It’s time for creative destruction. The hoopla surrounding the retail boom notwithstanding, players, both big and small, are feverishly experimenting with newer formats, adopting a few tried and tested ones, tweaking or discarding the old ones—just trying to figure out the immense possibilities open to them.
Branded retail, as we all know, is just about 3% of the overall retail industry in India—far less than China’s 12%. That’s on the opportunity side. On the ground, major brands are still experimenting with the look and feel of their stores—should it be a hypermart, specialty mart, a convenience store, or a discount outlet?—as they try to balance format choice with factors such as catchment profiling, tenant mapping, psychographics of the locals, availability of space, the prevailing real estate/rental value, to name just a few.
The low conversions (from footfalls) is still a cause for worry, 20-25% at best, according to Puneet Khanna, senior consultant, Technopak Advisers, a management consultancy firm that focuses on the fashion, FMCG and retail sectors. “But once the novelty factor wears off, the statistic might improve,” he adds.
Right now, the uncertainties are far too many, as data collated by real estate consultant, Chesterton Meghraj, to assess the success of major malls in seven metropolitan cities testifies. It indicates that in the national capital region alone, as many as 11 brands (including Lotto, Banana Leaf, Sprandi and Finesse) have opted to move out of MGF Metropolitan, which is arguably one of the best performing malls in the NCR. The exodus happened over a period of three years, since MGF’s inception in 2003.
Likewise, in just over two years, SF Jeans and Ao’s chose to move out of East Delhi Mall in Ghaziabad; Crossroads, Hot Breads and Sita Art Jewellery from DLF City Centre in Gurgaon (started in 2003). Unfortunately, in a booming market these are the kind of stories that no one talks about. (See box “Game up” for similar movements across cities.)
The reason for their movement, according to Deepak Bhavsar, senior consultant at Chesterton Meghraj, in most cases was “high rentals and low conversion rates.”
More movements may happen, as location preferences change. “With foreign players entering the market, the format size may increase as most foreign store mangers abroad follow the rule of one million-plus sq. ft. space,” explains Vivek Kaul, retail head and associate director, Jones Lang Lasalle India. “Some brands may choose to move to specialised wedding, luxury or jewellery malls, or to smaller towns which too are witnessing high growth.”
A spokesperson for Pantaloon Retail (India), agrees: “There are over 100 cities and towns in India wherein at least 20% of consumers are waiting to be tapped by modern retail.” Pantaloon, incidentally has straddled most formats to ultimately hit the bull’s eye—a combination of multi-brand formats (over 140 stores in 32 cities), such as Big Bazaar, Food Bazaar, Fashion Station, Blue Sky, Depot, Footmart, Brand Factory, Top 10 etc, along with niche, single-brand specialty stores, stocking aLL, Gini & Jony, Etam, Indigo Nation, Marks & Spencer products, among others.
“India demands a uniquely Indian format,” reveals Pantaloon, in whose case Big Bazaar is a prime example of the way hypermarts can be customised to suit the Indian palate in terms of look, touch and feel, choice and quality thrown in for good measure.
“A mix of supermarket and discount stores would fit the Indian market the most depending on the retailer’s competitive advantage. The key is to switch between formats according to business needs,” observes RC Agarwal, chairman, Vishal Mega Mart, which is again an Indian-version of a Wal-Mart-like chain, with 46 multi-band outlets spread across 34 cities.
In a hypermart, the space division between anchor stores and vanilla stores in the Indian context works out as 40:60, which may be significantly higher than that followed abroad. But then the Indian market is still maturing, and it’s safer for them to repose the maximum trust in the big brands (secured as anchors and big formats). Says Lalit Kumar, CEO, Ebony Retail Holdings. “The hypermarket is emerging as the most favorable format, though convenience stores would be the best way to compete with unorganised retailing.”
This, in effect, implies that the traditional formats, such as kirana stores, weekly haats and village bazaars will remain, along with the City Centres and the Sahara Malls of the day. The cultural and regional differences in the subcontinent are perhaps so strong that it’s difficult to agree upon a one-size-fits-all formula.
The future will no doubt belong to customer centric-formats. “A retailer would also have to undertake regular reviews of brands (and price points) to maintain the optimum value proposition,” adds Kumar. If the experiment doesn’t work, it’s better to cut losses and beat a hasty retreat, as many brands have chosen to do.
Most important, the retail sector has been liberalised partially. Watch out for the bloodbath that will follow. Once that’s over, and when the more dauntless players get a firmer foothold, the market size is expected to double. After all, 97% of the Rs 9,30,000-crore market remains untapped by common reckoning!
Source : Financial Express
Friday, December 29, 2006
Tuesday, December 26, 2006
Nuance and Zegna FDI proposals for retail cleared
Zurich based, Swiss firm Nuance Group, which is dedicated to the concept of Innovation in all its forms- exciting shop concepts, range of products and pioneering collaborations, has obtained permission to bring in Rs 25 crore as FDI investment in the country. Nuance Group, which plans to set up duty-free shops at airports in India, was among 18 applicants whose proposal for FDI was cleared by the government of India on Thursday.
It may be recalled that Raheja owned Shoppers’ Stop has recently tied up with the Nuance group for this purpose. Nuance Group’s proposal is to undertake operation and management of duty-free shops, food and beverage outlets at airports in Mumbai, Bangalore, Hyderabad and other places.
Besides, the proposal of Italian company Ermenegildo Zegna Holditalia, the world leader in men’s fine clothing, which wants to set up a single brand ‘zegna’ retail stores in India has also been approved by the government. The $865 million Zegna is a competitor to such world known brands as Gucci, Armani and Gianni Versace.
Source : Indiaretailbiz
It may be recalled that Raheja owned Shoppers’ Stop has recently tied up with the Nuance group for this purpose. Nuance Group’s proposal is to undertake operation and management of duty-free shops, food and beverage outlets at airports in Mumbai, Bangalore, Hyderabad and other places.
Besides, the proposal of Italian company Ermenegildo Zegna Holditalia, the world leader in men’s fine clothing, which wants to set up a single brand ‘zegna’ retail stores in India has also been approved by the government. The $865 million Zegna is a competitor to such world known brands as Gucci, Armani and Gianni Versace.
Source : Indiaretailbiz
Friday, December 22, 2006
Reliance Retail to source CTVs from Videocon
In what could be one of the largest sourcing deals by a domestic retailer, Mukesh Ambani promoted Reliance Retail is tying up with consumer durables major Videocon Industries to source colour televisions (CTVs), glass shells and colour picture tubes (CPTs) from Videocon for its durables retail foray. As part of the agreement, which is expected to be finalised soon, Reliance will sell CTVs from Videocon through its retail outlets under the ‘Reliance’ brand name, according to sources close to the development. Reliance has planned 10,000 outlets by 2010.
Although Reliance’s requirement for CTVs and CPTs could not be ascertained, the deal will substantially boost Videocon’s overall sales of colour TVs, which currently stands at 3 million per annum, including flagship brand Videocon and sub brands like Sansui, Toshiba, Hyundai, Akai, Kenstar, Electrolux, Kelvinator. Industry leader LG Electronics India at present sells 5.5 lakh TVs per annum.
“Soon after entering into a buyer-seller agreement with Reliance Retail, Videocon will start supplying its products to the company in bulk, in a phased manner, which will be marketed through Reliance outlets as private labels. This will depend upon the number of consumer durable retailing outlets Reliance will roll out in a phased manner,” said the source.
Talks are currently on between the two companies, sources added. When contacted, a Reliance spokesperson refused to comment on the development.
Asked about how a likely tie-up between two large enterprises would impact the durables market scenario, Deepak Jassani, head - retail research, HDFC said, “Reliance will prefer positioning Videocon CTVs at the low end of the market. However, the margins that Videocon will gain through the deal may not be very exciting as Reliance is a tough negotiator.”
Suresh Khanna, secretary general, Consumer Electronics and Television Manufacturers Association (CETMA) said, “The move of Videocon entering into buyer selling agreement with Reliance will lead to further growth in the industry as well as add to Videocon’s topline. Videocon Industries has eight sub-brands under its portfolio and since Reliance is likely to roll out huge number of consumer durable retailing outlets, the move will give further scope to Videocon to spur more volumes.”
Reliance has made a foray into the retail segment by rolling out 17 ‘Reliance Fresh’ outlets in Hyderabad. While the company is eyeing 784 cities and 6,000 towns in the country for Reliance Fresh outlets, it is also planning to roll out consumer durables retailing outlets in a phased manner very soon.
Source : Financial Express
Although Reliance’s requirement for CTVs and CPTs could not be ascertained, the deal will substantially boost Videocon’s overall sales of colour TVs, which currently stands at 3 million per annum, including flagship brand Videocon and sub brands like Sansui, Toshiba, Hyundai, Akai, Kenstar, Electrolux, Kelvinator. Industry leader LG Electronics India at present sells 5.5 lakh TVs per annum.
“Soon after entering into a buyer-seller agreement with Reliance Retail, Videocon will start supplying its products to the company in bulk, in a phased manner, which will be marketed through Reliance outlets as private labels. This will depend upon the number of consumer durable retailing outlets Reliance will roll out in a phased manner,” said the source.
Talks are currently on between the two companies, sources added. When contacted, a Reliance spokesperson refused to comment on the development.
Asked about how a likely tie-up between two large enterprises would impact the durables market scenario, Deepak Jassani, head - retail research, HDFC said, “Reliance will prefer positioning Videocon CTVs at the low end of the market. However, the margins that Videocon will gain through the deal may not be very exciting as Reliance is a tough negotiator.”
Suresh Khanna, secretary general, Consumer Electronics and Television Manufacturers Association (CETMA) said, “The move of Videocon entering into buyer selling agreement with Reliance will lead to further growth in the industry as well as add to Videocon’s topline. Videocon Industries has eight sub-brands under its portfolio and since Reliance is likely to roll out huge number of consumer durable retailing outlets, the move will give further scope to Videocon to spur more volumes.”
Reliance has made a foray into the retail segment by rolling out 17 ‘Reliance Fresh’ outlets in Hyderabad. While the company is eyeing 784 cities and 6,000 towns in the country for Reliance Fresh outlets, it is also planning to roll out consumer durables retailing outlets in a phased manner very soon.
Source : Financial Express
Wadias plan retail biz with Carrefour
The world’s second largest retailer, the $74-billion Euro Carrefour of France, is in advanced talks with the Wadias for a retail venture in India. Carrefour, which was earlier close to signing a deal with the Dubai-based Landmark group, has been surveying the Indian market for over 4 months now. Ness Wadia, the elder son of Bombay Dyeing chairman Nusli Wadia, is likely to head the retail venture.
Carrefour, which has around 7,000 stores all over the world, runs a chain of hypermarkets, super markets, and hard discount and convenience stores. The Wadia group, which is present in textiles and the airline business, is currently battling another French partner, Danone, in FMCG major Britannia Industries.
The Wadias join a growing bandwagon of domestic businesses entering retail. Reliance Industries has announced a retail venture worth Rs 25,000 crore to set up a network of 10,000 hypermarkets, super markets and other formats by 2010. Bharti has entered into an MoU with Wal-Mart Stores Inc, for its retail foray.
Source : Financial Express
Carrefour, which has around 7,000 stores all over the world, runs a chain of hypermarkets, super markets, and hard discount and convenience stores. The Wadia group, which is present in textiles and the airline business, is currently battling another French partner, Danone, in FMCG major Britannia Industries.
The Wadias join a growing bandwagon of domestic businesses entering retail. Reliance Industries has announced a retail venture worth Rs 25,000 crore to set up a network of 10,000 hypermarkets, super markets and other formats by 2010. Bharti has entered into an MoU with Wal-Mart Stores Inc, for its retail foray.
Source : Financial Express
India's Retail Bonanza
The battle for India's retail market is heating up. Consider these signs -- as India's economy booms, with 8.7% growth expected this year, Indian retailers are now starting to invade rivals' turf in an effort to build a nationwide network. So attractive is the prize, that companies from other businesses are jumping in -- that's what commodities and telecom player, Mumbai-based Aditya Birla Group, is doing as it prepares to launch a major retail operation in the middle of next year.
But the biggest sign that the subcontinent is gearing up for a shopping revolution came on Nov. 27. That's when Bentonville, Ark.-based Wal-Mart Stores (WMT ) announced its plans to link up with New Delhi-based Bharti Enterprises, India's largest mobile phone company, to start selling by 2007 to the cost-conscious Indian consumer.
Because of continuing restrictions on foreign involvement in retail, the joint venture will focus on logistics, warehousing, and the cash-and-carry wholesale business, at least initially.
"Size is Everything"
Meanwhile, the pressure is on for the Indian players to snap up market share -- the more the better. And given the stakes, speed, too, is critical. So local competitors, including new entrants such as Reliance Retail, and longer-established players including Mumbai-based Future Group and Shoppers' Stop -- the retail arm of Mumbai-based construction company K Raheja group -- are jumping in.
Trent, the retail portion of conglomerate Tata Group, as well as Kolkata-based Spencer's Retail, are sprucing up their product offerings, opening more outlets, and entering into a range of retail formats, from neighborhood stores and hypermarkets, to department stores and even kiosks. It's all part of their quest to become pan-India players. "In today's market size is everything. Wal-Mart isn't something that we should worry about, says Kishore Biyani, CEO of Future Group.
Brave words, but given the size of the potential market, maybe Biyani is right -- there may be room for both domestic and foreign. Today, India is the land of shopkeepers, dominated by a staggering 12 million neighborhood, or kirana, stores, ranging in size from 50 sq. ft. to 150 sq. ft.. But the future may well belong to the big-outlet, Western-style retail format, which now only makes up 3% of the total market.
Supersizing Stores
With consolidation continuing, that portion of the market should grow to 10% by 2010, when today's $300 billion Indian retail market will reach $427 billion, predicts New Delhi-based consumer-goods consultancy Technopak Advisors. And by 2015, the total market value should reach $637 billion.
Already, specialty stores are proliferating, selling everything from books to health-care goods and home furnishings to apparel. But it is the large-format supermarket and hypermarket stores that are sucking up the lion's share of investment. Technopak reckons that today's total of 50 hypermarkets -- which are superstores that combine a supermarket with a department store -- will grow to 1,200 across India by 2011, at which time there will be 3,000 supermarkets, twice as many as there are today.
And that will require $25 billion to be invested in the retail sector over the next five years, as compared with the $2 billion that trickled in over the last decade -- 35% of that investment is expected to come from the foreign players.
Marking Their Territory
But even before the big foreign money arrives, local players are ramping up operations. Future Group's Biyani says he plans to expand from 160 stores today to 3,300 by 2010, which will require opening a store a day for the next three to four years. "We want to capture consumer spending," says Biyani. He wants to expand his discount Big Bazaar stores, the Indian version of Wal-Mart, from the current 37 to 100 by December, 2007, before "any international retailer opens its store here," he says.
Or take the 108 stores in the Spencer's Retail chain that includes hypermarkets, supermarkets, and daily convenience stores, all part of RPG Enterprises. After a split last year with its erstwhile partner Dairy Farm International, part of Hong Kong-based Jardine Matheson Holdings (JMHLY), it has also had to part with the well-known Food World brand, a chain of supermarkets that pioneered food retailing in India.
For years, Spencer's Retail was a south Indian brand, but now Vice-Chairman Sanjiv Goenka is aiming to have a national footprint. That will require opening 1,900 stores in three years with a total investment of $450 million. "Give us scale, and sales growth will come," he boasts.
Perhaps the most ambitious is Reliance Retail, which plans to invest $5 billion to build 10 million square feet of retail space over the next four years. With its deep pockets, it plans to set up a range of different store formats, including convenience stores and hypermarkets as well as create a back-end retail-services business.
Real Estate Challenge
Making its retail debut in November, Reliance chose to focus first on selling produce, which accounts for a full 75% of all retail purchases in India, compared with just 25% in the U.S. Today, there are 22 Reliance Fresh 250-sq. ft. neighborhood stores, in Hyderabad in the south and in north India's Jaipur, Rajasthan.
To be sure, the growth of a developed retail market in India won't be easy. And perhaps the biggest challenge facing companies is India 's soaring real estate prices. According to a report earlier this year by JM Morgan Stanley, a Mumbai-based joint venture between Morgan Stanley (MS) and JM Financial Group, one of India's top financial-services companies, India's commercial and residential property prices are up 80% to 100% over the last year. "It's simply a demand-supply situation," says Govind Shrikhande, CEO at Shoppers' Stop.
His company's plans call for spending $250 million to expand its current 20 department stores to 50 and its one existing hypermarket -- Hypercity in Mumbai -- to 18, over the next five years. And Shrikhande predicts that over the next five years the expansion of the Indian retail sector will require an additional 200 million square feet. That won't be easy. Given tight land resources, he expects a shortfall of 20 million to 30 million square feet.
Joining Hands?
That reality has savvy Indian retailers doubling as real estate agents as well. Eight months ago, Reliance Chairman Mukesh Ambani and his friend and colleague Anand Jain set up a $555 million realty fund. And Future Group's Biyani created the Kshitij realty fund in March, 2005, four years after he launched his retail operations. Now not only does he have a stable supply of land for his company's malls, but he also runs a business selling space to his competitors.
The biggest challenge ahead is likely to come from the Wal-Marts, Metros, Carrefours, and Tescos. Competing head-on with these behemoths will be tough, particularly as today's restrictions, including a ban on foreigners operating anything but single-brand outlets, begin to gradually be lifted. But the future could also bring new opportunities for Indian players who opt to link up with, or even sell to, the big international retailers, something that is already quietly being discussed by some of India's biggest retailers, say retail industry analysts.
Meanwhile, as they race to add capacity, retailers are counting on the fast-growing Indian economy to support their ambitious expansions. "There's room for everybody," says Raghu Pillai, CEO of operations and strategy at Reliance Retail. Bullish attitudes like that will no doubt continue to fuel the Indian retail revolution.
Source : Business Week
But the biggest sign that the subcontinent is gearing up for a shopping revolution came on Nov. 27. That's when Bentonville, Ark.-based Wal-Mart Stores (WMT ) announced its plans to link up with New Delhi-based Bharti Enterprises, India's largest mobile phone company, to start selling by 2007 to the cost-conscious Indian consumer.
Because of continuing restrictions on foreign involvement in retail, the joint venture will focus on logistics, warehousing, and the cash-and-carry wholesale business, at least initially.
