Unilever India Exports (UIEL) today announced that it has reached an agreement to sell Sangam - a non-store home delivery retail business - to Wadhawan Food Retail (WFRL) with effect from March 31, 2007. UIEL is a 100% subsidiary of Hindustan Lever (HLL). The value of the deal was not disclosed.
The Sangam business was conceptualized in 2001 to experiment with the direct-to-consumer channel combining the twin benefits of convenience and value. The idea was to test market it in Mumbai under the brand Sangam Direct before taking a decision to extend it across the country.
The decision for a larger roll-out was put on hold in the context of the evolving retail scenario in the country. An HLL statement said that it was not in its strategic interest to continue to be present in this format of organised retail.
WFRL is currently present in Mumbai through its retail food & grocery store Spinach, and has about 23 outlets in the city. The Wadhawan group has diversified business interests including DHFL, a private sector housing finance company.
Source : Business Standard
Thursday, April 5, 2007
Monday, April 2, 2007
Reliance Retail mulls used vehicle mkt foray
Mukesh Ambani-controlled Reliance Retail is planning a second-hand car market venture on the lines of Maruti's True Value and Mahindra’s Automart.
The venture marks an addition to its plans to set up multi-brand car servicing stations at its retail outlets and its auto finance business.
Reliance Retail plans to cover 1,500 cities with over 1,500 supermarkets and 1,000 hyper-markets.
Reliance Retail is reportedly in talks with Corghi SpA, an Italian automotive firm, to offer customers at its outlets vehicle servicing facilities.
Corghi manufactures tyre changers, wheel balancers, wheel aligners, and lifting and testing equipment.
An RIL spokesperson declined to comment.
Industry estimates put the annual second-hand car market at 1 million units, almost as big as the new-car market (1.3 million units). Both markets grew 20 per cent in 2006-07 and are expected to grow at 20 to 25 per cent in the coming years.
The market is dominated by informal deals, with the organised sector accounting for only 20 per cent of the business through players like Maruti (True Value), Hyundai (Advantage), Ford (Assured), Mahindra (Automart India) and Honda (Auto Terrace). Others include e-commerce auto websites
Source : Business Standard
The venture marks an addition to its plans to set up multi-brand car servicing stations at its retail outlets and its auto finance business.
Reliance Retail plans to cover 1,500 cities with over 1,500 supermarkets and 1,000 hyper-markets.
Reliance Retail is reportedly in talks with Corghi SpA, an Italian automotive firm, to offer customers at its outlets vehicle servicing facilities.
Corghi manufactures tyre changers, wheel balancers, wheel aligners, and lifting and testing equipment.
An RIL spokesperson declined to comment.
Industry estimates put the annual second-hand car market at 1 million units, almost as big as the new-car market (1.3 million units). Both markets grew 20 per cent in 2006-07 and are expected to grow at 20 to 25 per cent in the coming years.
The market is dominated by informal deals, with the organised sector accounting for only 20 per cent of the business through players like Maruti (True Value), Hyundai (Advantage), Ford (Assured), Mahindra (Automart India) and Honda (Auto Terrace). Others include e-commerce auto websites
Source : Business Standard
Exclusive malls for luxury goods in India
While, over 200 international luxury retail brands like Escada, Alfred Dun Hill, Hermes are wanting to foraying into India, they are finding it difficult to do so for want of suitable space and high rental cost.
The situation, however, may change soon and customers accustomed to good life may not have to travel to Dubai, Singapore or Europe to buy them, since the Gitanjali Group is pumping in Rs.100 crore to set up ‘luxury malls’ for ceating exclusive space for selling high end goods of global and local luxury brands. Luxury Connections, another of Gitanjali’s subsidiary will facilitate the entry of such brands in the country.
While, Gitanjali’s first ‘luxury mall,’ admeasuring about 45,000 sq. ft., will come up by end 2007, it is also looking at setting such malls in Delhi and Mumbai thereafter. These malls, apart from offering exclusive retail space to luxury brands, will also be equipped with the world class digital exhibition and conference facilities.
KSA Technopak, in its report “India Luxury Trends 2006″, has estimates that the luxury segment in India is worth $444 million, spanning across 1.6 million high-income households with an earning capacity of Rs. 45 lakh (approximately $100,000) annually. These high-net worth households, according to the report, are growing at 14 per cent annually and are spending nearly $9,000 per annum on luxury goods.
Source : IndiaRetailBiz
The situation, however, may change soon and customers accustomed to good life may not have to travel to Dubai, Singapore or Europe to buy them, since the Gitanjali Group is pumping in Rs.100 crore to set up ‘luxury malls’ for ceating exclusive space for selling high end goods of global and local luxury brands. Luxury Connections, another of Gitanjali’s subsidiary will facilitate the entry of such brands in the country.
While, Gitanjali’s first ‘luxury mall,’ admeasuring about 45,000 sq. ft., will come up by end 2007, it is also looking at setting such malls in Delhi and Mumbai thereafter. These malls, apart from offering exclusive retail space to luxury brands, will also be equipped with the world class digital exhibition and conference facilities.
KSA Technopak, in its report “India Luxury Trends 2006″, has estimates that the luxury segment in India is worth $444 million, spanning across 1.6 million high-income households with an earning capacity of Rs. 45 lakh (approximately $100,000) annually. These high-net worth households, according to the report, are growing at 14 per cent annually and are spending nearly $9,000 per annum on luxury goods.
Source : IndiaRetailBiz
Tuesday, March 27, 2007
Subhiksha: Closing in on the customer
The company is rolling out convenience stores at a blistering pace in a bid to take on the ‘kiranas’
Most youngsters of today must have heard tales from their grandparents on how they would walk miles to the ‘mandi’ to save that extra anna. The next generation moved on to the neighbourhood ‘kirana’ stores, and couldn’t do without delivery at the doorstep. Today’s shoppers are spoilt for choice; they have big spacious hypermarkets to shop in or if that’s too far away, the ‘kirana’s’ just around the corner. And now, they have neighbourhood convenience stores like Subhiksha.
If the pace of its rollout is any evidence, the Chennai-based retailer could give mom-and-pop stores, a run for their money. From just 120 outlets in March 2006, most of which were in Chennai, the company’s chain of stores will grow five-fold to 650 outlets this month. Today it has 74 stores in Mumbai and more than 100 outlets in Delhi. Says Mohit Khattar, president, marketing, “By the end of the year we should have almost one thousand outlets and this could double to 2000 in two years.” The retailer believes the company’s turnover could hit Rs 2,000 crore in a year’s time from Rs 350 crore currently.
Khattar says Subhiksha’s taking on the ‘kiranas’ and targeting the Rs 2,000-3,000 that households spend every month on food and toiletries. He’s also clear that the chain does not intend to target the more affluent households.”Our outlets are not destination stores like those located in malls,” he says. The shops are not air-conditioned and about 1,500- 2,000 square feet in size. Most do not allow consumers to walk around and browse; consumers have to walk down a single aisle and in many shops, can’t turn back. Subhikhsha’s value proposition: provisions that are a good 10 per cent cheaper than those available at the ‘kiranas’. And home delivery to boot. That’s going to be the long term differentiator. Says Khattar, “We offer the lowest prices across products, not just on 50 or 100 items and we’re cheaper than supermarkets or kiranas. Our customers should easily be able to save around Rs 700-800 every month on a bill of Rs 4,000.”
What Subhikhsha believes will work for it are the attractive prices that are available throughout and not just on some days of the week. It hopes to attract a large portion of the total food and grocery spends, which are estimated to be as much as 40 per cent of total spends. Some of the stores also stock medicines and telecom products. Gibson Vedamani, chief operating officer, Retailers Association of India, likes the strategy. Says he, “They have positioned themselves on the value-for-money platform which is a strong property and will help them attract consumers quickly.”
To be able to sell to customers at attractive prices, Subhikhsha needs to build scale quickly. Today, the company has a total floor space of 1.3 million square feet; by the end of 2008-09, it hopes to be able to increase this by at least two and half times to around 3.25 million square feet. Industry experts point out that since the company is not banking on experience shopping and relies on its low-cost advantage ,it has to scale up before hypermarkets enter the game as they will offer consumers both the experience and good prices.
Says Harminder Sahni, principal associate, KSA Technopak, “Subhiksha largely caters to a segment driven by price. Hypermarkets could be cheaper and Subhiksha will be squeezed between the experience stores and the hyper markets.” Vedmani agrees. “When hypermarkets enter they will pose a huge threat. But if the company can scale up quickly, it will be able compete with the new entrants,” he observes.
As of now though, Subhiksha’s stores are doing brisk business. In fact, the demand, says Khattar, has been overwhelming and there have been times when stores have run out of stocks.He’s busy making sure that the shopshelves are full. That should make sure the stores too are full.
Source : Business Standard
Most youngsters of today must have heard tales from their grandparents on how they would walk miles to the ‘mandi’ to save that extra anna. The next generation moved on to the neighbourhood ‘kirana’ stores, and couldn’t do without delivery at the doorstep. Today’s shoppers are spoilt for choice; they have big spacious hypermarkets to shop in or if that’s too far away, the ‘kirana’s’ just around the corner. And now, they have neighbourhood convenience stores like Subhiksha.
If the pace of its rollout is any evidence, the Chennai-based retailer could give mom-and-pop stores, a run for their money. From just 120 outlets in March 2006, most of which were in Chennai, the company’s chain of stores will grow five-fold to 650 outlets this month. Today it has 74 stores in Mumbai and more than 100 outlets in Delhi. Says Mohit Khattar, president, marketing, “By the end of the year we should have almost one thousand outlets and this could double to 2000 in two years.” The retailer believes the company’s turnover could hit Rs 2,000 crore in a year’s time from Rs 350 crore currently.
Khattar says Subhiksha’s taking on the ‘kiranas’ and targeting the Rs 2,000-3,000 that households spend every month on food and toiletries. He’s also clear that the chain does not intend to target the more affluent households.”Our outlets are not destination stores like those located in malls,” he says. The shops are not air-conditioned and about 1,500- 2,000 square feet in size. Most do not allow consumers to walk around and browse; consumers have to walk down a single aisle and in many shops, can’t turn back. Subhikhsha’s value proposition: provisions that are a good 10 per cent cheaper than those available at the ‘kiranas’. And home delivery to boot. That’s going to be the long term differentiator. Says Khattar, “We offer the lowest prices across products, not just on 50 or 100 items and we’re cheaper than supermarkets or kiranas. Our customers should easily be able to save around Rs 700-800 every month on a bill of Rs 4,000.”
What Subhikhsha believes will work for it are the attractive prices that are available throughout and not just on some days of the week. It hopes to attract a large portion of the total food and grocery spends, which are estimated to be as much as 40 per cent of total spends. Some of the stores also stock medicines and telecom products. Gibson Vedamani, chief operating officer, Retailers Association of India, likes the strategy. Says he, “They have positioned themselves on the value-for-money platform which is a strong property and will help them attract consumers quickly.”
To be able to sell to customers at attractive prices, Subhikhsha needs to build scale quickly. Today, the company has a total floor space of 1.3 million square feet; by the end of 2008-09, it hopes to be able to increase this by at least two and half times to around 3.25 million square feet. Industry experts point out that since the company is not banking on experience shopping and relies on its low-cost advantage ,it has to scale up before hypermarkets enter the game as they will offer consumers both the experience and good prices.
Says Harminder Sahni, principal associate, KSA Technopak, “Subhiksha largely caters to a segment driven by price. Hypermarkets could be cheaper and Subhiksha will be squeezed between the experience stores and the hyper markets.” Vedmani agrees. “When hypermarkets enter they will pose a huge threat. But if the company can scale up quickly, it will be able compete with the new entrants,” he observes.
As of now though, Subhiksha’s stores are doing brisk business. In fact, the demand, says Khattar, has been overwhelming and there have been times when stores have run out of stocks.He’s busy making sure that the shopshelves are full. That should make sure the stores too are full.
Source : Business Standard
Monday, March 26, 2007
Outlook on the retail sector for 2007
2007 will be a year of expansion and growth for the organised retail sector, from both existing and new entrants. The economic outlook for India remains strong, supporting continued growth in incomes and positive demographic shifts. In order to take advantage of this growth, retailers across categories are ramping up their store networks aggressively. With shortening investment cycles, leading retailers are set to embark on aggressive expansion plans over the next two to three years in order to maintain market dominance.
Companies are consolidating their presence in existing locations and moving into smaller Tier II and larger Tier III cities, while regional players are attempting to expand their geographic footprint. Many firms are also attempting to establish a foothold in new sectors, pre-empting their competitors and stealing an advantage.
2007 will also see retailers strengthening operational strategies to differentiate themselves from competition and retain customer loyalty. A key difference between this and earlier investment cycles is the increased focus on developing the supply chain, measures that will benefit the sector as a whole.
While the potential tightening of consumer credit markets has been highlighted as a threat to this growth, other potentially limiting factors include the continued lack of availability of quality retail space, paucity of quality manpower and a need for greater legislative changes, such as uniformity of state-level taxes.
Food and groceries to see strong competition
The three nameplate entries into organised retail - Reliance Retail, the Aditya Birla Group and Bharti Retail (through a 50:50 joint venture (JV) for supply chain and a wholly-owned front-end) with Wal-Mart Stores Inc ('AA'/Stable/'F1+') - have all chosen the food and groceries category as their debut sector. This is due to the easy scalability of network and operations and the substantial opportunity in this space.
This segment has the lowest penetration of organised retail (estimated at 1%), and therefore the highest supply chain inefficiencies. It is also less susceptible to cyclical fluctuations as it follows the basic, more stable demands of consumers. These three retailers have all chosen the "small box" format for their preliminary entry into the sector, using this to establish their supply chain network.
Having established themselves in this sector, these new entrants have plans to enter the hypermarket format as well. Existing retailers, including Subhiksha (discount supermarket), Piramyd (Trumart), Godrej (Nature Fresh), RPG Retail (Spencer's Daily, based in the south), Nilgiris (supermarket, based in the south) and Pantaloon Retail (India) Ltd (Big Bazaar and Food Bazaar), have all announced large investments over the next few years. However, increased competition in this field is unlikely to have a major effect on broad-level operating metrics of existing retailers in the immediate-term, given the low penetration of organised retail.
That said, in larger cities where penetration levels are higher, losses at the store level could result from growing competition and higher operating costs.
However, given the substantial opportunities available in the Tier II and Tier III cities, the full effect of competition will only be felt in the medium- to long-term. Retailers will find it necessary to have at least a limited presence in larger cities despite higher costs, primarily for strategic and brand purposes.
Over the medium term, hypermarkets will have more competition. The Indian market is large enough to support around four to five major players, though survival will depend on retailers' ability to deliver tangible value to the customer and their supply chain efficiencies. Maintaining lean operating levels will become increasingly critical, and are required to manage margins. The longer term could also see a scenario of margins shrinking as growth rates slow.
Supply chain improvements
The supply chain will see substantial investment over the short-term. Reliance has announced plans to invest up to 25% (over Rs 6,000 crore) of its retail investments in improving its supply chain while the JV between Wal-Mart and Bharti Retail is focused solely on supply chain, with the front-end being owned and managed by Bharti to ensure compliance with prevailing regulations. These investments, coupled with those of existing retailers, will result in a marked improvement in the supply chain, facilitating higher efficiency, better inventory management, and lower waste. The food and groceries category, which is one of the most fragmented, will benefit the most from these initiatives, enabling retailers to offer better prices to customers and suppliers alike. With regards to other categories such as durables and apparel, Fitch expects a greater focus on private labels for the purpose of margin enhancement. Another noticeable trend is the focus on improving store-level operations, for example, in visual merchandising and point-of-purchase. These customer-facing developments are designed to improve the retail experience, with the ultimate goal of boosting loyalty and repeat visits.
Real estate pressures to continue
The substantial increase in real estate costs has impacted margin growth for retailers across the board. However, leading players have tried to mitigate the impact by:
• Advance real estate booking at lower prices;
• Revenue sharing pricing with fixed and variable components;
• Negotiating advantageous rates from real estate providers using their "anchor tenant" status.
Retailers must also compete for quality retail space, which remains in relatively short supply.
While many large new retail real estate developments have taken place recently, many of the new malls have been ill-planned, and created with a view to quick profits through sale, rather than long-term sustained revenues through leases. As a result, some of these malls are already witnessing a decline in footfalls. With the creation of 150 million sq ft of retail space, provisionally scheduled for 2010, and with the increased contributions from reputable builders, Fitch anticipates greater availability of quality retail space in the medium-term. However, to meet the current expectations of 12-15% penetration and to support an ongoing growth rate of around 30-35%, the required real estate for the organised sector alone is estimated to be around 400-450 million sq ft. To meet this figure, the sector would need to invest between $8-10 billion, in addition to ongoing expenditure. As a result, we expect the availability of retail space to remain a constraint for retailers, continuing to impact margins in the near term due to the expectation of firm prices in the short- to medium-term.
Acquisitions and expansion
For the first time (barring the small acquisition of Fabmall by Trinethra), the Indian retail sector has also experienced M&A activity over the past six months. New entrants are finding it easier to pay a premium and acquire regional players in order to rapidly scale up their operations and establish a footprint in the sector. Examples include the recently concluded acquisition of Trinethra by the Aditya Birla group and the acquisition of Nilgiris by a private equity fund. Market sources indicate that other regional players could also be looking to exit the market in light of increased competition and the attractive valuations which currently prevail.
It is believed that this activity will intensify in the longer term, once the impact of higher penetration and slower growth rates is felt. In the interim, existing mid-sized players are expanding to gain the maximum footprint possible in the shortest time frame using routes such as the capital markets.
An example can be seen in Vishal Retail which plans to raise Rs 110 crore from its proposed initial public offering (IPO), while Pantaloon Retail (India) Ltd 'F1 (ind)' has raised funds through the sale of equity in its Home Solutions Retail Ltd to private equity funds. Existing retailers are expected to also raise additional debt to finance their expansions, likely to result in higher gearing, partly offset by the higher earnings expected from these investments.
Source : Financial Express
Companies are consolidating their presence in existing locations and moving into smaller Tier II and larger Tier III cities, while regional players are attempting to expand their geographic footprint. Many firms are also attempting to establish a foothold in new sectors, pre-empting their competitors and stealing an advantage.
2007 will also see retailers strengthening operational strategies to differentiate themselves from competition and retain customer loyalty. A key difference between this and earlier investment cycles is the increased focus on developing the supply chain, measures that will benefit the sector as a whole.
While the potential tightening of consumer credit markets has been highlighted as a threat to this growth, other potentially limiting factors include the continued lack of availability of quality retail space, paucity of quality manpower and a need for greater legislative changes, such as uniformity of state-level taxes.
Food and groceries to see strong competition
The three nameplate entries into organised retail - Reliance Retail, the Aditya Birla Group and Bharti Retail (through a 50:50 joint venture (JV) for supply chain and a wholly-owned front-end) with Wal-Mart Stores Inc ('AA'/Stable/'F1+') - have all chosen the food and groceries category as their debut sector. This is due to the easy scalability of network and operations and the substantial opportunity in this space.
This segment has the lowest penetration of organised retail (estimated at 1%), and therefore the highest supply chain inefficiencies. It is also less susceptible to cyclical fluctuations as it follows the basic, more stable demands of consumers. These three retailers have all chosen the "small box" format for their preliminary entry into the sector, using this to establish their supply chain network.
