Stay abreast of the fast moving economic super-power — India!
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India Retail News: Reliance, Pantaloon, Carrefour, HLL launches Super Value stores, NauticaThe categories covered in this report are: (Click to view) Big players – plans and investments
Big players – plans and investments1. Reliance Retail will work on both retail and supply models Apart from its mega plans for retail, Reliance is also working on creating a successful supply chain model. The company has been supplying fresh fruits and vegetables to Big Bazaar as a practice of sorts, and is keen on continue doing so. When Reliance receives its consignment of goods from China, it will supply the items not only to its own stores, but to other retailers as well. Keeping procurement as a separate division from retail, Reliance has already set up rural business supply hubs in Punjab, Haryana, Himachal Pradesh, Uttranchal and West Bengal, for procurement of grains and milk products. Taking a long term approach, Reliance has build schools and medical centers and also has soil and weather specialists to help the farmers maximize their production.
2. Reliance and Pantaloon building online retail business Both Reliance and Pantaloon have plans to aggressively market their products online, creating a significant online channel, similar to Wal-Mart’s model, whose online sales are growing even faster than eBay and Amazon. The online business is currently estimated to be worth Rs. 11 billion and is likely to reach Rs. 23 billion in a year. Most online business in India still consists of travel and ticketing as yet. Pantaloon is revving up its futurebazaar.com and Reliance is putting a separate team altogether for its ecommerce operations. Current players such as Fabmall and Rediff are also improving their strategies to meet the new competition on an even keel. 3. Reliance Retail considers credit division Reliance Industries Ltd. is considering entering the personal finance business, including auto and consumer loan business under its retail venture. Although the company spokesperson refused to comment, a source said that Reliance would like to be a one-stop shop for such services and might even pull in banks such as ICICI and HDFC. 4. Reliance Retail’s first store to open on October 18 Reliance Retail’s much anticipated retail foray will come to fruition on October 18, when its first store opens in Hyderabad. The food and grocery format store will be inaugurated by Andhra Pradesh chief minister, YSR Reddy. Besides this store, 28 other stores in AP will also be opening on the same day. After the AP launch, Reliance Retail will open next in Punjab and then to other cities such as Mumbai and Delhi.
Bharti Enterprises’ chairman Sunil Mittal said that the company will be announcing its international retail partner in early October and that food and grocery will form the base of its retail business. The company has been in talk with global giants such as Wal-Mart, Tesco and Carrefour in the recent past. 6. Pantaloon announces new format, Brand Factory Pantaloon announced a new format called Brand Factory that will offer fashion brands at factory prices, while not compromising on the shopping experience. Vishnu Prasad, President (south) and CEO for Central and Brand Factory, said that "Factory outlets have become distinct shopping destinations with distinct audiences.… Brand Factory will offer brands at discounts and also provide the treatment and shopping experience that the customer deserves." The first Brand Factory outlet will be opening in a Bangalore suburb, Marathahalli, where several other factory outlets are already located. The store will have120 brands such as Arrow, Esprit, Van Heusen, Levis, Reebok, Lee, Pepe, Wrangler, Provogue and others, spread over 70,000 sq ft of space. The company plans to open 55 outlets by 2010, in 40 cities across India. The second outlet will open in Hyderabad in October and the third one in Ahmedabad. Pantaloon is looking to open outlets in metro’s and tier I towns with a population of more than 1 million. 7. Pantaloon plans to open the largest Big Bazaar store Pantaloon Retail will be opening its second store in Nagpur, which will be the largest store so far. Covering an area of 120,000 sq ft, the outlet will open before the Dussehra festival on October 2, 2006. The outlet comprises of five floors and will be located in Poonam Mall in Wardhaman Nagar. Besides stocking thousands of goods at discount prices, the store will also feature a live kitchen, a restaurant, a gym, a hair salon and an entertainment centre. 