Indian Retailer

Bharti Wal-Mart Sets Up Farm Produce Sourcing Centre

2010-01-22T12:03:00.000+05:30

Bharti Wal-Mart Pvt. Ltd. said Wednesday it has set up its first centre in the northern Indian state of Punjab to source farm produce for its wholesale cash-and-carry business as well as for the retail stores under the 'Easyday' brand.

Bharti Wal-Mart is a joint venture between the world's largest retailer by revenue, Wal-Mart Stores Inc., and India's Bharti Enterprises Ltd., which is the parent company of the country's largest telecommunications company by users, Bharti Airtel Ltd.

The joint venture currently operates a single wholesale store in Punjab.

The agricultural co-operative centre aims to create "a robust aggregating, handling, packaging and delivering system of fresh produce," to the wholesale store that operates under the name Best Price, as well as the 'Easyday' stores, Bharti Wal-Mart said in an e-mailed statement.

The chain of retail stores in India, under the "Easyday" brand, is run by Bharti Retail, another unit of Bharti Enterprises.

Indian laws don't allow multiple-brand retailers, such as U.S.-based Wal-Mart, to sell directly to consumers. But they can run wholesale operations and provide back-end support to local retailers.

The centre will "directly link farmers to consumers, providing them access to quality produce at low prices," said Raj Jain, managing director and chief executive at Bharti Wal-Mart.

Designers explore tier-II towns as orders dry up in west

2010-01-22T11:01:00.000+05:30

Small towns and emerging markets are fast-replacing Paris and New York as the hotspots for Indian fashion designers such as Anamika Khanna, Sabyasachi Mukherjee and Rajesh Pratap Singh.

With the western world still struggling to come out of its worst recession in several decades, the fashion fraternity is now venturing into small cities and towns in India with cheaper offerings and targeting newer markets in Latin America and Asia. Many designers have opted out of international fashion weeks that charge exorbitant entry fees to focus funds towards what they see as emerging markets outside the big five cities. Anamika withdrew from the European market this year, though she continues to retail in Kuwait and Dubai. “It was a case of growing too big too fast in Europe,” the Kolkata-based designer said.

Rajesh Pratap Singh said he explored better opportunities in new markets such as Latin America last year after facing a lot of order cancellations over the past two seasons. Manish Arora, who operates through a subsidiary in Europe, found new stockists across Bahrain, Singapore and Italy and cut prices by 10-12 %.

But the real hip story is India. Sabyasachi Mukherjee is doing shows in cities such as Chandigarh and Nagpur and has launched an ethno-pret (ready-towear ) line that plays in a lower price band of Rs 5,000-15 ,000. The strategy helped his business expand 65% this year to Rs 22 crore. “The middle class is getting more affluent and it would be foolish not to capitalise on this growing market. I intend to launch a sub brand in a lower price category that will exponentially increase my audience by next year,” he said.

Mumbai-based Krishna Mehta is also overwhelmed by the demand in smaller cities such as Kochi, Vijayawada, Baroda and Rajkot where she entered this year with products priced 25% lower than her retail prices a year ago. She said that the label’s turnover has multiplied thrice in one year and production capacity almost quadrupled. “Organised designer retail in India is ready for a scale game for the first time,” said Delhi-based designer Raghavendra Rathore.

The likes of Mukherjee and Manish Arora now plan to attract venture capital investors by the end of the year to fund expansion. One reason behind the domestic designers’ sudden penchant for cheaper offerings is the fear of foreign brands. “In order to compete with foreign brands, we have brought down the average price bracket of Manish Arora’s western wear to Rs 10, 000-20 ,000 from above Rs 20,000 earlier,” said Deepak Bhagwani, director of Three Clothing Company, which owns the label.

Besides extending into accessories, jewellery and home textiles, Indian designers are increasingly seeing business through design collaborations in India.

While Mukherjee has tied up with real estate developer Samira Habitat to design five luxury villas in Alibaug, Rajesh Pratap Singh has several multiplex interior projects in the pipeline. Manish Arora has launched a crockery collection with home accessories chain Good Earth in addition to his sub-brand Fish Fry that was licensed to Reebok just as Aki Narula is collaborating with sports lifestyle brand PUMA. Rajesh Pratap Singh also plans to add sev

LS Retail to set up CoE in India

2010-01-22T07:59:00.000+05:30

LS Retail, a leading Dynamics Retail Solutions provider, has chosen Dynamic Vertical Solutions (DVS), business management applications provider, to set up its “Retail Centre of Excellence” (CoE) in India.

The “Retail Centre of Excellence”, is an initiative to provide retailers of all sizes insights into usage and application of cutting edge technologies in the retail industry and would showcase an end-to-end solution roadmap for the retail industry.

Through the Retail Centre of Excellence DVS would demonstrate the strengths of its retail offerings provide thought leadership on industry issues and promote usage of ground breaking technologies making it a centre of learning for the Indian retail community.

Gunnar Gunnarsson, CEO of LS Retail said “LS Retail is very proud to announce DVS as our chosen Retail Centre of Excellence in India. We are confident that the retail industry in India, and globally, will benefit from the technological educational and best practice learning that this Centre will provide.”

Microsoft India, the Indian subsidiary office of Microsoft Redmond, has given its full support to this initiative. DVS which works very closely with Microsoft as one of its primary Principal Partners will look to support Microsoft Dynamics Partners in India and across the globe to penetrate and support the Indian Retail Market.

Rajan Anandan, Managing Director, Microsoft India said, “The Retail Centre of Excellence will be a much required platform and space for businesses to interact, learn and adopt best of breed retail technology solutions. The CoE will act as a facilitator for the retail industry, in its quest for achieving competitive advantage in the market place.”

Through the newly created Retail Centre of Excellence, DVS will deliver business value to retailers seeking to improve their bottom line profitability.

The 'Retail Centre of Excellence' will be fully operational to go live in the First Quarter of the next financial year (April-June 2010).

Future group's home retailing sees turnaround

2010-01-21T11:56:00.002+05:30

Kishore Biyani’s Future Group has seen a turnaround in home retailing after months of decline, on the back of improved consumer sentiments and focused merchandising plans, a key group executive said.

Home retailing was a laggard among the group’s flagship Pantaloon Retail’s three business segments — value, lifestyle and home. The home segment registered nearly 10 per cent fall every month since November 2008. It had stopped giving same-store numbers since June 2009.

Same-store sales compares sales of stores that have been in the business for a year or more, which allow investors to determine what portion of new sales has come from sales growth and what portion from opening new stores. Future group’s home retailing segment comprises furniture and furnishings, electronics and durables, among others.

However, the home segment has been seeing over 10 per cent growth in same-store sales since November 2009, said Mahesh Shah, chief executive of Home Town, a home improvement retail chain of the Group. “Positive sentiment is back. A lot of people are buying new homes and such homes being delivered. The increase in real estate activity has had direct impact on our business,’’ he said.

In terms of revenue growth, the home segment is likely to see a jump of 15 to 20 per cent in the current financial year, Shah said. The segment had seen a fall of 12 per cent in 2008-09.

“The slowdown helped us to focus on individual categories and individual consumers, as to what they want. We followed a 360-day approach to the business,’’ said Vivek Biyani, director of Home Solutions Retail (India) Ltd, which runs formats such as Home Town and eZone, among others.

The chain launched new categories such as plywood wardrobes, plywood kitchens, solidwood furnitures, fabric sofas and marble dining sets to cater to growing demand for such products in Indian cities. The chain also launched eight-seater dining sets in cities such as Delhi and Kolkata where homes are bigger in size. “We are selling 1,200 wardrobes a week now compared with 350 a week earlier,’’ Biyani says.