Having established themselves in this sector, these new entrants have plans to enter the hypermarket format as well. Existing retailers, including Subhiksha (discount supermarket), Piramyd (Trumart), Godrej (Nature Fresh), RPG Retail (Spencer's Daily, based in the south), Nilgiris (supermarket, based in the south) and Pantaloon Retail (India) Ltd (Big Bazaar and Food Bazaar), have all announced large investments over the next few years. However, increased competition in this field is unlikely to have a major effect on broad-level operating metrics of existing retailers in the immediate-term, given the low penetration of organised retail.
That said, in larger cities where penetration levels are higher, losses at the store level could result from growing competition and higher operating costs.
However, given the substantial opportunities available in the Tier II and Tier III cities, the full effect of competition will only be felt in the medium- to long-term. Retailers will find it necessary to have at least a limited presence in larger cities despite higher costs, primarily for strategic and brand purposes.
Over the medium term, hypermarkets will have more competition. The Indian market is large enough to support around four to five major players, though survival will depend on retailers' ability to deliver tangible value to the customer and their supply chain efficiencies. Maintaining lean operating levels will become increasingly critical, and are required to manage margins. The longer term could also see a scenario of margins shrinking as growth rates slow.
Supply chain improvements
The supply chain will see substantial investment over the short-term. Reliance has announced plans to invest up to 25% (over Rs 6,000 crore) of its retail investments in improving its supply chain while the JV between Wal-Mart and Bharti Retail is focused solely on supply chain, with the front-end being owned and managed by Bharti to ensure compliance with prevailing regulations. These investments, coupled with those of existing retailers, will result in a marked improvement in the supply chain, facilitating higher efficiency, better inventory management, and lower waste. The food and groceries category, which is one of the most fragmented, will benefit the most from these initiatives, enabling retailers to offer better prices to customers and suppliers alike. With regards to other categories such as durables and apparel, Fitch expects a greater focus on private labels for the purpose of margin enhancement. Another noticeable trend is the focus on improving store-level operations, for example, in visual merchandising and point-of-purchase. These customer-facing developments are designed to improve the retail experience, with the ultimate goal of boosting loyalty and repeat visits.
Real estate pressures to continue
The substantial increase in real estate costs has impacted margin growth for retailers across the board. However, leading players have tried to mitigate the impact by:
• Advance real estate booking at lower prices;
• Revenue sharing pricing with fixed and variable components;
• Negotiating advantageous rates from real estate providers using their "anchor tenant" status.
Retailers must also compete for quality retail space, which remains in relatively short supply.
While many large new retail real estate developments have taken place recently, many of the new malls have been ill-planned, and created with a view to quick profits through sale, rather than long-term sustained revenues through leases. As a result, some of these malls are already witnessing a decline in footfalls. With the creation of 150 million sq ft of retail space, provisionally scheduled for 2010, and with the increased contributions from reputable builders, Fitch anticipates greater availability of quality retail space in the medium-term. However, to meet the current expectations of 12-15% penetration and to support an ongoing growth rate of around 30-35%, the required real estate for the organised sector alone is estimated to be around 400-450 million sq ft. To meet this figure, the sector would need to invest between $8-10 billion, in addition to ongoing expenditure. As a result, we expect the availability of retail space to remain a constraint for retailers, continuing to impact margins in the near term due to the expectation of firm prices in the short- to medium-term.
Acquisitions and expansion
For the first time (barring the small acquisition of Fabmall by Trinethra), the Indian retail sector has also experienced M&A activity over the past six months. New entrants are finding it easier to pay a premium and acquire regional players in order to rapidly scale up their operations and establish a footprint in the sector. Examples include the recently concluded acquisition of Trinethra by the Aditya Birla group and the acquisition of Nilgiris by a private equity fund. Market sources indicate that other regional players could also be looking to exit the market in light of increased competition and the attractive valuations which currently prevail.
It is believed that this activity will intensify in the longer term, once the impact of higher penetration and slower growth rates is felt. In the interim, existing mid-sized players are expanding to gain the maximum footprint possible in the shortest time frame using routes such as the capital markets.
An example can be seen in Vishal Retail which plans to raise Rs 110 crore from its proposed initial public offering (IPO), while Pantaloon Retail (India) Ltd 'F1 (ind)' has raised funds through the sale of equity in its Home Solutions Retail Ltd to private equity funds. Existing retailers are expected to also raise additional debt to finance their expansions, likely to result in higher gearing, partly offset by the higher earnings expected from these investments.
Source : Financial Express
Now even Defence Services to get into Retail!!!
The Defence Ministry has been suggested to lease out 17 lakh acres of unutilised land spread over in 62 cantonments that Directorate General of Defence Estate (DGDE) has it in its possession for 50 years for development of Retail Outlets for Defence related products and Bio Farming.
In a Paper brought out by ASSOCHAM on Outsourcing Possibilities in Defence Sector; “Unlocking the True Wealth” submitted to Defence Minister by ASSOCHAM President, Venugopal N. Dhoot on Friday, it has also been highlighted that of 17 lakh acres of land, 9000 acres is under encroachment spread over in 17 states including Delhi which should be immediately claimed by the Ministry of Defence.
Dhoot also added that Ministry of Defence (MoD) can do wonders with this land and drastically reduce its dependence on budgetary allocations by putting this land for retail chains either in private or joint sector as it will accrue it revenues in lakhs of crores and thus can become a part and parcel of inclusive growth.
Not only retail and other relevant economic activities could be brought in such landscape but also bio-fuel plants be grown in them to help Defence forces extract diesel out of their seeds for its fleet of vehicles and reduce its dependence on state owned oil companies for supplies of diesel and other fuels, added Dhoot.
The Paper has pointed out that with Indian majors like Bharti (slated to invest a magnanimous $ 2.5 billion in the India retail trade business in the next seven years with technological support from Walmart) and Reliance, Essar taking up agro-farming and retailing in a major way and foreign players too eager to share the increasingly delectable Indian Retail pie, the defence land can be utilized for better productivity by possibly leasing out this land to these retail companies. Reliance has also entered into collaboration with Punjab Agro Food Corporation so that farm & retail linkages with local communities can be executed with ease.
Punjab will become RIL’s agricultural hub as well as a mainstream centre for Reliance's other retail plans in north India. It has also picked up 2000 acres of land across Chandigarh, Ludhiana, Amrtisar and Sangrur. Essar is further the largest exporter in the country of floriculture products, leading to huge earnings of Foreign Exchange.
It has also suggested by saying that the amount of revenue this simple exercise can generate for the MoD, being ploughed back into the sector, reinvested for the development and maintenance of Defence Services, ordnance and equipment and the defence personnel. Moreover, we are sure to witness a multiplier effect of this simple exercise on the economy as well in terms of GDP growth, employment generation improving the economic status vand welfare of farmers and above all contributing to the aim of ‘Inclusive Growth’, bringing the rural India within the ambit of development.
The Chamber has also emphasised that Defence Distribution Network is one major area where outsourcing can be ventured. With the total Defence Services expenditure increased from Rs.890bn in 2006-07 to Rs. 960bn in 2007-08, India is among the top ten countries in terms of defence expenditure. With Rs 540.78bnout of this dedicated to the Revenue Expenditure, It strongly feels that the focus needs to be riveted on this aspect of Defence, which includes the non-offensive kind of items (like boots, specialized clothing, medicine, transportation and communication systems etc) primarily required for the sustenance of the armed forces.
Herein, can come in the role of the country’s largest distribution network i.e. the Defence Storage and Distribution. With the emergence of organized retailing and big foreign giants like Walmart, Sainsbury, Carrefour, Marks & Spencer and Tesco Co. Ltd foraying into the arena. Thus, outsourcing its procurement and maintenance can be leveraged to generate benefit for the Defence Sector as well as the economy as a whole. It can play a significant role in the growth of retailing sector in India having outpours for the economy. Further, it surely will seek to augment the services and products to a new level.
Source : Indiainfoline
In a Paper brought out by ASSOCHAM on Outsourcing Possibilities in Defence Sector; “Unlocking the True Wealth” submitted to Defence Minister by ASSOCHAM President, Venugopal N. Dhoot on Friday, it has also been highlighted that of 17 lakh acres of land, 9000 acres is under encroachment spread over in 17 states including Delhi which should be immediately claimed by the Ministry of Defence.
Dhoot also added that Ministry of Defence (MoD) can do wonders with this land and drastically reduce its dependence on budgetary allocations by putting this land for retail chains either in private or joint sector as it will accrue it revenues in lakhs of crores and thus can become a part and parcel of inclusive growth.
Not only retail and other relevant economic activities could be brought in such landscape but also bio-fuel plants be grown in them to help Defence forces extract diesel out of their seeds for its fleet of vehicles and reduce its dependence on state owned oil companies for supplies of diesel and other fuels, added Dhoot.
The Paper has pointed out that with Indian majors like Bharti (slated to invest a magnanimous $ 2.5 billion in the India retail trade business in the next seven years with technological support from Walmart) and Reliance, Essar taking up agro-farming and retailing in a major way and foreign players too eager to share the increasingly delectable Indian Retail pie, the defence land can be utilized for better productivity by possibly leasing out this land to these retail companies. Reliance has also entered into collaboration with Punjab Agro Food Corporation so that farm & retail linkages with local communities can be executed with ease.
Punjab will become RIL’s agricultural hub as well as a mainstream centre for Reliance's other retail plans in north India. It has also picked up 2000 acres of land across Chandigarh, Ludhiana, Amrtisar and Sangrur. Essar is further the largest exporter in the country of floriculture products, leading to huge earnings of Foreign Exchange.
It has also suggested by saying that the amount of revenue this simple exercise can generate for the MoD, being ploughed back into the sector, reinvested for the development and maintenance of Defence Services, ordnance and equipment and the defence personnel. Moreover, we are sure to witness a multiplier effect of this simple exercise on the economy as well in terms of GDP growth, employment generation improving the economic status vand welfare of farmers and above all contributing to the aim of ‘Inclusive Growth’, bringing the rural India within the ambit of development.
The Chamber has also emphasised that Defence Distribution Network is one major area where outsourcing can be ventured. With the total Defence Services expenditure increased from Rs.890bn in 2006-07 to Rs. 960bn in 2007-08, India is among the top ten countries in terms of defence expenditure. With Rs 540.78bnout of this dedicated to the Revenue Expenditure, It strongly feels that the focus needs to be riveted on this aspect of Defence, which includes the non-offensive kind of items (like boots, specialized clothing, medicine, transportation and communication systems etc) primarily required for the sustenance of the armed forces.
Herein, can come in the role of the country’s largest distribution network i.e. the Defence Storage and Distribution. With the emergence of organized retailing and big foreign giants like Walmart, Sainsbury, Carrefour, Marks & Spencer and Tesco Co. Ltd foraying into the arena. Thus, outsourcing its procurement and maintenance can be leveraged to generate benefit for the Defence Sector as well as the economy as a whole. It can play a significant role in the growth of retailing sector in India having outpours for the economy. Further, it surely will seek to augment the services and products to a new level.
Source : Indiainfoline
Friday, March 23, 2007
Kotak buys a piece of Home Solutions
HYDERABAD: Kotak Mahindra Bank’s India Growth Fund has picked up equity worth $12 million in Kishore Biyani’s Home Solutions Retail India Ltd, which is set to roll out Home Town, its new format modelled on Home Depot.
This is the second private equity investment in the latest format from the group after ICICI Venture invested $27.3 million in October last in the company that sells furniture, hardware and paint.
”We closed the investment recently in the company which is set to kick off operations later this month,” Nitin Deshmukh, head, private equity, Kotak Mahindra Bank, told DNA Money.
The $160 million India Growth Fund has made nine investments and is about 55% invested as of date.
The first Home Town is slated to roll out on March 31 from Noida and thereafter in six other cities within six to nine months in cities, including Hyderabad, Bangalore, Pune, Thane, Surat and Ahmedabad at an investment of Rs 150-175 crore, a Pantaloon official said.
Each of the Home Town formats, which will be spread over at least 1.25 lakh sq ft, will also incorporate e-Zone, the electronics lifestyle format and the Collection-i, Pantaloon’s furniture and home accessories formats, he added.
Properties have already been signed up and construction work at most of these locations is already on so that some of them could be opened within a month or two.
Home Town will offer everything a customer would need to build, furnish and decorate a home including building material, paints, tiles, electrical and plumbing products and services, furnishings, furniture and consumer durables.
According to estimates, the current home market in the country is estimated at between Rs 75,000 crore and Rs 100,000 crore which is largely serviced by the unorganised market.
Source : DNA Money
This is the second private equity investment in the latest format from the group after ICICI Venture invested $27.3 million in October last in the company that sells furniture, hardware and paint.
”We closed the investment recently in the company which is set to kick off operations later this month,” Nitin Deshmukh, head, private equity, Kotak Mahindra Bank, told DNA Money.
The $160 million India Growth Fund has made nine investments and is about 55% invested as of date.
The first Home Town is slated to roll out on March 31 from Noida and thereafter in six other cities within six to nine months in cities, including Hyderabad, Bangalore, Pune, Thane, Surat and Ahmedabad at an investment of Rs 150-175 crore, a Pantaloon official said.
Each of the Home Town formats, which will be spread over at least 1.25 lakh sq ft, will also incorporate e-Zone, the electronics lifestyle format and the Collection-i, Pantaloon’s furniture and home accessories formats, he added.
Properties have already been signed up and construction work at most of these locations is already on so that some of them could be opened within a month or two.
Home Town will offer everything a customer would need to build, furnish and decorate a home including building material, paints, tiles, electrical and plumbing products and services, furnishings, furniture and consumer durables.
According to estimates, the current home market in the country is estimated at between Rs 75,000 crore and Rs 100,000 crore which is largely serviced by the unorganised market.
Source : DNA Money
Tuesday, March 20, 2007
RIL plans consumer durable biz foray before foreign players
It will soon be raining consumer durable retailers in India! Reliance Industries is in a hurry to kickstart its operations this month, before international players like Best Buy and Jumbo flood the market. CNBC-TV18 reports.
'Reliance Digital' is the name likely to be up in front of Reliance's Durable Speciality stores. Reliance Retail will open its first durable store in the national capital region, or NCR, by end of this month, which will be followed by two other stores in south India. The company is looking at opening 15-20 such stores, covering six-seven cities in the first year of operation.
Raghu Pillai, Pres & Chief Exec (Ops & Strategy), Reliance Retail says, "Fitch for designing of our stores. We will be opening our stores in Delhi, Bangalore and Mumbai."
This selection of the designing firm is obviously foreseeing the entry of Best buy, the largest consumer electronic retailer globally, into India. Fitch is also designing newer format stores for 'Best Buy' internationally.
Sources tell CNBC-TV18, that CEO of Best Buy will be visiting India this month for initial talks. Also, Dubai-based consumer durable chain, Jumbo, has already bought about six properties in Delhi and should be starting its first store in a month's time.
No wonder then, Reliance is in a hurry to kick start this venture. It is aiming at a topline of about Rs 1500-2000 crore in the very first year. Also Reliance Retail's plans to provide after sales service may finally be falling into place.
Girish V Rao, VP - Sales & Mktg, LG says, "If they meet the standards, we can let them take care of customer service, maybe we could consider that."
Early this year, Reliance Retail had sought margins of about 30-40% from durable majors but they will now have to settle for 13-14% margins.
Source: Moneycontrol
'Reliance Digital' is the name likely to be up in front of Reliance's Durable Speciality stores. Reliance Retail will open its first durable store in the national capital region, or NCR, by end of this month, which will be followed by two other stores in south India. The company is looking at opening 15-20 such stores, covering six-seven cities in the first year of operation.
Raghu Pillai, Pres & Chief Exec (Ops & Strategy), Reliance Retail says, "Fitch for designing of our stores. We will be opening our stores in Delhi, Bangalore and Mumbai."
This selection of the designing firm is obviously foreseeing the entry of Best buy, the largest consumer electronic retailer globally, into India. Fitch is also designing newer format stores for 'Best Buy' internationally.
Sources tell CNBC-TV18, that CEO of Best Buy will be visiting India this month for initial talks. Also, Dubai-based consumer durable chain, Jumbo, has already bought about six properties in Delhi and should be starting its first store in a month's time.
No wonder then, Reliance is in a hurry to kick start this venture. It is aiming at a topline of about Rs 1500-2000 crore in the very first year. Also Reliance Retail's plans to provide after sales service may finally be falling into place.
Girish V Rao, VP - Sales & Mktg, LG says, "If they meet the standards, we can let them take care of customer service, maybe we could consider that."
Early this year, Reliance Retail had sought margins of about 30-40% from durable majors but they will now have to settle for 13-14% margins.
Source: Moneycontrol
In Mexico, Wal-mart is defying its critics
JUCHITAN, Mexico - For as long as anyone can remember, shopping for many items in this Zapotec Indian town meant lousy selection and high prices. Most families live on less than $4,000 a year. Little wonder that this provincial corner of Oaxaca, historically famous for keeping outsiders at bay, welcomed the arrival of Wal-Mart.
Back home in the U.S., Wal-Mart Stores Inc. is known not only for its relentless focus on low prices but also for its many critics, who assail it for everything from the wages it pays to its role in homogenizing American culture. But while its growth in the U.S. is slowing, Wal-Mart is striking gold south of the border, largely free from all the criticism. Like Wal-Mart fans in less affluent parts of America, most shoppers in developing countries are much more concerned about the cost of medicine and microwaves than the cultural incursions of a multinational corporation.
That fact is making Wal-Mart a dominant force in Latin America. Wal-Mart de Mexico SAB, a publicly traded subsidiary, is not only the biggest private employer in Mexico - it's the biggest single retailer in Latin America. Sales at Wal-Mex, as the Mexican unit is called, are forecast to rise 16 percent to $21 billion this year, representing a quarter of Wal-Mart's foreign revenue. International revenue soared 30 percent to $77.1 billion, accounting for 22 percent of Wal-Mart's sales, in the fiscal year ended Jan. 31. Wal-Mex profits are forecast to grow 20 percent to $1.3 billion this year.
Meanwhile, Wal-Mart's biggest stumbles have occurred in more affluent foreign markets like Japan. It incurred roughly $1 billion in charges last year to depart Germany and South Korea.
Wal-Mart is now betting on the world's most populated developing nations as its engine for future growth. The retailer is acquiring a retail chain in China, for instance, and seeking to open in India, where it's been kept at bay, with new local partners.
"Wal-Mart can have a dramatic effect in emerging markets," says Mark Husson, who covers Wal-Mart for HSBC Securities. "If you look where Wal-Mart has been less successful, it's the developed economies like Germany and Japan, where you have sophisticated urban dwellers who have a whole host of other concerns."
Wal-Mart's revenues in the U.S. grew 7.8 percent last year. In an attempt to import some of Wal-Mex's success, the company promoted Eduardo Castro-Wright, a top Wal-Mex executive from 2001 to 2005, to serve as chief executive of its U.S. stores. Mr. Castro-Wright is also a board member of Dow Jones & Co., publisher of The Wall Street Journal.
When Wal-Mart was building a store in Juchitan in 2005, local shopkeepers and leftist groups tried to rouse popular sentiment against the American invader. The efforts failed, and by the end of opening day sales were so strong "the place looked like it had been looted," says Max Jimenez, the store's 31-year-old manager. The store's sales nearly doubled Wal-Mart's initial projections last year, and it still attracts customers from hours away.
Wal-Mart bet on Mexico just as the country was opening to global trade. After Mexico's devastating currency crash and economic collapse in 1994, Sears Roebuck & Co. and former rival Kmart both pulled up stakes, but Wal-Mart stuck it out. Carrefour SA, a key global rival for Wal-Mart, pulled out in 2005 after failing to gain share in an increasingly competitive market.
