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
Monday, January 22, 2007
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
Monday, January 8, 2007
Aditya Birla to follow ‘Ekla Chalo Re’ maxim for its retail venture
Aditya Birla Retail, the unlisted retail arm of the Rs. 40,000 crore Aditya Birla Group, which decisively entered organised retail with the acquisition of 20 years old, Hyderabad based, well established, over 172 supermarket and convenience stores strong “Trinethra” super retail chain, across the southern states of India has decided to go it alone without seeking any partnership or joint venture arrangements with any foreign retail major.
It may be recalled here that only a few weeks back, telecom major Bharati has entered into a joint venture agreement with the world’s biggest US$316 billion retailer Wal-Mart for setting up back-end logistic and supply chain operations as well as cash and carry retail business in India. Tata owned Infinity Retail has similarly joined hands with Australian retail major Woolworth to manage sourcing and technicals for its retail chain “Croma,” which has plans to set up 30 stores across the country this year to sell consumer electronic durables.
Among other major players, Reliance Retail, which has already opened 22 neighbourhood convenience stores under the brand name of “Reliance Fresh” in Hyderabad and Jaipur, has like Birlas decided to seek no foreign partner for its Rs. 25,000 crore multi format retail roll out.
On the contrary, two other major retail players, namely, Kishore Biyani owned Pantaloon Retail and K. Raheja owned Shoppers’ Stop, which are not only already listed on the stock exchanges but have also registered national presence, have made licensing arrangements with several foreign player for the use of specific brands, products or formats. For example, Shoppers’ Stop is a master franchisee for ‘Mothercare’ (pregnancy and parenting products) and has agreement with the swiss group ‘Nuance’ to set up duty free shops at airports, while Pantaloon has reportedly made arrangements with ‘Starbucks’ (for Coffee shops) and has floated joint venture with Alpha Airports to set up shops at newly modernised airport in India.
Source : IndiaRetailBiz
It may be recalled here that only a few weeks back, telecom major Bharati has entered into a joint venture agreement with the world’s biggest US$316 billion retailer Wal-Mart for setting up back-end logistic and supply chain operations as well as cash and carry retail business in India. Tata owned Infinity Retail has similarly joined hands with Australian retail major Woolworth to manage sourcing and technicals for its retail chain “Croma,” which has plans to set up 30 stores across the country this year to sell consumer electronic durables.
Among other major players, Reliance Retail, which has already opened 22 neighbourhood convenience stores under the brand name of “Reliance Fresh” in Hyderabad and Jaipur, has like Birlas decided to seek no foreign partner for its Rs. 25,000 crore multi format retail roll out.
On the contrary, two other major retail players, namely, Kishore Biyani owned Pantaloon Retail and K. Raheja owned Shoppers’ Stop, which are not only already listed on the stock exchanges but have also registered national presence, have made licensing arrangements with several foreign player for the use of specific brands, products or formats. For example, Shoppers’ Stop is a master franchisee for ‘Mothercare’ (pregnancy and parenting products) and has agreement with the swiss group ‘Nuance’ to set up duty free shops at airports, while Pantaloon has reportedly made arrangements with ‘Starbucks’ (for Coffee shops) and has floated joint venture with Alpha Airports to set up shops at newly modernised airport in India.
Source : IndiaRetailBiz
Reliance Fresh gears up to enter Gujarat with 100+ outlets
Reliance Fresh, the neighbourhood convenient store format of RIL’s Rs. 25,000 crore retail initiative, Reliance Retail, which made its debut on 3rd November, 2006, in Hyderabad with the opening of a cluster of 11 stores and which now has 22 stores in operation in Hyderabad, Secunderabad and Jaipur is gearing up to enter its home state Gujarat with a big bang. According to media reports, Reliance will begin its Gujarat foray with the opening of 40 Fresh stores in Ahmedabad in March to be followed by 20 stores in Surat, 15 in Vadodara, 12 in Rajkot and 10 in Jamnagar; in April, 2007.