1. Carrefour and Landmark in talks French retailer Carrefour and Dubai based retailer Landmark have been conducting talks to open around 200 stores in India in the next 10 years, although no final agreement has been reached as yet. Mickey Jagtiani, CEO of the Landmark Group said, "Negotiations are in a very early stage and we are very keen for this to go ahead. We still have to see how the companies will be structured, but I am very optimistic that this will be resolved." 2. Calvin Klein and Murjani tie up Calvin Klein, a subsidiary of Phillips-Van Heusen Corporation, announced that it had signed a distribution agreement with Murjani India Ltd. for the distribution and store license in India. With this agreement, Murjani will sell Calvin Klein products, including women’s and men’s clothing and accessories. The 40 stores planned for India will mostly be exclusive free standing stores, with a few select department stores that are approved by Calvin Klein Inc. The first of these stores is likely to open in early 2007. Murjani already has agreements with several leading brands such as Gucci, Jimmy Choo and French Connection. 3. BreadTalk opens its first outlet Singapore based BreadTalk, a boutique bakery chain, opened its first outlet in India in Inorbit Mall in Mumbai. Brought to India by Crustum Products Pvt. Ltd., the wholly owned subsidiary of Viceroy Hotels Ltd., the company has reportedly invested $1 million in the venture. The next three years will see 40 outlets being opened, each with an investment of Rs. 7 million. Most outlets will be located in malls and other high traffic areas. 4. Carrefour to enter India under cash-and-carry format French retail giant, Carrefour will be coming to India as a cash-and-carry retailer, investing an estimated $100 million in the venture. The first store will come up in the National Capital Region. This is the second international retailer than has followed this track of operations, with Germany’s Metro already operating in this format. Carrefour operates on this format already and has 120 such outlets. The company also has a sourcing office in Gurgaon. According to sources, the company is keen to set up its supply chain in the country under this route, and once FDI regulations are changed, it will adapt the model to serve consumers directly. While entering via a franchisee is simpler, the cash-and-carry method gives the retailer full control and a deeper understanding of the market and its prices. Carrefour has appointed Jones Lang LaSalle as its realty consultant and is already looking to locations. 5. US photo studio chain FoBaz to enter Indian market US based photo studio chain FoBaz is entering the Indian market and has set up a wholly owned subsidiary called FoBaz India. The new company has been set up with investments from PhotoWorks, XMedia Technologies and Matinicus Capital and is reportedly in talks to tie up with Reliance Retail. The company will be investing approximately Rs. 600 million to build a retail network here and will operate in online, retail and mobile formats. According to Virender Ahluwalia, CEO of FoBaz India, “We are discussing the franchisee model with a few local players. In India, almost the entire market exists in the unorganized formats. We will be keen to have tie-up with local players, and cash on their existing customer base.” 6. Nautica Home and Nautica Kids coming soon to India VF Corp owned Nautica will soon be bringing two of its brands to India, Nautica Kids and Nautica Home. The company has formed a 60:40 joint venture with Arvind Brands. The same joint venture controls other VF brands such as Lee and Wrangler. While Nautica Kids will be opening in October 2006, Nautica Home will open in November. Stores each are likely to be opening in Bangalore and Delhi first, followed by Chandigarh, Hyderabad, Mumbai and Pune. The company’s store in Bangalore’s Vital Mallaya Road will be the largest in the world, at 6,500 sq ft, and will stock the entire range of Nautica products, apparel for men and women, footwear, luggage and fashion accessories. Generally, international Nautica stores range from 2,800-3,500 sq ft. The company is present in over 60 countries. Regional Trends1. Mall fever in Kolkata Malls are coming up in Kolkata like there’s no tomorrow. An estimated 46 malls are likely to be ready by 2010. Domestic retailers such as Globus, Spencers’, Fun Republic and Adlabs are all rushing to the city to be part of this boom. The malls are not only located in the city, but also in the suburbs such as Jessore Road, Madhyamgram and Howrah. The city has also shown the lead in