion (Rs. 300 billion) by 2010. Kishore Biyani, MD of The Future Group said, “McKinsey has been roped in to assist and systemize our future growth plans. They have already completed the first project and will work with us on more projects.” 5. ColorPlus co-founder starts new venture Kailash Bhatia, one of the co-founders of one of India’s most successful apparel brand, has brought out a new venture code named Clothes & More with the backing of a US based venture capital fund. He had earlier sold all of his stock to Raymond a few years ago. According to reports, the new venture plans to raise an estimated Rs. 800 million-1 billion, although the amount is yet to be confirmed. Incidentally, this will be the second venture capital backed start up in the branded apparel industry. The first VC backed deal was when Sriram Srinavasan and other top executives from Madura Garments floated Indus League in 1999, with the backing of Draper International and later on by ICICI Ventures and currently owned by Pantaloon. 6. Pantaloon opens its 31st Big Bazaar The 31st Big Bazaar opened in Agra at the Pacific Taj Mall, the first mall in the city. The store has a total area of 43,750 sq ft and over 160,000 products. 7. Ensuring long shelf life As the number of supermarkets and hypermarkets increase, so will the number of vendors supplying products to them. According to Dharmender Jain, CFO of HyperCITY, “We have 450-500 SME vendors. The numbers have risen over the last 5-6 months. Many new vendors are approaching us with their products.” SMEs have a distinct advantage when it comes to providing items with local customizations and flavors that large manufactures are not able to produce. To be a successful, a SME must use technology to connect with the retailers, and be aware of changes in packaging. 8. PGC: Tirupur manufacturing and export company launches own store Prem Gupta Company a manufacturing and export company based in Tirupur entered the domestic retail industry with the opening of its T-Mart stores. The company plans to have 2010 stores across the country by 2010 of which 50 will be company owned and operated, 300 would be franchisees and the remaining 1,600 would be ‘shop-in-shops’. The company will initially be manufacturing only cotton knitted garments for men, women and children and add woven garments and accessories at a later time. PGC already has a tie up with Swiss brand Switcher which has given it exposure to the urban Indian consumer. 9. Delhi’s sealing drive drives down durable sales The shop sealing drive conducted by the Municipal Corporation of Delhi has resulted in a drop in sales of consumer durables, especially as it comes during the festive shopping season. According to OP Batra, managing director of Navin Electronics, a Delhi based company, “Since the durable, retailing, malls and grocery shops will be sealed in most parts of Delhi based on the directive of the Supreme Court, the city will witness a 50% dip in durables sales this festive season.” While LG Electronics which has 70 dealers in the affected areas will be affected by this sealing, Samsung India stores are located in commercial areas and this order will not affect them adversely. Haier Appliances dealers that are located in the sealing zones are making alternative arrangements to display and sell their products in commercial areas and malls. 10. Retailers to push private label FMCG products Several retailers such as Subhiksha, Spencer’s and Big Bazaar are planning to push private label oral care products to compete with FMCG majors. Spencer’s is keen on personal care products. JH Mehta, President Spencer’s Retail said, "The products will be targeted at the value-conscious consumer. Consumers will slowly understand the value of private labels, even in oral hygiene segment, since these will be produced by the same manufacturer." Subhiksha is planning to focus exclusively on private labels for oral care products and hopes to win customers by offering superior products at lower prices. To compete effectively with FMCG majors, the retailers plan to increase branding and marketing to promote these products, including direct contact with customers, sampling and in-store branding etc. Contract manufacturers such as JHS Svendgaard Labs, supplier of dental care products to eight international retail chains in the US, Europe and the Middle East are betting on India and increasing manufacturing capacity by 300% to catch a large slice of this emerging market. 11. Railways in talks with the Aditya Birla Group After talks with Pantaloon Retail, the Indian Railways is in talks with the Aditya Birla Group as a public-private partnership to transport goods and play a key role in the growth of organized retail. The AVB Group is keen on setting up agri-commodities retail outlets, warehouses, processing centers and cold chains at railway stations. India loses Rs. 500 billion annually to wastage due to its inefficient supply chain of vegetables and fresh fruits. The Railways is hoping to double its revenue in five years through supply chains to retailers. At present, only 50 million tones of agri-products travels on the railways, of a total 400 million tones. 