"Size is Everything"
Meanwhile, the pressure is on for the Indian players to snap up market share -- the more the better. And given the stakes, speed, too, is critical. So local competitors, including new entrants such as Reliance Retail, and longer-established players including Mumbai-based Future Group and Shoppers' Stop -- the retail arm of Mumbai-based construction company K Raheja group -- are jumping in.
Trent, the retail portion of conglomerate Tata Group, as well as Kolkata-based Spencer's Retail, are sprucing up their product offerings, opening more outlets, and entering into a range of retail formats, from neighborhood stores and hypermarkets, to department stores and even kiosks. It's all part of their quest to become pan-India players. "In today's market size is everything. Wal-Mart isn't something that we should worry about, says Kishore Biyani, CEO of Future Group.
Brave words, but given the size of the potential market, maybe Biyani is right -- there may be room for both domestic and foreign. Today, India is the land of shopkeepers, dominated by a staggering 12 million neighborhood, or kirana, stores, ranging in size from 50 sq. ft. to 150 sq. ft.. But the future may well belong to the big-outlet, Western-style retail format, which now only makes up 3% of the total market.
Supersizing Stores
With consolidation continuing, that portion of the market should grow to 10% by 2010, when today's $300 billion Indian retail market will reach $427 billion, predicts New Delhi-based consumer-goods consultancy Technopak Advisors. And by 2015, the total market value should reach $637 billion.
Already, specialty stores are proliferating, selling everything from books to health-care goods and home furnishings to apparel. But it is the large-format supermarket and hypermarket stores that are sucking up the lion's share of investment. Technopak reckons that today's total of 50 hypermarkets -- which are superstores that combine a supermarket with a department store -- will grow to 1,200 across India by 2011, at which time there will be 3,000 supermarkets, twice as many as there are today.
And that will require $25 billion to be invested in the retail sector over the next five years, as compared with the $2 billion that trickled in over the last decade -- 35% of that investment is expected to come from the foreign players.
Marking Their Territory
But even before the big foreign money arrives, local players are ramping up operations. Future Group's Biyani says he plans to expand from 160 stores today to 3,300 by 2010, which will require opening a store a day for the next three to four years. "We want to capture consumer spending," says Biyani. He wants to expand his discount Big Bazaar stores, the Indian version of Wal-Mart, from the current 37 to 100 by December, 2007, before "any international retailer opens its store here," he says.
Or take the 108 stores in the Spencer's Retail chain that includes hypermarkets, supermarkets, and daily convenience stores, all part of RPG Enterprises. After a split last year with its erstwhile partner Dairy Farm International, part of Hong Kong-based Jardine Matheson Holdings (JMHLY), it has also had to part with the well-known Food World brand, a chain of supermarkets that pioneered food retailing in India.
For years, Spencer's Retail was a south Indian brand, but now Vice-Chairman Sanjiv Goenka is aiming to have a national footprint. That will require opening 1,900 stores in three years with a total investment of $450 million. "Give us scale, and sales growth will come," he boasts.
Perhaps the most ambitious is Reliance Retail, which plans to invest $5 billion to build 10 million square feet of retail space over the next four years. With its deep pockets, it plans to set up a range of different store formats, including convenience stores and hypermarkets as well as create a back-end retail-services business.
Real Estate Challenge
Making its retail debut in November, Reliance chose to focus first on selling produce, which accounts for a full 75% of all retail purchases in India, compared with just 25% in the U.S. Today, there are 22 Reliance Fresh 250-sq. ft. neighborhood stores, in Hyderabad in the south and in north India's Jaipur, Rajasthan.
To be sure, the growth of a developed retail market in India won't be easy. And perhaps the biggest challenge facing companies is India 's soaring real estate prices. According to a report earlier this year by JM Morgan Stanley, a Mumbai-based joint venture between Morgan Stanley (MS) and JM Financial Group, one of India's top financial-services companies, India's commercial and residential property prices are up 80% to 100% over the last year. "It's simply a demand-supply situation," says Govind Shrikhande, CEO at Shoppers' Stop.
His company's plans call for spending $250 million to expand its current 20 department stores to 50 and its one existing hypermarket -- Hypercity in Mumbai -- to 18, over the next five years. And Shrikhande predicts that over the next five years the expansion of the Indian retail sector will require an additional 200 million square feet. That won't be easy. Given tight land resources, he expects a shortfall of 20 million to 30 million square feet.
Joining Hands?
That reality has savvy Indian retailers doubling as real estate agents as well. Eight months ago, Reliance Chairman Mukesh Ambani and his friend and colleague Anand Jain set up a $555 million realty fund. And Future Group's Biyani created the Kshitij realty fund in March, 2005, four years after he launched his retail operations. Now not only does he have a stable supply of land for his company's malls, but he also runs a business selling space to his competitors.
The biggest challenge ahead is likely to come from the Wal-Marts, Metros, Carrefours, and Tescos. Competing head-on with these behemoths will be tough, particularly as today's restrictions, including a ban on foreigners operating anything but single-brand outlets, begin to gradually be lifted. But the future could also bring new opportunities for Indian players who opt to link up with, or even sell to, the big international retailers, something that is already quietly being discussed by some of India's biggest retailers, say retail industry analysts.
Meanwhile, as they race to add capacity, retailers are counting on the fast-growing Indian economy to support their ambitious expansions. "There's room for everybody," says Raghu Pillai, CEO of operations and strategy at Reliance Retail. Bullish attitudes like that will no doubt continue to fuel the Indian retail revolution.
Source : Business Week
Monday, December 18, 2006
Reliance to set up NBFC for retail
In a bid to provide a back-up for its ambitious $5.6 billion retail rollout, Reliance Industries (RIL) is in the process of setting up a non-banking finance company (NBFC) for retail finance. The company is in the process of going through the necessary formalities for securing an NBFC license, sources said.
Reliance’s retail finance plan is significant also because rival Ambani faction, the Anil Dhirubhai Ambani Group (ADAG) is a major player in financial services, with a major presence in the NBFC, asset management and insurance space. However, RIL sources said the retail finance NBFC was “intrinsic” to the group’s massive retail plan. An RIL spokesperson declined to comment on the NBFC plan. How ADAG will react to the RIL retail finance plan is not yet clear.
The structuring of the NBFC is still being kept under wraps. The retail finance plan is being spearheaded by KL Muralidhara, who joined Reliance Retail after quitting as American Express India country head. According to the broad contours of the Reliance retail finance plan, the NBFC will get into a range of activities like consumer finance and funding for farmers, who are seen as a major part of the Reliance Retail “farm to fork” initiative. This apart, sources said the gameplan is also to get into travel-related services and loyalty cards as part of the retail support plan.
While Reliance Retail’s 1500 stores would be the front-end, the company also plans to set up large “distribution centres” at the district levels, over 100-acre type areas. “These distribution centres would be the backbone of the back-end,” sources said, and it was here that the NBFC would play a key role for farmers too.
For instance, these distribution centres would be equipped with cold storages, weather kiosks and “farm malls”, where farmers would be able to buy tractors, motorcycles and seeds. The availability of farm credit at such points is therefore seen as vital to the overall retail rollout plan.
On the urban malls side, consumer finance would be a major area of activity for the NBFC. The plan is to give customers the option of availing Reliance’s retail finance for purchasing electronic equipment, telecom equipment and the entire range of consumer products, which will be available at the Reliance Retail outlets.
Source : The Financial Express
Reliance’s retail finance plan is significant also because rival Ambani faction, the Anil Dhirubhai Ambani Group (ADAG) is a major player in financial services, with a major presence in the NBFC, asset management and insurance space. However, RIL sources said the retail finance NBFC was “intrinsic” to the group’s massive retail plan. An RIL spokesperson declined to comment on the NBFC plan. How ADAG will react to the RIL retail finance plan is not yet clear.
The structuring of the NBFC is still being kept under wraps. The retail finance plan is being spearheaded by KL Muralidhara, who joined Reliance Retail after quitting as American Express India country head. According to the broad contours of the Reliance retail finance plan, the NBFC will get into a range of activities like consumer finance and funding for farmers, who are seen as a major part of the Reliance Retail “farm to fork” initiative. This apart, sources said the gameplan is also to get into travel-related services and loyalty cards as part of the retail support plan.
While Reliance Retail’s 1500 stores would be the front-end, the company also plans to set up large “distribution centres” at the district levels, over 100-acre type areas. “These distribution centres would be the backbone of the back-end,” sources said, and it was here that the NBFC would play a key role for farmers too.
For instance, these distribution centres would be equipped with cold storages, weather kiosks and “farm malls”, where farmers would be able to buy tractors, motorcycles and seeds. The availability of farm credit at such points is therefore seen as vital to the overall retail rollout plan.
On the urban malls side, consumer finance would be a major area of activity for the NBFC. The plan is to give customers the option of availing Reliance’s retail finance for purchasing electronic equipment, telecom equipment and the entire range of consumer products, which will be available at the Reliance Retail outlets.
Source : The Financial Express
India's 40 million shopkeepers brace for Wal-Mart effect
Somdutt's ramshackle storefront is an odd place to hear mention of Wal-Mart. Not 10 steps from his stall, where he sells packing materials, there is a goat, several squatters huddled around a fire, and an ancient banyan tree filtering the last rays of winter sunlight.
Mr. Somdutt, who offers only one name, doesn't exactly know what Wal-Mart is. But he knows the world's largest retailer is coming to India, and he wants it stopped.
"These big retail stores are going to snatch away our livelihoods," says the white-haired patriarch, who has worked this stall for 25 years.
Following the footsteps of exotic locales such as Hercules, Calif., and Toledo, Ohio, India is fighting Wal-Mart's announced plans to begin operations here in 2007. For many, the so-called "Wal-Mart Effect" is more than just a matter of losing shops in historic downtowns. According to a study by AC Nielsen, India has more shops per capita than any other nation in the world, meaning that the advent of "big-box retail" could impact 40 million shop owners and employees.
Analysts say retailers such as Wal-Mart are eyeing India's rising middle class, and a retail market that could be worth more than $600 billion in less than a decade.
But communists and trade unions have forced a government inquiry into Wal-Mart's plans, and they made the issue part of a nationwide strike that nearly shut down Calcutta's airport last week.
It is an important moment for India's economic reform effort, and for the country's far left, which spawned the world's first democratically elected Communist government in 1957. Often ignored during India's recent binge of free-market reform, the left is now hoping to stir the nation's unease about foreign corporations - and few names serve better than Wal-Mart.
"The left has to change its tactics," says Shameem Faizee, secretary of the National Council of the Communist Party of India. Until now, it has given the government too much latitude, he says. "We have to consider how we can stop the government."
Among the stalls of Delhi's bazaars, it is not difficult to raise suspicions about Wal-Mart. For several years now, shopkeepers here have cast a wary eye toward the fringes of town, where scrub land has been transformed into air-conditioned shopping palaces of glass and neon. "A lot of shopkeepers have been losing business" to the new malls, says P.N. Bhatia, from behind the counter of his fabric shop.
This is most shopkeepers' perception of Wal-Mart: Western-style glitz at Western prices. It begets disquiet, but not panic. The local market will continue to survive because it has always been cheaper, they say. But when he is informed that Wal-Mart's philosophy is to sell large volumes at the lowest prices, Mr. Bhatia's countenance drops. "The big retail stores will definitely take away business from small shopkeepers," he says.
For such shop owners, who know of Wal-Mart only as a distant name associated with American economic hegemony, there is a need for education, say union leaders. "It's directly hitting the business of these sorts of people," says Amarjeet Kaur of the All-India Trade Union Congress.
The nationwide strike last week was a part of raising that awareness. On a bright winter's day, leftists and union leaders marched toward parliament, thronging a dilapidated truck draped in red Communist flags. From its creeping pulpit - amid cries of "long live the revolution" - Ms. Kaur proclaimed: "Not one East India Company but hundreds of foreign companies are coming to loot India."
It is an idea that still kindles many Indians to action. The previous government was tossed out in part because voters felt it was turning against its own people in favor of headlong free-market reforms. The government has changed, but for some Indians the perception hasn't.
"The foreign companies are exploiting the weaknesses of the Indian government and taking over the Indian economy in the same way as the East India Company did with the weak Mughal empire," says Bhatia, an animated government pensioner who displays the Indian ability to relate events separated by centuries with complete assurance.
Of course, that assertion is widely debated here. India still maintains many protections. For example, big foreign retailers like Wal-Mart are banned from opening their own stores here. Wal-Mart had to form a partnership with an Indian company, Bharti, to enter India.
The stores, expected to open next year, will be run by Bharti. But Wal-Mart plans to provide the logistical backbone. That way, when India removes its limitations on foreign investment - which is seen as inevitable - Wal-Mart will be able to move quickly, already having a network of distribution centers, as well as a refrigerated transport chain to bring foods to market.
Still, the effect on retailers is not a foregone conclusion. "The talk about mom-and-pop stores being closed overnight is a myth," says Asitava Sen, a retail analyst at PricewaterhouseCoopers in New Delhi, suggesting that Wal-Mart will not be in direct competition with them.
Indeed, Wal-Mart's discount strategy isn't always successful. The company announced earlier this year that it was pulling out of South Korea and Germany.
Somdutt, for one, hopes to adapt and survive. In the past 25 years, his store has changed from a tea shop to a packaging store, but it has always been the sole means of support for him and his family.
"In the past couple of years our business has gone down because of [malls]," he says, but adds with optimism: "Wal-Mart could set up [here], and it wouldn't make much of a difference. God will provide for everyone
Source : CSMonitor
Mr. Somdutt, who offers only one name, doesn't exactly know what Wal-Mart is. But he knows the world's largest retailer is coming to India, and he wants it stopped.
"These big retail stores are going to snatch away our livelihoods," says the white-haired patriarch, who has worked this stall for 25 years.
Following the footsteps of exotic locales such as Hercules, Calif., and Toledo, Ohio, India is fighting Wal-Mart's announced plans to begin operations here in 2007. For many, the so-called "Wal-Mart Effect" is more than just a matter of losing shops in historic downtowns. According to a study by AC Nielsen, India has more shops per capita than any other nation in the world, meaning that the advent of "big-box retail" could impact 40 million shop owners and employees.
Analysts say retailers such as Wal-Mart are eyeing India's rising middle class, and a retail market that could be worth more than $600 billion in less than a decade.
But communists and trade unions have forced a government inquiry into Wal-Mart's plans, and they made the issue part of a nationwide strike that nearly shut down Calcutta's airport last week.
It is an important moment for India's economic reform effort, and for the country's far left, which spawned the world's first democratically elected Communist government in 1957. Often ignored during India's recent binge of free-market reform, the left is now hoping to stir the nation's unease about foreign corporations - and few names serve better than Wal-Mart.
"The left has to change its tactics," says Shameem Faizee, secretary of the National Council of the Communist Party of India. Until now, it has given the government too much latitude, he says. "We have to consider how we can stop the government."
Among the stalls of Delhi's bazaars, it is not difficult to raise suspicions about Wal-Mart. For several years now, shopkeepers here have cast a wary eye toward the fringes of town, where scrub land has been transformed into air-conditioned shopping palaces of glass and neon. "A lot of shopkeepers have been losing business" to the new malls, says P.N. Bhatia, from behind the counter of his fabric shop.
This is most shopkeepers' perception of Wal-Mart: Western-style glitz at Western prices. It begets disquiet, but not panic. The local market will continue to survive because it has always been cheaper, they say. But when he is informed that Wal-Mart's philosophy is to sell large volumes at the lowest prices, Mr. Bhatia's countenance drops. "The big retail stores will definitely take away business from small shopkeepers," he says.
For such shop owners, who know of Wal-Mart only as a distant name associated with American economic hegemony, there is a need for education, say union leaders. "It's directly hitting the business of these sorts of people," says Amarjeet Kaur of the All-India Trade Union Congress.
The nationwide strike last week was a part of raising that awareness. On a bright winter's day, leftists and union leaders marched toward parliament, thronging a dilapidated truck draped in red Communist flags. From its creeping pulpit - amid cries of "long live the revolution" - Ms. Kaur proclaimed: "Not one East India Company but hundreds of foreign companies are coming to loot India."
It is an idea that still kindles many Indians to action. The previous government was tossed out in part because voters felt it was turning against its own people in favor of headlong free-market reforms. The government has changed, but for some Indians the perception hasn't.
"The foreign companies are exploiting the weaknesses of the Indian government and taking over the Indian economy in the same way as the East India Company did with the weak Mughal empire," says Bhatia, an animated government pensioner who displays the Indian ability to relate events separated by centuries with complete assurance.
Of course, that assertion is widely debated here. India still maintains many protections. For example, big foreign retailers like Wal-Mart are banned from opening their own stores here. Wal-Mart had to form a partnership with an Indian company, Bharti, to enter India.
The stores, expected to open next year, will be run by Bharti. But Wal-Mart plans to provide the logistical backbone. That way, when India removes its limitations on foreign investment - which is seen as inevitable - Wal-Mart will be able to move quickly, already having a network of distribution centers, as well as a refrigerated transport chain to bring foods to market.
Still, the effect on retailers is not a foregone conclusion. "The talk about mom-and-pop stores being closed overnight is a myth," says Asitava Sen, a retail analyst at PricewaterhouseCoopers in New Delhi, suggesting that Wal-Mart will not be in direct competition with them.
Indeed, Wal-Mart's discount strategy isn't always successful. The company announced earlier this year that it was pulling out of South Korea and Germany.
Somdutt, for one, hopes to adapt and survive. In the past 25 years, his store has changed from a tea shop to a packaging store, but it has always been the sole means of support for him and his family.
"In the past couple of years our business has gone down because of [malls]," he says, but adds with optimism: "Wal-Mart could set up [here], and it wouldn't make much of a difference. God will provide for everyone
Source : CSMonitor
Metro AG to pump in Rs 2000cr
With Wal-Mart finally setting foot in India in collaboration with Sunil Mittal’s Bharti Enterprises, German retail chain Metro Cash & Carry has put its India plans on the fast track.
The company plans to invest close to Rs 1,800-2,000 crore in the next three years to build a pan India network for its cash and carry business.
It is targeting 15-18 stores during the period in all major cities across the country, including two to three in Calcutta.
The first city store, on the EM Bypass, is expected to be ready by May-June next year, said James Scott, regional operating officer, Metro Cash & Carry International.
The company now has two stores in Bangalore and one in Hyderabad. The store in Mumbai is under construction.
In 2007, it will open three stores. Five to eight more stores will come up in 2008 and 2009. Each store entails an investment of 20 million euros.