“While others were concentrating on cost cutting, we were using our learning during the slowdown,’’ Shah says.

According to Shah, the average spending in Home Town has gone up by eight to 10 per cent in January, compared to the same month last year. He expects it to go up to 20 per cent in the coming months. “Due to improvement in sentiments and increase in our merchandise, customers are buying two-three products instead of the one they used to buy earlier,’’ he adds.

Home Town on Wednesday opened a store of over two lakh sq ft in Vikhroli, a central suburb of Mumbai, taking its store tally to 10. The chain claims it is the country’s largest home improvement store. It has invested Rs 30 crore on the store and another Rs 10 crore on merchandise. It plans to open three more such stores in the country.

“Last year, our strategy was increasing top line and making margins was easier, as commodity prices were down. Now, since prices have shot up, we want to increase volumes and increase our margins,’’ Shah says.

Kraft-Cadbury deal: What it means for India?

2010-01-21T11:54:00.002+05:30

One of the world's largest food companies, Kraft Foods, has finally bitten into sweet chocolate with its bid for Cadbury. But in the Indian market, where Cadbury is synonymous with chocolate, it’s time now to see both Toblerone and Dairy Milk on the same rack.

Kraft has finally managed to take a bite of Cadbury through its $19.6 billion bid and emerge as the No 1 foodmaker. Once the deal goes through, Kraft, known for its brands like Oreo and Tang, will get into the Indian market, Kraft has been eyeing since a very long time now.

CY Pal, non-executive chairman of Cadbury, said, “Kraft has very little presence in India at the moment, while Cadbury has an extremely strong presence in India. We are the market leaders in India and therefore it would benefit Kraft immensely in terms of broadening the base of the business in India.”

Kraft will get access not only to Cadbury's five manufacturing units here, but also over 1.2 million retail outlets spread across the country. In addition Kraft is also likely to set up their own manufacturing units to make milk products and biscuits.

But even for Cadbury, which has over 72 per cent share in the Rs 2000 crore chocolate market, it's sweet deal, say experts. Cadbury can now enter newer and high margins segments, courtesy Kraft's portfolio of over 40 super brands, many of them in the premium segment.

Ashish Nanda, partner of retail and consumer products at Ernst & Young, said, “Kraft is not new in the country, especially in urban markets where it is well known. So, the moment the portfolio is expanded, the entire relevance to the trade channel increases channel partner and economic viability improves.”

But apart from multinationals Nestle, homegrown company Britannia, which has made fortunes selling biscuits and dairy products, will also have to fight world's largest biscuit brand Oreo and Kraft Cheese. Well, in this competition, Indian consumers will now surely have much more in the plate than they can actually gulp.

Tescos to open first cash & carry store in 2010

2010-01-20T15:56:00.000+05:30

Tesco, the third largest retailer in the world, is planning to open its first wholesale cash & carry outlet in India this year, its senior official said here. "We will open our first wholesale cash & carry outlet in India this year," Tesco International and Internal Communications Director Greg Sage told PTI.

Tesco already has presence in India through a joint venture with Tatas. These stores are located in Mumbai, Bengaluru, Ahmedabad and Chennai. Greg said "we see a huge opportunity for future growth in India".

Corporate and Legal Affairs Director and Tesco Board member Lucy Neville-Rolfe said Tesco operated 4,331 stores worldwide and employed 470,000 people in 14 countries. Besides India, the other international markets were the UK retail giant Tesco has presence include Thailand, Poland, Hungary, South Korea, China, Ireland, Malaysia, Slovakia, Turkey, Japan and the US.

"We continue to expand our international business and are investing in banking, mobile phones and other retail services," he said. Each of Tesco's international businesses also has a community plan, which include initiatives to help consumers to be green and meet "our commitment to be a zero-carbon business by 2050", he added.

Carrefour sees Future in India, may ink JV soon

2010-01-19T09:07:00.002+05:30

Carrefour, Europe’s biggest retail chain, has agreed with Kishore Biyani of Pantaloon Retail to set up franchisee stores in

India after six years of wandering in the world’s second-fastest growing nation for partnerships, including with Mukesh Ambani’s Reliance Retail and real estate group DLF.

The Paris-based retailer, which is seeing revenues in its home country falling due to a tightening of spending by consumers, is expected to sign on the dotted line by March, said an executive familiar with the development.

When the deal with India’s retail king Biyani is formally announced, Carrefour would be the third among the big names entering the $390-billion Indian retail market after the Beast of Bentonville, Wal-Mart, and UK’s Tesco.

Kishore Biyani, CEO of Future Group, declined comment. Carrefour did not respond to an email from ET.

Carrefour, Wal-Mart and other big retailers from the developed world are keen to have a presence in India despite regulatory obstacles, hoping that the laws would be eased as it happened in the telecom and other sectors. Also, the cleaning up of excesses in the industry, after the exuberance of the past decade, is giving hopes of a more saner approach to business. In the last downturn, many retailers, including Reliance Retail, the AV Birla group’s More, which went on a spree in setting up outlets had to shutter many of them and a prominent name, Subhiksha, went bust. The losses continue for many, though it has slowed.

The Carrefour franchisee is likely to be a part of the Future Value Retail, a 100% unit of Pantaloon Retail, which owns hypermarket chains Big Bazaar and Food Bazaar. The Big Bazaar, which has 109 stores, contributes 65% of the Future Group’s $2-billion total revenues. Food Bazaar, a supermarket chain has 152 stores.

Carrefour has two entities in India — Carrefour WC & C India and Carrefour India Master Franchise Company.

Although the franchisee stores may be dealing with similar products as some of Mr Biyani’s existing outlets, it would serve the affluent upper middle-income and rich customers who don’t look for economy or hesitate to pay more for the experience of shopping in a luxurious atmosphere.

This would pit the Carrefour-Biyani combination against the Raheja group’s HyperCity that sells expensive products such as imported wine and whiskey.

Thierry Garnier, executive director in charge of international partnerships at Carrefour, is leading the negotiation with Kishore Biyani’s son and Future Group director Rakesh Biyani, the official said. Sameer Sain, CEO of Future Capital Holdings and a former Goldman Sachs banker, is helping Biyanis close the deal.

Negotiations get tough as parties attempt to factor in the future arrangements anticipating changes in rules.

Currently, Indian rules permit foreign direct investment in the wholesale business, which supply to other retailers, but not directly to customers, popularly known as cash-and-carry. Foreign investment is barred in multi-brand retail stores, while the likes of single-brand such as Nike and Reebok can be owned up to 51%. Multi-brand international ret

Reliance Jewels to open 100 stores by 2013

2010-01-19T09:06:00.002+05:30

Mukesh Ambani owned Reliance Retail Ltd plans to increase it's branded gold jewellery outlets to 100 within the next thee years.

The first store was launched in here in early 2009. Sprawled over three storeys and covering an area of 6,000 sq ft, the Reliance Jewels store at Bangalore proffered as many as 10,000 designs of elegantly created jewelry pieces. It is learnt that the jewelry collection here, has been assimilated from different parts of India. The availability of a wide range of gold and diamond jewelry makes Reliance Jewels a one-stop shopping venue for buyers of fine jewelry.

The competition in the branded jewelry segment in India is about to intensify with announcement of RRL. Mukesh Ambani owned Reliance Retail Limited ventured into “gems” and “jewelry trade” because of the never ending demand of jewels in India.