In Mexico, Wal-Mart has been a counterweight to the powers that control commerce. One of the most closed economies in the world until the late 1980s, Mexico was dominated for decades by a handful of big grocers and retailers. All were members of a national retailing association called ANTAD, and cutthroat competition was taboo. At the local level, towns are still hostage to local bosses, known here as caciques, the Indian word for local strongmen who control politics and commerce.
Wal-Mart's jobs pay well by Mexican standards and serve as a gateway to the state health and pension systems. Full-time jobs with regular salaries are scarce. About half Mexico's labor force - 20 million people - work in a so-called informal economy of day laborers, unregistered taxi drivers and street vendors. Their salaries are in cash and they pay no taxes. Because they aren't in the tax system, they are also not eligible for the state-run health-care system and government mortgage subsidies, and they have no pensions.
In a country where family connections often matter more than skill, Wal-Mart trains floor workers to rise to management. Plus, Wal-Mart lowered prices on thousands of staples from tomatoes to diapers, helping stretch low wages here for millions of middle-class and poor consumers.
The retailer entered Mexico in 1991, teaming up with local retailer Cifra SA. When Wal-Mart started to publish price comparisons showing how much cheaper its prices were, other retailers were outraged. In 2002, Wal-Mex was forced to resign from ANTAD. Then rivals were forced to improve service and keep up with price cuts to stay in business. In January alone, Wal-Mart cut prices on 7,500 items.
Some in Mexico aren't happy with the fact that Wal-Mart now accounts for half of the country's entire supermarket sales. Mexico's beloved open-air food markets, where hawkers buff up the fruit and offer tasty sample slices, have been hit hard. Over the past few years, local shopkeepers have teamed up with leftist intellectuals to try to block the construction of new Wal-Marts in several places.
"When the small-business owner goes out of business, the middle class gets smaller," says Sebastian Alvarez, a 34-year-old liquor-store owner who is part of a group in the tourist mecca of Los Cabos, at the southern tip of the Baja California peninsula, seeking to block a Wal-Mart. Though opposition is small today, he said he expects criticism of Wal-Mart to grow in coming years - just as it did over time in the U.S.
For now, however, such efforts have been largely unsuccessful. Global Exchange, a San Francisco-based antiglobalization group, is advising Mr. Alvarez and others in Los Cabos who want to prevent Wal-Mart from entering Baja California Sur, the only Mexican state without a Wal-Mart store. The group figured it might sway the town's new left-wing mayor, Luis Diaz, a member of a political party that opposes free trade.
But Mr. Diaz is welcoming the American retailer. "I can understand that some businesses might be hurt by Wal-Mart, but the fact is that the people here want it. It increases the purchasing power of people with very little money," Mr. Diaz says in an interview.
Wal-Mart's success among the poor of Mexico has made it something of a hero with politicians here. Compare how Wal-Mart's applications to move into banking were received in the U.S. and in Mexico. North of the border, labor unions and banks have all but killed the plan. U.S. Federal Reserve Chairman Ben Bernanke raised concerns about regulating a combined lender and retailer.
In contrast, Mexico's central banker Guillermo Ortiz is a Wal-Mart fan, once crediting its price cutting with helping control inflation in the years after Mexico's 1994 currency collapse. Mr. Ortiz and other regulators hope Wal-Mart will change Mexican banking, which is dominated by a few foreign-owned financial firms that cater mainly to the wealthy. Wal-Mart got its Mexican banking license quickly, and branches of its Adelante bank (which means "forward" in Spanish) are set to open this year.
Wal-Mart's success in Mexico is on display in Juchitan, a sun-soaked desert village of 90,000 residents near southern Oaxaca state's Pacific coast. The town, a hotbed of left-wing politics, fought off the Aztecs, the Spanish and the invading French over the centuries. Many people here still prefer to speak Zapotec rather than Spanish.
When Wal-Mart started to build one of its "Bodega Aurrera" stores - austere versions of the Super Center designed to meet small-town needs - a scattering of marchers gathered on a few days to protest that the new store would put local merchants out of business, and harm the local culture. But the protests died out because most people wanted the store, the first big national retailer to venture in.
In Juchitan, as in other small Mexican towns, consumer goods often cost far more than in cities, partly because of transport costs. But Wal-Mart's huge fleet of trucks and computerized logistics allow it to sell a microwave at the same price in Juchitan as in Mexico City. To do it, Wal-Mart squeezes out overhead even more aggressively in its small-town stores. The floors of the Bodega store are concrete, which requires a smaller cleaning staff.
In recent months, as rising prices for U.S. corn pushed up the price of Mexico's corn tortilla, a staple for millions of poor, Wal-Mart could keep tortilla prices largely steady because of its long-term contracts with corn-flour suppliers. The crisis turned into free advertising for Wal-Mart, as new shoppers lined up for the cheaper tortillas.
Wal-Mart also overcame a Juchitan cacique, or local boss: Hector Matus, a trained doctor who goes by La Garnacha, the name for a fried tortilla snack popular in town. Dr. Matus, 55, owns six pharmacies, stationery stores and general stores. He has also held an array of political posts, including Juchitan mayor and state health minister. As town mayor from 2002 to 2004, he says he blocked a national medical-testing chain from opening in town because it meant low-price competition to local businessmen doing blood work.
But Dr. Matus couldn't persuade local and state officials to block Wal-Mart, and he is feeling the pinch. Sales are off 15 percent at his stores since Wal-Mart arrived, and he is now lowering prices in response. Even so, he's still more expensive. A box of Losec stomach medicine costs 80 pesos ($7.30) at one of Dr. Matus's stores, marked down from 86 pesos. The price at Wal-Mart is 77 pesos ($7.20).
Dr. Matus isn't happy about the competition. "I could still kick them out of town, because I know how to mobilize people," he said, sitting in his living room surrounded by pictures of himself with leading Mexican politicians dating back to the 1970s. Despite his bravado, town officials say Wal-Mart is staying. "The ones who have benefited the most (from Wal-Mart) are the poorest," says Feliciano Santiago, the deputy mayor. "I hope another one comes."
When Wal-Mart opened its doors here, it tried hard to fit in. It found Zapotec-speaking interviewers to put applicants at ease. At the morning sales meeting here, the obligatory Wal-Mart cheer is shouted in Zapotec ("Gimme a W!" is "Dane Na Ti W!"). Product announcements are broadcast in Zapotec by saleswomen in traditional flowing skirts and ornate blouses. Shoppers hear the strident trumpets and cymbal clashes of local tunes, called sones de Tehuantepec.
In Mexican towns like Juchitan, shopping at a Wal-Mart is a high-end experience. The air conditioning and lights are on. Across town at an outdoor market, flies swarm on buckets of shrimp and fish piled on counters without ice, let alone refrigeration.
Gisela Lopez, the 31-year-old head of billing at the Juchitan store, benefited from the retailer's system of promoting from within. Raised by her uneducated, Zapotec-speaking grandparents, Lopez earned a computer degree at Juchitan's small technical college and then left for the booming northern city of Monterrey in search of opportunity.
Lacking connections, she couldn't find the office job she dreamed about, and took a job at one of Wal-Mart's stores. After three months, Ms. Lopez made cashier supervisor, and later moved over to the billing department. When Wal-Mart opened a store in Juchitan, Ms. Lopez jumped at the chance to move home - and was promoted to billing chief in the process.
"It's a very different place to work, because you can succeed by your own effort," says Ms. Lopez, whose $12,000-a-year salary now puts her in Mexico's middle class.
Lopez's story of economic mobility is a rare one. Most of her childhood friends don't have steady jobs, she said. The success stories are friends who inherited jobs from their parents at the state oil company's big refinery in Salina Cruz, about an hour away.
Source : Wall Street Journal
Back home in the U.S., Wal-Mart Stores Inc. is known not only for its relentless focus on low prices but also for its many critics, who assail it for everything from the wages it pays to its role in homogenizing American culture. But while its growth in the U.S. is slowing, Wal-Mart is striking gold south of the border, largely free from all the criticism. Like Wal-Mart fans in less affluent parts of America, most shoppers in developing countries are much more concerned about the cost of medicine and microwaves than the cultural incursions of a multinational corporation.
That fact is making Wal-Mart a dominant force in Latin America. Wal-Mart de Mexico SAB, a publicly traded subsidiary, is not only the biggest private employer in Mexico - it's the biggest single retailer in Latin America. Sales at Wal-Mex, as the Mexican unit is called, are forecast to rise 16 percent to $21 billion this year, representing a quarter of Wal-Mart's foreign revenue. International revenue soared 30 percent to $77.1 billion, accounting for 22 percent of Wal-Mart's sales, in the fiscal year ended Jan. 31. Wal-Mex profits are forecast to grow 20 percent to $1.3 billion this year.
Meanwhile, Wal-Mart's biggest stumbles have occurred in more affluent foreign markets like Japan. It incurred roughly $1 billion in charges last year to depart Germany and South Korea.
Wal-Mart is now betting on the world's most populated developing nations as its engine for future growth. The retailer is acquiring a retail chain in China, for instance, and seeking to open in India, where it's been kept at bay, with new local partners.
"Wal-Mart can have a dramatic effect in emerging markets," says Mark Husson, who covers Wal-Mart for HSBC Securities. "If you look where Wal-Mart has been less successful, it's the developed economies like Germany and Japan, where you have sophisticated urban dwellers who have a whole host of other concerns."
Wal-Mart's revenues in the U.S. grew 7.8 percent last year. In an attempt to import some of Wal-Mex's success, the company promoted Eduardo Castro-Wright, a top Wal-Mex executive from 2001 to 2005, to serve as chief executive of its U.S. stores. Mr. Castro-Wright is also a board member of Dow Jones & Co., publisher of The Wall Street Journal.
When Wal-Mart was building a store in Juchitan in 2005, local shopkeepers and leftist groups tried to rouse popular sentiment against the American invader. The efforts failed, and by the end of opening day sales were so strong "the place looked like it had been looted," says Max Jimenez, the store's 31-year-old manager. The store's sales nearly doubled Wal-Mart's initial projections last year, and it still attracts customers from hours away.
Wal-Mart bet on Mexico just as the country was opening to global trade. After Mexico's devastating currency crash and economic collapse in 1994, Sears Roebuck & Co. and former rival Kmart both pulled up stakes, but Wal-Mart stuck it out. Carrefour SA, a key global rival for Wal-Mart, pulled out in 2005 after failing to gain share in an increasingly competitive market.
In Mexico, Wal-Mart has been a counterweight to the powers that control commerce. One of the most closed economies in the world until the late 1980s, Mexico was dominated for decades by a handful of big grocers and retailers. All were members of a national retailing association called ANTAD, and cutthroat competition was taboo. At the local level, towns are still hostage to local bosses, known here as caciques, the Indian word for local strongmen who control politics and commerce.
Wal-Mart's jobs pay well by Mexican standards and serve as a gateway to the state health and pension systems. Full-time jobs with regular salaries are scarce. About half Mexico's labor force - 20 million people - work in a so-called informal economy of day laborers, unregistered taxi drivers and street vendors. Their salaries are in cash and they pay no taxes. Because they aren't in the tax system, they are also not eligible for the state-run health-care system and government mortgage subsidies, and they have no pensions.
In a country where family connections often matter more than skill, Wal-Mart trains floor workers to rise to management. Plus, Wal-Mart lowered prices on thousands of staples from tomatoes to diapers, helping stretch low wages here for millions of middle-class and poor consumers.
The retailer entered Mexico in 1991, teaming up with local retailer Cifra SA. When Wal-Mart started to publish price comparisons showing how much cheaper its prices were, other retailers were outraged. In 2002, Wal-Mex was forced to resign from ANTAD. Then rivals were forced to improve service and keep up with price cuts to stay in business. In January alone, Wal-Mart cut prices on 7,500 items.
Some in Mexico aren't happy with the fact that Wal-Mart now accounts for half of the country's entire supermarket sales. Mexico's beloved open-air food markets, where hawkers buff up the fruit and offer tasty sample slices, have been hit hard. Over the past few years, local shopkeepers have teamed up with leftist intellectuals to try to block the construction of new Wal-Marts in several places.
"When the small-business owner goes out of business, the middle class gets smaller," says Sebastian Alvarez, a 34-year-old liquor-store owner who is part of a group in the tourist mecca of Los Cabos, at the southern tip of the Baja California peninsula, seeking to block a Wal-Mart. Though opposition is small today, he said he expects criticism of Wal-Mart to grow in coming years - just as it did over time in the U.S.
For now, however, such efforts have been largely unsuccessful. Global Exchange, a San Francisco-based antiglobalization group, is advising Mr. Alvarez and others in Los Cabos who want to prevent Wal-Mart from entering Baja California Sur, the only Mexican state without a Wal-Mart store. The group figured it might sway the town's new left-wing mayor, Luis Diaz, a member of a political party that opposes free trade.
But Mr. Diaz is welcoming the American retailer. "I can understand that some businesses might be hurt by Wal-Mart, but the fact is that the people here want it. It increases the purchasing power of people with very little money," Mr. Diaz says in an interview.
Wal-Mart's success among the poor of Mexico has made it something of a hero with politicians here. Compare how Wal-Mart's applications to move into banking were received in the U.S. and in Mexico. North of the border, labor unions and banks have all but killed the plan. U.S. Federal Reserve Chairman Ben Bernanke raised concerns about regulating a combined lender and retailer.
In contrast, Mexico's central banker Guillermo Ortiz is a Wal-Mart fan, once crediting its price cutting with helping control inflation in the years after Mexico's 1994 currency collapse. Mr. Ortiz and other regulators hope Wal-Mart will change Mexican banking, which is dominated by a few foreign-owned financial firms that cater mainly to the wealthy. Wal-Mart got its Mexican banking license quickly, and branches of its Adelante bank (which means "forward" in Spanish) are set to open this year.
Wal-Mart's success in Mexico is on display in Juchitan, a sun-soaked desert village of 90,000 residents near southern Oaxaca state's Pacific coast. The town, a hotbed of left-wing politics, fought off the Aztecs, the Spanish and the invading French over the centuries. Many people here still prefer to speak Zapotec rather than Spanish.
When Wal-Mart started to build one of its "Bodega Aurrera" stores - austere versions of the Super Center designed to meet small-town needs - a scattering of marchers gathered on a few days to protest that the new store would put local merchants out of business, and harm the local culture. But the protests died out because most people wanted the store, the first big national retailer to venture in.
In Juchitan, as in other small Mexican towns, consumer goods often cost far more than in cities, partly because of transport costs. But Wal-Mart's huge fleet of trucks and computerized logistics allow it to sell a microwave at the same price in Juchitan as in Mexico City. To do it, Wal-Mart squeezes out overhead even more aggressively in its small-town stores. The floors of the Bodega store are concrete, which requires a smaller cleaning staff.
In recent months, as rising prices for U.S. corn pushed up the price of Mexico's corn tortilla, a staple for millions of poor, Wal-Mart could keep tortilla prices largely steady because of its long-term contracts with corn-flour suppliers. The crisis turned into free advertising for Wal-Mart, as new shoppers lined up for the cheaper tortillas.
Wal-Mart also overcame a Juchitan cacique, or local boss: Hector Matus, a trained doctor who goes by La Garnacha, the name for a fried tortilla snack popular in town. Dr. Matus, 55, owns six pharmacies, stationery stores and general stores. He has also held an array of political posts, including Juchitan mayor and state health minister. As town mayor from 2002 to 2004, he says he blocked a national medical-testing chain from opening in town because it meant low-price competition to local businessmen doing blood work.
But Dr. Matus couldn't persuade local and state officials to block Wal-Mart, and he is feeling the pinch. Sales are off 15 percent at his stores since Wal-Mart arrived, and he is now lowering prices in response. Even so, he's still more expensive. A box of Losec stomach medicine costs 80 pesos ($7.30) at one of Dr. Matus's stores, marked down from 86 pesos. The price at Wal-Mart is 77 pesos ($7.20).
Dr. Matus isn't happy about the competition. "I could still kick them out of town, because I know how to mobilize people," he said, sitting in his living room surrounded by pictures of himself with leading Mexican politicians dating back to the 1970s. Despite his bravado, town officials say Wal-Mart is staying. "The ones who have benefited the most (from Wal-Mart) are the poorest," says Feliciano Santiago, the deputy mayor. "I hope another one comes."
When Wal-Mart opened its doors here, it tried hard to fit in. It found Zapotec-speaking interviewers to put applicants at ease. At the morning sales meeting here, the obligatory Wal-Mart cheer is shouted in Zapotec ("Gimme a W!" is "Dane Na Ti W!"). Product announcements are broadcast in Zapotec by saleswomen in traditional flowing skirts and ornate blouses. Shoppers hear the strident trumpets and cymbal clashes of local tunes, called sones de Tehuantepec.
In Mexican towns like Juchitan, shopping at a Wal-Mart is a high-end experience. The air conditioning and lights are on. Across town at an outdoor market, flies swarm on buckets of shrimp and fish piled on counters without ice, let alone refrigeration.
Gisela Lopez, the 31-year-old head of billing at the Juchitan store, benefited from the retailer's system of promoting from within. Raised by her uneducated, Zapotec-speaking grandparents, Lopez earned a computer degree at Juchitan's small technical college and then left for the booming northern city of Monterrey in search of opportunity.
Lacking connections, she couldn't find the office job she dreamed about, and took a job at one of Wal-Mart's stores. After three months, Ms. Lopez made cashier supervisor, and later moved over to the billing department. When Wal-Mart opened a store in Juchitan, Ms. Lopez jumped at the chance to move home - and was promoted to billing chief in the process.
"It's a very different place to work, because you can succeed by your own effort," says Ms. Lopez, whose $12,000-a-year salary now puts her in Mexico's middle class.
Lopez's story of economic mobility is a rare one. Most of her childhood friends don't have steady jobs, she said. The success stories are friends who inherited jobs from their parents at the state oil company's big refinery in Salina Cruz, about an hour away.
Source : Wall Street Journal
Reliance Retail to turn Adani outlets into speciality stores
Reliance Retail plans to transform the recently-acquired Adani Retail’s general purpose outlets into speciality stores such as jewellery, medicines, specs, home furnishing, telecom and even consumer electronic outlets.
Around 10-15 out of the total 26 outlets will be transformed into speciality stores in Ahmedabad alone. In Vadodara, Reliance will start operations with 10 outlets and subsequently increase the number to 16. The company also plans two mega outlets in Vadodara.
Reliance has already absorbed a few of the Adani Retail executives. However, many others have already left Adani to join other retail chains. While Reliance is yet to formally get possession of the Adani outlets, it is said to have shelled out Rs 170-190 crore for the deal.
The Adani group has already withdrawn its in-house brand ‘Advantage’ across segments such as food and detergents. It was selling the in-house brands exclusively through its retail outlets. “The size of Adani outlets is not large enough to convert them into Reliance Fresh.
The minimum area of Reliance Fresh stores is around 4,000 square feet while the outlets that we have acquired are mostly in the range of 2,000- 3,000 sq ft. So we have decided to create specialised stores in those outlets that will sell single product category,” a senior Reliance executive told ET.
Most of the 56 Adani outlets are located in Ahmedabad, Vadodara and Rajkot. Sources say half of the total outlets in the three cities will be specialty outlets. The outlets in smaller cities such as Anand, Nadiad, Mundra, Gandhinagar and Navsari will largely have smaller format Reliance Fresh stores.
The first Reliance Fresh outlet will be launched in March end in Ahmedabad, while the outlets acquired from Adani will be revamped and readied for launch by April end. It will also roll out its retail operations in Vadodara, Rajkot and Surat.
“All our retail outlets will have differentials in terms of service, offerings and prices. While these will be relatively smaller outlets, we are also searching for sites to develop large-format exclusive furniture stores in Ahmedabad,” said the executive.