Metro, which has a 28-billion-euro cash and carry business, is one of the first foreign retailers to enter India.
With the government’s restriction on foreign direct investment in front-end retail, Metro has restricted itself to wholesale.
Apart from fresh agricultural produce and food, it also supplies various items to shops, hotels, restaurants and even retailers.
The company has joined hands with local entrepreneur Mahendra K. Jalan’s Keventer to outsource supply chain infrastructure.
Metro will provide technology for grading, sorting, ripening and packaging agri products to Keventer.
However, the German firm is not looking at a Wal-Mart-Bharti structure to enter business to consumer (B2C) retail.
“We are not tying up with any Indian company,” Scott added.
Metro Cash & Carry CEO Thomas M. Huebner was in Calcutta recently.
“To sustain the 10 per cent growth rate, trade and distribution is also important. We need to invest in supply chain infrastructure, especially in agriculture. However, it is often a neglected issue here,” Huebner said
Source : The Telegraph
The company plans to invest close to Rs 1,800-2,000 crore in the next three years to build a pan India network for its cash and carry business.
It is targeting 15-18 stores during the period in all major cities across the country, including two to three in Calcutta.
The first city store, on the EM Bypass, is expected to be ready by May-June next year, said James Scott, regional operating officer, Metro Cash & Carry International.
The company now has two stores in Bangalore and one in Hyderabad. The store in Mumbai is under construction.
In 2007, it will open three stores. Five to eight more stores will come up in 2008 and 2009. Each store entails an investment of 20 million euros.
Metro, which has a 28-billion-euro cash and carry business, is one of the first foreign retailers to enter India.
With the government’s restriction on foreign direct investment in front-end retail, Metro has restricted itself to wholesale.
Apart from fresh agricultural produce and food, it also supplies various items to shops, hotels, restaurants and even retailers.
The company has joined hands with local entrepreneur Mahendra K. Jalan’s Keventer to outsource supply chain infrastructure.
Metro will provide technology for grading, sorting, ripening and packaging agri products to Keventer.
However, the German firm is not looking at a Wal-Mart-Bharti structure to enter business to consumer (B2C) retail.
“We are not tying up with any Indian company,” Scott added.
Metro Cash & Carry CEO Thomas M. Huebner was in Calcutta recently.
“To sustain the 10 per cent growth rate, trade and distribution is also important. We need to invest in supply chain infrastructure, especially in agriculture. However, it is often a neglected issue here,” Huebner said
Source : The Telegraph
Food for Thought: Kishore Biyani on entry of Retail MNCs in India
Boom or doom?
India’s GDP — $600 billion. Size of Walmart — $285 billion. Size of Indian retail — $250 billion. That the likes of Walmart are so eager to enter India and dominate retail cannot be emphasised more.
But should we allow them to dominate us? Remember, this is not automobile or oil and gas or power or metal sector that we are talking about.
It’s the most precious end of the value-chain — retail — and hence, owning the last mile customer. Should the power to own millions of Indian customers be given away so early on? We have suffered once by offering our ‘trade’ to outsiders. This time we need to be careful.
What is so glamorous about these foreign retail companies that we are gift wrapping our 1.2 billion consumers to them? What is it that a Walmart can do that an Indian retail company cannot?
Retail is an infrastructure business. Organised retail is growing at 40% in India. Walmart cannot grow it faster, for if it were possible, Indian retailers would have grown it. So, what is the BIG attraction? Is it: Investment?
Today capital is no constraint. With 1.2 billion consumers, of which 60% are the young, and the industry growing at 40%, Indian retail companies, if allowed to access foreign capital, can bring in more money than Walmart and the likes.
And also, retail is not a capital-intensive business. Indian retailers will invest faster than foreign retailers because they understand India.
We are looking at 100% square feet addition in the next two years on a base of 2.5 million. That’s not small.
Efficiency? Indian retailers, if allowed to gain size, will also become equally efficient. Nowhere in the world can you buy potatoes and tomatoes at Rs 6 and Rs 12/kg.
Indian retail has been serving 1.2 billion people, half of them at the bottom of the pyramid. If the likes of Walmart invest $500 million in supply chain management, as they claim, the prices cannot remain at this level.
At Walmart’s return of investment (ROI) of 18%, they will expect $90 million annually. Either the Indian customer or the Indian vendor will suffer, or both.
Employment? If Walmart stores will employ people, they will also wipe out the ‘father and son’ stores. The question that needs to be asked is whether ‘incremental’ employment will be created?
Outsourcing? It’s a business need and an ‘economic’ decision. If Indian companies are cost competitive, the US has no choice but to outsource.
That outsourcing is linked to opening retail surprises me. Infact, that they are linking the two, questions their intent. They need an alternate to China and that is India.
I strongly feel that we are proceeding with undue haste. There could be pressures on the government from the US, Indian corporate houses, like telecom and insurance, and, foreign consultants.
The government knows the importance of ‘trade’ (buying and selling). Giving up retail means giving up the power of owning customers. Should this be done so early on? Will this be a ‘boom’?
At 3% organised share if India is attractive, at 10% it will be more so! If there is a hurry, then open up lifestyle retail first.
Let them expand the consumption in the upper end of the market by bringing luxury and home goods. This way they can demonstrate all that they are saying.
Also, the Indian government will save foreign exchange as this set of Indian customers won’t travel abroad to shop.
And if they need to open value retail, let foreign companies be allowed to develop second tier cities and smaller towns and create the ‘infrastructure’ that they have been talking about. Let their demonstration be an indication of the next step for opening up.
Source: “View from the top,” The Sunday Times
India’s GDP — $600 billion. Size of Walmart — $285 billion. Size of Indian retail — $250 billion. That the likes of Walmart are so eager to enter India and dominate retail cannot be emphasised more.
But should we allow them to dominate us? Remember, this is not automobile or oil and gas or power or metal sector that we are talking about.
It’s the most precious end of the value-chain — retail — and hence, owning the last mile customer. Should the power to own millions of Indian customers be given away so early on? We have suffered once by offering our ‘trade’ to outsiders. This time we need to be careful.
What is so glamorous about these foreign retail companies that we are gift wrapping our 1.2 billion consumers to them? What is it that a Walmart can do that an Indian retail company cannot?
Retail is an infrastructure business. Organised retail is growing at 40% in India. Walmart cannot grow it faster, for if it were possible, Indian retailers would have grown it. So, what is the BIG attraction? Is it: Investment?
Today capital is no constraint. With 1.2 billion consumers, of which 60% are the young, and the industry growing at 40%, Indian retail companies, if allowed to access foreign capital, can bring in more money than Walmart and the likes.
And also, retail is not a capital-intensive business. Indian retailers will invest faster than foreign retailers because they understand India.
We are looking at 100% square feet addition in the next two years on a base of 2.5 million. That’s not small.
Efficiency? Indian retailers, if allowed to gain size, will also become equally efficient. Nowhere in the world can you buy potatoes and tomatoes at Rs 6 and Rs 12/kg.
Indian retail has been serving 1.2 billion people, half of them at the bottom of the pyramid. If the likes of Walmart invest $500 million in supply chain management, as they claim, the prices cannot remain at this level.
At Walmart’s return of investment (ROI) of 18%, they will expect $90 million annually. Either the Indian customer or the Indian vendor will suffer, or both.
Employment? If Walmart stores will employ people, they will also wipe out the ‘father and son’ stores. The question that needs to be asked is whether ‘incremental’ employment will be created?
Outsourcing? It’s a business need and an ‘economic’ decision. If Indian companies are cost competitive, the US has no choice but to outsource.
That outsourcing is linked to opening retail surprises me. Infact, that they are linking the two, questions their intent. They need an alternate to China and that is India.
I strongly feel that we are proceeding with undue haste. There could be pressures on the government from the US, Indian corporate houses, like telecom and insurance, and, foreign consultants.
The government knows the importance of ‘trade’ (buying and selling). Giving up retail means giving up the power of owning customers. Should this be done so early on? Will this be a ‘boom’?
At 3% organised share if India is attractive, at 10% it will be more so! If there is a hurry, then open up lifestyle retail first.
Let them expand the consumption in the upper end of the market by bringing luxury and home goods. This way they can demonstrate all that they are saying.
Also, the Indian government will save foreign exchange as this set of Indian customers won’t travel abroad to shop.
And if they need to open value retail, let foreign companies be allowed to develop second tier cities and smaller towns and create the ‘infrastructure’ that they have been talking about. Let their demonstration be an indication of the next step for opening up.
Source: “View from the top,” The Sunday Times
TCS retail product evinces interest from Wal-Mart
TCS retail product -Personal Shopping Assistant (PSA) has evinced interest from Wal-Mart and Target, the largest retailer in the world and the sixth-largest retailer in the US respectively, reports Economic Times.
PSA is a software product out of the retail innovation lab of TCS. The technology is currently at a prototype stage and will see a mass rollout within a year.
TCS retail product -Personal Shopping Assistant (PSA) has evinced interest from Wal-Mart and Target, the largest retailer in the world and the sixth-largest retailer in the US respectively, reports Economic Times.
PSA is a software product out of the retail innovation lab of TCS. The technology is currently at a prototype stage and will see a mass rollout within a year.
Source : HDFC Securities
PSA is a software product out of the retail innovation lab of TCS. The technology is currently at a prototype stage and will see a mass rollout within a year.
TCS retail product -Personal Shopping Assistant (PSA) has evinced interest from Wal-Mart and Target, the largest retailer in the world and the sixth-largest retailer in the US respectively, reports Economic Times.
PSA is a software product out of the retail innovation lab of TCS. The technology is currently at a prototype stage and will see a mass rollout within a year.
Source : HDFC Securities
Friday, December 15, 2006
Metro Cash, RIL rope in ICICI to spot property
German retail giant Metro Cash & Carry and India’s emerging retail venture Reliance Retail have roped in the property services group of ICICI Bank for identifying retail properties for its proposed pan India expansion.
The retail companies, which are planning a rapid expansion in the next two years, will use the expertise of the Bank’s recently launched property services group to identify and acquire properties like malls and other retail spaces in various locations in the country.
While Metro Cash & Carry has studied the options of expanding into Tamil Nadu, Andhra Pradesh, West Bengal, Delhi and Mumbai next year, Reliance Retail – the newly launched retail initiative of the Mukesh Ambani-led Reliance group – has plans to open over 10-11 stores in all big cities in the country over one year’s time.
Sources said Metro Cash & Carry was already finalising a property at Bhandup in Mumbai through ICICI Bank to enter Maharashtra state and is scouting for more locations in Mumbai and other cities.
ICICI Bank had ventured into this specialised services for the booming retail sector about an year ago. With this, it provides services such as property tracking, identification, due diligence and negotiation with property owners among others.
Metro Cash & Carry India, which set up its first distribution centre in Bangalore, is likely to have five to six distribution centres in Tamil Nadu with a minimum requirement of about seven acres each covering 125,00 sq ft.
The investment for each centre would be up to Rs 70 crore. The company, a member of the German Metro Group, entered India in 2003 and has two distribution centres in Bangalore at present.
However , it is not yet clear that the company will get into consumer retail with local partners in the country. Since the current law does not allow FDIs in front- end retail in India, it is present only in the cash and carry (wholesale) format currently.
On the other hand, Reliance Retail will open neighborhood supermarkets in almost all the cities.
Reliance Retail, which last month opened its first 11 stores in Hyderabad, plans to open stores in another 783 cities and towns and 6,000 smaller towns by 2011.
Source : Business Standard
The retail companies, which are planning a rapid expansion in the next two years, will use the expertise of the Bank’s recently launched property services group to identify and acquire properties like malls and other retail spaces in various locations in the country.
While Metro Cash & Carry has studied the options of expanding into Tamil Nadu, Andhra Pradesh, West Bengal, Delhi and Mumbai next year, Reliance Retail – the newly launched retail initiative of the Mukesh Ambani-led Reliance group – has plans to open over 10-11 stores in all big cities in the country over one year’s time.
Sources said Metro Cash & Carry was already finalising a property at Bhandup in Mumbai through ICICI Bank to enter Maharashtra state and is scouting for more locations in Mumbai and other cities.
ICICI Bank had ventured into this specialised services for the booming retail sector about an year ago. With this, it provides services such as property tracking, identification, due diligence and negotiation with property owners among others.
Metro Cash & Carry India, which set up its first distribution centre in Bangalore, is likely to have five to six distribution centres in Tamil Nadu with a minimum requirement of about seven acres each covering 125,00 sq ft.
The investment for each centre would be up to Rs 70 crore. The company, a member of the German Metro Group, entered India in 2003 and has two distribution centres in Bangalore at present.
However , it is not yet clear that the company will get into consumer retail with local partners in the country. Since the current law does not allow FDIs in front- end retail in India, it is present only in the cash and carry (wholesale) format currently.
On the other hand, Reliance Retail will open neighborhood supermarkets in almost all the cities.
Reliance Retail, which last month opened its first 11 stores in Hyderabad, plans to open stores in another 783 cities and towns and 6,000 smaller towns by 2011.
Source : Business Standard
Reliance Retail presses fast forward
This could well be the Wal-Mart effect. Reliance Industries Ltd (RIL) appears to be ready for the next stage in its fledgling retail business sooner than planned. So, after the neighbourhood convenience stores called Reliance Fresh across Hyderabad, RIL has also begun the cash & carry format through ‘Ranger Farm’ outlets in NCR.
It’s now gearing up for the launch of Speciality Stores and Hypermarkets over the next two months.
In fact, the new retail blueprint involves Reliance pulling up retail shutters across several cities in the next few days — Jaipur, Delhi and NCR, Kochi, Bangalore and Chennai.
The first Ranger Farm outlet, which acts as a wholesale supplier of fresh fruits and vegetables to push-cart vendors and others, has made its debut in Hyderabad recently and another one is coming up in Jaipur next week.
So, while on the one hand, the Fresh stores service individual customers and households, the Farm (which will have dedicated outlets functioning between 2 am and 9 am every morning) supplies the same produce and groceries to wholesale customers such as vegetable vendors and others.
Then, the first Hypermarket is expected to come up in the National Capital Region (NCR) and Ahmedabad by the end of February next year. Does the arrival of Wal-Mart on the Indian retail scene have anything to do with RIL fast forwarding its roll-out?
Industry experts agree, pointing out that the company’s foray into the cash & carry wholesale trade could provide tough competition to the Bharti, Wal-Mart joint venture.
The RIL hypermarkets would be spread over 50,000 sq ft and would stock consumer electronics, apparel and home furnishings, besides fresh fruits and vegetables. The Speciality Store format is expected to launch with high-end apparel initially.
RIL chairman Mukesh Ambani has declared an investment of about Rs 25,000 crore in the first phase of retail expansion. Of this earmarked investment, Rs 10,000 crore has already been approved as equity.
The retail blueprint will see RIL reaching 784 towns, 6,000 rural mandis and 70 of the country’s top cities over the next 18-24 months. The company is eyeing retail space of 100 million sq ft under its belt by the turn of the decade, a turnover of Rs 1,00,000 crore and breakeven within the first year of operations.
Source : DNA Money
It’s now gearing up for the launch of Speciality Stores and Hypermarkets over the next two months.
In fact, the new retail blueprint involves Reliance pulling up retail shutters across several cities in the next few days — Jaipur, Delhi and NCR, Kochi, Bangalore and Chennai.
The first Ranger Farm outlet, which acts as a wholesale supplier of fresh fruits and vegetables to push-cart vendors and others, has made its debut in Hyderabad recently and another one is coming up in Jaipur next week.
So, while on the one hand, the Fresh stores service individual customers and households, the Farm (which will have dedicated outlets functioning between 2 am and 9 am every morning) supplies the same produce and groceries to wholesale customers such as vegetable vendors and others.
Then, the first Hypermarket is expected to come up in the National Capital Region (NCR) and Ahmedabad by the end of February next year. Does the arrival of Wal-Mart on the Indian retail scene have anything to do with RIL fast forwarding its roll-out?
Industry experts agree, pointing out that the company’s foray into the cash & carry wholesale trade could provide tough competition to the Bharti, Wal-Mart joint venture.
The RIL hypermarkets would be spread over 50,000 sq ft and would stock consumer electronics, apparel and home furnishings, besides fresh fruits and vegetables. The Speciality Store format is expected to launch with high-end apparel initially.
RIL chairman Mukesh Ambani has declared an investment of about Rs 25,000 crore in the first phase of retail expansion. Of this earmarked investment, Rs 10,000 crore has already been approved as equity.
The retail blueprint will see RIL reaching 784 towns, 6,000 rural mandis and 70 of the country’s top cities over the next 18-24 months. The company is eyeing retail space of 100 million sq ft under its belt by the turn of the decade, a turnover of Rs 1,00,000 crore and breakeven within the first year of operations.
Source : DNA Money
Reliance Retail opens first set of stores in Jaipur
Reliance Retail Ltd is all set to formally open its `Reliance Fresh` retail stores in Jaipur from tomorrow, after opening its maiden store in Hyderabad last month, report agency sources.
Jaipur has been chosen as the next destination for opening of these farm fresh stores after its launch in Hyderabad, mainly because the infrastructure required to start the stores have been put in place quickly and efficiently in Rajasthan.
Reliance will open five stores in Jaipur this week, which will stock 125 varieties of fruits and vegetables at a time.
All seasonal fruits and vegetables will be available including puja flowers.
The company siad that 30% of fruits and vegetables for the stores in Rajasthan will be sourced from within the state, especially from Alwar, while the rest would be obtained from all over the country.
President and chief executive (food business), Gunendar Kapur, said the retail scene in India is totally fragmented and Reliance Retail is to be the most organised and admired retail company in India.
He said that the complete farm-to-fork project cycle initiated by the RIL is part of its agricultural initiative and is unlikely to harm the small-time vegetable vendor.
RIL feels India`s retail growth, which is now worth USD 300 billion, could grow up to USD 427 billion in the next four years.
Source : Myiris.com
Jaipur has been chosen as the next destination for opening of these farm fresh stores after its launch in Hyderabad, mainly because the infrastructure required to start the stores have been put in place quickly and efficiently in Rajasthan.
Reliance will open five stores in Jaipur this week, which will stock 125 varieties of fruits and vegetables at a time.
All seasonal fruits and vegetables will be available including puja flowers.
The company siad that 30% of fruits and vegetables for the stores in Rajasthan will be sourced from within the state, especially from Alwar, while the rest would be obtained from all over the country.