By the end of December 2009, Reliance increased the number of store launches for Reliance Jewels to 10. The multi-format retailer now aims to expand by opening jewelry stores in Ahmedabad, Bangalore, Dhanbad, Gurgaon, Hyderabad, Jalandhar, Jamnagar, Jamshedpur, Jodhpur, Ludhiana, Mumbai, New Delhi and Vizag adhering to core Reliance Jewels’ strategy of expansion through saturation.

“We are upbeat about our same store sales growth. The past eight months have been very good for us... with 22 per cent growth. And I think this is the best time to expand as the rentals have gone down to some extent. In the next 3 years, we will be scaling the Reliance Jewel stores to 100,” Reliance Retail Lifestyle’s CEO Bijou Kurien told PTI.

The company has plans to add 14 more by this fiscal-end to its existing 10 outlets of Reliance Jewels, which sells gold and diamond jewellery under private label RJ. “We have announced to open 10 more Reliance Jewels stores and six Time Out store by the end March with a total investment of Rs. 150 crore,” Kurien said. The new stores will come up in New Delhi, Ahmedabad, Andhra Pradesh and Mumbai, where it already has its lifestyle outlets. Besides it will also open a few shops in Kochi and Bengaluru.

All its outlets of Reliance Jewels are large format stores ranging from 2,500 sq ft to 15,000 sq ft. As per the plan, the gold jewelry at all Reliance Jewels’ stores will consist of Kolkata Filigree, Rajkot minakari jewelry, Kundan from Jaipur, Temple jewelry from Kerala, Jadau from Amritsar and so on. Even in Diamond jewelry, Reliance Jewels will offer only the best. One will find the widest variety of Diamond jewelry designs here ranging from simple daily wear to party wear items to celebrate every special occasion in a person’s life.

Reliance Retail hiring professionals from Thailand

2010-01-19T09:04:00.002+05:30

Reliance Retail is slowly filling its top slots with professionals from Thailand, a country whose retail market once used to resemble India’s with its freshly-minted organised players hemmed in by a well-entrenched network of neighbourhood stores.

The firm has already hired at least 10 people in key roles — all of them from Thailand’s Tesco Lotus. Around 20-25 more are expected to join in the coming months to run its value formats, confirmed two persons on condition of anonymity since they are not authorised to speak to the media.

The Thai professionals will be heading key functions such as operations, commercial, IT, supply chain and HR. ET had reported last month that Gwyn Sundhagul, former chief marketing officer and director at Tesco Lotus, has joined as CEO of value formats at Reliance Retail.

Titima Bantrapiwat has joined as head of supply chain and Sansahee Kubena has come on board as head of HR.

“We engage with global and domestic talent in line with requirements and identified gaps across levels in the organisation. We would not like to comment on any specific appointments,” said a Reliance Retail spokesman said. Meanwhile, K Radhakrishnan who was heading value format and Ratan Agarwal, head of HR for the value format, have left the company.

Raghu Pillai who virtually ran the show as president for strategy at the value format has been shifted to the chairman’s office to oversee alliances and joint ventures.

Many of these Thai professionals are being hired on the company’s payroll, while others are being brought in on limited-term contracts. The incoming team has been mandated to study the company’s systems and processes closely, identify the gaps and suggest remedial measures, said another person familiar with the retailer’s plans.

Reliance has been in talks with various global retail chains for a strategic partnership. ET had reported on its talks with French retail chain Carrefour to establish a partnership in the value retail business.

The infusion of foreign talent is happening in the division that runs the so-called value retail formats —Reliance Super and Reliance Fresh and Reliance Hyper. The company, which started operations in 2006 and now runs about 1,000 stores across formats, also runs a line of specialty stores such as Trends, Timeout, Digital, Footprints and Jewels. Value format stores accounts for more than 70% of the company’s revenues.

Talent shortage

India’s $37 billion organized retail industry, which enjoys only a fraction of the estimated $400 billion retail market, faces huge human resources challenge, as it scrambles to fill up ranks with able and experienced professionals. The spotlight on management talent is even harsher. Many retailers, who undertook a scorching pace of expansion during the boom years, have been hurt badly since the onset of the economic slowdown. While one major retail chain, Subhiksha, went bankrupt, a few others reportedly came close.

Reliance Retail, a subsidiary of Reliance Industries Ltd, reported a loss of Rs 260.2 crore on a combined turnover of Rs 2,400 crore last fiscal. RIL chairman Mukesh Ambani emphasized t

Retailers offer freebies, discount to spur sales

2010-01-18T18:28:00.000+05:30

For retailers, every occasion to celebrate is appropriate to do big business. This year, the Republic Day falls soon after weekend and top retailers are hiking their advertising and marketing spends by an additional 30% to 50% on offering huge discount offers, freebies to woo customers and spur sales. Before the last Republic Day, they were not so enthusiastic due to the economic slowdown, and rather preferred to maintain their consumer offers to certain categories only.

Big Bazaar, part of the Future Group, plans to launch Saalke Sabse Saste Chaar Din (the year’s most economical four days of shopping) offer between January 23 and 26, which will run across 120 Big Bazaar hypermarkets in 70 cities of India on many merchandise. Damodar Mall, group customers director, Future Group told FE, “After witnessing revival in footfalls since October last year , we are hiking expenditure for ads and marketing spends for this Republic Day over previous corresponding period by an additional 25% to 30%, and thereby cash in on the opportunity from weekend onwards as January 23 falls on a Saturday.”

“We hope to achieve 35% to 40% higher revenues through promotions during the Republic Day through innovative consumer offers apart from offering huge discounts on existing merchandise as well,” Mall added. The overall marketing budget by Big Bazaar was Rs 100 crore during the previous Republic Day, which included below-the-line advertisements, promotions and innovations, according to the Future Group spokesperson.

Meanwhile, Hypercity Retail India too plans to hike its marketing budget by over 50% for this Republic Day, over previous corresponding period, in launching innovative consumer offers on certain existing and new merchandise. This would include food, grocery and general merchandise, Ashutosh Chakradeo, head - food & grocery, Hypercity Retail ( India ) Ltd said.

Premium department store, Shopper’s Stop plans to launch new variety of ethnic apparels in private labels, which will be offered to customers at discounts with a value-for-money pricing strategy during the Republic Day. Besides, there could be offers on purchase of certain branded luxury perfumes and accessories as well, its president and CEO, Govind Shrikhande said. According to him, “Soon after New Year promotions, we feel Republic Day is the main driving force for spurring sales. Hence, we are upbeat about upcoming occasional celebrations and looking at increasing marketing spends.”

Reliance Retail loses out to VVF to acquire 3 Henkel brands

2010-01-18T18:21:00.002+05:30

Mumbai-based VVF Ltd beat Mukesh Ambani’s Reliance Retail to acquire three brands from detergent and home care company Henkel India, namely Aramusk and Moloy soaps and Mahabringol hair oil.

The move comes three months after VVF, the makers of Doy and Jo soaps and one of the world’s largest contract manufacturers of bar soaps, bought out Henkel’s plant at Tiljala, Kolkata.

Rashmin Joshi, president and director (consumer goods) of VVF, confirmed the development. “We have been looking at such acquisitions as part of our core growth strategy,” he added. Reliance Retail, which was keen to buy the three regional brands on the block to boost its private brands business, lost out because Henkel was keen to sell them off along with the plant.

“Reliance Retail was keen only on acquiring the three brands; so lost out to VVF,” an official directly involved with the development said.

The total deal is estimated at Rs 22-23 crore, with the plant accounting for Rs 17-18 crore, the official said.