Source : Economic Times
Around 10-15 out of the total 26 outlets will be transformed into speciality stores in Ahmedabad alone. In Vadodara, Reliance will start operations with 10 outlets and subsequently increase the number to 16. The company also plans two mega outlets in Vadodara.
Reliance has already absorbed a few of the Adani Retail executives. However, many others have already left Adani to join other retail chains. While Reliance is yet to formally get possession of the Adani outlets, it is said to have shelled out Rs 170-190 crore for the deal.
The Adani group has already withdrawn its in-house brand ‘Advantage’ across segments such as food and detergents. It was selling the in-house brands exclusively through its retail outlets. “The size of Adani outlets is not large enough to convert them into Reliance Fresh.
The minimum area of Reliance Fresh stores is around 4,000 square feet while the outlets that we have acquired are mostly in the range of 2,000- 3,000 sq ft. So we have decided to create specialised stores in those outlets that will sell single product category,” a senior Reliance executive told ET.
Most of the 56 Adani outlets are located in Ahmedabad, Vadodara and Rajkot. Sources say half of the total outlets in the three cities will be specialty outlets. The outlets in smaller cities such as Anand, Nadiad, Mundra, Gandhinagar and Navsari will largely have smaller format Reliance Fresh stores.
The first Reliance Fresh outlet will be launched in March end in Ahmedabad, while the outlets acquired from Adani will be revamped and readied for launch by April end. It will also roll out its retail operations in Vadodara, Rajkot and Surat.
“All our retail outlets will have differentials in terms of service, offerings and prices. While these will be relatively smaller outlets, we are also searching for sites to develop large-format exclusive furniture stores in Ahmedabad,” said the executive.
Source : Economic Times
Pantaloon to double stores' number, invest Rs 400 cr
Close on the heels of spinning the flagship Pantaloons chain of stores into a strategic business unit (SBU), Kishore Biyani’s Future Group is all set to scale up its presence across the country. Expansion plans will involve doubling of the number of Pantaloons stores by December and entail an outlay of nearly Rs 400 crore.
Speaking to ET, Pantaloon Retail India (PRIL) CEO-Pantaloons Sanjeev Agrawal said: “By December 2007, we will have some 50 Pantaloons outlets across the country. The focus will be on tier II and tier III cities. However, the stores located in the metros will continue to contribute nearly 75% to the company’s topline.”
PRIL is the retail arm of the Future Group. Following this, total square feet area covered by Pantaloons stores will increase to 2 m sq ft from 0.5 m. A Pantaloons store typically on an average occupies 20,000 sq ft and entails an investment of Rs 2,500 per sq ft. The group operates 26 stores across the nation.
Incidentally, the Future Group has just completed restructuring its retail business. Each of the retail formats, including the likes of Pantaloons, Big Bazaar, Food Bazaar and Central will now operate as separate SBUs within PRIL and have separate management teams led by separate chief executive officers.
Elaborating on the growth plans, Mr Agrawal said the Pantaloons store already has operations in second-tier markets like Mangalore, Vadodara, Pune, Lucknow and Kanpur and has already identified properties for expansion in Agra, Surat, Bhubaneswar and Siliguri.
In line with the new positioning as Fresh Fashion, the stores will target the upper-middle class (SEC A and B1) consumers. “Unlike in other cities, Pantaloons stores in the east will continue to have a different lineage. It will maintain a departmental store format with substantial non-apparel merchandise as well,” he added.
Source : Economic Times
Speaking to ET, Pantaloon Retail India (PRIL) CEO-Pantaloons Sanjeev Agrawal said: “By December 2007, we will have some 50 Pantaloons outlets across the country. The focus will be on tier II and tier III cities. However, the stores located in the metros will continue to contribute nearly 75% to the company’s topline.”
PRIL is the retail arm of the Future Group. Following this, total square feet area covered by Pantaloons stores will increase to 2 m sq ft from 0.5 m. A Pantaloons store typically on an average occupies 20,000 sq ft and entails an investment of Rs 2,500 per sq ft. The group operates 26 stores across the nation.
Incidentally, the Future Group has just completed restructuring its retail business. Each of the retail formats, including the likes of Pantaloons, Big Bazaar, Food Bazaar and Central will now operate as separate SBUs within PRIL and have separate management teams led by separate chief executive officers.
Elaborating on the growth plans, Mr Agrawal said the Pantaloons store already has operations in second-tier markets like Mangalore, Vadodara, Pune, Lucknow and Kanpur and has already identified properties for expansion in Agra, Surat, Bhubaneswar and Siliguri.
In line with the new positioning as Fresh Fashion, the stores will target the upper-middle class (SEC A and B1) consumers. “Unlike in other cities, Pantaloons stores in the east will continue to have a different lineage. It will maintain a departmental store format with substantial non-apparel merchandise as well,” he added.
Source : Economic Times
Friday, March 16, 2007
Reliance indicates alliance talks with Carrefour; French retail giant denies them
Mukesh Ambani owned, Reliance Industries, as reported earlier, is inching forward towards acquiring a stake in the world’s second biggest retail group, France based Carrefour.
“Talks are at an advanced stage,” a senior Reliance official told AFP. “We are talking (about an alliance) at the global level, this is not only for India.” Reliance source further said that the alliance could take the form of “a controlling stake (in Carrefour)” or a “joint venture.”
Carrefour in a statement has, however, denied such talks: “Carrefour states that it has had no contact with this group (Reliance) and no negotiations are under way.”
Reliance, India’s biggest listed company in the private sector, has recently entered the lucrative retail sector and has committed an investment of Rs. 30,000 crore, in the first phase of what it calls a “farm to fork” initiative. While, Reliance has already rolled out 71 neighbourhood, convenience stores, in several parts of the country, it’s gearing up to also roll out hypermarket, supermarket and speciality store formats, in the next few months. Reliance hopes to achieve annual sales of $25 billion (over Rs. one lakh crore) by 2011, which according to its Chairman Mukesh Ambani, will transform India’s retail landscape.
By entering into an international joint venture with Carrefour, Reliance would catapult itself into the select club of the world’s biggest retailers.
While, through the joint venture, Reliance will get access to international markets for Indian products, particularly agri-products, it will also leverage strong supply chain systems of the French retailer.
Last week, Carrefour had declared:” it was preparing to develop new engines for growth in countries with strong growth potential such as Russia and India.”
The French retail giant was initially in talks to tie up with Bharti, however, the Indian telecom giant decided to strike a deal with Wal-Mart for a cash and carry venture.
Last month, a Carrefour manager had told AFP that the company was in talks with “five or six Indian groups” about entering the country’s retail sector, but did not name them, and said an agreement would be announced “in a matter of months.” These groups, among others, according to market sources, included, housing and banking giant HDFC, cookies and textiles major Bombay Dyeing, and telecom and energy major Reliance ADAG. Carrefour had, earlier, called off negotiatons with the Dubai base Landmark Group.
A rapidly-growing affluent middle class comprising about a third of India’s 1.1 billion population annually spends an estimated $300 billions on shopping. Three percent of this, or roughly nine to ten billion, is contributed what is called organised or modern retail. Growing at around 25 percent per annum, the figure gor organised retail is likely to more than double by 2010.
Ambani’s sights, according to The Economic Times, were set on “turbo-charging Reliance Industries into the global super-league” with a war chest of up to 30 billion dollars.
Carrefour was rocked last week when France’s richest man and controller of the LVMH luxury goods empire, Bernard Arnault, teamed up with US private equity group Colony Capital to buy nearly 10 percent of the company.
The purchase by Arnault was followed hours later by the resignation of Carrefour’s chairman Luc Vandevelde amid disagreements with the Halley family, the main shareholder.
Source : IndiaRetailBiz
“Talks are at an advanced stage,” a senior Reliance official told AFP. “We are talking (about an alliance) at the global level, this is not only for India.” Reliance source further said that the alliance could take the form of “a controlling stake (in Carrefour)” or a “joint venture.”
Carrefour in a statement has, however, denied such talks: “Carrefour states that it has had no contact with this group (Reliance) and no negotiations are under way.”
Reliance, India’s biggest listed company in the private sector, has recently entered the lucrative retail sector and has committed an investment of Rs. 30,000 crore, in the first phase of what it calls a “farm to fork” initiative. While, Reliance has already rolled out 71 neighbourhood, convenience stores, in several parts of the country, it’s gearing up to also roll out hypermarket, supermarket and speciality store formats, in the next few months. Reliance hopes to achieve annual sales of $25 billion (over Rs. one lakh crore) by 2011, which according to its Chairman Mukesh Ambani, will transform India’s retail landscape.
By entering into an international joint venture with Carrefour, Reliance would catapult itself into the select club of the world’s biggest retailers.
While, through the joint venture, Reliance will get access to international markets for Indian products, particularly agri-products, it will also leverage strong supply chain systems of the French retailer.
Last week, Carrefour had declared:” it was preparing to develop new engines for growth in countries with strong growth potential such as Russia and India.”
The French retail giant was initially in talks to tie up with Bharti, however, the Indian telecom giant decided to strike a deal with Wal-Mart for a cash and carry venture.
Last month, a Carrefour manager had told AFP that the company was in talks with “five or six Indian groups” about entering the country’s retail sector, but did not name them, and said an agreement would be announced “in a matter of months.” These groups, among others, according to market sources, included, housing and banking giant HDFC, cookies and textiles major Bombay Dyeing, and telecom and energy major Reliance ADAG. Carrefour had, earlier, called off negotiatons with the Dubai base Landmark Group.
A rapidly-growing affluent middle class comprising about a third of India’s 1.1 billion population annually spends an estimated $300 billions on shopping. Three percent of this, or roughly nine to ten billion, is contributed what is called organised or modern retail. Growing at around 25 percent per annum, the figure gor organised retail is likely to more than double by 2010.
Ambani’s sights, according to The Economic Times, were set on “turbo-charging Reliance Industries into the global super-league” with a war chest of up to 30 billion dollars.
Carrefour was rocked last week when France’s richest man and controller of the LVMH luxury goods empire, Bernard Arnault, teamed up with US private equity group Colony Capital to buy nearly 10 percent of the company.
The purchase by Arnault was followed hours later by the resignation of Carrefour’s chairman Luc Vandevelde amid disagreements with the Halley family, the main shareholder.
Source : IndiaRetailBiz
Thursday, March 15, 2007
Retailers eye housing stock
Reliance, Bharti's response to Ahmedabad's space crunch.
In what could become a trend in the booming retail business, Reliance Retail, Future Group and Bharti-WalMart are among leading retail companies that are acquiring housing societies and colonies in Ahmedabad to knock down and build mega-retail stores.
Bharti-WalMart’s proposed retail venture has approached Goyal Park Row Houses, an upscale area west of river Sabarmati, at Rs 33,750 per sq yard, almost double the prevailing price of Rs 15,000 per sq yard.
There are 140 houses in the row, each with an average size of 251 sq yard. The joint venture, therefore, will be paying Rs 119 crore for 35,000 sq yard of land. The society also has a parking lot and a park.
Nearly 4 km away, Reliance Retail has acquired a 6,700-sq-yard plot, Paritosh Bungalow, bordering the commercial Chimanlal Girdhardas (CG) Road. The company is learnt to have paid Rs 37,000 a sq yard, or nearly Rs 25 crore, for the plot 8-10 months ago. The prevailing price along CG Road is Rs 60,000 per sq yard.
Latching on to the trend, real estate developer Navratna Organisers and Developers, a leading construction group in the city, has acquired Panchavati Apartments, an apartment block, along CG Road to build a mall and lease space to retail chains.
Navratna paid Rs 36.60 crore for the 6,000-sq-yard plot. “We will be constructing a 1,25,000-sq-ft mall in that space and leasing it to retailers,” said Pranav Shah, managing director, Navratna, adding that the company had applied to the Ahmedabad Municipal Corporation for a change in land use.
Navratna is also developing a 12,700-sq-yard mall named Kolonnade Centre for Big Bazaar, a part of Kishore Biyani’s Future Group. Shah declined to comment on the size of the deal and the duration of the lease.
Another developer in the city, Agrawal Builders, has acquired a housing complex spread over 28,000 sq yard, about 2 km from Goyal Park, to construct a multiplex and business centre.
Explaining the trend, Gujarat Institute of Housing and Estate Developers President Jaxay Shah said, “The reason for retail companies approaching housing colonies is the scarcity of premium plots in commercial areas and also since old housing colonies would provide a larger floor space index (FSI) for construction. The buildings in these areas have also completed their life cycle.”
For residential areas, the law requires space to be kept for utilities, which reduces the size of the built-up area. Commercial buildings, on the other hand, tend to have fewer utilities and therefore more space for construction.
Shah added that companies have to pay a premium of 15 to 20 per cent for commercial plots along the Sarkhej-Gandhinagar Highway on the edge of the city, where a significant level of commercial construction is taking place. Buying land in the heart of the city, therefore, was considered a more viable option.
Source : Business Standard
In what could become a trend in the booming retail business, Reliance Retail, Future Group and Bharti-WalMart are among leading retail companies that are acquiring housing societies and colonies in Ahmedabad to knock down and build mega-retail stores.
Bharti-WalMart’s proposed retail venture has approached Goyal Park Row Houses, an upscale area west of river Sabarmati, at Rs 33,750 per sq yard, almost double the prevailing price of Rs 15,000 per sq yard.
There are 140 houses in the row, each with an average size of 251 sq yard. The joint venture, therefore, will be paying Rs 119 crore for 35,000 sq yard of land. The society also has a parking lot and a park.
Nearly 4 km away, Reliance Retail has acquired a 6,700-sq-yard plot, Paritosh Bungalow, bordering the commercial Chimanlal Girdhardas (CG) Road. The company is learnt to have paid Rs 37,000 a sq yard, or nearly Rs 25 crore, for the plot 8-10 months ago. The prevailing price along CG Road is Rs 60,000 per sq yard.
Latching on to the trend, real estate developer Navratna Organisers and Developers, a leading construction group in the city, has acquired Panchavati Apartments, an apartment block, along CG Road to build a mall and lease space to retail chains.
Navratna paid Rs 36.60 crore for the 6,000-sq-yard plot. “We will be constructing a 1,25,000-sq-ft mall in that space and leasing it to retailers,” said Pranav Shah, managing director, Navratna, adding that the company had applied to the Ahmedabad Municipal Corporation for a change in land use.
Navratna is also developing a 12,700-sq-yard mall named Kolonnade Centre for Big Bazaar, a part of Kishore Biyani’s Future Group. Shah declined to comment on the size of the deal and the duration of the lease.
Another developer in the city, Agrawal Builders, has acquired a housing complex spread over 28,000 sq yard, about 2 km from Goyal Park, to construct a multiplex and business centre.
Explaining the trend, Gujarat Institute of Housing and Estate Developers President Jaxay Shah said, “The reason for retail companies approaching housing colonies is the scarcity of premium plots in commercial areas and also since old housing colonies would provide a larger floor space index (FSI) for construction. The buildings in these areas have also completed their life cycle.”
For residential areas, the law requires space to be kept for utilities, which reduces the size of the built-up area. Commercial buildings, on the other hand, tend to have fewer utilities and therefore more space for construction.
Shah added that companies have to pay a premium of 15 to 20 per cent for commercial plots along the Sarkhej-Gandhinagar Highway on the edge of the city, where a significant level of commercial construction is taking place. Buying land in the heart of the city, therefore, was considered a more viable option.
Source : Business Standard
Wednesday, March 14, 2007
Pantaloon Retail undergoes major rejig
Pantaloon Retail has made major changes in its organisational structure, giving more impetus on the verticals and zones. It has created five verticals — retail, incubation and innovation, products, JV and partnerships and zonal strategy.
Pantaloon Retail Director Rakesh Biyani will be retail CEO. Under this vertical, its hypermarket chain Big Bazaar, mall business Central, food retail Food Bazaar and Pantaloon chain will operate.
Rajan Malhotra, who was category head, Big Bazaar, will take over as CEO. South zone head Vishnu Prasad will be the CEO of Central. Sadashiv Nayak, head, western zone, will be the CEO of Food Bazaar. Sanjeev Aggarwal, who was president, marketing of Pantaloon Retail will be the CEO of Pantaloon chain.
In the second vertical of incubations and innovation, Damodar Mall will be the CEO. Mall was heading the foods business of Pantaloon Retail. In the third vertical, different lines of businesses including fashion, food, general merchandise and home will operate.
Kailash Bhatia will now head the fashion business of Pantaloon. Earlier, Bhatia was the CEO of ColourPlus apparel chain. Arvind Chaudhary will be the CEO of Foods business. Earlier, he was the category head, foods.
In the general merchandise, the CEO is yet to be appointed and the company will appoint the CEO once the home business becomes a mature business, Pantaloon Retail head Sanjay Jog said.
“We have businesses which are both matured and in the incubation stages. Now we have reached a stage where we can leverage on the products and businesses within the group. These factors necessitated the change in the organisation,” Jog said.
It has also effected major changes in the zonal structures. All the zones will be vertically aligned to vertical heads. “A zonal head will be responsible for our entire operations including projects, properties, supply chain, HR, IT and others in the zone,” he said.
Source : Business Standard
Pantaloon Retail Director Rakesh Biyani will be retail CEO. Under this vertical, its hypermarket chain Big Bazaar, mall business Central, food retail Food Bazaar and Pantaloon chain will operate.
Rajan Malhotra, who was category head, Big Bazaar, will take over as CEO. South zone head Vishnu Prasad will be the CEO of Central. Sadashiv Nayak, head, western zone, will be the CEO of Food Bazaar. Sanjeev Aggarwal, who was president, marketing of Pantaloon Retail will be the CEO of Pantaloon chain.
In the second vertical of incubations and innovation, Damodar Mall will be the CEO. Mall was heading the foods business of Pantaloon Retail. In the third vertical, different lines of businesses including fashion, food, general merchandise and home will operate.
Kailash Bhatia will now head the fashion business of Pantaloon. Earlier, Bhatia was the CEO of ColourPlus apparel chain. Arvind Chaudhary will be the CEO of Foods business. Earlier, he was the category head, foods.
In the general merchandise, the CEO is yet to be appointed and the company will appoint the CEO once the home business becomes a mature business, Pantaloon Retail head Sanjay Jog said.
“We have businesses which are both matured and in the incubation stages. Now we have reached a stage where we can leverage on the products and businesses within the group. These factors necessitated the change in the organisation,” Jog said.
It has also effected major changes in the zonal structures. All the zones will be vertically aligned to vertical heads. “A zonal head will be responsible for our entire operations including projects, properties, supply chain, HR, IT and others in the zone,” he said.
Source : Business Standard
Friday, March 9, 2007
Wal-Mart marries online shopping with offline delivery; offers multi channel experience to its customers
Wal-Mart, the world’s biggest retailer, rolled out first phase of its “Site to Store” inititiative on 6th March, 2007. While, the new service will allow Wal-Mart’s customers to surf, select and order merchandise of their choice at their webshopping site (walmart.com) online, they would be able to physically pick up the ordered goods from any of the Wal-Mart’s stores. There will be no shipping cost on such orders. Online store of Walmart, it may be noted, offers a much bigger selection of products than Walmart stores. This will also have the advantage of placing orders at one’s time of convenience in the comfort of one’s home.
The new service, which offers a new way to shop Wal-Mart’s products and services, therefore, will effectively marry the comfort of online shopping with the nationwide brick and marter footprint of its stores. The new service, marks an important milestone in retailing, as what Wal-Mart does today becomes the industry norm tomorrow.