President and chief executive (food business), Gunendar Kapur, said the retail scene in India is totally fragmented and Reliance Retail is to be the most organised and admired retail company in India.
He said that the complete farm-to-fork project cycle initiated by the RIL is part of its agricultural initiative and is unlikely to harm the small-time vegetable vendor.
RIL feels India`s retail growth, which is now worth USD 300 billion, could grow up to USD 427 billion in the next four years.
Source : Myiris.com
Thursday, December 14, 2006
Dabur scripts its retail story around health & wellness
Dabur India is currently exploring an entry into the consumer retail business, and in all probablity, it would play in the niche area of health and wellness.
“Retail is an opportunity that requires to be studied.We are looking at various options, but have not finalised any plans. But we are sure that we will not be a mainstream retail player, meaning we wouldn’t be in food and grocery retailing,” Dabur India chief executive officer Sunil Duggal told ET.
Mr Duggal said the company was building retail business models and would see whether these would fit in with the overall business plans of the company. “If we decide to enter the retail business, it will be in the front-end. Our plans will be focused and specialised with health and wellness being the obvious option at the moment. We could make a foray through Dabur India or through a separate company,” he said.
The company’s top management has begun initial talks on the possibility of being a high -treet retailer in health and wellness. The idea behind the move is that the company would sell its own brands, and also offer a complete portfolio of products catering to the health-conscious urban Indian. This model would be close to the one followed by retailer Boots in the UK. Dabur India is still exploring various formats and working on possible store sizes.
The health and wellness retail business is still at a nascent stage in the country. There are no specialty formats, however, some hypermarket chains like Pantaloon and Piramyd have health and wellness units. These units are currently part of their larger retail shops.
Industry experts say if Dabur ventures into this specialty format, it will have to set up stores measuring close to 2,000-2,500 sq ft. The company may also go in for an arrangement with one of the upcoming multi-brand or hypermarket retail chains. For instance, American photography retail chain Fobaz has entered into a similar arrangement with Reliance Retail.
Specialty retail has been a very successful business model in the West. Some of the industry experts that ET spoke to expect similar success in India as well. However, most of the action on the specialty retail front has been in the consumer durables and electronics segments. The health and wellness segment has been considered a niche segment.
In recent times though, some of the larger Indian corporate houses have shown a keen interest in offbeat specialty retail ventures. There have been recent reports about larger retailers planning exclusive jewellery and other product outlets.
Meanwhile, Dabur India is also planning a foray into the mass-premium skin-care range of products. It is likely to introduce some new brands in this range. At present, the two brands in its stable are Gulabari and Vatika Fairness Face Pack.
Source : Economic Times
“Retail is an opportunity that requires to be studied.We are looking at various options, but have not finalised any plans. But we are sure that we will not be a mainstream retail player, meaning we wouldn’t be in food and grocery retailing,” Dabur India chief executive officer Sunil Duggal told ET.
Mr Duggal said the company was building retail business models and would see whether these would fit in with the overall business plans of the company. “If we decide to enter the retail business, it will be in the front-end. Our plans will be focused and specialised with health and wellness being the obvious option at the moment. We could make a foray through Dabur India or through a separate company,” he said.
The company’s top management has begun initial talks on the possibility of being a high -treet retailer in health and wellness. The idea behind the move is that the company would sell its own brands, and also offer a complete portfolio of products catering to the health-conscious urban Indian. This model would be close to the one followed by retailer Boots in the UK. Dabur India is still exploring various formats and working on possible store sizes.
The health and wellness retail business is still at a nascent stage in the country. There are no specialty formats, however, some hypermarket chains like Pantaloon and Piramyd have health and wellness units. These units are currently part of their larger retail shops.
Industry experts say if Dabur ventures into this specialty format, it will have to set up stores measuring close to 2,000-2,500 sq ft. The company may also go in for an arrangement with one of the upcoming multi-brand or hypermarket retail chains. For instance, American photography retail chain Fobaz has entered into a similar arrangement with Reliance Retail.
Specialty retail has been a very successful business model in the West. Some of the industry experts that ET spoke to expect similar success in India as well. However, most of the action on the specialty retail front has been in the consumer durables and electronics segments. The health and wellness segment has been considered a niche segment.
In recent times though, some of the larger Indian corporate houses have shown a keen interest in offbeat specialty retail ventures. There have been recent reports about larger retailers planning exclusive jewellery and other product outlets.
Meanwhile, Dabur India is also planning a foray into the mass-premium skin-care range of products. It is likely to introduce some new brands in this range. At present, the two brands in its stable are Gulabari and Vatika Fairness Face Pack.
Source : Economic Times
Companies mull innovative ways to retain talent
Salaries in the retail industry skyrocketed when Reliance went on a hiring spree for its retail venture last year. The world's largest retailer Wal-Mart and the Aditya Birla group could prop up salaries further in 2007.
Fast-paced expansions by existing retailers and the emergence of new players are creating an unprecedented war for talent, leading to 35-40 per cent rise in salaries across-the-board.
"Reliance has set new salary benchmarks. While individual talent itself will determine the price, salaries will go up significantly," said R Subramanian, managing director of the Chennai-based retail chain, Subiksha. Subiksha has stepped up hiring for expansions into the North and the West.
Subramanian will be forced to part with more money for talent shortly as the Bharti-Wal-Mart joint venture, which plans to open its first retail store by August 15, has begun its talent hunt. While Wal-Mart has a tight-fisted approach on salaries to save costs, it may not happen in India where talent is scarce, said industry sources.
The Birlas, who plan to recruit people for its new retail venture, is now offering attractive salaries to court talent.
The Birlas had to pay 35-40 per cent more to hire senior executives from rivals like Mumbai-based Shoppers' Stop. "I see the salaries going up further," said Govind Shrikhande, COO, Shoppers' Stop.
For instance, the average annual salary of a store head has jumped by 40 per cent to Rs 10 lakh in the last one year. This is set to touch Rs 14-16 lakh in the next one year, said industry sources.
Shoppers' Stop, which gave a 40 per cent hike in salaries when the churn started, last year, is exploring new ways to fight attrition. "We can, of course, give ESOPs to all employees. We need to implement other concrete measures," Shrikhande added.
Players like Mumbai-based D-Mart are organising programmes such as "Talent Meet" to create a bonding among employees. "Once in a while, we will have a singing competition or something like that before the store opens," says an employee of D-Mart at Nerul in New Mumbai.
Poaching from other industries is also underway. "There is a great shortage for skilled manpower," said Mohit Mohan, senior vice-president, executive search firm, Gilbert Associates.
That is why companies like Subiksha are recruiting from FMCG majors. Executives from Asian Paints and Bharti Telecom have recently joined the company.
There is, however, no major benefit since salaries in FMCG and Telecom industries are high. However, executives who make the switch are likely to get better bargains.
"Retail is very hot today. Hence, people want to join the industry and get substantial hikes in the next one year when more players come in," said an HR consultant.
The fight for talent is more intense at the bottom. Most store executives have joined the retail industry from call centres. Some of them are going back as the BPO industry offers decent hikes too.
Even poaching has gained momentum at the top-level too. Reliance, which doles out Rs 4 crore to its CEOs, is now losing people to new entrants. Start-ups need experienced people, since they can bring in lot of expertise for rolling out stores.
"It is not correct to assume that new entrants like Wal-Mart will go for substantial hikes. Global companies follow the policy of training people for specific needs," says Rajeev Karwal, who recently quit Reliance Retail as CEO.
What Karwal says seems to be right; if Wal-Mart's recent moves are any indication. It has chosen Lance Rettig, who joined as a cashier at a Wal-Mart store in Arizona 18 years ago, as the head of its liaison office in India.
"Nearly 76 per cent of our store managers started as associates (entry-level staff)," Michael T Duke, vice-chairman, Wal-Mart Stores, had told Hindustan Times. It remains to be seen whether this strategy will pay off in India
Source : Hindustan Times
Fast-paced expansions by existing retailers and the emergence of new players are creating an unprecedented war for talent, leading to 35-40 per cent rise in salaries across-the-board.
"Reliance has set new salary benchmarks. While individual talent itself will determine the price, salaries will go up significantly," said R Subramanian, managing director of the Chennai-based retail chain, Subiksha. Subiksha has stepped up hiring for expansions into the North and the West.
Subramanian will be forced to part with more money for talent shortly as the Bharti-Wal-Mart joint venture, which plans to open its first retail store by August 15, has begun its talent hunt. While Wal-Mart has a tight-fisted approach on salaries to save costs, it may not happen in India where talent is scarce, said industry sources.
The Birlas, who plan to recruit people for its new retail venture, is now offering attractive salaries to court talent.
The Birlas had to pay 35-40 per cent more to hire senior executives from rivals like Mumbai-based Shoppers' Stop. "I see the salaries going up further," said Govind Shrikhande, COO, Shoppers' Stop.
For instance, the average annual salary of a store head has jumped by 40 per cent to Rs 10 lakh in the last one year. This is set to touch Rs 14-16 lakh in the next one year, said industry sources.
Shoppers' Stop, which gave a 40 per cent hike in salaries when the churn started, last year, is exploring new ways to fight attrition. "We can, of course, give ESOPs to all employees. We need to implement other concrete measures," Shrikhande added.
Players like Mumbai-based D-Mart are organising programmes such as "Talent Meet" to create a bonding among employees. "Once in a while, we will have a singing competition or something like that before the store opens," says an employee of D-Mart at Nerul in New Mumbai.
Poaching from other industries is also underway. "There is a great shortage for skilled manpower," said Mohit Mohan, senior vice-president, executive search firm, Gilbert Associates.
That is why companies like Subiksha are recruiting from FMCG majors. Executives from Asian Paints and Bharti Telecom have recently joined the company.
There is, however, no major benefit since salaries in FMCG and Telecom industries are high. However, executives who make the switch are likely to get better bargains.
"Retail is very hot today. Hence, people want to join the industry and get substantial hikes in the next one year when more players come in," said an HR consultant.
The fight for talent is more intense at the bottom. Most store executives have joined the retail industry from call centres. Some of them are going back as the BPO industry offers decent hikes too.
Even poaching has gained momentum at the top-level too. Reliance, which doles out Rs 4 crore to its CEOs, is now losing people to new entrants. Start-ups need experienced people, since they can bring in lot of expertise for rolling out stores.
"It is not correct to assume that new entrants like Wal-Mart will go for substantial hikes. Global companies follow the policy of training people for specific needs," says Rajeev Karwal, who recently quit Reliance Retail as CEO.
What Karwal says seems to be right; if Wal-Mart's recent moves are any indication. It has chosen Lance Rettig, who joined as a cashier at a Wal-Mart store in Arizona 18 years ago, as the head of its liaison office in India.
"Nearly 76 per cent of our store managers started as associates (entry-level staff)," Michael T Duke, vice-chairman, Wal-Mart Stores, had told Hindustan Times. It remains to be seen whether this strategy will pay off in India
Source : Hindustan Times
Starcom bags media duties for the Future Group
Starcom has bagged the media duties for the Future Group (formerly Pantaloon Retail). Carat was the incumbent agency and this development follows soon after Carat parted ways with the Percept Group. The creative duties for the business continue to lie with Percept H and Mudra.
The Future Group was spending close to Rs 40 crore as advertising spends till last year. Sources close to the development state that these spends are likely to increase this year, as a result of the entire marketing budget of the company doubling from the present Rs 100 crore to Rs 200 crore.
This sudden increase in the marketing budget of the company is a probable counter to the pressure from mega players such as Reliance Retail and Bharti-Walmart, which will enter the Indian market soon.
The Future Group will focus mainly on above-the-line marketing activities to communicate to the target audience. It has already roped in celebrities such as Bipasha Basu, Zayed Khan and Himesh Reshmmiya to advertise its various brands. The focus on below-the-line activities will remain the same as they are believed to be an essential medium to reach out to consumers.
Source : agencyfaqs
The Future Group was spending close to Rs 40 crore as advertising spends till last year. Sources close to the development state that these spends are likely to increase this year, as a result of the entire marketing budget of the company doubling from the present Rs 100 crore to Rs 200 crore.
This sudden increase in the marketing budget of the company is a probable counter to the pressure from mega players such as Reliance Retail and Bharti-Walmart, which will enter the Indian market soon.
The Future Group will focus mainly on above-the-line marketing activities to communicate to the target audience. It has already roped in celebrities such as Bipasha Basu, Zayed Khan and Himesh Reshmmiya to advertise its various brands. The focus on below-the-line activities will remain the same as they are believed to be an essential medium to reach out to consumers.
Source : agencyfaqs
Garment exporters join the retail rush
The entry of big players such as Bharti-Wal Mart and Reliance group into the retail business and penetration of organised retailing in non-metro cities in India is fueling the garment sector in the country like never before. With an exposure of hardly 5%, the traditional garment exporters from India are now eyeing a bigger pie in the growing organised retail sector in the country.
India’s biggest garment exporters, including Creative Garment, Kaytee Corp, Orient Craft and Gokaldas Exports, are all bullish on the potential of garment business in the retail sector in India. Most of these companies are now in the process of evolving a separate business model for the domestic market to increase presence from current levels of 4-5% to over 20% over next two years.
While Gokaldas Exports and Kaytee Corp have set up separate business divisions to cater to the growing domestic market another exporter, Creative Group have floated a separate company to tap the opportunities here.
“There is a lot of interest and we are talking to all the players for sourcing agreement on a long-term basis and if the volumes are good we may also set up separate manufacturing units dedicated to the domestic market,” says Gokaldas Exports’ executive director-finance, Rajendra J Hinduja. The Rs 884-crore company is already supplying to few of the organised retailers in India.
“We have recently set up a separate division, which will look into the opportunities of garment supplies in the domestic market,” Kaytee Corp chairman and managing director Premal Udani told ET. The company generates almost 96% of its revenue from the exports market, but hopes to increase its presence in the domestic market to 20% in the next two years.
At present, volumes are low while there is a pressure on the margin in the price-sensitive Indian market. “The volumes are bound to grow for the garment suppliers, as the organised retailers penetrate small towns and cities in India. We expect that the overall garment and fabric industry in India will double to $40 billion in next six to seven years.
This growth will largely come from the organised retailers and with the required systems of quality, technology and compliance in place, garment exports can benefit a lot in the emerging market here,” said Technopak’s chief operating officer Harminder Sahni.
Most of these players are supplying small volume garments to organised players such as Shopper’s Stop, Globus, Pantaloon and Lifestyle. “The Indian market is different and the suppliers will have to accept flexible payment mechanism.
In India, payments are normally made after 45-60 days of delivery, unlike the exports market, where the payments are immediate,” says Creative Garments chief Rahul Mehta, who is also the president of the Clothing Manufacturers’ Association of India. The Creative group has now floated a new company, Creative Casual Wear, which will handle the domestic business
Source : Economic Times
India’s biggest garment exporters, including Creative Garment, Kaytee Corp, Orient Craft and Gokaldas Exports, are all bullish on the potential of garment business in the retail sector in India. Most of these companies are now in the process of evolving a separate business model for the domestic market to increase presence from current levels of 4-5% to over 20% over next two years.
While Gokaldas Exports and Kaytee Corp have set up separate business divisions to cater to the growing domestic market another exporter, Creative Group have floated a separate company to tap the opportunities here.
“There is a lot of interest and we are talking to all the players for sourcing agreement on a long-term basis and if the volumes are good we may also set up separate manufacturing units dedicated to the domestic market,” says Gokaldas Exports’ executive director-finance, Rajendra J Hinduja. The Rs 884-crore company is already supplying to few of the organised retailers in India.
“We have recently set up a separate division, which will look into the opportunities of garment supplies in the domestic market,” Kaytee Corp chairman and managing director Premal Udani told ET. The company generates almost 96% of its revenue from the exports market, but hopes to increase its presence in the domestic market to 20% in the next two years.
At present, volumes are low while there is a pressure on the margin in the price-sensitive Indian market. “The volumes are bound to grow for the garment suppliers, as the organised retailers penetrate small towns and cities in India. We expect that the overall garment and fabric industry in India will double to $40 billion in next six to seven years.
This growth will largely come from the organised retailers and with the required systems of quality, technology and compliance in place, garment exports can benefit a lot in the emerging market here,” said Technopak’s chief operating officer Harminder Sahni.
Most of these players are supplying small volume garments to organised players such as Shopper’s Stop, Globus, Pantaloon and Lifestyle. “The Indian market is different and the suppliers will have to accept flexible payment mechanism.
In India, payments are normally made after 45-60 days of delivery, unlike the exports market, where the payments are immediate,” says Creative Garments chief Rahul Mehta, who is also the president of the Clothing Manufacturers’ Association of India. The Creative group has now floated a new company, Creative Casual Wear, which will handle the domestic business
Source : Economic Times
Letter From India: From the 'subzi mandi' to the hypermarket
RETAILERS from across the world are coming to India, to use a cliche, wholesale. So much so that nostalgia is setting in for those used to shopping at Delhi’s Chandni Chowk, Kolkata’s New Market, Bangalore’s Russell Market and Mumbai’s Crawford Market.
There is already that quaint smell of old memories, mixed with the fresh smell of vegetables.
One is not even talking of the subzi mandi, the wholesale greengrocer’s market that is integral to urban and semi-urban India. But retail is not confined to fruits and vegetables. India’s cash-rich corporations, raring to go multinational wherever they can, are readying for international tie-ups to sell just about everything. Clothes, stationery, sportswear, inner and outerwear, tailored clothing, eyewear, watches, fragrance, footwear and accessories — the list is endless.
Apparel, however, remains the key revenue driver accounting for almost 80 per cent of total sales. According to industry insiders, the total apparel market in India for kids alone is around US$2.9 billion (RM10.7 billion).
The Indian retail market is estimated at between US$300 billion and $350 billion. But organised retail accounts for only US$8 billion. By 2010, it is expected to touch US$22 billion.
Eyeing this huge opportunity, domestic majors Tata, Aditya Birla and Reliance have already jumped in. For many of them, essentially traders two generations ago, retail should be refreshing.
The Wal-Mart agreement with communications major Bharti last month is expected to energise other global retailers, including French giant Carrefour and Hong Kong-based A.S. Watson and AEA Holdings, to firm up their India plans.
As in many other fields, Tata is the pioneer with the apparel retail chain "Westside". Last year, they brought in Australia’s Woolworth’s and are now turning to British Tesco for a strategic alliance to set up a chain of hypermarkets.