building specialty malls and more are expected to come up, especially in the home furnishings area. 1. Plus size fashion becoming acceptable in India Plus size western wear is becoming acceptable in India with the number of fashion conscious customers on the rise. Approximately 30% of the country’s population is considered overweight, so the trend of plus size specialty stores is expected. Rucheera Gumber, fashion analyst at KSA Technopak, says that the market for such clothes was non-existent five year ago. Delhi based Revolution has been operating since 2001, selling western style clothing to women who might have no problem finding traditional Indian clothing due to the abundance of tailors. Westside has its own plus size clothing line for women called Gia and Pantaloon’s plus size line is ALL (which stands for A little larger), specialty store Mustard has a boutique in Bangalore and Hyderabad. 2. Pune to set up a flower mart Pune’s Agriculture Produce Marketing Committee (APMC) announced that it will be setting up a state of the art flower mart, for both wholesale and retail business. The inspiration of this flower mart has been the Aalsmeer flower market in Holland. The Rs. 320 million project will be spread over 3.5 acres and will have an auction house as well as grading and packing facilities. There will also be 300 stores, exhibition centers, an auditorium and cold chain facilities for exporters and farmers. HR News1. Retail sector will require 2 million professionals in next 2 years According to The Retailers Association of India (RAI) estimates, the retail industry in India will require about 2 million professionals in the next 2 years. The current requirement for front end workers is 1.25 million and is likely to increase to 3.25 million by 2008-09. Several retailers such as Pantaloon, Piramyd, Shoppers’ Stop, Lifestyle, Arrow, Landmark and others have already begun recruiting on a major scale, while new entrants such as Reliance, Raymond’s, The Aditya Birla Group, and others have been targeting other retailers to head hunt professionals. The Future Group, Landmark and Piramyd have also tied up with management schools to sponsor and train students who would then work for a mandatory time period with the sponsoring company. Government Policy1. Delhi malls likely to team up with Delhi government to banish child labor The Delhi government is keen on tying up with local malls to refuse items produced by child labor. A senior official said that the labor department has been suggesting to all mall owners to also display posters in the mall’s public spaces that no products had been made using child labor. Malls are also required to check if products have been made by children before giving permission. The move has originated due to raids on zari units which have over 50,000 children employed, most between 5-12 years. Sector specificApparel & Footwear 1. Reebok plans to open 1100 stores Reebok will be increasing its stores from the current 350 to 1,100 by the year 2010 as announced by its CEO and President Paul Harrington. Interestingly, India is the world’s only market where Reebok has higher sales than Adidas and Nike. As part of the promotion, Reebok has signed a new campaign with cricketers Rahul Dravid and Mahendra Singh Dhoni. 2. Globus opens its first store in Lucknow The Rajan Raheja Group’s retail fashion chain Globus, opened its first store in Lucknow at the Waves East End Mall. The company now has a total of 13 stores, located mostly in the metros, and is now diversifying into tier II towns. The company will now open stores in Ghaziabad and Kanpur. 3. Piramyd plans to add 6 stores a year Piramyd Retail announced that it is planning to expand its lifestyle store, Piramyd by adding 6 new stores. The announcement was made at the opening of the company’s third store in Pune. The company is also focusing to increase its market share in the southern region besides the northern and western regions. This financial year, stores will open in Chandigarh, Surat, Ludhiana and add to existing stores in Ahmedabad and Delhi. Bookstores 1. Landmark opens in Gurgaon Landmark opened a store in Gurgaon, its first store in north India. The store is spread over 23,000 sq ft. On the occasion, Hemu Ramiah, CEO Landmark said “Our increasing spread gives us a better platform to negotiate rates and formats. We are the only ones who can ask publishers to give us paperback versions for hardbacks.” Landmark is opening 6 stores each year, with an investment of Rs. 300 million, in cities such as Pune and Lucknow. The company already has stores in Chennai, Bangalore, Kolkata, Mumbai and Vadodara. Food & Grocery 1. Retailers keen on unbranded food items Organized retailers such as Food Bazaar and Spencers’ are giving unbranded food items a boost by offering processes such as in-house chakkis (flour mill), kneaded dough and ready-to-cook chopped vegetables. AC Nielsen estimates that almost 60% of purchased items in a shopping basket consist of unbranded items. Some food retailers have set up live kitchens within the stores offering home style food cooked on the spot. Piramyd Retail’s Trumart stores are looking for vendors to tie up with for supply of fresh idli batter, dosas and bakery items. 