Although the brands do not bring in much turnover at a national level, they are attractive local buys. Aramusk is among the oldest male deodorant soaps in the country with a loyal consumer, while Moloy sandalwood soap and Mahabringol hair oil have reasonable equity in eastern India.

“We plan to take the three acquired brands national in due course,” said Mr Joshi, pointing out that his Rs 1,350-crore company already covers one million outlets across the country. The Kolkata plant, which can produce 10,000 tonnes of soaps per year and a smaller amount of toothpaste, will be VVF’s eighth plant.

It will manufacture Henkel’s Margo, the three acquired brands, and its own Doy at the plant, Mr Joshi said.

The Chennai-based Henkel India, 51% owned by Düsseldorf, Germany-based Henkel group, put the three brands on the block last year. Media reports had said Marico and Emami too were interested in Aramusk and Moloy brands.

The company wanted to prune its portfolio to focus on flagship brands Henko and Mr White (both laundry care products), Pril dishwasher, Margo soap, Fa deodorants and Neem toothpaste.

Alongside, Henkel — which also makes haircare brands Igora, Bonacure, Glatt and Palette and Bref surface cleaners — also decided to divest the Kolkata plant to concentrate on marketing.

Henkel had acquired the plant along with Aramusk and Moloy brands one decade ago when it bought out Shaw Wallace’s consumer care division, which included Calcutta Chemicals and Detergents India.

Henkel now has only one plant in Pondicherry for manufacturing its laundry and home care products. About a dozen contract manufacturers make the rest of its products as the company wants to focus on marketing and distribution.

Apart from soaps brands Doy, Doy Aloe Vera and Jo and contact manufacturing, VVF also makes oleochemicals, a key ingredient for soaps and cosmetics. In mid-2008, VVF had acquired Henkel’s soap manufacturing plant in Poland. It was the first European facility of the company with a global capacity of 300,000 metric tonnes.

Target Corporation to sell India Operations to Wipro

2010-01-17T23:23:00.000+05:30

IT giant Wipro is all set to buy US-based Target Corporation’s India captive technology centre located in Bangalore. Sources close to the deal revealed that Wipro has finished the due diligence exercise and the deal is likely to be announced this week.

Wipro is believed to have agreed to pay $60 million (around Rs 275 crore) for the centre, sources disclosed. Target Corp, in turn, has agreed to a long-term contract of assured business for the next 5 years, and the value for the same is estimated at $500 million.

TCS and Infosys were the other two Indian IT companies in the race to takeover Target’s India operation.

Target India, known as Target Technology Services India, is a wholly owned subsidiary of Minneapolis, US-based Target Corporation. The $65 billion Target owns and runs 1,744 stores in the US and is the second largest general merchandiser in the country. Target is an upscale discounter that provides quality, on-trend merchandise at attractive prices.

In addition, Target operates an online business, Target.com. Target, which started its India operation in May 2005, currently operates from three places in Bangalore – two offices in Embassy Golf Links and one in Manyata Technology Park, and has 2,000 people on its pay roll.

As per the deal its entire operation including employees will be taken over by Wipro.

The plan to hive off India operation was initiated in the second half of 2009 when Target decided to divest non-core businesses to shore up its financials. As US went deep into recession from the beginning of 2009, Target’s revenue and profits suffered. In April-June 2009 quarter, for example, its revenue at $15 billion was 2.6 per cent lower than same quarter previous year.

Target’s India centre works as a captive operation supporting various activities of the retail chain. It provides administrative support, business analytics, supply chain management, finance and accounting, HR, call centre, global sourcing & planning etc.

Industry observers believe that Target India will be a good win for Wipro. The knowledge base and the skills available in Target India will help Wipro to offer similar services to other big retail clients beyond Target. And with the global retail sales slowly picking up, Target Corp is possibly the right target for the fast growing Indian IT giant.

Dominos Pizza (Jubilant Foodworks) IPO opens on Monday

2010-01-17T23:17:00.000+05:30

The initial public offer of Jubilant Foodworks that runs the fastfood retail chain under the Dominos pizza brand in India will open for subscription from tomorrow.

The price band of the initial public offer (IPO), through which the company expects to raise up to Rs329 crore, has been fixed between Rs135 to Rs145 per equity.The issue closes on 20 January.

Jubilant Foodworks is hitting the capital market with an issue size of 2.26 crore equity shares of Rs10 each. At the upper end of price band, the offer is valued worth Rs328.72 crore.

"Jubilant Foodworks IPO would be an interesting case to watch as it represents the growing fastfood business in India," said Sudeep Bandyopadhyay, Group president, Finance, Spice Group.

The company has already roped in several anchor investors that includes Reliance MF, SBI MF, Blackrock, Canara Robeco MF and Fidelity for a total investment of Rs44.3 crore under its pre-IPO placement.

"Retail investors will look at rightly priced IPOs. The credibility of the promoter group and the pricing of the issue are the two most critical factors," Bandyopadhyay added.

Kotak Mahindra Capital Company is acting as the sole book running lead manager to the offer.The IPO comprises a fresh issue of 40 lakh equity shares and an offer for sale of 1.86 crore shares by India Pvt Equity Fund (Mauritius) and Indocean Pizza Holding.

HyperCITY Strengthens Expansion Plans with its Fifth Hypermarket in India

2010-01-15T10:49:00.002+05:30

HyperCITY Retail (I) Limited, today launched its much awaited store at Big Thane Shopping Centre, Ghodbunder Road, Thane. After the successful launch of four stores; in Mumbai, Vashi, Jaipur & Hyderabad; HyperCITY Thane is the fifth store in India and third in Mumbai.

Commenting on the launch of the Thane store, Mr. B S Nagesh, Vice Chairman, HyperCITY Retail said, “HyperCITY Thane is another milestone in our effort to bring about a retail revolution in India. HyperCITY provided Mumbai its largest & second largest hypermarket with Malad & Vashi, and now Thane’s largest as well. With Thane, HyperCITY has now over 3 Lac sq. ft. of retail space in Mumbai alone. HyperCITY Thane will enable customers to discover the next level of shopping; whilst continuing to provide unmatched affordability, guaranteed quality and a choice of products and service. HyperCITY Thane will also help customers save money by providing a “Free Bus Service”, which will pick & drop customers from their doorstep to HyperCITY & back. 2010 will see us launch more stores in Amritsar, and Bangalore.”

Spread across 1, 00,000 square feet of shopping area, the new HyperCITY store will provide Thaneites an international ambience where they can shop in comfort in a large, modern and exciting environment. HyperCITY Thane will carry a range of over 45,000 branded products catering to needs of the entire family. Shoppers will have the option to choose from a wide array of products in every category ranging from Fresh Produce, Food & Grocery, Home Care Products, Electronics & Home Appliances, Home-ware, Furniture, Apparel and Accessories, Lifestyle Products, Footwear and much more. At HyperCITY, one can get a taste of a scrumptious selection of breads, gourmet meats, seafood and foods from all over the world.

At HyperCITY, customers can ‘discover’ something new and exciting every time they walk into the store. The furniture section offers a range of stylish and contemporary furniture for your home at great value. Fully fitted concept rooms offer home solutions and ideas to customers. Sports enthusiast and health fitness conscious will find an exhaustive range of sports equipment from leading brands. With its wide selection of fashion clothing, accessories and footwear, HyperCITY offers everything that the customer needs to step out in style.

HyperCITY houses well-acclaimed international brands like Waitrose and Raleigh. The store has developed a suite of exclusive brands across all categories viz; Fresh Basket in Food, Ebano and Avorio in Home-ware, Maxit in Sports, Technix in Appliances, City, RiverInc in Fashion among others. They are available exclusively at HyperCITY which delivers increased value to customers by offering quality, uniqueness and price.