Setting up a shop and running it for long hours come naturally to Indians. Prince Klaus of The Netherlands, told me this in 1986: "My first glimpse of Indian enterprise was in East Africa in the 1940s, watching a family run a grocery. When the man rested, his wife or one of the children would manage. The shop closed for but a couple of hours."
He told Dutch entrepreneurs: "If you delay or do not go, others will." Today, the Dutch are here; so are many others. As the youngest male at home, it was my task to do the marketing. My cloth bag changed to a plastic one, and bicycle to scooter. Now, I motor down to the wholesale market. The shopping mall experience is but a decade old.
The retailing revolution is inevitable when India is changing quietly. Economist Ashok Gulati says that in the past two decades, consumption of vegetables has trebled in villages and doubled in towns; milk and milk product consumption have doubled in both urban and rural areas. The share of high-value foods has risen in India’s farm output from 32 to 44 per cent between 1983 and 2003.
Since retailing infrastructure must exert pressures on real estate, the phenomenon has seen a dual process. With branded players looking for quality space and high convertible footfalls, Khan Market, an upmarket shopping street in New Delhi, has become the costliest location with a 75 per cent jump, while South Extension, has recorded a jump of 111.5 per cent. Mumbai’s Linking Road too has registered a rise.
Soon, an estimated 50 million square feet of quality retail space will be available across India. Today, in Delhi, Mumbai and their suburbs, there are about 100 malls. They all mean thousands of jobs for skilled and semi-skilled youngsters.
Retailers are spreading out of the metros. Of the 700 new malls coming up, 40 per cent are in the smaller cities. Organised retailing in small-town India is growing at a staggering 50-60 per cent a year compared with 35-40 per cent in the metros. Cities like Dehradun, Vijayawada, Lucknow and Nashik will power India up the rankings soon.
But it is not going to be easy. The Left parties whose support is crucial to the government are against what they call "the backdoor entry of MNCs" and are opposing the foreign direct investment that major players are seeking.
"Expansion of the Wal-Mart chains has caused massive closure of small stores and pauperisation of poor communities even in the United States," says the Communist Party of India (Marxist).
Even without the communists’ accusations, Wal-Mart’s history is known. It entered Hong Kong in 1994 and quit the region two years later, after what some experts saw as poor choice of location and merchandise selection. It entered Indonesia in 1996, but left a year later, following the looting and torching of a store in Jakarta. Earlier this year, Wal-Mart exited Germany, where it had lost hundreds of millions of dollars since 1998, and South Korea.
The government is playing safe, adhering to permissible investment limits. Commerce and Industry Minister Kamal Nath wants to see whether farmers stand to benefit and what impact it could have on local neighbourhood stores.
When the malls spring up across India, and people take the Metro to buy green vegetables, a generation will pass clutching memories of mom-and-pop shops, home-made cloth bags, sustained haggling in open bazaars and the quiet thrill of getting an extra dash of chilly or coriander for free.
But I have no doubt that the small shopkeeper will survive. What will keep him going, I presume, will be the ability to make available that "something" the big retailers will have discarded for being either uneconomic or too cumbersome to handle. There will always be homegrown wisdom that will have escaped the PhDs of the Ivy League business and marketing schools.
If nothing works, the good old greengrocer will sit back and enjoy if he is lucky to get compensation, or with credit easily available, will move on to something more lucrative. Their sons and daughters, I am sure, will find something more productive to do in India’s booming economy.
Decades from now, the roadside vendor may be part of a movie or TV sequence or a character in a novel, to be read in electronic books, downloaded in airport kiosks.
Source : New Straits Times
There is already that quaint smell of old memories, mixed with the fresh smell of vegetables.
One is not even talking of the subzi mandi, the wholesale greengrocer’s market that is integral to urban and semi-urban India. But retail is not confined to fruits and vegetables. India’s cash-rich corporations, raring to go multinational wherever they can, are readying for international tie-ups to sell just about everything. Clothes, stationery, sportswear, inner and outerwear, tailored clothing, eyewear, watches, fragrance, footwear and accessories — the list is endless.
Apparel, however, remains the key revenue driver accounting for almost 80 per cent of total sales. According to industry insiders, the total apparel market in India for kids alone is around US$2.9 billion (RM10.7 billion).
The Indian retail market is estimated at between US$300 billion and $350 billion. But organised retail accounts for only US$8 billion. By 2010, it is expected to touch US$22 billion.
Eyeing this huge opportunity, domestic majors Tata, Aditya Birla and Reliance have already jumped in. For many of them, essentially traders two generations ago, retail should be refreshing.
The Wal-Mart agreement with communications major Bharti last month is expected to energise other global retailers, including French giant Carrefour and Hong Kong-based A.S. Watson and AEA Holdings, to firm up their India plans.
As in many other fields, Tata is the pioneer with the apparel retail chain "Westside". Last year, they brought in Australia’s Woolworth’s and are now turning to British Tesco for a strategic alliance to set up a chain of hypermarkets.
Setting up a shop and running it for long hours come naturally to Indians. Prince Klaus of The Netherlands, told me this in 1986: "My first glimpse of Indian enterprise was in East Africa in the 1940s, watching a family run a grocery. When the man rested, his wife or one of the children would manage. The shop closed for but a couple of hours."
He told Dutch entrepreneurs: "If you delay or do not go, others will." Today, the Dutch are here; so are many others. As the youngest male at home, it was my task to do the marketing. My cloth bag changed to a plastic one, and bicycle to scooter. Now, I motor down to the wholesale market. The shopping mall experience is but a decade old.
The retailing revolution is inevitable when India is changing quietly. Economist Ashok Gulati says that in the past two decades, consumption of vegetables has trebled in villages and doubled in towns; milk and milk product consumption have doubled in both urban and rural areas. The share of high-value foods has risen in India’s farm output from 32 to 44 per cent between 1983 and 2003.
Since retailing infrastructure must exert pressures on real estate, the phenomenon has seen a dual process. With branded players looking for quality space and high convertible footfalls, Khan Market, an upmarket shopping street in New Delhi, has become the costliest location with a 75 per cent jump, while South Extension, has recorded a jump of 111.5 per cent. Mumbai’s Linking Road too has registered a rise.
Soon, an estimated 50 million square feet of quality retail space will be available across India. Today, in Delhi, Mumbai and their suburbs, there are about 100 malls. They all mean thousands of jobs for skilled and semi-skilled youngsters.
Retailers are spreading out of the metros. Of the 700 new malls coming up, 40 per cent are in the smaller cities. Organised retailing in small-town India is growing at a staggering 50-60 per cent a year compared with 35-40 per cent in the metros. Cities like Dehradun, Vijayawada, Lucknow and Nashik will power India up the rankings soon.
But it is not going to be easy. The Left parties whose support is crucial to the government are against what they call "the backdoor entry of MNCs" and are opposing the foreign direct investment that major players are seeking.
"Expansion of the Wal-Mart chains has caused massive closure of small stores and pauperisation of poor communities even in the United States," says the Communist Party of India (Marxist).
Even without the communists’ accusations, Wal-Mart’s history is known. It entered Hong Kong in 1994 and quit the region two years later, after what some experts saw as poor choice of location and merchandise selection. It entered Indonesia in 1996, but left a year later, following the looting and torching of a store in Jakarta. Earlier this year, Wal-Mart exited Germany, where it had lost hundreds of millions of dollars since 1998, and South Korea.
The government is playing safe, adhering to permissible investment limits. Commerce and Industry Minister Kamal Nath wants to see whether farmers stand to benefit and what impact it could have on local neighbourhood stores.
When the malls spring up across India, and people take the Metro to buy green vegetables, a generation will pass clutching memories of mom-and-pop shops, home-made cloth bags, sustained haggling in open bazaars and the quiet thrill of getting an extra dash of chilly or coriander for free.
But I have no doubt that the small shopkeeper will survive. What will keep him going, I presume, will be the ability to make available that "something" the big retailers will have discarded for being either uneconomic or too cumbersome to handle. There will always be homegrown wisdom that will have escaped the PhDs of the Ivy League business and marketing schools.
If nothing works, the good old greengrocer will sit back and enjoy if he is lucky to get compensation, or with credit easily available, will move on to something more lucrative. Their sons and daughters, I am sure, will find something more productive to do in India’s booming economy.
Decades from now, the roadside vendor may be part of a movie or TV sequence or a character in a novel, to be read in electronic books, downloaded in airport kiosks.
Source : New Straits Times
Retail chains unleash new marketing plans
With competition hotting up, Indian retail chains are beefing up their marketing activities to recharge their brands. Retailers like Pantaloons, Ebony, Shopper’s Stop and Trent plan to step up marketing spends to stave off threats from mega players like Bharti-Wal-Mart or Reliance Retail.
Retail circles feel marketing activities will now gain momentum as the players have attained a certain scale of operation. Much of the activity till now was limited to below-the-line (BTL) marketing strategies like customer-loyalty programmes, direct mailers and in-store activities.
“But now since retail chains have attained a certain level of operation, the focus will shift to above-the-line (ATL) marketing. Each store will now want to communicate their brand differentiation to their consumers,” Gibson Vedamani, chief executive officer, Retailers Association of India, the industry’s apex body, told ET.
Elaborating, Landmark chief operations’ officer Himanshu Chakrawarti said: “The retail sector will now be opened up further and draw attention of several business groups. It is but imperative that after merchandise, marketing will assume huge importance for retailers to protect their turf.”
Kishore Biyani’s Future Group has already joined the bandwagon and roped in celebrities like Bipasha Basu, Zayed Khan (for the Pantaloons store) and Himesh Reshammaiya (for DJ&C apparel label). “We will be signing two more deals with
Bollywood heartthrobs for our apparel labels within the next one month,” said Pantaloon Retail India president (marketing) Sanjeev Agarwal.
Future Group’s marketing mix will vary from retail format to format. While the flagship Pantaloons store will focus more on ATL spends, the Big Bazaar chain will use a mix of both ATL and BTL activities.
“We will double overall marketing budget from the present Rs 100 crore to Rs 200 crore in 2007-08,” added Mr Agarwal.
Others including Ebony too will rope in a brand ambassador for its store brand.
“The marketing mix is certainly shifting towards ATL. We will soon appoint a celebrity for brand endorsement and increase our spent to some 3% of turnover,” said Lalit Kumar, chief executive officer, Ebony Retail Holdings.
Says BS Nagesh, managing director, Shopper’s Stop: “The marketing budget will grow by 35%, at par with the growth in business. However, we will maintain the over-all spend at about 4% of turnover.”
However, retailers are still not discounting BTL activities since it is a much more focused approach to hit the target consumer.
Shopper’s Stop, for instance, has an extensive BTL strategy which includes tactical promotions like organising men gizmo festival to building long-term relationship with its 7 lakh regular customers.
Source : Economic Times
Retail circles feel marketing activities will now gain momentum as the players have attained a certain scale of operation. Much of the activity till now was limited to below-the-line (BTL) marketing strategies like customer-loyalty programmes, direct mailers and in-store activities.
“But now since retail chains have attained a certain level of operation, the focus will shift to above-the-line (ATL) marketing. Each store will now want to communicate their brand differentiation to their consumers,” Gibson Vedamani, chief executive officer, Retailers Association of India, the industry’s apex body, told ET.
Elaborating, Landmark chief operations’ officer Himanshu Chakrawarti said: “The retail sector will now be opened up further and draw attention of several business groups. It is but imperative that after merchandise, marketing will assume huge importance for retailers to protect their turf.”
Kishore Biyani’s Future Group has already joined the bandwagon and roped in celebrities like Bipasha Basu, Zayed Khan (for the Pantaloons store) and Himesh Reshammaiya (for DJ&C apparel label). “We will be signing two more deals with
Bollywood heartthrobs for our apparel labels within the next one month,” said Pantaloon Retail India president (marketing) Sanjeev Agarwal.
Future Group’s marketing mix will vary from retail format to format. While the flagship Pantaloons store will focus more on ATL spends, the Big Bazaar chain will use a mix of both ATL and BTL activities.
“We will double overall marketing budget from the present Rs 100 crore to Rs 200 crore in 2007-08,” added Mr Agarwal.
Others including Ebony too will rope in a brand ambassador for its store brand.
“The marketing mix is certainly shifting towards ATL. We will soon appoint a celebrity for brand endorsement and increase our spent to some 3% of turnover,” said Lalit Kumar, chief executive officer, Ebony Retail Holdings.
Says BS Nagesh, managing director, Shopper’s Stop: “The marketing budget will grow by 35%, at par with the growth in business. However, we will maintain the over-all spend at about 4% of turnover.”
However, retailers are still not discounting BTL activities since it is a much more focused approach to hit the target consumer.
Shopper’s Stop, for instance, has an extensive BTL strategy which includes tactical promotions like organising men gizmo festival to building long-term relationship with its 7 lakh regular customers.
Source : Economic Times
Wednesday, December 13, 2006
Retail boom can double farm income
Farm incomes in India can double if organised retail enhances farmer realisations on food items from the currently low level of 30-35 per cent of retail price to the international norm of over 50 per cent of retail price, says a study by Crisil Research.
This enhancement would come from cost savings that will result from improving the underdeveloped supply chain for unprocessed food items. Higher farm incomes will benefit the vast majority of the nation’s population that is dependent on agricultural income.
Moreover, this additional purchasing power in the hands of farmers can add more than three percentage points to the nation’s annual GDP growth rate.
More than 70 per cent of retailing in India comes from the largely unorganised food and grocery segment. At an estimated Rs 10 trillion in 2006, India’s retail industry is almost one-third the country’s GDP.
Food and grocery (F&G) items account for more than 70 per cent of all retail sales. However, the penetration of organised retail in the F&G segment is negligible at around 1 per cent. About half of the total F&G retail comes from food grains and unprocessed fruits & vegetables- items that are purchased from farmers. CRISIL Research estimates the retail value of these unprocessed items at approximately Rs 3.8 trillion.
The supply chain for unprocessed food items is fairly underdeveloped in India and has many layers leading to high wastages and a high cost of distribution. Increased penetration of organised retail into the F&G segment can improve the supply chain and boost farm incomes.
The increasing penetration of organised retail into the F&G segment can bring about improvements to the supply chain for unprocessed food items. According to Sudhir Nair, “This can result in substantial cost savings which can be passed on to farmers as better prices paid for produce”.
The current farm realisations for unprocessed items are estimated at around Rs 1.2 trillion. If this segment shifts entirely to organised retailing and the realisations of farmers are at levels comparable to developed countries (around 60-65 per cent), associated farm incomes could double to Rs 2.5 trillion.
Higher farm incomes boost the purchasing power of 60 per cent of the population adding to GDP growth. Around 60 per cent of the Indian population is employed in agriculture. If income levels within this group increase, it can add significantly to economic activity.
For instance, if the farmers spend 80 per cent (given the lower propensity to save at low income levels) of their incremental income, the economy will witness an incremental spending of around Rs 1 trillion. This is equivalent to nearly 3 per cent of India’s GDP, even if the economic multiplier effect is excluded.
Source : Business Standard
This enhancement would come from cost savings that will result from improving the underdeveloped supply chain for unprocessed food items. Higher farm incomes will benefit the vast majority of the nation’s population that is dependent on agricultural income.
Moreover, this additional purchasing power in the hands of farmers can add more than three percentage points to the nation’s annual GDP growth rate.
More than 70 per cent of retailing in India comes from the largely unorganised food and grocery segment. At an estimated Rs 10 trillion in 2006, India’s retail industry is almost one-third the country’s GDP.
Food and grocery (F&G) items account for more than 70 per cent of all retail sales. However, the penetration of organised retail in the F&G segment is negligible at around 1 per cent. About half of the total F&G retail comes from food grains and unprocessed fruits & vegetables- items that are purchased from farmers. CRISIL Research estimates the retail value of these unprocessed items at approximately Rs 3.8 trillion.
The supply chain for unprocessed food items is fairly underdeveloped in India and has many layers leading to high wastages and a high cost of distribution. Increased penetration of organised retail into the F&G segment can improve the supply chain and boost farm incomes.
The increasing penetration of organised retail into the F&G segment can bring about improvements to the supply chain for unprocessed food items. According to Sudhir Nair, “This can result in substantial cost savings which can be passed on to farmers as better prices paid for produce”.
The current farm realisations for unprocessed items are estimated at around Rs 1.2 trillion. If this segment shifts entirely to organised retailing and the realisations of farmers are at levels comparable to developed countries (around 60-65 per cent), associated farm incomes could double to Rs 2.5 trillion.
Higher farm incomes boost the purchasing power of 60 per cent of the population adding to GDP growth. Around 60 per cent of the Indian population is employed in agriculture. If income levels within this group increase, it can add significantly to economic activity.
For instance, if the farmers spend 80 per cent (given the lower propensity to save at low income levels) of their incremental income, the economy will witness an incremental spending of around Rs 1 trillion. This is equivalent to nearly 3 per cent of India’s GDP, even if the economic multiplier effect is excluded.
Source : Business Standard
Retail majors eye container trains
The Mukesh Ambani-controlled Reliance Industries, Transport Corporation of India, overseas shipping companies like Mitsui OSK Lines, Hyundai Merchant Marine and NYK Lines, and Kishore Biyani’s Future group have all expressed interest in setting up private container train operations.
This is in response to the railway ministry’s invitation for proposals for the second round of licences to companies wanting to run container trains. The invitation is open from December 1 to January 31. Companies have to pay a one-time licence fee and haulage charges for using railway tracks and infrastructure.
Railway ministry officials said big companies like Transport Corporation of India, Future group and Bharti were among the first to show interest in the proposal.
“Yes we have been talking to the railways on various issues of co-operation and using their infrastructure, which will help us to build our logistics and supply chain. However, nothing has been concretised yet,” Future group Chairman Kishore Biyani told Business Standard.
When contacted, Transport Corporation of India Executive Director Vineet Agarwal said: “We are studying the bid documents for a licence to run container trains. We are also examining the key changes in the agreement.” He declined to divulge more details.
At the moment Concor, a public sector company controlled by the railways, has a monopoly in running container trains across the country. It offers ferrying rates to carry containers that are one-third of that on roads.
The routes offered to the private sector in the second round include Jawaharlal Nehru Port Trust to Delhi, and Mundra Port to Delhi — the busiest container routes in the country, responsible for over 60 per cent of the total container traffic by rail in the country.
Source : Business Standard
This is in response to the railway ministry’s invitation for proposals for the second round of licences to companies wanting to run container trains. The invitation is open from December 1 to January 31. Companies have to pay a one-time licence fee and haulage charges for using railway tracks and infrastructure.