2. Coffee market to see sizable investments Coffee culture is here to stay it seems. Major domestic and international coffee retailers are planning major expansion plans and investments of close to Rs. 3.25 billion over the next 3-5 years. Current players such as Barista, Costa Coffee, Café Coffee Day and Barnie’s are all on an expansion spree and global giant Starbucks is making its entry to the Indian market in 2007. Costa Coffee’s Indian franchisee Devyani International Ltd (DIL) recently announced it would be investing Rs. 1.5 billion to open 300 outlets in the next five years. The company is looking to the 18-25 age bracket of consumers who have a growing disposable income. 3. Spencers’ to open 6 more Dailies on Friday Spencers’ Retail announced that it will be opening 6 new stores on Friday, all of them Spencers’ Dailies. Including these new stores, their tally goes up to 80 stores in the country so far. The new stores will be located in Pune, Hyderabad, Tiruchi and Bangalore. Spencers’ Daily stores stock a variety of food, grocery, FMCG and other household goods. 4. HLL launches its self service stores Hindustan Lever Ltd. (HLL) has tied up with family grocers to launch the Super Value chain of stores. These stores were earlier promoted by HLL under the ‘Super Value’ program. Four such stores in Delhi have been converted to self-serve stores. According to Sanjay Dube, Executive Director (Sales & Customer Development) at HLL, "The self-service stores use the best practices of the modern trade such as category lay outing and standardized units to deliver a better shopping experience to shoppers." HLL hopes to win over customers by making shopping at Super Value stores by offering a “personalized and fulfilling" experience.
1. Organized retailing impacting FMCG companies revenue model The rise in organized retail is making an impact on how FMCG companies revenue models. Organized retail stores are generating an increased amount of income for suppliers such as Gujarat Co-operative Milk Marketing Federation (GCMMF) who manufacture the Amul and Sagar brands, which now earns 3% of its revenue from organized retail outlets. Parle Products sells its products at both organized and unorganized outlets and has also been seeing the rise in contribution from the organized retail outlets. Balaji Foods saw its revenues rise from 3% to 10% in the past two years at organized retail stores. Piyush Sinha, IIM Ahmedabad professor of Marketing says, “Earlier, neighborhood kirana stores were the primary purchase point. But in recent times, there is a visible shift towards hyper markets for purchase of food grains and other grocery products.” Jewellery & Watches 1. Timex opens outlet in Agra Timex Watches opened its first “Time Factory Store” in Agra. The company has been planning an aggressive campaign to boost sales across the country, with an investment of Rs. 1 billion in 2005 financial year to Rs. 2 billion in 2008. Timex is focusing on north India to generate sales and will have a minimum of 10 stores in the area by year end. 2. Rajesh Exports to start new retail venture Jewelry export company Rajesh Exports, who had recently purchased the Oyzterbay chain of jewelry stores, will be launching a new retail venture by the end of October, to coincide with the Diwali festival rush. The company will be converting its 30 Oyzterbay stores into jewelry stores under the name ‘Laabh Jewelers’. 3. Gitanjali Group launches a new retail format The Gitanjali Group announced that is has launched a new retail format where customers could purchase loose diamonds called ezeediamonds.com. All diamonds featured on the site will be approved by the International Gemological Institute as per specifications of cut, clarity and carat. According to Mehul Choksi, Chairman of the Gitanjali Group, "Ezeediamonds is essentially about selling loose diamonds on a retail platform, in just the way gold in India is." |
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