HyperCITY will provide ‘Free Bus Service’ to ferry interested customers free of charge from nearby residential societies in Thane to the store. The customers can avail of this Free Bus Service to the store for shopping and will be duly dropped back to the pickup point at set intervals of time, thus also contributing towards the eco-friendly initiative of ‘car pooling’ and helping the customers save money.

Now customers from Thane and beyond will have Discove

Vision Express forays into Mumbai

2010-01-12T11:54:00.002+05:30

Vision Express, the 50-50 Joint Venture between Reliance Retail and Pearle Europe, expands its base nationally on the occasion of its first anniversary, by foraying into Mumbai. The opening of the first Vision Express store in Mumbai is in sync with the brand's aggressive retail expansion strategy which has helped Vision Express establish a formidable presence with 41 stores across 18 cities in the country within the first year of its operations.

The Mumbai outlet is the 41st Vision Express outlet store in the country and reiterates the reputation of Vision Express as one of the fastest growing eyewear retail chains in the country.

Having embarked on the retail journey in December 2008, Vision Express has been changing the landscape of the eyewear retail industry in India by opening world-class optical stores across the country. Within a short period of time, the company has established a sizeable geographic presence and introduced unique services, stylish international products and exacting quality standards, at very sharp prices unparalleled in India's eyewear industry.

The Mumbai foray is part of an overall aggressive expansion strategy by the format which will see wide-spread expansion in terms of cities and number of stores in existing cities in its aim to achieve numero uno optical retail chain in the country.

On the occasion of the launch, Mr. Guillame Brouwet, CEO, Vision Express said, "We are proud to complete a great and successful year of our presence in India. The phenomenal customer response to our stores has helped us bring the best of optical retail experience to the Indian consumers through our network of 41 stores across 18 cities within the first year of our operations.

With the thought of extending the unique Vision Express experience further, on our first anniversary in India we have launched our first store in Mumbai and will expand to several new geographies in the months ahead. Through our ever expanding network we promise to bring international quality and several first-of-its-kind essential and compelling services at very competitive prices to the Indian consumers."

The new store is located at Shop No. UG 33A, Next to Westside, Korum Mall, Near Cadbury Compund,Thane (West) - 400 606, Thane, Mumbai. Like all other Vision Express outlets this outlet too will offer a wide variety of fashionable and trendy optical products at affordable prices. Vision Express, Europe's largest optical retail chain will present its global optical retail expertise through this store to the consumers in Thane and surrounding areas.

With its experience in more than 25 countries, Vision Express aims to provide shoppers across India a never before experienced shopping delight through the expanding network of Vision Express stores. The core of Vision Express, "We see it your way" reflects the brand's mission to optimize customer experience and satisfaction.

The store launch in Thane will be supplemented by special 1st anniversary celebrations targeted at bringing additional benefits to the consumers including its highly popular free eye test for all customers. The free eye test at Vision Express is a

TOUCHMATE, world’s largest technology products range manufacturer enters India

2010-01-12T11:52:00.002+05:30

TOUCHMATE M.E Free Zone Co., a Group comprising of 32 companies, established in 1988, the largest manufacturer & distributor for TOUCHMATE range of computers, accessories, peripherals, household appliances, mobile phones and software products, today announced its entry into Indian market, expanding its global presence even further.

TOUCHMATE which has over 1100 technology products under its brand has formed an Indian subsidiary by the name TOUCHMATE India Pvt. Ltd., to oversee and manage its Indian operations.

TOUCHMATE has heavily invested in R&D and has factories in China and Taiwan which enables it to develop innovative products and market them worldwide. It has recently opened an office in Hong Kong which shall handle its household appliances business. Besides, it has two state of the art PC assembling units that have a collective capacity of approx. 6000+ PCs per month.

Over the years the brand has established presence in 60 countries across the globe. It has sales office in Shenzhen, China to serve bulk order shipments.

TOUCHMATE is initially introducing its exciting range of media players; digital photo frames; HDMI Hard Disk Movie Player; DVD Boombox with LCD display & TV and Radio; designer notebook skins; fashionable notebook bags; Designer USB drives; Unique Internet multimedia optical mouse; Stylish web cameras; USB stereo headsets; and Bluetooth headsets in India.

According to Mr. Vasant Menghani, Founder & CEO, TOUCHMATE M.E Free Zone Co., “Indian market has impressed the world with its statistics and business potential lately. Technology usage and adoption has increased significantly in the recent past not just in metros but even in B & C class cities. This is primarily owing to a significant increase in disposable income of not just the upwardly mobile but middle-class population as well which has led to decent traction for technology products in all spheres of life across the country. The overall economic scenario in India presents a lucrative opportunity for us to be here.”

Mr. Alok Gupta, a veteran technology industry professional and a successful businessman in the domain has an equity stake in the Indian subsidiary and shall be heading the Indian operations as its Managing Director.

“Our first priority shall be to identify and align with channel partners and thus create a formidable network of distributors and resellers. We shall cohesively work with our channel partners and support them through our marketing and promotional schemes along with aggressive advertising and PR campaign nation-wide.

Besides this we shall tie-up with major brands in large format retail (LFR) i.e. chain of stores across cities, as well as successful individual retail brands Another important aspect on our priority list of Indian operations shall be to create a strong after sales support network,” explained Mr. Gupta.

Korean giant takes 15% in Home Shop 18

2010-01-12T11:50:00.002+05:30

GS Home Shopping, South Korea’s largest and the world’s third largest home shopping network, has picked 15% stake in Network I8 promoted Home Shop 18 for $18.5 million. Home Shop 18 is a 24-hour shopping channel. Under the agreement between the two, GS Home Shopping will lend its expertise in the areas of sourcing, merchandising, broadcasting and logistics to scale up HomeShop18’s business in India.

Sundeep Malhotra, CEO, Home Shop18 told FE, “Home Shop 18 has raised $23.5 million as growth capital to fund the exceptional growth and rapid expansion of its business. GS Home Shopping earlier known as LG Home Shopping has invested $18.5 million while Network18 Holdings Ltd, which is a wholly-owned subsidiary of Network18 Media and Investments Ltd, has pumped in $5 million.”

Network18, the parent company, will remain the majority shareholder in Home Shop18 with 51% stake whereas SAIF Partners, a private equity firm that provides growth capital to companies in Asia, has 31% stake.

The remaining 3% will be held with the employees in the form of employee stock options.

Haresh Chawla, group CEO, Network18, said, “We set up the business in April 2007 with SAIF Partners, which has been pioneering investors in home shopping in India and China, as an anchor investor. It is gratifying to see that one of the world’s largest home shopping companies has come on board as a strategic partner.”

Tae Soo Huh, CEO and president, GS Home Shopping, said, “Both HomeShop18 and GS Home Shopping are the pioneers of integrating media and retail in their respective countries and this partnership will be truly formidable. We aim to employ a collaborative approach to grow the home shopping segment in India with the HomeShop18 management team.”

Reliance Retail to open outlets at corporate premises

2010-01-11T16:13:00.002+05:30

Mukesh Ambani-led Reliance Retail has devised a new business model, under which it will open small outlets at the premises of large corporates.

The company, which is a subsidiary of Reliance Industries, will soon approach big corporate houses with this proposal to implement the novel business plan, a top Reliance Retail Official said.

"We will approach big corporate houses, where thousands of people work, with a proposal to open our small retail outlets there," the official told PTI.