A few of these Reliance Fresh stores may be Adani Supermarket converts, the deal for which is believed to be in the final stage of closure. Adani retail chain has 59 stores spread across big cities of Gujarat. All of these stores may not fit the bill as Reliance Fresh store format envisages retail space of between 2,000 and 4,000 sq. ft.
Reliance enjoys certain advantages in Gujarat, which even though head quartered in Mumbai, may be considered as its home state. Reliance has good infrastructure facilities near major cities of the state including Ahmedabad (textile mill), Vadodara (IPCL plant), Jamnagar (Refinery) and Surat (Hazira complex).
Reliance Fresh, it may be recalled, stocks fruits, flowers, vegetables and groceries beside a few staples like atta and rice, which are sold under its own in-house private label of ‘Reliance Select.’ Reliance Fresh also supplies these items in bulk to push-cart vendors and small retailers. Reliance Fresh is a part of the group’s ‘Farm to Fork’ initiative in which farm produce is procured directly from the farmers through its back end arm ‘Ranger Farms.’
Source : Times Of India
A few of these Reliance Fresh stores may be Adani Supermarket converts, the deal for which is believed to be in the final stage of closure. Adani retail chain has 59 stores spread across big cities of Gujarat. All of these stores may not fit the bill as Reliance Fresh store format envisages retail space of between 2,000 and 4,000 sq. ft.
Reliance enjoys certain advantages in Gujarat, which even though head quartered in Mumbai, may be considered as its home state. Reliance has good infrastructure facilities near major cities of the state including Ahmedabad (textile mill), Vadodara (IPCL plant), Jamnagar (Refinery) and Surat (Hazira complex).
Reliance Fresh, it may be recalled, stocks fruits, flowers, vegetables and groceries beside a few staples like atta and rice, which are sold under its own in-house private label of ‘Reliance Select.’ Reliance Fresh also supplies these items in bulk to push-cart vendors and small retailers. Reliance Fresh is a part of the group’s ‘Farm to Fork’ initiative in which farm produce is procured directly from the farmers through its back end arm ‘Ranger Farms.’
Source : Times Of India
41st Big Bazaar launched in Hyderabad; to cross 100 before Bharati-Wal-Mart debut
Kishore Biyani owned, India’s biggest listed retail company, Pantaloon Retail (India) launched 41st of its Big Bazaar, hypermarket store in Hyderabad, on Friday, the 5th. Set up with an investment of Rs. 15 crore and housed in 52,000 sq. ft. of retail space, this is the second of the planned seven Big Bazaar stores in Hyderabad. The company has planned to have an equal number of stand alone Food Bazaars in the city. Pantaloon expects to gross Rs. 100 crore in turnover from this store located on the busy RTC Cross roads of the city. Locations for the balance five Big Bazaar stores in the city have also been finalised.
Pantaloon is planning to take its tally of Big Bazaars in the south from present 11 to 30, around 50% of which will be in tier II cities, including 15 new locations like Vijaywada and Visakhapatnam.
The discount format, Big Bazaar value store chain, presently grosses combined turnover of 2,000 crore and offers 1.6 lakh items for sale.
Speaking to media persons on the occasion, Rohit Malhotra, Head Operations-Pantaloon (South Zone) said that the company has planned to reach the 100 stores target for Big Bazaar within a few months. It may be recalled that Pantaloon had earlier announced its plans to open 100 Big Bazaars prior to Bharati-WalMart retail chain making its planned debut in India in mid-August, 2007.
Source : IndiaRetailBiz
Pantaloon is planning to take its tally of Big Bazaars in the south from present 11 to 30, around 50% of which will be in tier II cities, including 15 new locations like Vijaywada and Visakhapatnam.
The discount format, Big Bazaar value store chain, presently grosses combined turnover of 2,000 crore and offers 1.6 lakh items for sale.