“A key advantage of Wal-Mart’s online channel is the ability to offer a much larger assortment of products through our virtual shelf space, while our offline channel’s key strengths include our nationwide footprint with more than 3,300 retail store locations and a world-class logistics network capable of efficiently delivering online products to customers at our stores. Site to Store leverages each of these strengths to provide customers with a robust multi-channel shopping experience,” said Mike Smith, Walmart.com’s director of store integration, on the company’s new initiative.
“Our extensive testing of the Site to Store service allowed us to create a multi-channel shopping experience that brings additional assortment, convenience and value to our customers,” added Raul Vazquez, Walmart.com’s CEO. “We found that nearly two-thirds of the customers who used the trial service also shop in Wal-Mart stores on a weekly basis. Site to Store not only offers these customers access to thousands of additional online products, but also gives them the added convenience of picking up those items at the store during their weekly shopping trips without paying for shipping.”
While, the new service will initially be available through 750 stores across the U.S., over the next few months, Wal-Mart will exend the service to all the 3,300 stores throghout the U.S.
The only negative about the service is delivery time. It could take as much as 7 to 10 business days (or 15 calender days) to deliver the merchandise after processing of the order. Although, customer will be notified about arrival of the ordered material through e-mail, the actual delivery time of up to a fortnight could prove to be a dampner
Source : IndiaRetailBiz
The new service, which offers a new way to shop Wal-Mart’s products and services, therefore, will effectively marry the comfort of online shopping with the nationwide brick and marter footprint of its stores. The new service, marks an important milestone in retailing, as what Wal-Mart does today becomes the industry norm tomorrow.
“A key advantage of Wal-Mart’s online channel is the ability to offer a much larger assortment of products through our virtual shelf space, while our offline channel’s key strengths include our nationwide footprint with more than 3,300 retail store locations and a world-class logistics network capable of efficiently delivering online products to customers at our stores. Site to Store leverages each of these strengths to provide customers with a robust multi-channel shopping experience,” said Mike Smith, Walmart.com’s director of store integration, on the company’s new initiative.
“Our extensive testing of the Site to Store service allowed us to create a multi-channel shopping experience that brings additional assortment, convenience and value to our customers,” added Raul Vazquez, Walmart.com’s CEO. “We found that nearly two-thirds of the customers who used the trial service also shop in Wal-Mart stores on a weekly basis. Site to Store not only offers these customers access to thousands of additional online products, but also gives them the added convenience of picking up those items at the store during their weekly shopping trips without paying for shipping.”
While, the new service will initially be available through 750 stores across the U.S., over the next few months, Wal-Mart will exend the service to all the 3,300 stores throghout the U.S.
The only negative about the service is delivery time. It could take as much as 7 to 10 business days (or 15 calender days) to deliver the merchandise after processing of the order. Although, customer will be notified about arrival of the ordered material through e-mail, the actual delivery time of up to a fortnight could prove to be a dampner
Source : IndiaRetailBiz
Thursday, March 8, 2007
Carrefour to partner with HDFC?
Notwithstanding the uncertainty gripping the retail sector, subsequent to appointment of ICRIER to study the impact of big retail on traditional ‘Kirana‘ (mom & pop) stores, here comes the news of a possible tie-up between the world’s, France based, second biggest retailer Carrefour (2006 global sales: Euro 87.422 billion, of which Euro 41.675 billion from France) and the country’s housing finance and banking behemoth HDFC, for the former’s retail foray into India, according to a news report published in the Economic Times.
This is quite surprising as Carrefour was considered to be close to signing a deal with Nusli Wadia controlled Bombay Dyeing, after it had earlier called off its talks with Landmark, the Dubai based retailing group. Carrefour was also said to be in talks with the Aditya Birla and Anil Ambani Groups, in this regard.
Since, both Carrefour, as per present retail policy guidelines on FDI in multi brand retail, and HDFC, which is working within the framework of RBI regulations, can not directly enter into the retail business, they may go for a three way joint venture. A seperate entity (say, a PE fund) floated by HDFC could, according to the report, tie up with a third entity which would have Carrefour’s franchisee licence to do retail business in India. Incidentally, multi brand, foreign retailers, under the present policy guidelines, are allowed to offer franchisee licencing rights to a domestic player.
While, HDFC’s strong retail banking, insurance, and housing finance network would help the joint venture reach the potential customers, it will also be able to leverage the same to cross promote each others products. Moreover, HDFC’s decades old experience in real estate as well as the huge landbank owned by HDFC’s realty fund will be of immense interest to Carrefour, since realty constitutes a critical cost component in hypermarket format retail business which is Carrefour’s forte.
Although, Carrefour operates in hypermarket, supermarket, hard discount and convenient store formats with 12,547 stores across the world, majority of its revenues (60%) comes from its hypermarket chain comprising 1,040 stores. The convenient stores formats on the other hand contributes ony 17% of the total.
It is also believed in knowledgeable circles that while Carrefour may be satisfied with providing manpower to spearhead the front end operations of the retail business in India, it may look at owning 100 percent of the cash & carry business, for which there are no policy restrictions. While multi brand foreign players like Metro AG (Germany), Shoprite (South Africa) and Marks & Spencers (UK) are already active in the cash & carry business in India, Wal-Mart, the world’s biggest US based retailer, has applied for investing in the cash & carry business.
Among major local retailers, currently Reliance and ITC are active in cah & carry operations through their ‘Rangers Farm’ and ‘Chaupal Fresh’ formats respectively, throgh which they supply of ‘farm fresh’ products to small traders and push cart vendors in bulk.
Source : IndiaRetailBiz
This is quite surprising as Carrefour was considered to be close to signing a deal with Nusli Wadia controlled Bombay Dyeing, after it had earlier called off its talks with Landmark, the Dubai based retailing group. Carrefour was also said to be in talks with the Aditya Birla and Anil Ambani Groups, in this regard.
Since, both Carrefour, as per present retail policy guidelines on FDI in multi brand retail, and HDFC, which is working within the framework of RBI regulations, can not directly enter into the retail business, they may go for a three way joint venture. A seperate entity (say, a PE fund) floated by HDFC could, according to the report, tie up with a third entity which would have Carrefour’s franchisee licence to do retail business in India. Incidentally, multi brand, foreign retailers, under the present policy guidelines, are allowed to offer franchisee licencing rights to a domestic player.
While, HDFC’s strong retail banking, insurance, and housing finance network would help the joint venture reach the potential customers, it will also be able to leverage the same to cross promote each others products. Moreover, HDFC’s decades old experience in real estate as well as the huge landbank owned by HDFC’s realty fund will be of immense interest to Carrefour, since realty constitutes a critical cost component in hypermarket format retail business which is Carrefour’s forte.
Although, Carrefour operates in hypermarket, supermarket, hard discount and convenient store formats with 12,547 stores across the world, majority of its revenues (60%) comes from its hypermarket chain comprising 1,040 stores. The convenient stores formats on the other hand contributes ony 17% of the total.
It is also believed in knowledgeable circles that while Carrefour may be satisfied with providing manpower to spearhead the front end operations of the retail business in India, it may look at owning 100 percent of the cash & carry business, for which there are no policy restrictions. While multi brand foreign players like Metro AG (Germany), Shoprite (South Africa) and Marks & Spencers (UK) are already active in the cash & carry business in India, Wal-Mart, the world’s biggest US based retailer, has applied for investing in the cash & carry business.
Among major local retailers, currently Reliance and ITC are active in cah & carry operations through their ‘Rangers Farm’ and ‘Chaupal Fresh’ formats respectively, throgh which they supply of ‘farm fresh’ products to small traders and push cart vendors in bulk.
Source : IndiaRetailBiz
Intel moves into RFID space; launches all in one RFID reader solution
Intel, the $35 billion, computer chip behemoth, on Tuesday, aggressively moved into RFID space, with the launch of R1000, an all in one, UHF RFID transreceiver. The new chip integrates a lot of RFID on a single unit, which has the potential of slashing RFID reader prices by half, by December, 2007. Typical EPC UHF readers, which currently cost around $1,600 may soon be available for as low as $500, say experts. This will accelarate pace of RFID development and adaption.
Despite, initial hiccups about the RFID technology, Wal-Mart, the world’d biggest retailer, has commited itself to the wide spread use of RFID tags. RFID tag technology, which has received a lot of flak on account of security concerns, has potential of slashing inventory costs and revolutionalising logistic operations.
Beside, cramming up to 90 percent of discrete components in a typical RFID radio, the new chip also reduces power consumption from today’s 20 -40 watts to less than two watts. The small size of R1000—an 8 mm, 56-pin, QFN package— also makes it attractive for various form factors, including mobile phones.
The new development, an outcome of Intel’s three years’ $20 million old effort in RFID space. Intel’s initiatives in RFID arena will give much needed boost to the fledging technology with has lots of promise for the retail industry.
Source : IndiaRetailBiz
Despite, initial hiccups about the RFID technology, Wal-Mart, the world’d biggest retailer, has commited itself to the wide spread use of RFID tags. RFID tag technology, which has received a lot of flak on account of security concerns, has potential of slashing inventory costs and revolutionalising logistic operations.
Beside, cramming up to 90 percent of discrete components in a typical RFID radio, the new chip also reduces power consumption from today’s 20 -40 watts to less than two watts. The small size of R1000—an 8 mm, 56-pin, QFN package— also makes it attractive for various form factors, including mobile phones.
The new development, an outcome of Intel’s three years’ $20 million old effort in RFID space. Intel’s initiatives in RFID arena will give much needed boost to the fledging technology with has lots of promise for the retail industry.
Source : IndiaRetailBiz
Monday, February 5, 2007
Tatas form JV with Irish farm major ‘Total’ to attack the back-end of the value chain
The Tata Group, which for the past two days, has been in the limelight for its ‘Corus’ buy out, has entered into an an agreement through its chemical arm Tata Chemicals Ltd. to enter into a 50:50 JV with the US$ 205 billion, Ireland-based, Europe’s largest fresh farm produce company, Total Produce, reports DNA Daily.
“We will directly attack the back-end of the value chain.” “People will come to us to procure,” says Homi Khusrokhan, Managing Director, Tata Chemicals Ltd. “We will provide tremendous improvement in value by modernising the cold chain, properly grading and warehousing and carting the produce from farms to the shopping centres,” adds Khusrokhan. Carl McCann, chairman, Total Produce, is confident of India’s great potential for a large and successful fresh foods business.
While, this is a good news for consumers, farm food producers, and retailers, this move may over a period of time almost eliminate the ubiquitous middleman, who for centuries has dominated the agri-produce trade, as the joint venture proposes to procure fresh fruits and vegetables and sell them directly to the wholesalers, thereby, completely avoiding the middlemen.
It is no surprise that all big business houses interested in organised retailing are focusing on the agri-produce sector. Not only this sector accounts for more than 30% of all retail business but also offers greatest opportunities of bringing supply chain efficiency benefits to the consumer. It is believed that as much as 35 to 40% of all farm produce, particularly, horticulture produce, is wasted before reaching the consumer due to supply chain inefficiencies.
While, Reliance is going big on its own agri-farming plans, telecom major Bharti already has an equal joint venture for the same with the US-based Rothschilds. Tobacco, hospitality and foods major ITC , though not directly involved with farming except with tobacco, has for several years, been developing linkage with the farm sector through its ‘Chaupal’ initiative. Similarly, foreign cash & carry players like Metro AG are involved in developing procurement centers, building storage and cold chain facilities to cut wastages and eliminate middlemen.
There could be a synergy for Tata Chemicals, the producer of fertilisers, soda ash and other chemicals, through an extensive network of farmers ‘Tata Kisan Sansars’ set up by it to strengthen its fertiliser and other farm inputs distribution chain.
The JV will begin its operations by setting up two hubs, in the north and the east. In two years these will be ramped up to 40.
The Tata-Total Produce JV may at some stage consider entering into contract farming as well.
Source : IndiaRetailBiz
“We will directly attack the back-end of the value chain.” “People will come to us to procure,” says Homi Khusrokhan, Managing Director, Tata Chemicals Ltd. “We will provide tremendous improvement in value by modernising the cold chain, properly grading and warehousing and carting the produce from farms to the shopping centres,” adds Khusrokhan. Carl McCann, chairman, Total Produce, is confident of India’s great potential for a large and successful fresh foods business.
While, this is a good news for consumers, farm food producers, and retailers, this move may over a period of time almost eliminate the ubiquitous middleman, who for centuries has dominated the agri-produce trade, as the joint venture proposes to procure fresh fruits and vegetables and sell them directly to the wholesalers, thereby, completely avoiding the middlemen.
It is no surprise that all big business houses interested in organised retailing are focusing on the agri-produce sector. Not only this sector accounts for more than 30% of all retail business but also offers greatest opportunities of bringing supply chain efficiency benefits to the consumer. It is believed that as much as 35 to 40% of all farm produce, particularly, horticulture produce, is wasted before reaching the consumer due to supply chain inefficiencies.
While, Reliance is going big on its own agri-farming plans, telecom major Bharti already has an equal joint venture for the same with the US-based Rothschilds. Tobacco, hospitality and foods major ITC , though not directly involved with farming except with tobacco, has for several years, been developing linkage with the farm sector through its ‘Chaupal’ initiative. Similarly, foreign cash & carry players like Metro AG are involved in developing procurement centers, building storage and cold chain facilities to cut wastages and eliminate middlemen.
There could be a synergy for Tata Chemicals, the producer of fertilisers, soda ash and other chemicals, through an extensive network of farmers ‘Tata Kisan Sansars’ set up by it to strengthen its fertiliser and other farm inputs distribution chain.
The JV will begin its operations by setting up two hubs, in the north and the east. In two years these will be ramped up to 40.
The Tata-Total Produce JV may at some stage consider entering into contract farming as well.
Source : IndiaRetailBiz
Thursday, February 1, 2007
Reliance Retail opens 9 ‘Fresh’ stores in NCR; targets 1 trillion in revenues
Reliance Retail juggernaut moved into National Capital region (NCR) today with the opening of nine ‘Fresh’ stores in Noida, Greater Noida, Gurgaon, Ghaziabad and Faridabad. NCR is one of the economically fastest growing geographical regions of the country. Within the next three months, Reliance wants to take the tally of these ‘Fresh’ stores to 100 in the Delhi- NCR region. Reliance is believed to have invested about Rs. 1,100 crore in this region.
Having launched the first cluster of its ‘Fresh’ stores on 3rd November, 2006, today’s launch takes the pan-India tally of Reliance ’Fresh’ stores to 49, spread across Andhra Pradesh (21), Jaipur (7), Chennai (12), and NCR (9). Three of these stores in Andhra and 12 stores in Chennai were launched during the previous week. Thus, 24 ‘Fresh’ stores have been launched within a short span of one week only.
Reliance expects to launch 1,000 stores before the year end. Occupying an aggregate retail
space of about 1,10,00 square feet, these neighbourhood convenience format stores occupy an average retail space of over 2,200 square feet and offer quality horticulture, grocery and dairy products at competitive prices. Apart from catering to house hold customers, Reliance also makes supplies of these items at wholesale prices to push-cart vendors and small kirana merchants through its wholesale format “Rangers Farm.”
Having already bought 74 nos. land plots for about Rs. 2,000 crore, Reliance has so far invested about Rs. 3,000 crore or about 10% of the first phase planned outlay of Rs. 25, 000 to 30,000 crore on its retail initiative.
According to Reliance Retail, President and CEO (Operations and Strategy), Raghu Pillai, Reliance would open bigger format stores like hypermarkets, supermarkets and speciality stores during the April-June quarter.
Reliance Retail, he said, would earn Rs 1 trillion (Rs. 1 lakh crore) in revenues in the next five years. This excludes additional revenues from the “Rangers Farm” wholesale business operations. Reliance’s experiment with this wholesale format in Hyderabad has been working fine, added Pillai.
Source : Indiaretailbiz
Having launched the first cluster of its ‘Fresh’ stores on 3rd November, 2006, today’s launch takes the pan-India tally of Reliance ’Fresh’ stores to 49, spread across Andhra Pradesh (21), Jaipur (7), Chennai (12), and NCR (9). Three of these stores in Andhra and 12 stores in Chennai were launched during the previous week. Thus, 24 ‘Fresh’ stores have been launched within a short span of one week only.
Reliance expects to launch 1,000 stores before the year end. Occupying an aggregate retail
space of about 1,10,00 square feet, these neighbourhood convenience format stores occupy an average retail space of over 2,200 square feet and offer quality horticulture, grocery and dairy products at competitive prices. Apart from catering to house hold customers, Reliance also makes supplies of these items at wholesale prices to push-cart vendors and small kirana merchants through its wholesale format “Rangers Farm.”
Having already bought 74 nos. land plots for about Rs. 2,000 crore, Reliance has so far invested about Rs. 3,000 crore or about 10% of the first phase planned outlay of Rs. 25, 000 to 30,000 crore on its retail initiative.
According to Reliance Retail, President and CEO (Operations and Strategy), Raghu Pillai, Reliance would open bigger format stores like hypermarkets, supermarkets and speciality stores during the April-June quarter.
Reliance Retail, he said, would earn Rs 1 trillion (Rs. 1 lakh crore) in revenues in the next five years. This excludes additional revenues from the “Rangers Farm” wholesale business operations. Reliance’s experiment with this wholesale format in Hyderabad has been working fine, added Pillai.
Source : Indiaretailbiz
Monday, January 22, 2007
Pantaloon joins hands with Staples to become leading office products’ supplier
Pantaloon Retail (India) has announced signing of an agreement to set up a JV between the US-based, world`s largest office products company, Staples and Future Office- its 100% subsidiary business unit.
The Boston -based USD 16.1 billion, Staples, which invented the office superstore concept in 1986, is the world’s largest office products company, has presence in 21 countries through a network of 1,800 stores and 69,000 employees. Staples’ range of office products include supplies, technology, furniture, and business services.
While, the JV agreement will allow Staples to enter the office products’ market in India, it will allow Pantaloon Retail to benefit from the industry expertise and sourcing network of Staples. In a related development, Future Office had recently announced acquisition of the operations and management of Officedge, an online B2B office products company providing contract delivery services to corporate customers across the country.
“The office products business in India presents tremendous opportunities for growth. Through our partnership with Staples, the industry leader, we can become the office products provider of choice for businesses throughout India,” said Pantaloon Retail MD and CEO Kishore Biyani, commenting on the deal.
Staples Future Office would serve businesses of all sizes through delivery as well as cash-and-carry locations, offering a wide range of office products from core office supplies, printers as well as computers. Future Office would expand its delivery operations in all major cities of the country, including Delhi, Mumbai, Bangalore, Hyderabad, Chennai, Kolkata, Pune, Ahmedabad, Indore and Chandigarh.
The deal is a part of the group’s strategy to become the leading provider of office products in India.
Source : IndiaRetailBiz
The Boston -based USD 16.1 billion, Staples, which invented the office superstore concept in 1986, is the world’s largest office products company, has presence in 21 countries through a network of 1,800 stores and 69,000 employees. Staples’ range of office products include supplies, technology, furniture, and business services.
While, the JV agreement will allow Staples to enter the office products’ market in India, it will allow Pantaloon Retail to benefit from the industry expertise and sourcing network of Staples. In a related development, Future Office had recently announced acquisition of the operations and management of Officedge, an online B2B office products company providing contract delivery services to corporate customers across the country.
“The office products business in India presents tremendous opportunities for growth. Through our partnership with Staples, the industry leader, we can become the office products provider of choice for businesses throughout India,” said Pantaloon Retail MD and CEO Kishore Biyani, commenting on the deal.