Railway ministry officials said big companies like Transport Corporation of India, Future group and Bharti were among the first to show interest in the proposal.
“Yes we have been talking to the railways on various issues of co-operation and using their infrastructure, which will help us to build our logistics and supply chain. However, nothing has been concretised yet,” Future group Chairman Kishore Biyani told Business Standard.
When contacted, Transport Corporation of India Executive Director Vineet Agarwal said: “We are studying the bid documents for a licence to run container trains. We are also examining the key changes in the agreement.” He declined to divulge more details.
At the moment Concor, a public sector company controlled by the railways, has a monopoly in running container trains across the country. It offers ferrying rates to carry containers that are one-third of that on roads.
The routes offered to the private sector in the second round include Jawaharlal Nehru Port Trust to Delhi, and Mundra Port to Delhi — the busiest container routes in the country, responsible for over 60 per cent of the total container traffic by rail in the country.
Source : Business Standard
Reliance Retail chooses Indian Terrain for brands
Reliance Retail just a while ago have announced that they have chosen Indian terrain to create brands for their stores.
Indian Terrain is a Rs75 crores menswear brand from Celebrity Fashions Ltd will develop an appareals brand called Spirit to be sold exclusively through Reliance Retail outlets across India.
Spirit brand of goods will be priced between Rs600 and Rs800 and to begin their will be only shirts and trousers in the portfolio. Spirit brand of apparels will be sold through Reliance HyperMarket as well as stand-alone apparel stores of Reliance. Indian Terrain expects to be a $100 Million brand in the next 3 years of which $35 Million will be in business from Reliance Retail.
India Terrain also launched Sweaters and Knitwears this winter and is already the leading brand in LifeStyle chain of retail stores in India.
Source : Reliance Retail Blogspot
Indian Terrain is a Rs75 crores menswear brand from Celebrity Fashions Ltd will develop an appareals brand called Spirit to be sold exclusively through Reliance Retail outlets across India.
Spirit brand of goods will be priced between Rs600 and Rs800 and to begin their will be only shirts and trousers in the portfolio. Spirit brand of apparels will be sold through Reliance HyperMarket as well as stand-alone apparel stores of Reliance. Indian Terrain expects to be a $100 Million brand in the next 3 years of which $35 Million will be in business from Reliance Retail.
India Terrain also launched Sweaters and Knitwears this winter and is already the leading brand in LifeStyle chain of retail stores in India.
Source : Reliance Retail Blogspot
Modern retail could account for 70% of industry by 2020
The modern retailer directly connects the producer and consumer, eliminating the middleman chain and thereby reducing costs
"India Retail Industry is likely to emerge as the largest in the world. Modern retail started in India a decade ago and now occupies 35 % of the retail industry. By 2020, this may surpass 70% and the 10,000 new retail stores in the pipeline would cover over 2,50,000 sq feet," Amit Vaishnav, Managing Director of Chennai-based Mega Food Company said on Sunday at a conference. He was of the view that a partnership between the manufacturers and modern retailer is a win win situation for both
Retailers were looking to gain shelf space and market name, Vaishnav said. "The modern retailer is leveraging the power of retailing. He places his own private brands on the shelf. He directly connects the producer and consumer, eliminating the middleman chain and thereby reducing costs," he added.
Vaishnav was of the view that a partnership between the manufacturers and modern retailer is a win win situation for both. "It can lead to the production of high value and niche products. It derives benefits of economies of scale and provides quality assurance on the products. The manufacturers can earn easy shelf space and higher margins reducing time in getting the product to the market. The retailer too earns higher category margins. If the product cost and quality is good and is going down well with the consumers, the retailers also benefit, he elaborated.
Talking of structuring private labels, Jean-Christophe Goarin, Consultant, GOA Consulting, referred to private labels in European and Indian markets. "European markets have a long standing practice of private labeling which have seen a continuous growth. The perfect example is Marks & Spencers that has been there for almost a century. In India, success has been seen in Westside, which is a full private labels department store; Pantaloons which has mixed brands private labels. Food brands are generally restricted to pulses. India is a market driven by suppliers and MRP's driven with low margins and short payment terms," elaborated Goarin, adding that India had a good scope for private retailing and labeling.
According to him, store brands have become reference for shoppers. "Brands offer 30-50 % gross margins. The consumer can compare the costs of various brands and make his choice. There are risks as well as rewards for suppliers, " Goarin said, explaining that risk came in the form of competition with own products and reprisal measures from traditional retailers while the rewards include less competition from European markets. Moreover retailers remain loyal to those who supply good quality products at reasonable prices," he pointed out
Goarin recommended the setting up of a dedicated team separate from buyers and manufacturers, and elaborated, “They should have a separate budget for packaging and quality control and resist the 'grow the margins only' approach. They should be the outside expertise on the whole process and build brand equity through dedicated and consistent quality control focus."
S Venkatraman, Director, Food & Agribusiness Advisory, Rabo India talked about Global trends in food labeling, food servicing in India and food retailing beyond urban India. "Foreign traders are into food, clothing, furniture and furnishings etc, while Indians focus is only on food. In countries like France and Germany, private labels have almost 30-40 % control on retailers. Shelf turnover is estimated to be 10% higher for brands in Europe. The strategy for private labeling is to improve the marketing of their product.," he pointed out.
Moving on to food servicing in India Venkataraman said, " India is rising on the Food Demand Curve. In countries like India and China, people are moving from mass consumption to convenience food technology. The trend of ready to eat food is slowly catching on. Food servicing market is estimated at Rs 35,000 crores where the share of private label is less than 5 per cent". Stressing the need for food retailing beyond urban India , he said, " Rural India is in itself a big market comprising over six lakh villages. It is a growing but an untapped market. Food retailing in rural areas would increase the prosperity in these areas," Venkataraman added.
Source : Indiainfoline
"India Retail Industry is likely to emerge as the largest in the world. Modern retail started in India a decade ago and now occupies 35 % of the retail industry. By 2020, this may surpass 70% and the 10,000 new retail stores in the pipeline would cover over 2,50,000 sq feet," Amit Vaishnav, Managing Director of Chennai-based Mega Food Company said on Sunday at a conference. He was of the view that a partnership between the manufacturers and modern retailer is a win win situation for both
Retailers were looking to gain shelf space and market name, Vaishnav said. "The modern retailer is leveraging the power of retailing. He places his own private brands on the shelf. He directly connects the producer and consumer, eliminating the middleman chain and thereby reducing costs," he added.
Vaishnav was of the view that a partnership between the manufacturers and modern retailer is a win win situation for both. "It can lead to the production of high value and niche products. It derives benefits of economies of scale and provides quality assurance on the products. The manufacturers can earn easy shelf space and higher margins reducing time in getting the product to the market. The retailer too earns higher category margins. If the product cost and quality is good and is going down well with the consumers, the retailers also benefit, he elaborated.
Talking of structuring private labels, Jean-Christophe Goarin, Consultant, GOA Consulting, referred to private labels in European and Indian markets. "European markets have a long standing practice of private labeling which have seen a continuous growth. The perfect example is Marks & Spencers that has been there for almost a century. In India, success has been seen in Westside, which is a full private labels department store; Pantaloons which has mixed brands private labels. Food brands are generally restricted to pulses. India is a market driven by suppliers and MRP's driven with low margins and short payment terms," elaborated Goarin, adding that India had a good scope for private retailing and labeling.
According to him, store brands have become reference for shoppers. "Brands offer 30-50 % gross margins. The consumer can compare the costs of various brands and make his choice. There are risks as well as rewards for suppliers, " Goarin said, explaining that risk came in the form of competition with own products and reprisal measures from traditional retailers while the rewards include less competition from European markets. Moreover retailers remain loyal to those who supply good quality products at reasonable prices," he pointed out
Goarin recommended the setting up of a dedicated team separate from buyers and manufacturers, and elaborated, “They should have a separate budget for packaging and quality control and resist the 'grow the margins only' approach. They should be the outside expertise on the whole process and build brand equity through dedicated and consistent quality control focus."
S Venkatraman, Director, Food & Agribusiness Advisory, Rabo India talked about Global trends in food labeling, food servicing in India and food retailing beyond urban India. "Foreign traders are into food, clothing, furniture and furnishings etc, while Indians focus is only on food. In countries like France and Germany, private labels have almost 30-40 % control on retailers. Shelf turnover is estimated to be 10% higher for brands in Europe. The strategy for private labeling is to improve the marketing of their product.," he pointed out.
Moving on to food servicing in India Venkataraman said, " India is rising on the Food Demand Curve. In countries like India and China, people are moving from mass consumption to convenience food technology. The trend of ready to eat food is slowly catching on. Food servicing market is estimated at Rs 35,000 crores where the share of private label is less than 5 per cent". Stressing the need for food retailing beyond urban India , he said, " Rural India is in itself a big market comprising over six lakh villages. It is a growing but an untapped market. Food retailing in rural areas would increase the prosperity in these areas," Venkataraman added.
Source : Indiainfoline
Wal-Mart's Indian Connection
At first blush, it seems like the strangest of pairings—the world's biggest retailer teaming up with the world's fastest-growing phone company. News on Nov. 27 that Wal-Mart Stores (WMT) had tapped Bharti Enterprises as its partner on a new venture to take on India's huge but fragmented retail market left many scratching their heads. What does a cellular carrier know about selling saris or sodas?
Possibly a lot. Bharti's Airtel is ubiquitous in India, much as Wal-Mart's stores are in the U.S.: Its black, red, and white logo is plastered on the sides of buildings in countless cities and villages. The Delhi company has grown to be the largest Indian mobile player, with 29 million subscribers and $2.5 billion in annual revenues, by perfecting its own "everyday low prices" formula.
By outsourcing off the technical aspects of the operation to established players such as Nokia (NOK), Ericsson (ERIC), and IBM (IBM), Airtel succeeded in driving down its price-per-minute charge to less than 2 cents. The company is an aggressive marketer, roping in customers at a rate of 1.5 million a month through hundreds of thousands of shops that sell Airtel services and recharge phones. "To play in India, you play to the 1 billion population, and you cater to all," says founder and Chairman Sunil Bharti Mittal.
End Run Around Regulation
Now the 49-year-old Punjabi entrepreneur is making a bet that could elevate his company to the ranks of India's most important conglomerates, such as Tata and Reliance. "We're at a tipping point," says Mittal. "India is becoming a consuming nation."
With India's economy growing at 8%-plus annually, retail sales are set to soar from $300 billion today to some $637 billion by 2015, estimates local consultancy KSA Technopak. But the market is now dominated by millions of tiny mom-and-pop shops. An antiquated transportation system and an army of middlemen have hobbled the development of homegrown retail chains with nationwide reach. And foreigners have been shut out by laws barring them from operating anything other than single-brand outlets.
Bharti and Wal-Mart have found a way around that prohibition. The partners will set up a 50-50 joint venture to handle logistics, warehousing, and haggling with suppliers. A separate company, owned entirely by Bharti, will run the retail end of the business. Bharti expects to have its first stores up and running within 12 months.
The behemoth from Bentonville, Ark., isn't the first multinational to court Bharti. French insurance giant Axa Group (AXA) recently formed a joint venture with the Indian company to sell life insurance. Retailers Carrefour of France and Tesco (TESOF) were each conducting their own mating dance with Bharti when Wal-Mart cut in. The American company wouldn't comment on the tieup except to say that it chose Bharti because of its knowledge of the Indian consumer.
Stiff Competition Ahead
India hands say an even bigger asset is Mittal's entrepreneurial drive. The son of politician, Mittal started his first business, a bicycle-parts maker, shortly after graduating from university in the 1970s. In the 1980s, he switched to importing portable electricity generators from Japan. Bharti was manufacturing push-button phones in the early 1990s, when India began deregulating its telecommunications sector. Mittal won bidding for a cellular license in 1992, and over the next decade, proceeded to buy out many of his struggling competitors.
Despite that impressive track record, Mittal and his new partner, Wal-Mart, had better brace for some stiff competition. Investment in India's retail sector is projected to total $25 billion over the next five years, up from a mere $2 billion in the past decade—with slightly over a third coming from foreign players.
Dreaming Big
Among Indian conglomerates, the race is already on. First out of the gate was Reliance Industries, which has already opened 30 produce stores and plans thousands of outlets in the next few years. "The size of the opportunity is huge, and there's room for a lot of players," says Venugopal Komanduri, chief executive for customer operations at Reliance Retail in Andhra Pradesh, the state where it's piloting store concepts.
Not everything Mittal touches turns to gold. In late 2004, Bharti teamed up with British investment bank Rothschild to take advantage of India's low-cost farming to export fresh fruit and vegetables to Europe. So far, the business has been a major disappointment. Crop yields are poor, and the company hasn't developed the cargo-carrying capacity to export to Europe.
Nonetheless, few would bet against Mittal. "Now is the time for people who dream big and have the ability to make it happen," says Ajit Rangnekar, deputy dean at the Indian School of Business in Hyderabad. "Sunil Mittal is one of those people."
Source : Business Week
Possibly a lot. Bharti's Airtel is ubiquitous in India, much as Wal-Mart's stores are in the U.S.: Its black, red, and white logo is plastered on the sides of buildings in countless cities and villages. The Delhi company has grown to be the largest Indian mobile player, with 29 million subscribers and $2.5 billion in annual revenues, by perfecting its own "everyday low prices" formula.
By outsourcing off the technical aspects of the operation to established players such as Nokia (NOK), Ericsson (ERIC), and IBM (IBM), Airtel succeeded in driving down its price-per-minute charge to less than 2 cents. The company is an aggressive marketer, roping in customers at a rate of 1.5 million a month through hundreds of thousands of shops that sell Airtel services and recharge phones. "To play in India, you play to the 1 billion population, and you cater to all," says founder and Chairman Sunil Bharti Mittal.
End Run Around Regulation
Now the 49-year-old Punjabi entrepreneur is making a bet that could elevate his company to the ranks of India's most important conglomerates, such as Tata and Reliance. "We're at a tipping point," says Mittal. "India is becoming a consuming nation."
With India's economy growing at 8%-plus annually, retail sales are set to soar from $300 billion today to some $637 billion by 2015, estimates local consultancy KSA Technopak. But the market is now dominated by millions of tiny mom-and-pop shops. An antiquated transportation system and an army of middlemen have hobbled the development of homegrown retail chains with nationwide reach. And foreigners have been shut out by laws barring them from operating anything other than single-brand outlets.
Bharti and Wal-Mart have found a way around that prohibition. The partners will set up a 50-50 joint venture to handle logistics, warehousing, and haggling with suppliers. A separate company, owned entirely by Bharti, will run the retail end of the business. Bharti expects to have its first stores up and running within 12 months.
The behemoth from Bentonville, Ark., isn't the first multinational to court Bharti. French insurance giant Axa Group (AXA) recently formed a joint venture with the Indian company to sell life insurance. Retailers Carrefour of France and Tesco (TESOF) were each conducting their own mating dance with Bharti when Wal-Mart cut in. The American company wouldn't comment on the tieup except to say that it chose Bharti because of its knowledge of the Indian consumer.
Stiff Competition Ahead
India hands say an even bigger asset is Mittal's entrepreneurial drive. The son of politician, Mittal started his first business, a bicycle-parts maker, shortly after graduating from university in the 1970s. In the 1980s, he switched to importing portable electricity generators from Japan. Bharti was manufacturing push-button phones in the early 1990s, when India began deregulating its telecommunications sector. Mittal won bidding for a cellular license in 1992, and over the next decade, proceeded to buy out many of his struggling competitors.
Despite that impressive track record, Mittal and his new partner, Wal-Mart, had better brace for some stiff competition. Investment in India's retail sector is projected to total $25 billion over the next five years, up from a mere $2 billion in the past decade—with slightly over a third coming from foreign players.
Dreaming Big
Among Indian conglomerates, the race is already on. First out of the gate was Reliance Industries, which has already opened 30 produce stores and plans thousands of outlets in the next few years. "The size of the opportunity is huge, and there's room for a lot of players," says Venugopal Komanduri, chief executive for customer operations at Reliance Retail in Andhra Pradesh, the state where it's piloting store concepts.
Not everything Mittal touches turns to gold. In late 2004, Bharti teamed up with British investment bank Rothschild to take advantage of India's low-cost farming to export fresh fruit and vegetables to Europe. So far, the business has been a major disappointment. Crop yields are poor, and the company hasn't developed the cargo-carrying capacity to export to Europe.
Nonetheless, few would bet against Mittal. "Now is the time for people who dream big and have the ability to make it happen," says Ajit Rangnekar, deputy dean at the Indian School of Business in Hyderabad. "Sunil Mittal is one of those people."
Source : Business Week
Pantaloon to ride on own labels
With its private labels giving it higher margins and revenues, Pantaloon Retail is planning to spin them off into individual store brands in the near future. The retail major has identified four of its leading private labels to add to its retail format considering the healthy growth rates registered by each of them.
Labels such as John Miller, Bare, Ajile and Rig have been shortlisted to make a foray into the retailing industry as standalone format stores.
Speaking to Business Line, Ms Bina Mirchandani, Head (Category Management), Pantaloon Retail, said: "Today our private labels generate between 75% and 80% of our revenues. Some of these brands have taken a natural level of growth in certain areas and we are thinking of exclusive stores for them."
For instance, one of its oldest menswear brands, John Miller, has achieved `critical mass' to exist as a standalone store brand.
Unisex brands such as Bare (denim and leisurewear), Ajile (sportswear) and Rig (utility weekendwear) have also been registering significant volumes to serve as individual store brands.
Besides, the higher margins registered by the private label brands has led Pantaloon to exploit the potential of these brands. Adds Ms Mirchandani, "As the brands are directly sourced from the manufacturer, it is easy to get higher margins. There is now a deliberate focus on these brands to take them out of Pantaloon into new formats."
At present, Pantaloon sports nearly 20 private label brands and it is the ladies' ethnicwear segment which is pegged to grow in excess of 50%. Its private label in ethnic ladies wear — Akkrruti — has already tied up with designers such as Rocky S. "The minute we feel the market is big enough we undergo a private label exercise," states Ms Mirchandani.
Pantaloon is eyeing the ladies' Westernwear segment and the men's partywear segment in which it might rope in more designers to give impetus to its private label exercise.