Elaborating on the new business model, the official said RRL envisages an employee-friendly retail format. It will provide price discounts to employees in these stores.

In the first phase, RRL plans to open Reliance TimeOut Stores, engaged in books and music retailing business, in Mumbai and Delhi.

"Our initial plan is to start this with our TimeOut stores where we sell music, books and gifts.

Canon Plans Rs 55cr Marketing Drive for Digicam

2010-01-11T16:10:00.003+05:30

Canon India, which recently slipped to third position in the digital camera category, announced its aggressive strategy for the year 2010 to target Rs 450 crore revenue in camera division.

The company plans to invest Rs 55 crore in the marketing of the camera business. Canon is also announcing new campaigns such as 'Canon on Wheels' and 'My IXUS, My Style' to tap a wider audience and reposition the category this year.

"Camera industry is growing at the rate of 35 percent per annum in India and Canon wants to replicate its success stories of the world in India too. Canon is rolling out aggressive marketing plans to touch Rs 450 crore revenue in camera division out of a total of Rs 1,100 crore in 2010," said Kensaku Konishi, president and chief executive officer, Canon India.

"To continue the momentum further, we will provide our consumers expanded portfolio of stylish and next generation digital imaging products. We are happy to launch the campaign 'Capture Mumbai' in the city of Mumbai to take our market share from 20 percent currently to 30 percent by June 2010," added Konishi.

The 'Capture Mumbai' campaign begins in January 2010 with mall roadshows at four prime venues within the city of Mumbai, where the company will showcase a wide range of cameras on display for the consumers to have a "hands on" experience. This will continue till June 2010. In Mumbai, Canon will roll out 100 roadshows during the next six months.

Across eight cities, Canon plans to reach out 50 lakh customers through a mass contact programme. To further enhance its presence in exhibitions, Canon plans to participate in 35 exhibitions across 35 cities to reach out to another 5 lakh visitors.

'Canon on Wheels' - Canon Image Mobile Express is a concept to create a wider touch and feel for Canon products and to connect with not just its customers in the metro, but also in Tier II and Tier III cities, said the company. Canon on Wheels will be a caravan of four vans that moves in a city to set up 'Canon Image Fest' mini expo that provides touch and feel experience. This will travel to cover 50 cities across India and target over 5 lakh customers.

Canon India also announced the launch of its soon-to-be launched television commercial, "My Ixus My Style". The new commercial, focused on youngsters, will be aired from 10 February 2010. The company will also be creating IXUS corners with a total of 500 outlets, out of which 150 will be available in Mumbai from today.

With the organised retail boom in India, Canon has introduced the concept of Canon League retail stores and partners and will target 150 Canon league points by providing cameras for demo to create experience points in retail stores. The Canon League programme for channel partners is to connect, develop and build a strong distribution channel.

Additionally, Canon is creating photo culture by building an online photo community of Canon camera users in India. In 2010 Canon is looking at expanding its members to 200,000 from the current 80,000.

Canon Edge, a one-stop informative website for all Canon buyers, can register and get information, discuss or share interesting tips on photography. Canon has created a panel with 12 famous photographers and six expert trainers to apply their experiences and knowledge about the nitty-gritty of photography.

Canon's camera and photo products business grew by 32 percent in 2009, the company claims. The company reported an overall revenue of Rs 840 crore in 2009, registering a 27 percent growth over 2008.

China-made Goods Taking International Online Retail Market Share

2010-01-11T15:42:00.000+05:30

Last week’s online holiday sales has once again convinced people about the prosperity of ecommerce in the 21st century. Bill Gates, CEO of the software giant Microsoft expressed his recognition with the bright future of online sales by praising Ma Yun, CEO of the largest Chinese B2B company Alibaba Group, to be the richest man in the world in 21st century. And Microsoft is moving. It has started its exploration into ecommerce by launching the Bing Cashback Search. It’s far from clear what the Bing Cashback Search will come off. But something interesting is taking place.

India’s businessmen are flocking onto eBay to sell beads for belly dance, African sellers are offering their unique ivory jewelry online, and Chinese merchants are selling low-priced electronic products to the world on the Internet.

All these are transforming the world we are familiar with, particularly Chinese low-priced electronics. In the past, Chinese electronic manufacturers made a slim profit by providing products through OEM to international giants like Walmart. And now they are making profits by selling directly to worldwide consumers at much lower distribution cost while consumers get what they want at lower price. This win-win online trade pattern is changing the conventional way of trading and foreign-trade-oriented online market places and trading platform have sprung up like mushrooms. For example, the emerging ChinaBuye.com. This Internet-based market place features electronic gadgets at the lowest price in the world with free worldwide shipping. “Our sales have more than doubled during this Christmas,” said Rose Green, Sales Director of ChinaBuye.com, “and we notice that international buyer prefer gifts costing less than $10, which is our speciality. Obviously, we’re on the right way.”

Made-in-China is now not only a word. It has become a brand. Many European and American consumers are logging onto International market places for bargains since they are no longer satisfied with the limited options provided by traditional retailers like Walmart and Dollar Shop.

Bisleri eyes markets with Indian diaspora

2010-01-11T15:38:00.002+05:30

Bisleri International Pvt. Ltd, which claims to be the market leader in India’s packaged water industry, is in talks with beverage makers and bottlers in countries such as Sri Lanka, Bangladesh, Oman and the United Arab Emirates to franchise its brand name “Bisleri”.

“We are in talks with several players and would finalize some of them very shortly,” said Anjana Ghosh, director, Bisleri, which recently began exporting packaged water to Singapore. She said she was eyeing markets with large Indian diaspora to cash in on the 45-year-old brand’s recall value. “Water is a bulky product...so the best thing is to make it locally. But the most important thing is to find the right partner.”

As per industry research body Beverage Marketing Corp.’s 2008 estimates, Asia consumes 26.2% of total packaged and mineral water produced, while West Asia consumes 3.5%.

Retail consultants said going international was the ideal growth model for a company that expects a turnover of Rs600 crore for 2009-10 fiscal, “Getting the right international partners and franchising is a good way as it does not even require capital investment,” said Purnendu Kumar, associate vice-president of retail consultancy Technopak Advisors Pvt. Ltd.

Bisleri is also looking aggressively at domestic growth After launching mineral water brand Vedica recently, it is test marketing flavoured water in Mumbai. “It should be in the market this summer,” Ghosh said.

DSF 2010 Retail registration opens for retailers across Dubai

2010-01-11T15:35:00.002+05:30

Retail outlets can start registering to be part of the upcoming 15th edition of Dubai Shopping Festival as the door was opened for registration on January 10.

DSF 2010 is expected to be a landmark edition with the participation of over 6000 retail outlets, over 150 international and regional events, and raffles giving away prizes worth millions of dirhams over 32 days of festivities.

As part of its commitment in supporting Dubai’s vibrant retail sector, DSF 2010 has included new categories to enable the scope of participation.

Registration is open until February 28, 2010. Registration forms are now available at the main branch of the Department of Economic Development at the DED offices at The Dubai Mall and Twaar Centre between 7.30am to 2.30 pm (Sunday to Thursday).

Retail outlets can be part of DSF 2010 through the following categories: DSF Sales, DSF Part Sale, DSF Discount, DSF Offers, DSF Raffle Promotion, Selling Kiosk/Stand, Promoting Kiosk/Stand, Media House, Online Promotion, and Paper/Leaflet Distribution categories.

RFID's Future Looks Bright for Indian Jewelers

2010-01-11T15:33:00.002+05:30

When radio frequency identification first began penetrating the retail industry, I thought the jewelry sector would be the first to adopt this technology, as jewelers were well positioned to justify the tag cost, and to use RFID to provide valuable reports and increase efficiency.