Staples Future Office would serve businesses of all sizes through delivery as well as cash-and-carry locations, offering a wide range of office products from core office supplies, printers as well as computers. Future Office would expand its delivery operations in all major cities of the country, including Delhi, Mumbai, Bangalore, Hyderabad, Chennai, Kolkata, Pune, Ahmedabad, Indore and Chandigarh.
The deal is a part of the group’s strategy to become the leading provider of office products in India.
Source : IndiaRetailBiz
Friday, January 19, 2007
Pantaloon does India proud
Pantaloon group has done proud to the Indian retail industry. Kishore Biyani, head of India's largest retail group Pantaloon was honoured with the International Retailer of the Year Award by the US National Retail Federation at its annual convention.
American retail industry registers a whooping 4.5 trillion dollars of annual sales. It’s for the first time that an Indian retail group has made to the top.
“I think what we have to learn from the US is how consumption can drive our economic growth,” said Pantaloon Retail MD Kishore Biyani adding that the US market is all about thinking big in terms of technology and consumerism.
Though Biyani declined to comment on reports of a tie-up with American coffee chain Starbucks, but said that he expects an Indian store to open by June this year. He ruled out a partnership with fast-food chain Burger King.
“Our job is to keep on meeting people. But I don't think so there's anything happening that side,” said Biyani.
The latest acquisition by Pantaloon Retail was of an online office products company OfficeEdge.
“Pantaloon is focused on giving the customer exactly what they want. They will sell in whatever format is needed, from food to electronics to high fashion apparel. And they really are a good example to all the other retailers who come here to learn,” said Karen Knobloch Senior VP, National Retail Federation.
Source : CNN - IBN
American retail industry registers a whooping 4.5 trillion dollars of annual sales. It’s for the first time that an Indian retail group has made to the top.
“I think what we have to learn from the US is how consumption can drive our economic growth,” said Pantaloon Retail MD Kishore Biyani adding that the US market is all about thinking big in terms of technology and consumerism.
Though Biyani declined to comment on reports of a tie-up with American coffee chain Starbucks, but said that he expects an Indian store to open by June this year. He ruled out a partnership with fast-food chain Burger King.
“Our job is to keep on meeting people. But I don't think so there's anything happening that side,” said Biyani.
The latest acquisition by Pantaloon Retail was of an online office products company OfficeEdge.
“Pantaloon is focused on giving the customer exactly what they want. They will sell in whatever format is needed, from food to electronics to high fashion apparel. And they really are a good example to all the other retailers who come here to learn,” said Karen Knobloch Senior VP, National Retail Federation.
Source : CNN - IBN
Wednesday, January 17, 2007
Will Wal-Mart Succeed in India? Perhaps.....But It Won't Be Easy
He doesn’t realise it, but I know everything about him,” says Indian retail magnate Kishore Biyani about a young man sitting with him in a Mumbai hotel meeting room in early December. “I see that he is wearing ColorPlus trousers. I know his waist size ... I know everything about him.
We are a company of observers, and everybody is trained to observe customers,” says Biyani, who is CEO of the Future Group and managing director of its flagship Pantaloon retail chain that last year had revenues of Rs 2,018 crore ($450 million) and expects to become a $1 billion company by mid 2007.
Biyani often spends Sundays hanging about unobtrusively and watching shoppers at his company’s 200 clothing stores in 32 Indian cities. The homegrown retailer’s obsession for observing the average Indian consumer also at public places like temples and movie halls underscores what could be Wal-Mart’s biggest challenge as it sets up shop in India in partnership with Bharti, a leading telecom services provider.
“India is a very diverse country — we have 6,000 castes and sub-castes in 28 states, and every community has its own tastes; every state has its own nuances,” says Biyani. “To manage the diversity and the heterogeneity will be one of the biggest challenges for anybody who comes to this market.”
Enigmatic India and its challenges in transportation, warehousing and distribution infrastructure haven’t deterred the world’s biggest organised retailers that have lobbied — unsuccessfully so far — with the Indian government to permit foreign direct investment in the retail industry.
Wal-Mart battled stiff opposition from Indian retail chains and found an open backdoor, forming a joint venture with Bharti to supply back-end supply chain technology and related processes; Bharti will handle the front-end of owning and running the stores, which are likely to be co-branded. The terms of the deal haven’t been disclosed, but media reports put Wal-Mart’s proposed investment in the venture at $100 million initially, rising to $450 million in a few years.
Cash and Carry
Waiting in the wings and actively negotiating with several Indian companies as potential partners are Tesco of the UK and Carrefour of France. Some, like Germany’s Metro and South Africa’s Shoprite, have already entered India with a cash-and-carry business that supplies only retailers, restaurants and business houses where the Indian government permits FDI.
Wal-Mart is also entering the cash-and-carry business, with Bharti supplying Wal-Mart’s stores in India. Moreover, many large Indian companies — including Reliance Industries, the Aditya Birla group, and other regional firms — have recently announced ambitious plans in retailing.
India’s retail industry is one of its fastest growing (with a 5% compounded annual growth rate) and has $320 billion in annual revenues this year, according to a report titled, “Retail in India: Getting Organised to Drive Growth,” released recently by consulting firm AT Kearney and the Confederation of Indian Industry (CII). Never mind that Wal-Mart’s $315.6 billion in global sales last year is about the size of the entire Indian retail industry. “
Rising incomes and increased consumerism in urban areas along with an upswing in rural consumption will further fuel this growth to around 7%-8%,” the authors say, pegging India’s consumer class with rising disposable income at 400 million people.
But now that Wal-Mart plans to enter India, attention is focused on the retail giant’s India strategy. Wharton professor of marketing Jagmohan Raju says one big challenge Wal-Mart will face in India has to do with how it is perceived by consumers. “In the US, when you think of a big warehouse store, you think of lower prices, and small, boutique stores have higher prices,” he says.
“In India, the perception is exactly the opposite — the bigger store has higher prices; smaller shops can offer lower prices because their overheads are lower. How will Wal-Mart’s positioning of lower prices carry forward in a mindset where customer perceptions of big versus small are so different?”
Consumer Behaviour
David Bell, Wharton professor of marketing, says Wal-Mart’s business model is founded on “everyday low prices for consumers and squeezing costs out of the system, and customer service with friendly people who greet you.” But those, he argues, do not guarantee shopper traffic, as consumer behaviour is dramatically different across global markets.
Coca-Cola might adjust to people’s preferences in different markets by making its drink sweeter or more effervescent. Or McDonalds could allow people to consume alcohol at its restaurants in France and make hamburgers with rice patties in Japan.
“But there’s considerably more variation in the way people shop for products than their underlying preference for the products themselves,” Bell says. “This is what makes it more difficult — not just for Wal-Mart in particular, but for any retailer — to be truly global.”
Changes in consumer preferences that Wal-Mart will encounter have to do with simple things like how often people like to go to a store or what motivates them to choose one store over another. “In local markets, you have dynamics of retail competition, variations in the frequency with which people like to shop, variation in the kind of products that drive people to the store, variation in the importance of the retail assortment.”
India’s retail industry is one of its fastest growing (with a 5% compounded annual growth rate) and has $320 billion in annual revenues this year, according to a report titled, “Retail in India: Getting Organised to Drive Growth,” released recently by consulting firm AT Kearney and the Confederation of Indian Industry (CII). Never mind that Wal-Mart’s $315.6 billion in global sales last year is about the size of the entire Indian retail industry. “
Rising incomes and increased consumerism in urban areas along with an upswing in rural consumption will further fuel this growth to around 7%-8%,” the authors say, pegging India’s consumer class with rising disposable income at 400 million people.
But now that Wal-Mart plans to enter India, attention is focused on the retail giant’s India strategy. Wharton professor of marketing Jagmohan Raju says one big challenge Wal-Mart will face in India has to do with how it is perceived by consumers. “In the US, when you think of a big warehouse store, you think of lower prices, and small, boutique stores have higher prices,” he says.
“In India, the perception is exactly the opposite — the bigger store has higher prices; smaller shops can offer lower prices because their overheads are lower. How will Wal-Mart’s positioning of lower prices carry forward in a mindset where customer perceptions of big versus small are so different?”
Consumer Behaviour
David Bell, Wharton professor of marketing, says Wal-Mart’s business model is founded on “everyday low prices for consumers and squeezing costs out of the system, and customer service with friendly people who greet you.” But those, he argues, do not guarantee shopper traffic, as consumer behaviour is dramatically different across global markets.
Coca-Cola might adjust to people’s preferences in different markets by making its drink sweeter or more effervescent. Or McDonalds could allow people to consume alcohol at its restaurants in France and make hamburgers with rice patties in Japan.
“But there’s considerably more variation in the way people shop for products than their underlying preference for the products themselves,” Bell says. “This is what makes it more difficult — not just for Wal-Mart in particular, but for any retailer — to be truly global.”
Changes in consumer preferences that Wal-Mart will encounter have to do with simple things like how often people like to go to a store or what motivates them to choose one store over another. “In local markets, you have dynamics of retail competition, variations in the frequency with which people like to shop, variation in the kind of products that drive people to the store, variation in the importance of the retail assortment.”
More blending might be on the way, especially in cultural nuances. Wal-Mart’s recent debacles in Germany and Korea, where it sold out to local retail players and exited, could be wake-up calls. In Germany, Wal-Mart’s low price strategy failed to win it a distinctive market position simply because two other well-entrenched retailers — Aldi and Lidl —have been following that strategy for years, says Bell.
He notes that Wal-Mart was also faulted for relying too heavily on a US-driven view of how Germans shop, made worse by populating its top management in the country with US expatriate executives, many of whom couldn’t speak German. Thirdly, the Wal-Mart strategy of a price-service combination with friendly greeters and so forth backfired. “Culturally, greetings and friendliness in stores are viewed by the Germans with a lot of suspicion,” says Bell.
Rites of Passage
Wal-Mart also had some lessons to learn in South America a couple of years ago, when it discovered that the design and layout of its stores did not match shopper preferences. “In South America, shopping for some families is an entertainment-driven event,” says Bell.
“You have the whole family or the extended family shopping together, so you need much wider aisles.” That, he says, is unlike what Wal-Mart is used to in the US, where a single person typically shops for the entire household. “It seems like a fundamental thing, but you could never predict that coming from the outside unless you have a local partner.”
Chastened by these experiences, Wal-Mart may not face the same problems in India. Bharti, its local partner, is a leader in the mobile phone services industry and must have deep insights into Indian consumer behaviour patterns. Even so, there could be surprises, as Biyani’s Big Bazaar store chain learned the hard way a couple of years ago.
The chain had bought 100,000 white cotton shirts, expecting good demand. But sales were slow, and promotional campaigns fell flat. It soon figured out why: The demographic profile of Big Bazaar’s middle-class shoppers meant people who commute in crowded trains and buses and not in air-conditioned cars.
Wal-Mart’s legendary success at procuring its supplies at extremely competitive prices has no doubt pleased its customers to whom those savings are passed on, but critics have accused it of compelling its suppliers to survive on very thin margins. Here, Biyani says he works differently.
“We are not like Wal-Mart; we believe in a situation of win, win and win,” he says. “The supplier should win, we should win and the customer should win. In Wal-Mart’s strategy, and maybe that of other international retailers, the company wins and the customer wins.
Somebody has to lose for those two to win.” Future Capital Holdings, a Biyani-run private equity firm, last month raised $830 million that it has begun investing as vendor financing in manufacturers of foods, garments and fashion jewellery, among others. Products of these companies get captive shelf space at the Future Group stores.
Raju says existing national brands will need to plan their response to Wal-Mart very carefully to ensure that while they get to supply the retail giant, they also don’t alienate their smaller store buyers. “They are used to it in the U.S.,” he says.
“Right now, Hindustan Lever deals with a lot of small stores. Tomorrow they will be dealing with large buyers like a Wal-Mart or Reliance Retail, so the relative power structure of buyers and who is supplying will change. This is a challenge they have faced in developed markets where they deal with the Tescos and Safeways.” He expects the national brands in India, such as HLL and P&G, to figure out ways to help small stores with specially tailored services “to ensure they also thrive and do well.”
Raju sees bigger benefits flowing to other players in the retail supply chain, such as farmers. “Companies like Wal-Mart coming to India, I hope, will help farmers because there will be fewer players in the chain,” he says. India’s retail promise must seem tempting, but that outlook “is tempered by the fact that the country is grappling with severe infrastructure and policy issues,” says the CII in the report it produced with AT Kearney.
“Cold chains [distribution chains for perishable items], warehousing and logistics infrastructure will fast become unmanageable challenges for India if proactive action is not taken.” It points to policy regimes that vary across states, “inadequate quality control and the lack of a skilled workforce.”
Biyani doesn’t buy all that, arguing that “India is a nation of dukaandars (shopkeepers) and that enough retail talent is available. He also dismisses concerns about distribution and logistics infrastructure with a simple, rhetorical question: “Have you [in the recent past] faced a shortage of anything you wanted to buy?” Biyani scoffs at Wal-Mart’s logistics and supply-chain strengths. “Where will they run their Volvo trucks here?” he asks, adding in a lighter vein, “They will probably have to have bullock carts and handcarts in their supply chain.”
Raju points out that Wal-Mart’s efficiencies stem from the scale of its purchases, which determines what prices it pays suppliers. “Suppliers are willing to work with them because if they don’t work with them they lose a big part of the market,” he says.
Coping with Oversupply
Organised retail is just beginning in India, but plans call for some 600 malls to be built over the next decade across the country. The nascent industry in India could learn valuable lessons about what went wrong with retailers in the U.S., leading to bankruptcies, closures and sell-offs at companies like K-Mart, Caldor and Bradlees.
“What went wrong [in the U.S. market] is oversupply,” says Martyn Chase, chairman of Donaldson, a London-based company that manages 350 retail malls across Europe. “One mall gets built, and somebody builds a new and bigger mall nearby, so the previous one is killed.” He doesn’t see an immediate threat of that happening in India, but says “you will get casualties in 10 years when you have too many of them.”
Chase says the way to prevent hemorrhaging and consolidation in the industry is to bring regulatory oversight. “You need proper regulations governing mall locations, mall size and the like,” he says. “Before you are allowed to build a mall in the UK, you have to demonstrate there is a need for it, by proving that there is enough demand from people who live in that area to make the mall work.”
Biyani argues that the underlying dynamics of standalone retail are not attractive. (Pantaloon’s urban locations put it in a different market segment from that of the big box centres Wal-Mart might put up on city outskirts.) “In India, no retailer has made big money so far,” says Biyani. (Pantaloon’s profits last year were 3% of revenues.)
“The money is in the peripheral activities; it’s never in the retail itself. It’s the power of retail that gets you the money; it’s never the transaction that gets you the money; it’s never the transaction that gets you the money.”
Reproduced with permission from Knowledge @ Wharton © 2006 The Trustees of the University of Pennsylvania. All rights reserved.
Source : Economic Times
We are a company of observers, and everybody is trained to observe customers,” says Biyani, who is CEO of the Future Group and managing director of its flagship Pantaloon retail chain that last year had revenues of Rs 2,018 crore ($450 million) and expects to become a $1 billion company by mid 2007.
Biyani often spends Sundays hanging about unobtrusively and watching shoppers at his company’s 200 clothing stores in 32 Indian cities. The homegrown retailer’s obsession for observing the average Indian consumer also at public places like temples and movie halls underscores what could be Wal-Mart’s biggest challenge as it sets up shop in India in partnership with Bharti, a leading telecom services provider.
“India is a very diverse country — we have 6,000 castes and sub-castes in 28 states, and every community has its own tastes; every state has its own nuances,” says Biyani. “To manage the diversity and the heterogeneity will be one of the biggest challenges for anybody who comes to this market.”
Enigmatic India and its challenges in transportation, warehousing and distribution infrastructure haven’t deterred the world’s biggest organised retailers that have lobbied — unsuccessfully so far — with the Indian government to permit foreign direct investment in the retail industry.
Wal-Mart battled stiff opposition from Indian retail chains and found an open backdoor, forming a joint venture with Bharti to supply back-end supply chain technology and related processes; Bharti will handle the front-end of owning and running the stores, which are likely to be co-branded. The terms of the deal haven’t been disclosed, but media reports put Wal-Mart’s proposed investment in the venture at $100 million initially, rising to $450 million in a few years.
Cash and Carry
Waiting in the wings and actively negotiating with several Indian companies as potential partners are Tesco of the UK and Carrefour of France. Some, like Germany’s Metro and South Africa’s Shoprite, have already entered India with a cash-and-carry business that supplies only retailers, restaurants and business houses where the Indian government permits FDI.
Wal-Mart is also entering the cash-and-carry business, with Bharti supplying Wal-Mart’s stores in India. Moreover, many large Indian companies — including Reliance Industries, the Aditya Birla group, and other regional firms — have recently announced ambitious plans in retailing.
India’s retail industry is one of its fastest growing (with a 5% compounded annual growth rate) and has $320 billion in annual revenues this year, according to a report titled, “Retail in India: Getting Organised to Drive Growth,” released recently by consulting firm AT Kearney and the Confederation of Indian Industry (CII). Never mind that Wal-Mart’s $315.6 billion in global sales last year is about the size of the entire Indian retail industry. “
Rising incomes and increased consumerism in urban areas along with an upswing in rural consumption will further fuel this growth to around 7%-8%,” the authors say, pegging India’s consumer class with rising disposable income at 400 million people.
But now that Wal-Mart plans to enter India, attention is focused on the retail giant’s India strategy. Wharton professor of marketing Jagmohan Raju says one big challenge Wal-Mart will face in India has to do with how it is perceived by consumers. “In the US, when you think of a big warehouse store, you think of lower prices, and small, boutique stores have higher prices,” he says.
“In India, the perception is exactly the opposite — the bigger store has higher prices; smaller shops can offer lower prices because their overheads are lower. How will Wal-Mart’s positioning of lower prices carry forward in a mindset where customer perceptions of big versus small are so different?”
Consumer Behaviour
David Bell, Wharton professor of marketing, says Wal-Mart’s business model is founded on “everyday low prices for consumers and squeezing costs out of the system, and customer service with friendly people who greet you.” But those, he argues, do not guarantee shopper traffic, as consumer behaviour is dramatically different across global markets.
Coca-Cola might adjust to people’s preferences in different markets by making its drink sweeter or more effervescent. Or McDonalds could allow people to consume alcohol at its restaurants in France and make hamburgers with rice patties in Japan.
“But there’s considerably more variation in the way people shop for products than their underlying preference for the products themselves,” Bell says. “This is what makes it more difficult — not just for Wal-Mart in particular, but for any retailer — to be truly global.”
Changes in consumer preferences that Wal-Mart will encounter have to do with simple things like how often people like to go to a store or what motivates them to choose one store over another. “In local markets, you have dynamics of retail competition, variations in the frequency with which people like to shop, variation in the kind of products that drive people to the store, variation in the importance of the retail assortment.”
India’s retail industry is one of its fastest growing (with a 5% compounded annual growth rate) and has $320 billion in annual revenues this year, according to a report titled, “Retail in India: Getting Organised to Drive Growth,” released recently by consulting firm AT Kearney and the Confederation of Indian Industry (CII). Never mind that Wal-Mart’s $315.6 billion in global sales last year is about the size of the entire Indian retail industry. “
Rising incomes and increased consumerism in urban areas along with an upswing in rural consumption will further fuel this growth to around 7%-8%,” the authors say, pegging India’s consumer class with rising disposable income at 400 million people.
But now that Wal-Mart plans to enter India, attention is focused on the retail giant’s India strategy. Wharton professor of marketing Jagmohan Raju says one big challenge Wal-Mart will face in India has to do with how it is perceived by consumers. “In the US, when you think of a big warehouse store, you think of lower prices, and small, boutique stores have higher prices,” he says.