Expanding network
At the same time, Pantaloon has been refurbishing its acquired denim brand - Jealous - belonging to Indus League Clothing, in which it has a stake. The Jealous 21 range comprises casual, club and denim wear. The brand is being reinvented to infuse energy into it. The company plans to expand its retail network for a nationwide presence with 120 stores in the next three years.
"We treat Indus League's brand of Jealous as one of our private labels," states Ms Mirchandani.
Source : Moneycontrol
Labels such as John Miller, Bare, Ajile and Rig have been shortlisted to make a foray into the retailing industry as standalone format stores.
Speaking to Business Line, Ms Bina Mirchandani, Head (Category Management), Pantaloon Retail, said: "Today our private labels generate between 75% and 80% of our revenues. Some of these brands have taken a natural level of growth in certain areas and we are thinking of exclusive stores for them."
For instance, one of its oldest menswear brands, John Miller, has achieved `critical mass' to exist as a standalone store brand.
Unisex brands such as Bare (denim and leisurewear), Ajile (sportswear) and Rig (utility weekendwear) have also been registering significant volumes to serve as individual store brands.
Besides, the higher margins registered by the private label brands has led Pantaloon to exploit the potential of these brands. Adds Ms Mirchandani, "As the brands are directly sourced from the manufacturer, it is easy to get higher margins. There is now a deliberate focus on these brands to take them out of Pantaloon into new formats."
At present, Pantaloon sports nearly 20 private label brands and it is the ladies' ethnicwear segment which is pegged to grow in excess of 50%. Its private label in ethnic ladies wear — Akkrruti — has already tied up with designers such as Rocky S. "The minute we feel the market is big enough we undergo a private label exercise," states Ms Mirchandani.
Pantaloon is eyeing the ladies' Westernwear segment and the men's partywear segment in which it might rope in more designers to give impetus to its private label exercise.
Expanding network
At the same time, Pantaloon has been refurbishing its acquired denim brand - Jealous - belonging to Indus League Clothing, in which it has a stake. The Jealous 21 range comprises casual, club and denim wear. The brand is being reinvented to infuse energy into it. The company plans to expand its retail network for a nationwide presence with 120 stores in the next three years.
"We treat Indus League's brand of Jealous as one of our private labels," states Ms Mirchandani.
Source : Moneycontrol
Subhiksha's float in 2nd half of 2007
Discount retailer Subhiksha Trading Services is planning its initial public offering (IPO) in the second half of 2007.
While announcing its plans to open 1,000 outlets across 10 states in the country by 2007 with a total outlay of Rs 500 crore, Subhiksha MD R Subramanian said, “The IPO is more for listing than raising money. It is to give liquidity to the shareholders.”
Subhiksha plans to open 180 stores across eight cities in Maharashtra at an investment of over Rs 100 crore. It will open as many as 80 outlets in Mumbai to be operational in the next four weeks.
Other cities where the company start its stores are Pune, Kolhapur, Sholapur, Sangli, Nashik, Aurangabad and Nagpur.
Subramaniam said, “With Maharashtra we will complete the final leg of our phase I (Rs 300 crore) expansion plan, meeting our 600-store target. We will shortly undertake our phase 2 expansion debuting in five states – Punjab, Madhya Pradesh, Uttar Pradesh, Haryana and West Bengal – and also in Chandigarh. We hope to hit the 1000-store mark during 2007.”
At present, Subhiksha has over 450 stores in five states with over 1 million sq ft of retail space.
The retail chain operates in four verticals – fruits and vegetables, pharmaceuticals, FMCG and telecom. Its direct supply arrangements with manufactures helps it reduce the supply-chain costs, in turn helping it keep prices of all products much lower than the market levels.
Commenting on the recent industry speculation that other retailers were in the lookout for acquiring Subhiksha, Subramanian said, “We categorically deny any discussions with any company. Speculation or claims in this regard are baseless. We have no intention to sell the company. On the contrary, constantly expanding, we are not averse to buying anything suitable.”
The MD said Subhiksha expected to more than double its revenues in 2006-07 – to Rs 750 crore from Rs 330 crore – in the year ending March 2007.
Source : Business Standard
While announcing its plans to open 1,000 outlets across 10 states in the country by 2007 with a total outlay of Rs 500 crore, Subhiksha MD R Subramanian said, “The IPO is more for listing than raising money. It is to give liquidity to the shareholders.”
Subhiksha plans to open 180 stores across eight cities in Maharashtra at an investment of over Rs 100 crore. It will open as many as 80 outlets in Mumbai to be operational in the next four weeks.
Other cities where the company start its stores are Pune, Kolhapur, Sholapur, Sangli, Nashik, Aurangabad and Nagpur.
Subramaniam said, “With Maharashtra we will complete the final leg of our phase I (Rs 300 crore) expansion plan, meeting our 600-store target. We will shortly undertake our phase 2 expansion debuting in five states – Punjab, Madhya Pradesh, Uttar Pradesh, Haryana and West Bengal – and also in Chandigarh. We hope to hit the 1000-store mark during 2007.”
At present, Subhiksha has over 450 stores in five states with over 1 million sq ft of retail space.
The retail chain operates in four verticals – fruits and vegetables, pharmaceuticals, FMCG and telecom. Its direct supply arrangements with manufactures helps it reduce the supply-chain costs, in turn helping it keep prices of all products much lower than the market levels.
Commenting on the recent industry speculation that other retailers were in the lookout for acquiring Subhiksha, Subramanian said, “We categorically deny any discussions with any company. Speculation or claims in this regard are baseless. We have no intention to sell the company. On the contrary, constantly expanding, we are not averse to buying anything suitable.”
The MD said Subhiksha expected to more than double its revenues in 2006-07 – to Rs 750 crore from Rs 330 crore – in the year ending March 2007.
Source : Business Standard
Reliance Retail plans to sell jeans at Rs 199
BANGALORE: One of Wal-Mart's most talked about products — for remarkably low-price — is $10 jeans. Now, India's aspiring Wal-Mart, Reliance Retail, is planning to come with jeans at Rs 199 (less than $5) when it starts its hypermarket venture.
The company has asked Arvind Mills, the world's biggest denim manufacturer, to produce jeans that can be sold at that price. Sources in Arvind Mills said the company was working on it but declined to provide details.
Sriram Srinivasan, head of Reliance Retail's apparel business, said he could not comment on the matter. Other sources close to Reliance said Reliance does not expect to make money on the product, but intends to use it as a "loss leader". In other words, sell it at a loss to increase store traffic and sales of other items.
A loss on the product looks inevitable. A reasonable denim fabric comes at Rs 70/metre. A pair of jeans requires 1.3 metres of fabric, which means the total fabric cost will be Rs 91. Tailoring charges and other costs (see graph) will take the total cost to over Rs 240. Even without the retailer's margin, there is a loss of over Rs 40."To prevent losses, you would need to bring the fabric cost down to Rs 40/metre. At that price, what you get is denim lookalike, not denim," says one denim expert.
Shumone Jaya Chatterjee, MD, Levi Strauss India, says if a hypermarket is trying to create new users with a low priced product, then it does not make sense to do it in the top 30 cities because people in these locations are already into jeans.
Bulk of the jeans market in top 30 cities is seen to be in the Rs 500 to Rs 800 range. Chatterjee says the largest selling price point in Levi’s standard segment brand Signature is Rs 799, followed by Rs 899 and then Rs 699. "We find people in big cities want better products. So, in Signature, we plan to move from the Rs 599-Rs 999 range to Rs 699-Rs 1,199 range, with improved products."
Source : Times Of India
The company has asked Arvind Mills, the world's biggest denim manufacturer, to produce jeans that can be sold at that price. Sources in Arvind Mills said the company was working on it but declined to provide details.
Sriram Srinivasan, head of Reliance Retail's apparel business, said he could not comment on the matter. Other sources close to Reliance said Reliance does not expect to make money on the product, but intends to use it as a "loss leader". In other words, sell it at a loss to increase store traffic and sales of other items.
A loss on the product looks inevitable. A reasonable denim fabric comes at Rs 70/metre. A pair of jeans requires 1.3 metres of fabric, which means the total fabric cost will be Rs 91. Tailoring charges and other costs (see graph) will take the total cost to over Rs 240. Even without the retailer's margin, there is a loss of over Rs 40."To prevent losses, you would need to bring the fabric cost down to Rs 40/metre. At that price, what you get is denim lookalike, not denim," says one denim expert.
Shumone Jaya Chatterjee, MD, Levi Strauss India, says if a hypermarket is trying to create new users with a low priced product, then it does not make sense to do it in the top 30 cities because people in these locations are already into jeans.
Bulk of the jeans market in top 30 cities is seen to be in the Rs 500 to Rs 800 range. Chatterjee says the largest selling price point in Levi’s standard segment brand Signature is Rs 799, followed by Rs 899 and then Rs 699. "We find people in big cities want better products. So, in Signature, we plan to move from the Rs 599-Rs 999 range to Rs 699-Rs 1,199 range, with improved products."
Source : Times Of India
Reliance aquires Adani Retail
Is this the Wal-Mart effect? Reliance Retail is making its first acquisition by buying out Gujarat-based Adani Retail lock, stock and barrel for Rs 100-110 crore. It seems the Mukesh Ambani-controlled company pipped other retailers like Subhiksha, Trinethra and, some say, even the Tatas to clinch the deal.
While the Reliance spokesperson declined comment, Adani Group chairman Gautam Adani was unavailable for comment. A senior Adani group official however said, “at this point of time, I can only say that it’s a rumour and not confirmed news.’’
Sources confirming the news said the buy-out will give Reliance access to 54 retail locations (neighbourhood stores, supermarkets and hypermarkets) across nine cities in Gujarat in one shot, besides its infrastructure and sourcing facilities.
As commercial real estate prices shoot up across India, the acquisition will help the company control costs substantially because 60% of Adani’s retail outlets are company-owned. The deal also works well for Adani as it will now focus on its core competencies like shipping and exports.
With the Bhart-Wal-Mart alliance breathing down its neck, the buy-out will help Reliance roll out its retail plans much faster. Sources said that even though Reliance and Adani were in talks for a while, the negotiations were expedited in the last seven days following the Bharti-Wal-Mart announcement.
The total retail space under construction add up to 150-m sq ft which will be ready for possession by 2010. Despite this, the retail sector is likely to face an acute shortage in terms of available space. Reliance alone will consume almost 100-m sq ft in this period, said real estate experts.
At present, Adani Retail operates a total of 54 supermarkets and hypermarkets and is likely to launch another outlet in Bharuch this week. The Rs 16,000-crore Adani group forayed into retail by acquiring a leading supermarket store V Ravjis in 2000.
While in the first two years, the company did not expand into other cities, it moved faster in the last four years with presence in Ahmedabad, Vadodara, Jamnagar, Surat, Rajkot, Anand, Nadiad, Mundra, Gandhinagar and Navsari. Adani's neighbourhood stores are typically 1,500-3000 sq ft and sells food & grocery.
The supermarkets, around 3,500-4,000 sq ft each, sell plastic items, crockery, cosmetics, imported products and the hypermarkets, around 8,000-25,000 sq ft, have dedicated sections for grocery, fast food, fresh fruits and vegetables and apparel among others.
Source : Economic Times
While the Reliance spokesperson declined comment, Adani Group chairman Gautam Adani was unavailable for comment. A senior Adani group official however said, “at this point of time, I can only say that it’s a rumour and not confirmed news.’’
Sources confirming the news said the buy-out will give Reliance access to 54 retail locations (neighbourhood stores, supermarkets and hypermarkets) across nine cities in Gujarat in one shot, besides its infrastructure and sourcing facilities.
As commercial real estate prices shoot up across India, the acquisition will help the company control costs substantially because 60% of Adani’s retail outlets are company-owned. The deal also works well for Adani as it will now focus on its core competencies like shipping and exports.
With the Bhart-Wal-Mart alliance breathing down its neck, the buy-out will help Reliance roll out its retail plans much faster. Sources said that even though Reliance and Adani were in talks for a while, the negotiations were expedited in the last seven days following the Bharti-Wal-Mart announcement.
The total retail space under construction add up to 150-m sq ft which will be ready for possession by 2010. Despite this, the retail sector is likely to face an acute shortage in terms of available space. Reliance alone will consume almost 100-m sq ft in this period, said real estate experts.
At present, Adani Retail operates a total of 54 supermarkets and hypermarkets and is likely to launch another outlet in Bharuch this week. The Rs 16,000-crore Adani group forayed into retail by acquiring a leading supermarket store V Ravjis in 2000.
While in the first two years, the company did not expand into other cities, it moved faster in the last four years with presence in Ahmedabad, Vadodara, Jamnagar, Surat, Rajkot, Anand, Nadiad, Mundra, Gandhinagar and Navsari. Adani's neighbourhood stores are typically 1,500-3000 sq ft and sells food & grocery.
The supermarkets, around 3,500-4,000 sq ft each, sell plastic items, crockery, cosmetics, imported products and the hypermarkets, around 8,000-25,000 sq ft, have dedicated sections for grocery, fast food, fresh fruits and vegetables and apparel among others.
Source : Economic Times
Railways - Potential Ally for the Retail Boom
Notwithstanding the sudden growth witnessed by civil aviation sector in the past few years, railways continue to remain life line of the country.
With 6,984 railway stations, railways not only reach every nook and corner of the country (well almost) but also connect supply centers of rural India to consumption centers of urban India. While, 14,300 trains running every day, offer best meeting points for a cross section of people, more than 13 million passangers travelling a day offer an unparalleled sales opportunity. Also, the 63,028 route kilometers of tracks, if exploited efficiently, could provide one of the best logistic networks available anywhere in the world.
Add to this, the availibility of 44,000 hactares of vacant land and you get the full picture of what railways can do for the growth of retail in the country.
No wonder then that all big ticket retailers, like Reliance, Bharatis, Birlas and Pantaloon, who are working on setting up pan-India retail networks, are all lining up to ally with the railways to exploit both the front-end and the back end opportunities being offered by the railways . According to a Business Standard report, the retailers are exploring possibilities, with the railway authorities, of setting up ware houses and cold chain along the railway’s network. The railways too look at retail as an emerging opportunity from which to begin with they are expecting to garner four percent of their revenues next year.
A clear policy framework is likely to emerge soon from the railways for use of the land, especially in retail and warehousing, after discussions with the corporate houses. They have already set up the Rail Land Development Authority this year for this purpose.
Source : IndiaRetailBiz
With 6,984 railway stations, railways not only reach every nook and corner of the country (well almost) but also connect supply centers of rural India to consumption centers of urban India. While, 14,300 trains running every day, offer best meeting points for a cross section of people, more than 13 million passangers travelling a day offer an unparalleled sales opportunity. Also, the 63,028 route kilometers of tracks, if exploited efficiently, could provide one of the best logistic networks available anywhere in the world.
Add to this, the availibility of 44,000 hactares of vacant land and you get the full picture of what railways can do for the growth of retail in the country.
No wonder then that all big ticket retailers, like Reliance, Bharatis, Birlas and Pantaloon, who are working on setting up pan-India retail networks, are all lining up to ally with the railways to exploit both the front-end and the back end opportunities being offered by the railways . According to a Business Standard report, the retailers are exploring possibilities, with the railway authorities, of setting up ware houses and cold chain along the railway’s network. The railways too look at retail as an emerging opportunity from which to begin with they are expecting to garner four percent of their revenues next year.
A clear policy framework is likely to emerge soon from the railways for use of the land, especially in retail and warehousing, after discussions with the corporate houses. They have already set up the Rail Land Development Authority this year for this purpose.
Source : IndiaRetailBiz
Monday, December 11, 2006
Pantaloon in office retail push, courts Staples Inc
Mumbai - Staples Inc, the world’s largest office supplies’ retailer, is set to enter the Indian organised retail sector close on the heels of retail giant Wal-Mart announcing plans to set up an Indian venture with the Bharti group.
The $16 billion US company that runs 1,600 stores in the US and Canada, is close to striking an alliance with Kishore Biyani's Future Group, currently the country's largest retail player, thanks to established brands such as Pantaloons and Big Bazaar.
Pantaloon Retail India Ltd, the listed entity that leads Biyani's ambitious chain that spans everything from bookseller Depot to extensions of Big Bazaar such as Furniture Bazaar and Food Bazaar, is set to be the vehicle for the collaboration.
“Staples and Pantaloon are expected to sign the agreement shortly. Pantaloon is forming a new company to manage the office supplies’ business," said a source close to the transaction. Pantaloon Retail's board, at its meeting held on November 17, approved the formation of a new subsidiary company to carry out the office supplies’ business. Pantaloon offered no comment on the issue.
Staples, which is expanding in markets outside the US, is betting big on Asia and has underlined that the region's emerging markets will be key business drivers. India being the hottest growth market after China in the continent, would likely be on its radar.
Staples has a joint venture with OA 365 in China. Similarly, it operates in Taiwan through a JV with UB Express.
Source : Hindustan Times
The $16 billion US company that runs 1,600 stores in the US and Canada, is close to striking an alliance with Kishore Biyani's Future Group, currently the country's largest retail player, thanks to established brands such as Pantaloons and Big Bazaar.
Pantaloon Retail India Ltd, the listed entity that leads Biyani's ambitious chain that spans everything from bookseller Depot to extensions of Big Bazaar such as Furniture Bazaar and Food Bazaar, is set to be the vehicle for the collaboration.
“Staples and Pantaloon are expected to sign the agreement shortly. Pantaloon is forming a new company to manage the office supplies’ business," said a source close to the transaction. Pantaloon Retail's board, at its meeting held on November 17, approved the formation of a new subsidiary company to carry out the office supplies’ business. Pantaloon offered no comment on the issue.
Staples, which is expanding in markets outside the US, is betting big on Asia and has underlined that the region's emerging markets will be key business drivers. India being the hottest growth market after China in the continent, would likely be on its radar.
Staples has a joint venture with OA 365 in China. Similarly, it operates in Taiwan through a JV with UB Express.
Source : Hindustan Times
Sam's Club - The Walmart Format for small retailers
According to the details of Wal-Mart-Bharati alliance being announced so far, Wal-Mart will be owning and managing Cash and Carry wholesale trade in India. It may be recalled that, as per present policy guidelines, a foreign entity can own up to 100% of equity in this format of retail trade. Wal-Mart, which operates a separate Cash & Carry division under Sam’s Club brand, is quite strong in this format of retail business. Sam’s Club, contributes as much as one eighth of Wal-Mart’s turnover. Here then is a quick run down on What, Where and How of the Sam’s Club operations:
Sam’s Club, named after the founder of Wal-Mart, Sam Walton, is a membership-only warehouse club (cash and carry wholesale). Wal-Mart owns and operates this division, the firs store of which was opened in the USA in 1983. Apart from the USA, Wal-Mart has Sam’s Clubs operating in China, Brazil, Puerto Rico, Mexico and Canada.