But RFID did not make a significant mark in this segment—at least, not in India. The primary reason may be that the industry is largely owned by traditional business groups averse to any changes in the processes they have been following for many years.

This aversion has resulted in the repulsion of any new technologies. The second major reason could be that the technology itself was not considered mature or reliable enough to handle expensive items like jewelry, for even a little flaw in the system could be catastrophically expensive to a jewelry firm.

Despite these hurdles, the acceptance scenario for India's jewelry companies has also evolved principally because people have seen or heard about successful deployments of RFID within that industry, and about the associated positive return on investment (ROI).

I very much understand and accept the fact that the advent of any new technology in India lags behind the West by two to three years. Keeping this timeframe in mind, I believe it's high time for the Indian market to adopt RFID extensively. The new generation, even of traditional business groups, is becoming more tech-savvy and enterprising in its approach.

This progressive group of businesspeople now wants to be informed, and to know how well they are competing with peers in other parts of the globe.

To support the wishes and expectations of jewelry merchants, the technology has also evolved to a much higher level. Now we can expect anti-collision capabilities in high-frequency (HF) RFID, thus enabling interrogators to read multiple RFID tags simultaneously.

Some RFID hardware vendors have enhanced the hardware to a level at which tags can be read even when stacked one on top of another. Currently, reading tags close to a metallic environment is not a challenge. We can now expect a longer read range, allowing HF RFID to be used in security gates.

Thanks to these advancements, systems integrators in India are feeling more confident and encouraged to deploy successful solution in the jewelry industry.

In general, RFID implementation in the jewelry domain is restricted to the two most serious applications: stock taking and security. At little extra cost, however, the technology can enable additional solutions that can provide visibility to decision makers in a great way.

For instance, RFID can be useful in tracking the performance of salespeople, in terms of time and the actual business he or she gets. Real-time inventory management and the movement of stock can provide some crucial data that can very useful for production management, shelf management and stock management.

With a few changes in processes, we can also keep track of an item's movement from one group of objects to another—and, in the event of any unauthorized item clustering, we can raise desirable alerts.
&nbsp

Survey:Shoppers Increasingly Go High-Tech For Shopping Needs

2010-01-11T15:28:00.002+05:30

Consumers' growing access to technology is leading retailers to become more creative in how they personalize promotions and sales as the industry continues to adopt to new technologies, according to findings by International Business Machines Corp (IBM).

Shoppers are increasingly using technologies to interact both with retailers and with other consumers, a trend even more pronounced in emerging markets. Consumers in India, China and Brazil are almost twice as willing to use multiple technologies for shopping, said IBM, as new technologies often grow faster in emerging countries.

The shift in high-tech shopping comes after research firm IDC said last month the number of mobile Internet users is expected to more than double over the next four years to more than one billion.

An IBM study, which surveyed more than 32,000 consumers globally, found 79% want to use Web sites to access and print coupons. Nearly as many want to use their mobile devices to find where stores are located, and 66% want to see what goods are in stock before going to a store.

But giving consumers real-time information about inventory can be challenging, especially when inventory is tight, according to Jill Puleri, an IBM retail executive. Puleri said IBM is looking to provide software that can instantly show consumers what is available in stores.

But she warned that if that information wasn't accurate, it could hurt a retailer's relationship with the consumer. The survey found 43% said that if an item wasn't available at a store, they would go elsewhere to find it.

The survey's results come after shopping by mobile phone jumped during the 2009 holiday season. For example, e-commerce giant eBay Inc. (EBAY) said last month the number of items bought on its site through mobile devices tripled from a year ago. Some notable purchases included a 23-foot deck boat and a Boston grand piano.

"Retailers cannot afford to sit still as this digital revolution happens," said Puleri. "They must engage plugged-in consumers in new and different ways, on their terms, and with more bi-directional feedback and dialogue."

That need can be met through various smartphone applications, like the coupon application called Yowza, which is available for Apple Inc.'s (AAPL) iPhone. Yowza allows consumers to pull up coupons on their phone to be scanned in stores.

Additionally, Puleri said the notion of "co-creating" was a surprising finding of the survey, as consumers reported they were very willing to collaborate with retailers. Puleri said retailers are also looking to reach out through social networking sites--like Facebook and Twitter--but added those interactions were most successful when consumers felt they were given exclusive offers.

Kodak plans to open 100 stores by 2012

2010-01-09T12:32:00.002+05:30

Imaging and printing solutions provider, Kodak India plans to open 100 Kodak Express stores in the country over the next two years, with an estimated investment of Rs 15 crore, a company official said.

"We plan to open 100 Kodak Express stores by 2012 with an investment of Rs 15 lakh per store. Our main focus will be major metros and tier II cities," Kodak India's Vice-President (Marketing) P N Raghuvir said here.

Presently, Kodak has 12 such stores in the country.

Kodak is the market leader in retail printing and recently became the second largest player in digital cameras category with 21 per cent market share in India, he said.

He pegged the total digital camera market in India at 1.5 million units.

Kodak, whose C140 was the highest selling model in 2009, saw a 35 per cent year-on-year growth last year. It hopes to continue the growth momentum this year as well, Raghuvir said.

Kodak enjoys a 29 per cent market share in the digicam segment, priced below Rs 10,000, which has been the major driver for its growth in the country, Raghuvir said.

The company also launched its solar chargers and a pocket size Digital Video Camcorder Zi8, which has a built-in USB arm that can be connected to personal computers directly without any cables, he said.

'NEXT' to build a Pan -India Network by leveraging FIHL expertise

2010-01-09T12:31:00.001+05:30

NEXT Retail India Ltd. is India's largest Electronics Retail Chain. Established in 2003, NEXT is amongst the giants in organized retailing of Consumer Electronics, Home Appliances, IT, Imaging, Accessories and Small Home appliances. With an overpowering presence in Tier 1 ,2 & 3 cities, NEXT is all geared up to expand its reach in Tier 4 cities now with the engagement of Franchise India. Franchise India is Asia's largest integrated Franchise and Retail Solutions Company that specializes in providing innovative solutions to its global clientele.

NEXT was incorporated to tap the immense potential of the retail industry. It has opened up a world of choices for shopping enthusiasts and homemakers, across all demographic and psychographic segments. NEXT is a multi-product showroom, stocking an entire range of electronic items right from Air-conditioners, LCD/Plasma TVs, Home Theater systems, Washing Machines, Refrigerators, Microwaves to small home appliances. NEXT retails some of the most popular brands such as LG, Samsung, Sony, Electrolux, Kelvinator, Whirlpool, Onida, Philips, Kenstar, Videocon, Sansui, including its own brand! NEXT also has a collection of Microsoft X-Box, Computers & Laptops of Acer, HCL, Lenova, HP.

Synovate India Retail Brands Survey 2007 rated NEXT as "All India No. 1 in Consumer Satisfaction" in the Consumer Durables category, which was established in the well-read Mint. The company is independently managed by the board of Directors currently operating over 500 showrooms across 16 states with a presence in 187 cities & towns spanning metros and large towns under the brand name of "NEXT".

Combining the best in quality, service, convenience and price, NEXT is also foraying into Apparel and lifestyle segments shortly.

Commenting upon the association, Mr Vijay Bhandari, Business Head, Key Accounts, Franchise India said, "We are delighted to be associated with India's Largest Electronic Retail Chain enabling Indian consumers to achieve their aspirations in a modern and enjoyable shopping atmosphere. With aggressive growth plans, NEXT enjoys a market share of 60% currently and is aiming for 75% by 2012-13 of organize electronic retails. Franchise India will strategize a robust marketing & franchise recruitment plan.