“In India, the perception is exactly the opposite — the bigger store has higher prices; smaller shops can offer lower prices because their overheads are lower. How will Wal-Mart’s positioning of lower prices carry forward in a mindset where customer perceptions of big versus small are so different?”
Consumer Behaviour
David Bell, Wharton professor of marketing, says Wal-Mart’s business model is founded on “everyday low prices for consumers and squeezing costs out of the system, and customer service with friendly people who greet you.” But those, he argues, do not guarantee shopper traffic, as consumer behaviour is dramatically different across global markets.
Coca-Cola might adjust to people’s preferences in different markets by making its drink sweeter or more effervescent. Or McDonalds could allow people to consume alcohol at its restaurants in France and make hamburgers with rice patties in Japan.
“But there’s considerably more variation in the way people shop for products than their underlying preference for the products themselves,” Bell says. “This is what makes it more difficult — not just for Wal-Mart in particular, but for any retailer — to be truly global.”
Changes in consumer preferences that Wal-Mart will encounter have to do with simple things like how often people like to go to a store or what motivates them to choose one store over another. “In local markets, you have dynamics of retail competition, variations in the frequency with which people like to shop, variation in the kind of products that drive people to the store, variation in the importance of the retail assortment.”
More blending might be on the way, especially in cultural nuances. Wal-Mart’s recent debacles in Germany and Korea, where it sold out to local retail players and exited, could be wake-up calls. In Germany, Wal-Mart’s low price strategy failed to win it a distinctive market position simply because two other well-entrenched retailers — Aldi and Lidl —have been following that strategy for years, says Bell.
He notes that Wal-Mart was also faulted for relying too heavily on a US-driven view of how Germans shop, made worse by populating its top management in the country with US expatriate executives, many of whom couldn’t speak German. Thirdly, the Wal-Mart strategy of a price-service combination with friendly greeters and so forth backfired. “Culturally, greetings and friendliness in stores are viewed by the Germans with a lot of suspicion,” says Bell.
Rites of Passage
Wal-Mart also had some lessons to learn in South America a couple of years ago, when it discovered that the design and layout of its stores did not match shopper preferences. “In South America, shopping for some families is an entertainment-driven event,” says Bell.
“You have the whole family or the extended family shopping together, so you need much wider aisles.” That, he says, is unlike what Wal-Mart is used to in the US, where a single person typically shops for the entire household. “It seems like a fundamental thing, but you could never predict that coming from the outside unless you have a local partner.”
Chastened by these experiences, Wal-Mart may not face the same problems in India. Bharti, its local partner, is a leader in the mobile phone services industry and must have deep insights into Indian consumer behaviour patterns. Even so, there could be surprises, as Biyani’s Big Bazaar store chain learned the hard way a couple of years ago.
The chain had bought 100,000 white cotton shirts, expecting good demand. But sales were slow, and promotional campaigns fell flat. It soon figured out why: The demographic profile of Big Bazaar’s middle-class shoppers meant people who commute in crowded trains and buses and not in air-conditioned cars.
Wal-Mart’s legendary success at procuring its supplies at extremely competitive prices has no doubt pleased its customers to whom those savings are passed on, but critics have accused it of compelling its suppliers to survive on very thin margins. Here, Biyani says he works differently.
“We are not like Wal-Mart; we believe in a situation of win, win and win,” he says. “The supplier should win, we should win and the customer should win. In Wal-Mart’s strategy, and maybe that of other international retailers, the company wins and the customer wins.
Somebody has to lose for those two to win.” Future Capital Holdings, a Biyani-run private equity firm, last month raised $830 million that it has begun investing as vendor financing in manufacturers of foods, garments and fashion jewellery, among others. Products of these companies get captive shelf space at the Future Group stores.
Raju says existing national brands will need to plan their response to Wal-Mart very carefully to ensure that while they get to supply the retail giant, they also don’t alienate their smaller store buyers. “They are used to it in the U.S.,” he says.
“Right now, Hindustan Lever deals with a lot of small stores. Tomorrow they will be dealing with large buyers like a Wal-Mart or Reliance Retail, so the relative power structure of buyers and who is supplying will change. This is a challenge they have faced in developed markets where they deal with the Tescos and Safeways.” He expects the national brands in India, such as HLL and P&G, to figure out ways to help small stores with specially tailored services “to ensure they also thrive and do well.”
Raju sees bigger benefits flowing to other players in the retail supply chain, such as farmers. “Companies like Wal-Mart coming to India, I hope, will help farmers because there will be fewer players in the chain,” he says. India’s retail promise must seem tempting, but that outlook “is tempered by the fact that the country is grappling with severe infrastructure and policy issues,” says the CII in the report it produced with AT Kearney.
“Cold chains [distribution chains for perishable items], warehousing and logistics infrastructure will fast become unmanageable challenges for India if proactive action is not taken.” It points to policy regimes that vary across states, “inadequate quality control and the lack of a skilled workforce.”
Biyani doesn’t buy all that, arguing that “India is a nation of dukaandars (shopkeepers) and that enough retail talent is available. He also dismisses concerns about distribution and logistics infrastructure with a simple, rhetorical question: “Have you [in the recent past] faced a shortage of anything you wanted to buy?” Biyani scoffs at Wal-Mart’s logistics and supply-chain strengths. “Where will they run their Volvo trucks here?” he asks, adding in a lighter vein, “They will probably have to have bullock carts and handcarts in their supply chain.”
Raju points out that Wal-Mart’s efficiencies stem from the scale of its purchases, which determines what prices it pays suppliers. “Suppliers are willing to work with them because if they don’t work with them they lose a big part of the market,” he says.
Coping with Oversupply
Organised retail is just beginning in India, but plans call for some 600 malls to be built over the next decade across the country. The nascent industry in India could learn valuable lessons about what went wrong with retailers in the U.S., leading to bankruptcies, closures and sell-offs at companies like K-Mart, Caldor and Bradlees.
“What went wrong [in the U.S. market] is oversupply,” says Martyn Chase, chairman of Donaldson, a London-based company that manages 350 retail malls across Europe. “One mall gets built, and somebody builds a new and bigger mall nearby, so the previous one is killed.” He doesn’t see an immediate threat of that happening in India, but says “you will get casualties in 10 years when you have too many of them.”
Chase says the way to prevent hemorrhaging and consolidation in the industry is to bring regulatory oversight. “You need proper regulations governing mall locations, mall size and the like,” he says. “Before you are allowed to build a mall in the UK, you have to demonstrate there is a need for it, by proving that there is enough demand from people who live in that area to make the mall work.”
Biyani argues that the underlying dynamics of standalone retail are not attractive. (Pantaloon’s urban locations put it in a different market segment from that of the big box centres Wal-Mart might put up on city outskirts.) “In India, no retailer has made big money so far,” says Biyani. (Pantaloon’s profits last year were 3% of revenues.)
“The money is in the peripheral activities; it’s never in the retail itself. It’s the power of retail that gets you the money; it’s never the transaction that gets you the money; it’s never the transaction that gets you the money.”
Reproduced with permission from Knowledge @ Wharton © 2006 The Trustees of the University of Pennsylvania. All rights reserved.
Source : Economic Times
Tuesday, January 16, 2007
Big Bazaar forays into Chennai
Big Bazaar, the value retailing concept of Pantaloon Retail and a part of Future group has set up its first standalone store in Chennai taking the number of Big Bazaars in the country to 40.
The over 50,000 sq feet store has been set up with an estimated investment of Rs 15 crore and the company is betting big on its motto 'nobody sells cheaper and better'.
"This is our tenth store in south India and we plan to take it to 33 by the end of this year. In Chennai alone, we would be adding close to five to seven Big Bazaars by 2007," Pantaloon Retail head operations south Rohit Malhotra said.
He said Big Bazaar offered special discounts and offers upto 60% on more than one lakh sixty thousand mass marketed products throughout the year. "We targeting a footfall of 50,000 per day and we feel the opening of a store in Chennai will bring significant value addition to a homemaker".
Source : Economic Times
The over 50,000 sq feet store has been set up with an estimated investment of Rs 15 crore and the company is betting big on its motto 'nobody sells cheaper and better'.
"This is our tenth store in south India and we plan to take it to 33 by the end of this year. In Chennai alone, we would be adding close to five to seven Big Bazaars by 2007," Pantaloon Retail head operations south Rohit Malhotra said.
He said Big Bazaar offered special discounts and offers upto 60% on more than one lakh sixty thousand mass marketed products throughout the year. "We targeting a footfall of 50,000 per day and we feel the opening of a store in Chennai will bring significant value addition to a homemaker".
Source : Economic Times
Home Solutions, Videocon tie up for durables
Making the first move in tie-ups between retail majors and durables suppliers, Videocon Industries Ltd on Wednesday signed a Rs 350-crore deal with Future Group company Home Solutions Retail India Limited.
The deal enables Home Solutions to source electronics and appliances for their in-store brands Sensei and Koryo. These products, meant just for Home Solutions, will be retailed exclusively from Future Group formats E-Zone and Electronics Bazaar. As reported by FE earlier, Mukesh Ambani-promoted Reliance Retail is also in talks with Videocon to source colour televisions, glass shells and colour picture tubes for its durables retail foray. As part of the agreement, which is expected to be finalised soon, Reliance will sell colour TV sets from Videocon at its retail outlets under the ‘Reliance’ brand name.
Both the deals will substantially boost Videocon’s overall sale of colour TVs, which currently stands at 3 million a year.
This includes flagship brand Videocon and sub-brands like Sansui, Toshiba, Hyundai, Akai, Kenstar, Electrolux, Kelvinator. Industry leader LG Electronics India at present has sales of 5.5 lakh TVs a year. Says Suresh Khanna, secretary-general, Consumer Electronics and Television Manufacturers’ Association, “The move will boost volumes in the industry apart from providing more scope to Videocon to spur volumes.”
Videocon and Home Solutions also signed another agreement which would require Home Solutions to give preferred vendor status to the Videocon brand. Home Solutions would use this agreement to stock and sell all Videocon products at all its outlets, Videocon said in a release.
The agreement was signed by PN Dhoot, director, Videocon Industries, and Kishore Biyani, CEO, Future Group. The partnership is aimed at gaining a competitive edge over cheap durable imports from China.
Dhoot said, “All distribution channels are equally important. But this strategic partnership acknowledges the momentum that organised retail would assume in the days to come.”
Added Biyani, “Through this agreement, we will be able to develop our private labels. Besides, e-Zone and Electronics Bazaar cater for all sections of society and Videocon’s wide range of products and multi-location manufacturing facilities will definitely help meet the rising expectations.”
Source : Financial Express
The deal enables Home Solutions to source electronics and appliances for their in-store brands Sensei and Koryo. These products, meant just for Home Solutions, will be retailed exclusively from Future Group formats E-Zone and Electronics Bazaar. As reported by FE earlier, Mukesh Ambani-promoted Reliance Retail is also in talks with Videocon to source colour televisions, glass shells and colour picture tubes for its durables retail foray. As part of the agreement, which is expected to be finalised soon, Reliance will sell colour TV sets from Videocon at its retail outlets under the ‘Reliance’ brand name.
Both the deals will substantially boost Videocon’s overall sale of colour TVs, which currently stands at 3 million a year.
This includes flagship brand Videocon and sub-brands like Sansui, Toshiba, Hyundai, Akai, Kenstar, Electrolux, Kelvinator. Industry leader LG Electronics India at present has sales of 5.5 lakh TVs a year. Says Suresh Khanna, secretary-general, Consumer Electronics and Television Manufacturers’ Association, “The move will boost volumes in the industry apart from providing more scope to Videocon to spur volumes.”
Videocon and Home Solutions also signed another agreement which would require Home Solutions to give preferred vendor status to the Videocon brand. Home Solutions would use this agreement to stock and sell all Videocon products at all its outlets, Videocon said in a release.
The agreement was signed by PN Dhoot, director, Videocon Industries, and Kishore Biyani, CEO, Future Group. The partnership is aimed at gaining a competitive edge over cheap durable imports from China.
Dhoot said, “All distribution channels are equally important. But this strategic partnership acknowledges the momentum that organised retail would assume in the days to come.”
Added Biyani, “Through this agreement, we will be able to develop our private labels. Besides, e-Zone and Electronics Bazaar cater for all sections of society and Videocon’s wide range of products and multi-location manufacturing facilities will definitely help meet the rising expectations.”
Source : Financial Express
Railways to chugh along the retail track
The Railways are getting ready to get onto the retail track. The Rail Ministry is likely to lease free land to retail giants like Reliance, Bharti, and the Birlas to set up retail networks and logistic parks reports CNBC-TV18.
Land-hungry retailers like Reliance, ITC, HLL, Bharti and Pantaloon are ready to collaborate with the Railways to build their retail network across the country. The Rail Ministry has held meetings with most of the major retail players to give details of the 43,000 hectares of free land where the retail networks can be set up.
Private players are expected to share their plans with the Railways shortly. Not just retail outlets, the Railways are also looking at giving land to set up retail infrastructure. The idea is to build at least four big multi-modal parks across four different parts of the country.
Each park will need an investment of up to Rs 5000 crore. Cities on the radar are Delhi, Mumbai, Chennai and Kolkata. There will be three supply chains -local, regional and inter-regional. Companies will have about 16 regional hubs, 360 sub-regional hubs and 7000 spokes in the country. The Railways is working closely with private container operators to make double-stack containers and wagons, which are compatible with international standards.
The model policy framework is being prepared, where private players will be given railway land via competitive bidding process and the company that promises to get the maximum traffic and revenue to the Railways will get the land. Private companies will need to pump in at least Rs 20,000-30,000 crore to set up ware-housing, cold storage, and multi-modal logistic parks. More clarity is expected in the coming railway budget.
Source : MoneyControl
Land-hungry retailers like Reliance, ITC, HLL, Bharti and Pantaloon are ready to collaborate with the Railways to build their retail network across the country. The Rail Ministry has held meetings with most of the major retail players to give details of the 43,000 hectares of free land where the retail networks can be set up.
Private players are expected to share their plans with the Railways shortly. Not just retail outlets, the Railways are also looking at giving land to set up retail infrastructure. The idea is to build at least four big multi-modal parks across four different parts of the country.
Each park will need an investment of up to Rs 5000 crore. Cities on the radar are Delhi, Mumbai, Chennai and Kolkata. There will be three supply chains -local, regional and inter-regional. Companies will have about 16 regional hubs, 360 sub-regional hubs and 7000 spokes in the country. The Railways is working closely with private container operators to make double-stack containers and wagons, which are compatible with international standards.
The model policy framework is being prepared, where private players will be given railway land via competitive bidding process and the company that promises to get the maximum traffic and revenue to the Railways will get the land. Private companies will need to pump in at least Rs 20,000-30,000 crore to set up ware-housing, cold storage, and multi-modal logistic parks. More clarity is expected in the coming railway budget.
Source : MoneyControl
RIL malls to house boutique hotels
AHMEDABAD: Reliance Retail will launch its first hypermarket in March in Ahmedabad. Though delayed, its hypermarkets, called Reliance Mart, will house boutique hotels. Of the company’s 1,500 hypermarkets, 30 will come up in Gujarat.
The first hypermarket, earlier scheduled for December at Iscon Mega Mall near SG Highway in the city, will now roll out in the first quarter of next year. Parimal Nathwani, group president, corporate affairs, Reliance Retail, said: “Our first hypermarket is scheduled to be launched in March on SG Highway.”
Sources added that Reliance Retail has purchased 2 lakh sq ft at Iskon Mall in Ahmedabad for Rs 9 crore. The company has paid Rs 7 crore as stamp duty, the highest paid by any construction firm in the state, sources added.
Iscon will also house Reliance Fresh. In Ahmedabad, Reliance will have three hypermarkets, the other two being at CG Road and at Shahibaug where it has bought the closed Tata Advance Mill.
The boutique hotels may come up in places like Moti Khawadi where Reliance has its grassroot refinery and one in Bhuj, sources said. Reliance officials declined to comment on this issue. “The refinery in Moti Khawadi is spread over 5 lakh sq ft and will house a hotel and multiplex. The company has roped in foreign architects for this project,” a realtor from Jamnagar said.
Besides, Reliance will open retail outlets in Jamnagar, Rajkot, Surat and Bhavnagar as well, sources said. Reliance has also leased 1.25 lakh sq ft at a shopping location in Greater Noida.
Reliance Retail is in the process of buying out Adani Retail for about Rs 110 crore, sources said.
Adani Retail has 54 stores across Gujarat; these include hypermarkets and supermarkets. “Our talks with Adani are progressing,” Nathwani said.
Reliance may change its retail plans by taking a more aggressive stand and by increasing its store format size, an official said on conditions of anonymity.
According to the findings of Trammel Crow Meghraj, there are currently 100 full-fledged malls and 300 malls, multiplexes and shopping centers are under construction. At the pace set this year, we stand to have close to 50 million sq ft of high-grade retail space by the end of 2007.
“The segment of India’s more affluent shoppers is 6 million strong and international retailer community has taken notice of this. This segment spends approximately $28.36 billion annually. India rates as the fifth most attractive emerging retail market in the world and represents a virtual goldmine. That is certainly strong incentive to adapt to India’s highly individualistic consumer mentality,” the study said.
Source : DNA Money
The first hypermarket, earlier scheduled for December at Iscon Mega Mall near SG Highway in the city, will now roll out in the first quarter of next year. Parimal Nathwani, group president, corporate affairs, Reliance Retail, said: “Our first hypermarket is scheduled to be launched in March on SG Highway.”
Sources added that Reliance Retail has purchased 2 lakh sq ft at Iskon Mall in Ahmedabad for Rs 9 crore. The company has paid Rs 7 crore as stamp duty, the highest paid by any construction firm in the state, sources added.
Iscon will also house Reliance Fresh. In Ahmedabad, Reliance will have three hypermarkets, the other two being at CG Road and at Shahibaug where it has bought the closed Tata Advance Mill.
The boutique hotels may come up in places like Moti Khawadi where Reliance has its grassroot refinery and one in Bhuj, sources said. Reliance officials declined to comment on this issue. “The refinery in Moti Khawadi is spread over 5 lakh sq ft and will house a hotel and multiplex. The company has roped in foreign architects for this project,” a realtor from Jamnagar said.
Besides, Reliance will open retail outlets in Jamnagar, Rajkot, Surat and Bhavnagar as well, sources said. Reliance has also leased 1.25 lakh sq ft at a shopping location in Greater Noida.
Reliance Retail is in the process of buying out Adani Retail for about Rs 110 crore, sources said.
Adani Retail has 54 stores across Gujarat; these include hypermarkets and supermarkets. “Our talks with Adani are progressing,” Nathwani said.
Reliance may change its retail plans by taking a more aggressive stand and by increasing its store format size, an official said on conditions of anonymity.
According to the findings of Trammel Crow Meghraj, there are currently 100 full-fledged malls and 300 malls, multiplexes and shopping centers are under construction. At the pace set this year, we stand to have close to 50 million sq ft of high-grade retail space by the end of 2007.
“The segment of India’s more affluent shoppers is 6 million strong and international retailer community has taken notice of this. This segment spends approximately $28.36 billion annually. India rates as the fifth most attractive emerging retail market in the world and represents a virtual goldmine. That is certainly strong incentive to adapt to India’s highly individualistic consumer mentality,” the study said.
Source : DNA Money
Bharti lines up billions for retail
200 hypermarket and large format stores by 2010.
Unravelling the details of its retail foray for the first time, the Bharti group said it planned to set up 200 hypermarkets and large format stores across the country and invest around $7 billion by 2010.
In addition, the group also expects to earn a revenue of over $1-2 billion from its retail business, which would constitute over 10-20 per cent of the group’s targeted turnover of $10 billion by 2010.