12. Metro Cash and Carry to buy produce directly from AP farmers Metro Cash and Carry is likely to purchase farm product directly from farmers in Andhra Pradesh. Farmers need to register with the company. According to J C Diwakar Reddy, Minister for Panchayat Raj, Metro was interested in purchasing rice, fish, fruits, vegetables and spices from farmers directly to sell in cities such as Hyderabad. 13. Spencer’s plans to catch up to other retailers Spencer’s is determined to catch up to other retailers and is moving fast in this endeavor. The company owned by RPG Group’s retail subsidiary Great Wholesale Club had 49 Foodworld stores and 3 Giant hypermarkets, which were renamed Spencer’s Hyper) in June 2005 when the company split with Dairy Farm International. Now there are a total of 69 stores, 7 Spencer’s Hyper, 3 Spencer’s Super and 59 Spencer’s Dailys. The company is continually expanding and will be opening 2 stores every week in September and October. According to Jitu Mehta, President of Spencer’s Retail, "We're looking to open 20 stores in 10 cities in six months." The initial focus is going to be on south India which has been the company’s stronghold. 14. Delhi-its are the country’s biggest spenders A report on household consumer expenditure brought out by the Delhi Government’s Directorate of Economics and Statistics shows that Delhi consumers have the highest per capita income and are the biggest spenders in the country. The average monthly per capita expenditure in urban Delhi increased from Rs. 1,563 in 2003 to Rs. 1,606 in 2004. For comparative terms, the national average is Rs. 1,060. Delhi has 3,275,000 families, with an average size of 4.62 persons. 3,072,000 families live in urban areas and only 203,000 in rural areas.
Education, food, transportation and rent were the main expenditures for Delhi consumers, with Rs. 2,484 on food, Rs. 823 on conveyance and Rs. 576 on education. Other expenditures were Rs. 565 on fuel and lighting, Rs. 327 on clothing, Rs. 228 on toiletries, Rs. 169 on entertainment and Rs. 756 on consumer services. 15. Tata’s plan grand launch in consumer durables Since its tie up with Woolworth’s, the Tata Group is planning an aggressive entry to the consumer durables retail space. The new venture has been named Value Electronics and has begun acquiring property and is in talks with several companies such as LG and Samsung for the supply of goods. The first of these stores will open in Mumbai by end 2006. Once open the stores will be the largest consumer durable stores in the country, ranging from 60,000 sq ft to up to 150,000 sq ft. The total area required by the company is estimated to be approximately 4 - 4.5 million. Besides well known brand names, the company also plans to launch its own in house brand under the Millenia brand. The Tata Group already has 2 other operation retail ventures, Westside, its lifestyle departmental store and Star India Bazaar, its hypermarket format store. 16. Malls keen on flexible working hours The organized sector of the Indian retail industry is voicing concern and demanding flexible working hours for the sector. In this regard, The Retailers Association of India (RAI) in conducting negotiations with several state governments to permit malls and department stores to remain open for all 24 hours. According to Gibson Vedamani, CEO of RAI, "Four states, including AP, Maharashtra, West Bengal, and MP have responded positively to the proposal." Other states where proposals have been given are Karnakata, Tamil Nadu and Kerala. At present the law requires all stores to be closed on one day of the week, restrictive timings for closing stores such as 9 or 10pm which are not conducive to consumers changed work timings. 17. Piramyd Megastore to focus its branding on women Piramyd Retail’s fashion and lifestyle retail chain, Piramyd Megastore has decided to focus its branding efforts on women, since they are the chief influencer on most purchases. Bipin Gurnani, CEO of Piramyd Megastore, feels that the brand needs a young and contemporary look. Saints & Warriers has been given the account for changing the look. 18. Carrefour finalizing plans with Landmark French retail giant and the world’s second largest retailer Carrefour is reportedly finalizing plans of a joint venture with the Landmark Group, who are already present in India with their departmental store chain Lifestyle, value retail chain Max and home furnishings chain Home Centers and Max Hypermarkets. The new joint venture is likely to be in the hypermarket format. The company was the first international retailer that entered several Asian countries such as Taiwan, Indonesia, Malaysia, Thailand and China. Carrefour has had a procurement office in Gurgaon, India since 2000 and through its network of distribution agent’s sources food products. Both companies have refused to comment at the present. The Carrefour Group is worth $94.5 billion and operates 7,000 stores in 29 countries although 47.8% of its sales come from France. The company operates in several formats including hypermarkets, supermarkets, discount stores and even cash and carry formats. 