Speaking to media persons on the occasion, Rohit Malhotra, Head Operations-Pantaloon (South Zone) said that the company has planned to reach the 100 stores target for Big Bazaar within a few months. It may be recalled that Pantaloon had earlier announced its plans to open 100 Big Bazaars prior to Bharati-WalMart retail chain making its planned debut in India in mid-August, 2007.
Source : IndiaRetailBiz
Friday, January 5, 2007
Aditya Birla takes formal plunge, acquires Trinethra retail chain
The year 2007, for organised retail has begun with a bang. Birlas, who were mulling over their entry in multi format multi brand retail for quite some time, have finally arrived. The Rs. 40,000 crore, Aditya Birla group, through unlisted Aditya Birla Retail, in a single stroke, has acquired a bouquet of over 172 retail stores, operating in southern India, with predominant presence in Andhra Pradesh, under popular brand names of Trinethra and Fabmall. While most of the group stores operate under Trinethra brand, stores located in Karnataka and Kerala operate under Fabmall brand, although, 50,000 sq. ft. big hypermarket in Mysore is known as Fabcity.
While, 83 Trinethra stores are located in Andhra Pradesh, 26 stores are located in Bangaluru and 15 are located in Chennai. Trinethra, prior to this acquisition, was aggressively pursuing its plan to set up new stores in tier II cities such as Mysore, Coimbatore and Tirupur in southern region of the country. Trinethra, which has adopted convenience and supermarket formats, is focused on selling food and groceries in residential areas, although some of the stores also offer pharmaceutical products. Trinethra also offers value-added services like forex remittances and bill payments. A typical Trinethra store ad measures around 2,500 sq.ft. in retail space. The chain of stores are serviced by an infrastructure of central warehouses in Andhra, Karnataka, Tamilnadu and Kerala, with a space of about 50,000 sq ft each
The two decades old, Rs. 250 crore, 2,500 employees strong, Hyderabad based, Trinethra group, originally founded by Mr Anjaneyulu Kakkera, is presently owned by India Venture Fund.
“This acquisition marks the entry of our group into retail and shows its long-term commitment to the business,” said Aditya Birla to an interviewer. It is believed that the Birla group is considering to invest Rs 6,000 crore in the initial phase, which depending on growth requirements could be ramped up further.
Although, organised retail constitutes only 3% of the estimated $320 billion retail market, it is growing at fast pace of 30% per annum. The growth according to industry experts, as reported many times earlier, is going to be driven by hyper and supermarkets. Aditya Birla Retail, is headed by its CFO Sumant Sinha.
Source : IndiaRetailBiz
While, 83 Trinethra stores are located in Andhra Pradesh, 26 stores are located in Bangaluru and 15 are located in Chennai. Trinethra, prior to this acquisition, was aggressively pursuing its plan to set up new stores in tier II cities such as Mysore, Coimbatore and Tirupur in southern region of the country. Trinethra, which has adopted convenience and supermarket formats, is focused on selling food and groceries in residential areas, although some of the stores also offer pharmaceutical products. Trinethra also offers value-added services like forex remittances and bill payments. A typical Trinethra store ad measures around 2,500 sq.ft. in retail space. The chain of stores are serviced by an infrastructure of central warehouses in Andhra, Karnataka, Tamilnadu and Kerala, with a space of about 50,000 sq ft each
The two decades old, Rs. 250 crore, 2,500 employees strong, Hyderabad based, Trinethra group, originally founded by Mr Anjaneyulu Kakkera, is presently owned by India Venture Fund.
“This acquisition marks the entry of our group into retail and shows its long-term commitment to the business,” said Aditya Birla to an interviewer. It is believed that the Birla group is considering to invest Rs 6,000 crore in the initial phase, which depending on growth requirements could be ramped up further.
Although, organised retail constitutes only 3% of the estimated $320 billion retail market, it is growing at fast pace of 30% per annum. The growth according to industry experts, as reported many times earlier, is going to be driven by hyper and supermarkets. Aditya Birla Retail, is headed by its CFO Sumant Sinha.
Source : IndiaRetailBiz
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