Bharti has entered into a joint venture with Wal-Mart, which will get into the cash and carry business, while the front end business of running the stores will be undertaken by Bharti.
Bharti is also tying up with Axa, its financial services and insurance service partner, to float a realty fund. The group will undertake a mixed strategy in acquiring real estate for its retail foray by leasing space in metros and by buying it in Tier II and Tier III cities.
The group will also launch a programme in which it hopes to rope in existing small retailers to join in as franchisees of Bharti’s retail chain.
The group’s realty company, Bharti Realty, is expected to be a key mover in identifying real estate for its proposed foray.
Though the front end stores will bear the Bharti name, discussions are on about the inclusion of the Wal-Mart brand as well.
Speaking to Business Standard, Sunil Bharti Mittal, chairman of the Bharti group said: “We should have 200 large stores and hundreds of small stores in the first phase. Depending on what we do in real estate and logistics, we will invest around $7 billion by 2010. Our expectation is a topline of $1-2 billion from retail by the same period.”
Mittal also said discussions were on whether the new venture would get into logistics, which included trucking, cold chain trucks, or whether these would be outsourced.
Source : Business Standard
Unravelling the details of its retail foray for the first time, the Bharti group said it planned to set up 200 hypermarkets and large format stores across the country and invest around $7 billion by 2010.
In addition, the group also expects to earn a revenue of over $1-2 billion from its retail business, which would constitute over 10-20 per cent of the group’s targeted turnover of $10 billion by 2010.
Bharti has entered into a joint venture with Wal-Mart, which will get into the cash and carry business, while the front end business of running the stores will be undertaken by Bharti.
Bharti is also tying up with Axa, its financial services and insurance service partner, to float a realty fund. The group will undertake a mixed strategy in acquiring real estate for its retail foray by leasing space in metros and by buying it in Tier II and Tier III cities.
The group will also launch a programme in which it hopes to rope in existing small retailers to join in as franchisees of Bharti’s retail chain.
The group’s realty company, Bharti Realty, is expected to be a key mover in identifying real estate for its proposed foray.
Though the front end stores will bear the Bharti name, discussions are on about the inclusion of the Wal-Mart brand as well.
Speaking to Business Standard, Sunil Bharti Mittal, chairman of the Bharti group said: “We should have 200 large stores and hundreds of small stores in the first phase. Depending on what we do in real estate and logistics, we will invest around $7 billion by 2010. Our expectation is a topline of $1-2 billion from retail by the same period.”
Mittal also said discussions were on whether the new venture would get into logistics, which included trucking, cold chain trucks, or whether these would be outsourced.
Source : Business Standard
Retail 2007: Shake, rattle & rollout
Beyond the Tata-Woolworth deal, the Bharti-Wal-Mart joint venture and much before Reliance Retail put its massive plans on the ground, an event on January 26, 2006, indicated the frenzy organised retailing was creating.
It was a mega sale at select Big Bazaar outlets — before any of the stores opened for business, queues were snaking out onto the streets. Such was the rush to pick up products at knocked-down prices, that some 5,00,000 customers crowded the stores and most of the outlets declared stock-outs and had to shut down by afternoon.
If 2006 was hot, then 2007 promise to be scorching. The Indian retail market is worth $320 billion, is growing at 8% — but only about 5% of that is accounted for by organised players. While the old guard of retailers fights back, new entrants like Reliance Retail, and soon Bharti-Wal-Mart, will be going into an expansion overdrive. Expect ripple effects — right from the quest for prime locations, expected to push real estate costs further north, to no-holds-barred wars for talent.
And the battleground won’t just be the big metros — cities like Baroda, Vizag, Kochi, Durgapur, Asansol, and Indore will see plenty of action. Indeed, it is the potential of a vastly under-penetrated market that’s spurring players on. A back-of-the-envelope calculation indicates that by the end of 2007-2008, major retailers would have added more than 6,000 new stores across various formats in India.
And that doesn’t include local retail players looking at a pan-national presence, buoyed by rising disposable income and purchasing power. “It’s a nascent industry now, but the planned investments by players will fuel growth and organised retailing will account for 15% of the total retail trade in the next three years,” says Harsh Goenka, chairman, RPG Enterprises.
According to the 2006 Global Retail Development Index conducted by AT Kearney, India is the most attractive destination for retail participation for global retailers. “It’s like the wild west, an uncharted place where players can ride as far as one can and plant a flag to claim territory,” says Raman Manglorkar, head of consumer and retail practice, AT Kearney.
According to Ajit Joshi, CEO, Croma, the multi-brand consumer retail format from the Tatas, 2007 will mark the beginning of a marathon, in which some players will fade away. “The trigger has been pulled and competition will only increase in all formats,” he says.
The year has also indicated that foreign retailers like Wal-Mart and Tesco aren’t going to wait for a change in FDI rules, and instead forging alliances with strong Indian partners. “The Bharti-Wal-Mart JV proved that there is a way around current legislation,” says Tim Sleep, head of retail, E&Y UK.
Govind Shrikhande, CEO, Shoppers’ Stop, believes that FDI policies can be relaxed with certain specifications. For instance, exclusive clauses that make it mandatory for foreign retailers to maintain exports in excess of their domestic turnover can be considered, he says, adding that when exports starts, the domestic quality also improves.
Even as there are untapped opportunities, there are hurdles. Two critical components — real estate and manpower — will continue to pose severe challenges to retailers. “It’s quite frightening. Store openings and profitability will be affected if real estate costs keep increasing,” admits Shrikhande.
Observers, however, say that real estate prices will come down to manageable levels in the long run. “There are a lot of properties that will come back into the market as they were not successful or were badly managed. So it will even out. But, then, there will be a strong focus on real estate in Tier II and Tier III cities,” says Manglorkar.
According to industry estimates, attrition is hovering around 4-5% on a monthly basis. “We are talking about 10 million sq ft space to be available in the next few years. But I need people to run the stores and there’s no sight of the situation improving in the near future,” says Goenka.
Joshi of Croma is widening the net and is looking to tap personnel from Industrial Training Institutes (ITIs) and even science graduates. “The products on our shelves are very technical. So it makes sense to source people with a technical background,” explains Joshi.
Similarly, Shoppers’ Stop has tied up with institutes for training programmes for its customer care associates and deputy managers. “There is a collective effort needed which is not happening so far,” says Shrikhande. The silver lining, though, is that the industry is likely to gain status as a career option with the entry of corporates in retailing. “While there will be pressure on the people front, the upside is that retail jobs will not be looked down upon,” says Dipankar Halder, CEO, Spinach.
So, going forward, retailing will move from a nascent sunrise sector to a full-fledged industry. Expect mergers and acquisitions, high profile movement of senior personnel and some important listings on the bourses. Also, expect reams and reams of newsprint spent on tracking the segment.
Source : Economic Times
It was a mega sale at select Big Bazaar outlets — before any of the stores opened for business, queues were snaking out onto the streets. Such was the rush to pick up products at knocked-down prices, that some 5,00,000 customers crowded the stores and most of the outlets declared stock-outs and had to shut down by afternoon.
If 2006 was hot, then 2007 promise to be scorching. The Indian retail market is worth $320 billion, is growing at 8% — but only about 5% of that is accounted for by organised players. While the old guard of retailers fights back, new entrants like Reliance Retail, and soon Bharti-Wal-Mart, will be going into an expansion overdrive. Expect ripple effects — right from the quest for prime locations, expected to push real estate costs further north, to no-holds-barred wars for talent.
And the battleground won’t just be the big metros — cities like Baroda, Vizag, Kochi, Durgapur, Asansol, and Indore will see plenty of action. Indeed, it is the potential of a vastly under-penetrated market that’s spurring players on. A back-of-the-envelope calculation indicates that by the end of 2007-2008, major retailers would have added more than 6,000 new stores across various formats in India.
And that doesn’t include local retail players looking at a pan-national presence, buoyed by rising disposable income and purchasing power. “It’s a nascent industry now, but the planned investments by players will fuel growth and organised retailing will account for 15% of the total retail trade in the next three years,” says Harsh Goenka, chairman, RPG Enterprises.
According to the 2006 Global Retail Development Index conducted by AT Kearney, India is the most attractive destination for retail participation for global retailers. “It’s like the wild west, an uncharted place where players can ride as far as one can and plant a flag to claim territory,” says Raman Manglorkar, head of consumer and retail practice, AT Kearney.
According to Ajit Joshi, CEO, Croma, the multi-brand consumer retail format from the Tatas, 2007 will mark the beginning of a marathon, in which some players will fade away. “The trigger has been pulled and competition will only increase in all formats,” he says.
The year has also indicated that foreign retailers like Wal-Mart and Tesco aren’t going to wait for a change in FDI rules, and instead forging alliances with strong Indian partners. “The Bharti-Wal-Mart JV proved that there is a way around current legislation,” says Tim Sleep, head of retail, E&Y UK.
Govind Shrikhande, CEO, Shoppers’ Stop, believes that FDI policies can be relaxed with certain specifications. For instance, exclusive clauses that make it mandatory for foreign retailers to maintain exports in excess of their domestic turnover can be considered, he says, adding that when exports starts, the domestic quality also improves.
Even as there are untapped opportunities, there are hurdles. Two critical components — real estate and manpower — will continue to pose severe challenges to retailers. “It’s quite frightening. Store openings and profitability will be affected if real estate costs keep increasing,” admits Shrikhande.
Observers, however, say that real estate prices will come down to manageable levels in the long run. “There are a lot of properties that will come back into the market as they were not successful or were badly managed. So it will even out. But, then, there will be a strong focus on real estate in Tier II and Tier III cities,” says Manglorkar.
According to industry estimates, attrition is hovering around 4-5% on a monthly basis. “We are talking about 10 million sq ft space to be available in the next few years. But I need people to run the stores and there’s no sight of the situation improving in the near future,” says Goenka.
Joshi of Croma is widening the net and is looking to tap personnel from Industrial Training Institutes (ITIs) and even science graduates. “The products on our shelves are very technical. So it makes sense to source people with a technical background,” explains Joshi.
Similarly, Shoppers’ Stop has tied up with institutes for training programmes for its customer care associates and deputy managers. “There is a collective effort needed which is not happening so far,” says Shrikhande. The silver lining, though, is that the industry is likely to gain status as a career option with the entry of corporates in retailing. “While there will be pressure on the people front, the upside is that retail jobs will not be looked down upon,” says Dipankar Halder, CEO, Spinach.
So, going forward, retailing will move from a nascent sunrise sector to a full-fledged industry. Expect mergers and acquisitions, high profile movement of senior personnel and some important listings on the bourses. Also, expect reams and reams of newsprint spent on tracking the segment.
Source : Economic Times
Burger King to dine with Pantaloon in India?
Close on heels of the announcement of Kishore Biyani owned, Rs. 2,199 crore, retail major Pantaloon tieing up with Starbucks- the world’s biggest coffeee shop chain, comes the buzz of Pantaloon’s possible tie up with the US-based, world’s second biggest, US$ 2,048 million, 37,000 employees strong, international fast food restaurants chain, Burger King.
Burger King, founded in 1954, in a suburb of Miami, is a large fast food chain of more than 11,100 restaurants spread across 65 countries. The restaurant chain is predominantly selling burgers, French fries, soft drinks, desserts, and sandwiches. Burger King’s trademark product is a hamburger called the Whopper. The Whopper is also a line of sandwiches, all made with the same ingredients.
Burger King Chain, which is the world’s second biggest fast food chain after McDonalds, follows a strong franchisee based model. 90% of the chain’s restaurants are, family owned, independent franchisees. It is speculated that Burger King for its foray into India would like to follow a similar model.
Source : IndiaRetailBiz
Burger King, founded in 1954, in a suburb of Miami, is a large fast food chain of more than 11,100 restaurants spread across 65 countries. The restaurant chain is predominantly selling burgers, French fries, soft drinks, desserts, and sandwiches. Burger King’s trademark product is a hamburger called the Whopper. The Whopper is also a line of sandwiches, all made with the same ingredients.
Burger King Chain, which is the world’s second biggest fast food chain after McDonalds, follows a strong franchisee based model. 90% of the chain’s restaurants are, family owned, independent franchisees. It is speculated that Burger King for its foray into India would like to follow a similar model.
Source : IndiaRetailBiz
Monday, January 15, 2007
Subhiksha to storm Kolkata with 90 stores in four months
Subhiksha, the Chennai-based, R. Subramanian owned, over 500 stores strong, discount food and grocery chain, in its now familiar carpet bombing strategy of simultaneously opening a large number of outlets in a single location, is gearing up to storm Kolkata with a cluster of 90 outlets in four months. It has already begun the process of identifying store locations and building distribution centers in the city.
Subhiksha will have more stores than Post Offices in Kolkata, said a company official.
Subhiksha would also set up a regional hub in Kolkata for procurement so as to avoid paying central sales tax, which despite proposed reduction in the rate, will continued to be levied at 3% from April, 2007.
Kolkata, which has a Rs 300-crore-a-month market for food and groceries, offers a huge potential as the organised retailers in the city like Arambagh, C3 and Food Bazaar, account for just Rs 10 crore.
At the moment, Subhiksha does not deal in poultry or fish, however, it would consider offering these items in Kolkata as “Fish and Kolkata are inseparable,” said R. Subramanian, M D of the company. Subhiksha offers an average discount of 9-10 per cent, compared with 2 per cent at Food Bazar. Subhisksha has no takeovers in mind and the entire chain will be created from scratch, added Subramanian.
Unlike other retail stores in Kolkata, Subhiksha will have the added advantage of remaining open between 9 AM and 9 PM.
Kolkata foray for the retail chain is part of second phase expansion for the retail chain in which it wants to take the number of stores in the network to 1,000 by the end of 2007. The expansion will be spread across five states of Bengal, Punjab, Madhya Pradesh, Uttar Pradesh and Haryana, including Chandigarh.
Source : IndiaRetailBiz
Subhiksha will have more stores than Post Offices in Kolkata, said a company official.
Subhiksha would also set up a regional hub in Kolkata for procurement so as to avoid paying central sales tax, which despite proposed reduction in the rate, will continued to be levied at 3% from April, 2007.
Kolkata, which has a Rs 300-crore-a-month market for food and groceries, offers a huge potential as the organised retailers in the city like Arambagh, C3 and Food Bazaar, account for just Rs 10 crore.
At the moment, Subhiksha does not deal in poultry or fish, however, it would consider offering these items in Kolkata as “Fish and Kolkata are inseparable,” said R. Subramanian, M D of the company. Subhiksha offers an average discount of 9-10 per cent, compared with 2 per cent at Food Bazar. Subhisksha has no takeovers in mind and the entire chain will be created from scratch, added Subramanian.
Unlike other retail stores in Kolkata, Subhiksha will have the added advantage of remaining open between 9 AM and 9 PM.
Kolkata foray for the retail chain is part of second phase expansion for the retail chain in which it wants to take the number of stores in the network to 1,000 by the end of 2007. The expansion will be spread across five states of Bengal, Punjab, Madhya Pradesh, Uttar Pradesh and Haryana, including Chandigarh.
Source : IndiaRetailBiz
Subhiksa crosses halfway mark; well on its way to 1,000 in 2007
Subhiksha – the chennai based, no frills, discount retail chain, which recently hit the 500-stores mark, has catapulted itself into one of the country’s largest supermarket chains, with over one million sq. ft. of retail space, spread across five states of the country.
Speaking on the occasion, R Subramanian, MD, Subhiksha said, “With Maharasthra we will complete our 600-store target, and we will shortly activate Phase 2 of our expansion plans foraying into 5 more states including Chandigarh, Punjab, Madhya Pradesh, Uttar Pradesh, Haryana and West Bengal. We hope to hit the 1000-store mark during 2007.”
“Our goal of becoming India’s favorite neighborhood store is now well on its way. We want to be able to provide customers from all segments of society, in all parts of the country, with a viable smart shopping option,” added Subramanian.
Unlike Big Bazaar, its discount, food and grocery, retail counterparts, Subhiksha believes in setting up non-air conditioned small neighbourhood stores (near the community) measuring around 2,000 sq.ft. in retail space. As such, while Subhiksha competes with big store chains on regular discounts, it competes with traditional ‘father and son’ kirana stores on close proximity to its customers.
Subhiksha operates in four verticals — fruits and vegetables, pharmaceuticals, FMCG and telecom. Beside loyalty discounts and regular discounts of 10% on medicines and 8 to 10% on FMCCG products. The retail chain also makes the Every Day Low Price (EDLP) offer to its customers, which is sustained through discounts obtained by the chain from direct supply arrangements with manufacturers, along with bulk purchase and cash transactions.
While the discount model of Subhiksha is based on world famous Wal-Mart strategy, the carpet bombing model is based on the ‘Starbucks’ strategy, in which the coffee retail chain opens a cluster of stores in close proximity to each other, in a geographical area which has high population density with purchasing potential. This enables the chain to cannibilise sales within its own network rather than allowing them to go to other individual stores or retail chains. Even, Reliance, so far seems to have followed a similar strategy having opened a Cluster of ‘Fresh’ stores in Hyderabad and Jaipur.
While, the decade old, Rs. 340 crore in turnover, Subhiksha retail chain, has invested about Rs. 300 crore on its first phase of expansion, the total outlay for 1,000 stores will be around Rs. 500 crore. It may be recalled that ICICI Venture Capital holds 24% of the equity in the company. The company is mulling over making Initial Public Offering (IPO) in the second half of 2007.
Source : IndiaRetailBiz
Speaking on the occasion, R Subramanian, MD, Subhiksha said, “With Maharasthra we will complete our 600-store target, and we will shortly activate Phase 2 of our expansion plans foraying into 5 more states including Chandigarh, Punjab, Madhya Pradesh, Uttar Pradesh, Haryana and West Bengal. We hope to hit the 1000-store mark during 2007.”
“Our goal of becoming India’s favorite neighborhood store is now well on its way. We want to be able to provide customers from all segments of society, in all parts of the country, with a viable smart shopping option,” added Subramanian.
Unlike Big Bazaar, its discount, food and grocery, retail counterparts, Subhiksha believes in setting up non-air conditioned small neighbourhood stores (near the community) measuring around 2,000 sq.ft. in retail space. As such, while Subhiksha competes with big store chains on regular discounts, it competes with traditional ‘father and son’ kirana stores on close proximity to its customers.
Subhiksha operates in four verticals — fruits and vegetables, pharmaceuticals, FMCG and telecom. Beside loyalty discounts and regular discounts of 10% on medicines and 8 to 10% on FMCCG products. The retail chain also makes the Every Day Low Price (EDLP) offer to its customers, which is sustained through discounts obtained by the chain from direct supply arrangements with manufacturers, along with bulk purchase and cash transactions.
While the discount model of Subhiksha is based on world famous Wal-Mart strategy, the carpet bombing model is based on the ‘Starbucks’ strategy, in which the coffee retail chain opens a cluster of stores in close proximity to each other, in a geographical area which has high population density with purchasing potential. This enables the chain to cannibilise sales within its own network rather than allowing them to go to other individual stores or retail chains. Even, Reliance, so far seems to have followed a similar strategy having opened a Cluster of ‘Fresh’ stores in Hyderabad and Jaipur.
While, the decade old, Rs. 340 crore in turnover, Subhiksha retail chain, has invested about Rs. 300 crore on its first phase of expansion, the total outlay for 1,000 stores will be around Rs. 500 crore. It may be recalled that ICICI Venture Capital holds 24% of the equity in the company. The company is mulling over making Initial Public Offering (IPO) in the second half of 2007.
Source : IndiaRetailBiz
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