Purchases at Sam’s Clubs, except for items in the Optical, Pharmacy, or Cafe sections, could be made by registered club members only. The Club Membership, with varying benefits, is available in four flavours: Business ($35), Business Plus ($100), Advantage ($40) and Advantage Plus ($100). While, the membership is required to be purchased at Sam’s Club; a one time day pass may be obtained from the company’s website or through newspaper ads. A 10% surcharge is added to the prices for non-members. Sam’s Club markets items under the private labels Member’s Mark, Bakers & Chefs, and Sam’s Club.
Sam’s club focuses on small businesses as its target customers with promotional tag line: “we are in business for small business.”
Many of the Sam’s Club members are small businesses, who offer their customers a small selection of items without the expense of having them delivered. Like other warehouse clubs (also known as cash and carry wholesale traders), most merchandise at Sam’s Club is sold in bulk and directly off the pallets. Clubs are arranged much like a warehouse, with merchandise stocked in warehouse-style steel bins.
There are more than 550 Sam’s Clubs in the United States with an average retail space of 128,000 square feet (12,000 m²) or 3 acres (1.2 ha). The largest Sam’s Club is located in Utica, Michigan, with over 145,000 sq. ft. of retail space.
Source : IndiaRetailBiz
Sam’s Club, named after the founder of Wal-Mart, Sam Walton, is a membership-only warehouse club (cash and carry wholesale). Wal-Mart owns and operates this division, the firs store of which was opened in the USA in 1983. Apart from the USA, Wal-Mart has Sam’s Clubs operating in China, Brazil, Puerto Rico, Mexico and Canada.
Purchases at Sam’s Clubs, except for items in the Optical, Pharmacy, or Cafe sections, could be made by registered club members only. The Club Membership, with varying benefits, is available in four flavours: Business ($35), Business Plus ($100), Advantage ($40) and Advantage Plus ($100). While, the membership is required to be purchased at Sam’s Club; a one time day pass may be obtained from the company’s website or through newspaper ads. A 10% surcharge is added to the prices for non-members. Sam’s Club markets items under the private labels Member’s Mark, Bakers & Chefs, and Sam’s Club.
Sam’s club focuses on small businesses as its target customers with promotional tag line: “we are in business for small business.”
Many of the Sam’s Club members are small businesses, who offer their customers a small selection of items without the expense of having them delivered. Like other warehouse clubs (also known as cash and carry wholesale traders), most merchandise at Sam’s Club is sold in bulk and directly off the pallets. Clubs are arranged much like a warehouse, with merchandise stocked in warehouse-style steel bins.
There are more than 550 Sam’s Clubs in the United States with an average retail space of 128,000 square feet (12,000 m²) or 3 acres (1.2 ha). The largest Sam’s Club is located in Utica, Michigan, with over 145,000 sq. ft. of retail space.
Source : IndiaRetailBiz
Reliance targetting Subhiksha
With 54 outlets of Gujarat based Adani Super Markets almost already in its pocket, Reliance Retail, according to media speculation, is looking at acquiring smaller players in the modern retail space.
Reliance Retail, it may be recalled, has so far rolled out 17 ‘Reliance Fresh’ neighbourhood, convenience stores, in two clusters of 11 and six stores, in Hyderabad.
The need for quick growth has become all the more urgent after announcement of the entry of Wal-Mart with Bharati in India. Bharati is preparing to roll out several hundred stores across the country beginning August, 15, 2007. The inorganic growth route would suit Reliance’s Rs. 25,000 crore retail initiative most.
The name of Subhiksha, among possible targets, keeps cropping up every now and then despite Subhiksha having flatly denied any such possibility several times in the past. Subhiksha, it may be recalled, is expanding at a scortching pace through what it likes to call as a carpet bombing strategy in which it simultaneously opens a number of stores in a particular geography. According to the plans already announced, Subhiksha will have up to 700 stores up and running by March, 2007 and up to 1,200 stores by March, 2008. If true, acquiring Subhiksha, can give Reliance a shot in the arm as Subhiksha has acquired a large presence across various states in the country.
Another name doing the rounds is that of Landmark, which is the book and music store chain owned by Trent– a Tata group retail arm.
Source : IndiaRetailBiz
Reliance Retail, it may be recalled, has so far rolled out 17 ‘Reliance Fresh’ neighbourhood, convenience stores, in two clusters of 11 and six stores, in Hyderabad.
The need for quick growth has become all the more urgent after announcement of the entry of Wal-Mart with Bharati in India. Bharati is preparing to roll out several hundred stores across the country beginning August, 15, 2007. The inorganic growth route would suit Reliance’s Rs. 25,000 crore retail initiative most.
The name of Subhiksha, among possible targets, keeps cropping up every now and then despite Subhiksha having flatly denied any such possibility several times in the past. Subhiksha, it may be recalled, is expanding at a scortching pace through what it likes to call as a carpet bombing strategy in which it simultaneously opens a number of stores in a particular geography. According to the plans already announced, Subhiksha will have up to 700 stores up and running by March, 2007 and up to 1,200 stores by March, 2008. If true, acquiring Subhiksha, can give Reliance a shot in the arm as Subhiksha has acquired a large presence across various states in the country.
Another name doing the rounds is that of Landmark, which is the book and music store chain owned by Trent– a Tata group retail arm.
Source : IndiaRetailBiz
Friday, December 8, 2006
Bring 'em on.... Local retailers ready to face the Giants
As India gets set for its big retail boom, with majors like Reliance and Bharti-Wal Mart entering the fray with their aggressive retail strategy and reach, far from feeling the pressure, mid-sized retailers are confident of holding their ground, reports Moneycontrol.
The Indian retail scene has been bombarded with news of big-ticket deals and retail forays by some of the major industrial houses of India like Reliance and Bharti. However, up until now the existing mid-sized super-markets such as Spinach, D-Mart and Haiko, had not be dominated by any group.
Spinach for instance, has 5000- 7000 sq ft stores and medium sized 2500 - 3000 sq ft stores. The company, at present, has 15 stores in Mumbai and boasts about sourcing fruits and vegetables directly from the farmers in Maharashtra and the neighbouring states, which they say, helps them provide customers with vegetables and fruits at a much lower price compared to the local vendors in the market.
India's largest private company Reliance Industries- with annual revenues of $20 billion - is spending $5.5 billion to open Western-style supermarkets and modern convenience stores in 784 cities across India. Within four years, Reliance Industries Ltd. intends to build 100 million square feet of markets and super-centers.
Interestingly, many of these mid-sized super-markets believe that given the size of Indian population and consumption power, the market is ready to absorb many new players.
Dippankar Halder, CEO at Spinach believes that the huge food sector of India has the capacity to accommodate many more players, including Reliance and Bharti.
“What most hyper or super markets have done today is to Indianize the western model, however we are essentially westernizing the Indian model. We want to connect with the local vendors to know each area and understand its consumption habits better. The food sector in India is huge, but it has been faced with a lot of internal challenges. If we are good locally, one challenge is conquered. Our aim is to replace ‘Kirana Stores’. I feel the market is big enough to accommodate many players,” says Halder.
Haiko Supermarket, another mid-sized player, which launched its store in Mumbai in 2000, doesn’t seem threatened by the big brothers coming into the business.
Senior Officer Marketing, at Lake Wood Malls, the company which owns Haiko Supermarket, Rajat Jain says, 'We do not feel threatened by the big retail chains because we feel our target audience is different. The 'local' aspect that we provide is unique to us. Huge retail chains may open stores that are far from residential areas, and when it comes to food and groceries, people prefer stores that are close-by.'
Jain adds that bigger deals or discounts that may be provided by huge chains due to their capacity is also not a threatening factor since Haiko can boast of its after sales services like very flexible exchange policies etc. While right now Haiko has just one plush outlet in Mumbai it hopes to open more stores soon.
With Wal-Mart's entry into India, retail majors could be in a hurry to open more stores. Reliance expects to have 1,000 stores up and running by early next year and Pantaloon aims at 50 Big Bazaars by January.
Reports indicate that the Aditya Birla Group will invest Rs 9,000 crore, over the next 7 years on its retail business. The plan is to have 3,000 supermarkets and 200 hypermarkets in 100 Indian cities.
The Birlas are scouting for space in cities like Amritsar, Jalandhar, Kanpur, Allahabad, Lucknow and Indore and hope to hit the shelves sometime next year.
Deepankar Sanwalka, a retail expert at KPMG Consulting says, “While it is true that there is space for mid-level retailers, the bigger players might just come and tie-up with these mid-sized retailers. A lot of them might get taken over by the big chains, since for such operations scale is required. Many of them could be converted into franchisees.”
He also throws light on the fact that the deal values that bigger chains can provide by way of wholesale will definitely be much better than the mid-size retailer. At the same time Sanwalka says that the Indian retail model has space for 6-8 big retail players since right now only 3% of retail market is organized and even in the next 6 years only 10% will be organized.
Players like SPAR International have already attempted to bring together small, independent retailers together and thereby compete more effectively with the giant retail chains even though its joint venture partner Radhakrishna Foodland pulled out of the deal since reports indicate that they were not willing to part with their brand or share their wafer thin margins with SPAR.
The key issue in India is to manage a smooth supply chain right from the farmer level right upto the retail level, say experts. While, chains like Wal-Mart are known to be experts at the retail model, Reliance too aims to build a 21st-century retail supply chain from growers to grocery-store shelves, in a chain that Reliance Chairman Mukesh Ambani calls 'farm to fork.'
So while some experts suggest that organized retail should address the 30-35% crop and food wastage in India, and hope to reduce it drastically, the immediate concern is whether independent retailers choose to come under a common brand or retain their brand and hope to withstand the pressure from the big boys.
Source : Moneycontrol.com
The Indian retail scene has been bombarded with news of big-ticket deals and retail forays by some of the major industrial houses of India like Reliance and Bharti. However, up until now the existing mid-sized super-markets such as Spinach, D-Mart and Haiko, had not be dominated by any group.
Spinach for instance, has 5000- 7000 sq ft stores and medium sized 2500 - 3000 sq ft stores. The company, at present, has 15 stores in Mumbai and boasts about sourcing fruits and vegetables directly from the farmers in Maharashtra and the neighbouring states, which they say, helps them provide customers with vegetables and fruits at a much lower price compared to the local vendors in the market.
India's largest private company Reliance Industries- with annual revenues of $20 billion - is spending $5.5 billion to open Western-style supermarkets and modern convenience stores in 784 cities across India. Within four years, Reliance Industries Ltd. intends to build 100 million square feet of markets and super-centers.
Interestingly, many of these mid-sized super-markets believe that given the size of Indian population and consumption power, the market is ready to absorb many new players.
Dippankar Halder, CEO at Spinach believes that the huge food sector of India has the capacity to accommodate many more players, including Reliance and Bharti.
“What most hyper or super markets have done today is to Indianize the western model, however we are essentially westernizing the Indian model. We want to connect with the local vendors to know each area and understand its consumption habits better. The food sector in India is huge, but it has been faced with a lot of internal challenges. If we are good locally, one challenge is conquered. Our aim is to replace ‘Kirana Stores’. I feel the market is big enough to accommodate many players,” says Halder.
Haiko Supermarket, another mid-sized player, which launched its store in Mumbai in 2000, doesn’t seem threatened by the big brothers coming into the business.
Senior Officer Marketing, at Lake Wood Malls, the company which owns Haiko Supermarket, Rajat Jain says, 'We do not feel threatened by the big retail chains because we feel our target audience is different. The 'local' aspect that we provide is unique to us. Huge retail chains may open stores that are far from residential areas, and when it comes to food and groceries, people prefer stores that are close-by.'
Jain adds that bigger deals or discounts that may be provided by huge chains due to their capacity is also not a threatening factor since Haiko can boast of its after sales services like very flexible exchange policies etc. While right now Haiko has just one plush outlet in Mumbai it hopes to open more stores soon.
With Wal-Mart's entry into India, retail majors could be in a hurry to open more stores. Reliance expects to have 1,000 stores up and running by early next year and Pantaloon aims at 50 Big Bazaars by January.
Reports indicate that the Aditya Birla Group will invest Rs 9,000 crore, over the next 7 years on its retail business. The plan is to have 3,000 supermarkets and 200 hypermarkets in 100 Indian cities.
The Birlas are scouting for space in cities like Amritsar, Jalandhar, Kanpur, Allahabad, Lucknow and Indore and hope to hit the shelves sometime next year.
Deepankar Sanwalka, a retail expert at KPMG Consulting says, “While it is true that there is space for mid-level retailers, the bigger players might just come and tie-up with these mid-sized retailers. A lot of them might get taken over by the big chains, since for such operations scale is required. Many of them could be converted into franchisees.”
He also throws light on the fact that the deal values that bigger chains can provide by way of wholesale will definitely be much better than the mid-size retailer. At the same time Sanwalka says that the Indian retail model has space for 6-8 big retail players since right now only 3% of retail market is organized and even in the next 6 years only 10% will be organized.
Players like SPAR International have already attempted to bring together small, independent retailers together and thereby compete more effectively with the giant retail chains even though its joint venture partner Radhakrishna Foodland pulled out of the deal since reports indicate that they were not willing to part with their brand or share their wafer thin margins with SPAR.
The key issue in India is to manage a smooth supply chain right from the farmer level right upto the retail level, say experts. While, chains like Wal-Mart are known to be experts at the retail model, Reliance too aims to build a 21st-century retail supply chain from growers to grocery-store shelves, in a chain that Reliance Chairman Mukesh Ambani calls 'farm to fork.'
So while some experts suggest that organized retail should address the 30-35% crop and food wastage in India, and hope to reduce it drastically, the immediate concern is whether independent retailers choose to come under a common brand or retain their brand and hope to withstand the pressure from the big boys.
Source : Moneycontrol.com
LVMH sets shop in India
Call it the coming of age of organised and branded retail in India. Swiss luxury goods and fashion group LVMH Moet Hennessy Louis Vuitton is preparing to ride the retail boom in India, and intends to invest in setting up company-owned boutique retail chains for premium brands like Tag Heuer and Zenith in the country.
The group has already initiated talks with leading retail companies in India to set up joint ventures to enter single brand retailing in the country. The FDI norms today permit overseas firms to own up to 51% stake in single brand retail ventures.
"Tag Heuer has been present in the country for nearly three years now and has become the tyhird largest premium watch brand here. Our aim to bcome the number one brand and we feel investments in the retail market in India will help us achieve this," said LVMH group head (Asia Pacific) Ravi Thakran.
The firm has already earmarked an investment of close to Rs 25 crore for establishing a chain of Tag Heuer boutique retail outlets across the country next year. This would also mark a big strategy shift for the company, which today operates through six standalone franchsee outlets.
"Lack of retail infrastructure is hampering growth today and we want to invest in the retail sector here to maximise growth," Thakran said.
The group, he said, is also planning to introduce two other luxury brands in India — Zenith (watches) and Fendi (fashion). "While LVMH will again look at investing in setting up single brand retail chain for Zenith watches, we will take the franchisee route for Fendi," Thakran said.
Both Zenith and Fendi would also make their India debut in early 2007, he said. "We are in talks with a few retail chains for setting up joint ventures in India under the current 51:49 investment norm. These ventures would be in place soon," Thakran added.
Zenith today sells premium watches that range between Rs 1.5 lakh and a few crores. The firm plans to introduce the entire range in India through these single brand outlets, but the mainstream watches here would be in the range of Rs 1.5 lakh to Rs 5 lakh. Some products in the Rs 20 lakh and Rs 1 crore range would also be displayed and sold in the country, he said.
"India is today at the cusp of a big change, and we are betting on this changing customer behaviour. We feel the market for such premum products is on the rise in India and we want to be well entrenched in the market to take full benefit of the potential here. With these brands, we want to target the niche masses in India, where we find a clear demand for luxury products," Thakran further said.
The retail market was put in fire after Bharti Airtel's deal with world's biggest retailer Wal-Mart. According experts, other global biggies, who do not want to be left behind, are trying out every option to enter the lucrative India retail industry. Since the organise retail is a small segment, foreign players see big potential for growth here.
Source : Times Of India, 3rd Dec '06
The group has already initiated talks with leading retail companies in India to set up joint ventures to enter single brand retailing in the country. The FDI norms today permit overseas firms to own up to 51% stake in single brand retail ventures.
"Tag Heuer has been present in the country for nearly three years now and has become the tyhird largest premium watch brand here. Our aim to bcome the number one brand and we feel investments in the retail market in India will help us achieve this," said LVMH group head (Asia Pacific) Ravi Thakran.
The firm has already earmarked an investment of close to Rs 25 crore for establishing a chain of Tag Heuer boutique retail outlets across the country next year. This would also mark a big strategy shift for the company, which today operates through six standalone franchsee outlets.
"Lack of retail infrastructure is hampering growth today and we want to invest in the retail sector here to maximise growth," Thakran said.
The group, he said, is also planning to introduce two other luxury brands in India — Zenith (watches) and Fendi (fashion). "While LVMH will again look at investing in setting up single brand retail chain for Zenith watches, we will take the franchisee route for Fendi," Thakran said.
Both Zenith and Fendi would also make their India debut in early 2007, he said. "We are in talks with a few retail chains for setting up joint ventures in India under the current 51:49 investment norm. These ventures would be in place soon," Thakran added.
Zenith today sells premium watches that range between Rs 1.5 lakh and a few crores. The firm plans to introduce the entire range in India through these single brand outlets, but the mainstream watches here would be in the range of Rs 1.5 lakh to Rs 5 lakh. Some products in the Rs 20 lakh and Rs 1 crore range would also be displayed and sold in the country, he said.
"India is today at the cusp of a big change, and we are betting on this changing customer behaviour. We feel the market for such premum products is on the rise in India and we want to be well entrenched in the market to take full benefit of the potential here. With these brands, we want to target the niche masses in India, where we find a clear demand for luxury products," Thakran further said.
The retail market was put in fire after Bharti Airtel's deal with world's biggest retailer Wal-Mart. According experts, other global biggies, who do not want to be left behind, are trying out every option to enter the lucrative India retail industry. Since the organise retail is a small segment, foreign players see big potential for growth here.
Source : Times Of India, 3rd Dec '06
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