19. Titan increasing its concept stores Titan Industries Ltd announced its plans to set up 8-10 concept stores to showcase its watches and jewelry. The company is likely to invest and estimated Rs. 150-200 million per store. Although some concept stores would be franchised out, most would be company owned and operated. The company is also bringing out a new retail identity for its watches and jewelry segment. Titan’s jewelry segment is growing at 60% while for the watches it is 30%. The company’s turnover for the last financial year was Rs. 14.81 billion and it is targeting to reach Rs. 20 billion this year. 20. Indian retailers follow variety of formats to find the right mix The Indian retail scene is booming and companies are testing a wide variety of formats, joint ventures and franchising. Planet Retail, the company that has franchises for Planet Sports, Marks & Spencers and The Body Shop, will be bringing in UK based Debenhams by October end. The Landmark Group operates through several formats, at both ends of the price scale. While Bossini and Kappa are both luxury brands, Max Retail is its value chain and Home Centre is its home focused chain. 21. Pantaloon opens 32nd Big Bazaar store and plans 17 more Pantaloon Retail will be opening 17 Big Bazaar outlets in south India in the next year, including eight to nine stores in Kerala, where it currently does not have any stores at the present. The company has 5 outlets in Bangalore including one opening on Saturday, September 23, 2006, and one each in the cities of Hyderabad, Vizag and Mangalore. Each new store will require an investment of Rs. 100-200 million, depending on its sq footage. 22. Bharti to finalize retail model in October Bharti Enterprises announced that it would be finalizing its retail model plans in October. Sunil Mittal, chairman of Bharti Enterprises said that his team of experts was exploring the possibilities of tying up with an international company and was in talks with several multinational retailers including UK based Tesco. 23. Specialty stores to take center stage Even though hypermarkets have been getting a lot of attention in recent times, it is the specialty store trend that is really taking off. The specialty store trend cuts across sectors with some offbeat categories and even some in the unorganized sector. Hindustan Lever is considering a chain of stores only for laundry products. Other categories inviting interest are electronics and electrical products, office products and stationary, toys, lingerie, chocolates and furnishings. Some of the major names currently involved in this thinking include the Tata's, the Jumbo group from Dubai, Marks & Spencer's Women Secret, Straps which was earlier Sensa, Luxur Parker, Bilt, Havells, Phillips and Bajaj Electronics. The Indo Rama Group recently tied up with Office 1 Superstore International to open Office 1 stores for stationary and office needs. According to Harminder Sahni, CEO of KSA Technopak, “Internationally, specialized retail is a big business. Similar trends will emerge in India.” Abhijit Das, head of Ansal Plaza Mall Management Co. adds, “Since most stores in these specialized categories will need much lesser space in comparison to the existing formats, such as lifestyle and hypermarkets, they will all come up in malls. There won’t be too many stand-alone stores.” 24. Lifestyle and NIFT team up to groom retailers Lifestyle International and the National Institute of Fashion Technology (NIFT) in Hyderabad have tied up to provide grooming to its sales team as it has tied up with the institute in other major cities. NIFT will offer a three month course in Fashion Retail Management Studies that will be sponsored by Lifestyle. The company plans to induct candidates who have completed the course into their stores with regular salaries for a mandatory two year period. 25. Aditya Birla Group plans $2 billion retail foray The Aditya Birla Group announced that it would be investing over $2 billion over the next five years to set up supermarkets and hypermarkets in India. The company plans to focus on private label products, especially in food, apparel and homecare products and is expected to start operations by end 2007. Contrasting other domestic retailers, The Aditya Birla Group headed by Kumaramangalam Birla is not looking to tie up with any international retail company and is finalizing its finances and has already hired key people from Shoppers' Stop and Pantaloon. |
|
|||||||||||||||||||||||||||||
Privacy Policy | Customer Service Policy | Contact us | Media Kit | Site Map |  |  |  |
www.india-reports.com: A Chillibreeze Website - Focusing on niche, value added epublications covering Indian business, economy, industries and government policy. The information on this web site is protected by copyright. Users of the web site are not authorized to redistribute, reproduce, republish, store in any medium, modify, or make public or commercial use of the information without the written authorization of |