Franchise India successfully close many franchise & real estate transaction for next as per expansion plans across India with in a short span 3 months, we have the mandate of preparing an elaborate strategy for the successful implementation of its franchise program to stable its No.1 position as a promising brand. For investors looking for long term investments and stable returns NEXT is the best power brand opportunity!"

Jaipan to open 200 retail stores starting next month

2010-01-08T12:41:00.002+05:30

Mumbai-based home appliances manufacturer Jaipan Industries said it will foray into retail industry by opening 200 stores pan-India, to sell lighting accessories starting next month.

"We plan to enter into retail lighting industry by opening 200 stores starting next month, which would run through franchise operations. The company also plans to raise more capital (by way of rights issue) in the period ahead to fund our new ventures," Jaipan Industries Managing Director J N Agarwal told PTI.

Jaipan plans to invest Rs 10-crore in the first phase of retail expansion but will increase the investment size in later stages, Agarwal said, adding that shops will be opened across major cities.

Besides, the company is also mulling rights issue sometime over the next two years, to mop up funds that will be used to fuel its expansion plans, Agarwal said.

Kishore Biyani all set to launch telecom services

2010-01-08T12:40:00.002+05:30

Mr Kishore Biyani is getting ready to unleash his mobile services.

The business model is likely to be based on the MVNO platform( Mobile Virtual Network Operator) platform whereby a mobile operator does not own its own spectrum and usually does not have its own network infrastructure.

Instead, MVNOs have business arrangements with traditional mobile operators to buy minutes of use (MOU) for sale to their own customers. ``We should be ready with the telecom services within the next six to eight weeks,'' stated Mr Kishore Biyani, Chairman of the Future Group.

It was at the IRF (India Retail Forum) last year that Mr Biyani had disclosed his plans to enter the telecom space with plans of making Rs 1000 crore on the project. Currently, the telecom project is being handled by Mr Biyani himself and the services are now on the threshold of being launched soon through his retail outlets.

“There are many thoughts on generating revenues, but it our telecom project which will be unleashed within a matter of weeks,'' added Mr. Biyani.

Virgin Mobile model

Currently it is the Virgin Mobile brand which has entered India through a franchise arrangement with Tata Teleservices. The Future Group is expected to be based on a business model similar to that of Virgin Mobile.

According to sources, there will be SIM cards based on the GSM platform from the Tata DoCo o brand which will provide the back-end for the Future Group's foray into telecom.

However, there are no plans to tap into the synergies which might exist in the hardware market considering the group already has a joint venture under Future Axiom Telecom which is into sourcing and wholesale distribution of mobile handsets.

Hospitality plans

The Future Group is also keen to enter the hospitality industry with its own chain of hotels. “It is just a thought at the moment and nothing has been formed up as yet,'' added Mr Biyani.

Besides, the Future Group is also planning to upgrade its loyalty and direct marketing programmes. There would be new loyalty card which can be used across the group companies.

Future Group Shelves plan to set up stores for electrical products

2010-01-08T12:38:00.002+05:30

Kishore Biyani’s Future Group has shelved its plan to set up standalone stores for retailing electrical and lighting products to conserve cash, according to a company executive.

Home Solutions Retail India Ltd (HSRIL), a unit of Future Group, was planning to enter the Rs 2,000-crore lighting products market with its own stores, called ‘Bijli Ghar’. These were proposed to be set up initially as shop-in-shop in Big Bazaar stores and as standalone stores later. The group was targeting revenues of Rs 100 crore in the first year of operations.

“Instead of running separate stores for lighting products, we thought of launching products in our existing stores,” the executive said.

The company has instead launched compact fluorescent lamps (CFLs) and electrical accessories under the ‘LSL’ brand, the executive added.

HSRIL had set up two joint ventures with lighting products manufacturer Asian Electronics — Asian Retail Lighting and Home Lighting India Ltd — to manufacture lighting products for the retail sector and for home lighting.

On Wednesday, Asian Electronics said it was merging Home Lighting with Asian Retail Lighting and disposing its entire investments in Home Lighting.

“Both the companies were operating from the same location and doing similar work. We thought of merging the companies to bring operational synergies and cost efficiencies,” R D Goradia, senior vice-president, Asian Electronics, told Business Standard.

Even Future Group has been streamlining its operations. Late last year, the group had said it was consolidating its non-retail investments to retain Pantaloon as a profitable retail company. On January 1, Pantaloon, the flagship company of Future Group, announced that it had transferred the value retail business of the company to Future Value Retail.

Wal-Mart to bring private label suppliers to India

2010-01-07T12:22:00.000+05:30

Several global companies from whom Wal-Mart Stores Inc., the world's biggest retailer, sources consumer goods for its private labels business are seeking an entry into India to profit from the growing importance of organized retailing in one of the world's fastest growing economies.

We have a lot of international private label suppliers who are interested in setting up shop in India to create private labels, not just for Bharti Retail and Bharti-Walmart stores, but for the entire industry. We are working on those suppliers to come to India, a spokesperson for Bharti-Walmart Pvt. Ltd told Mint in an email interview.

The firm has already launched eight of Wal-Mart's private labels in India, including the Great Value brand. Bharti-Walmart is a 50:50 joint venture between the US retailing powerhouse and Bharti Enterprises Ltd.

The spokesperson declined to name the companies interested in coming to India or the kind of opportunities they were exploring.Bharti-Walmart has already introduced eight of Wal-Mart's private labels in India, which it sells at the company's sole wholesale retail outlet in Amritsar and at about six dozen Easy Day stores owned by Bharti Retail Ltd, which directly cater to retail customers.

The private labels on offer in India include the popular Great Value brand, which offers tea, local snacks, ketchup, dish-washing bars, and toilet and glass cleaners.Private labels are brands owned by large retailers that can be sold at lower prices without harming profit margins because they do not entail large marketing and advertising costs. Most large retailers in India such as Pantaloon Retail (India) Ltd, Aditya Birla Retail Ltd, Spencer's Retail Ltd and Reliance Retail Ltd are pushing private labels to capture a larger share of consumer spending in their stores.

Smart sourcing is one of the key factors in retailing success-and Wal-Mart is widely regarded to have one of the best-oiled supply chains in the world, with 61,000 suppliers in 50 countries, including India.The suppliers to the world's largest retailer by sales aren't small either. For instance, its cereal and snacks private label supplier Ralcorp Holding Inc. has an annual revenue of around $3.9 billion (around Rs17,980 crore). New York Stock Exchange-listed Cott Corp., which supplies private label beverages to Wal-Mart and other retailers, including Britain's Tesco Plc. and Germany's Metro AG, has annual revenue of $1.7 billion.

Other global suppliers to Wal-Mart include billion-dollar companies such as baby food maker PBM Products Llc, and pickles and soup supplier TreeHouse Foods Inc."As a global sourcing organization, we are always looking for emerging opportunities to get the best products for our customers, on an ongoing basis," the spokesperson said.

India allows fully owned foreign subsidiaries in most of the manufacturing businesses unless they operate in sectors reserved for small-scale industries, such as pickles, mustard oil, wax candles and safety matches, among others."It's natural for these companies to come here and it's natural for Wal-Mart to bring people it is already familiar with and who understand its needs," said Jayant Kochar, managing director of New Delhi-based retail consultancy firm Go Fish Retail Solutions.

Kochar said the arrival of such vendors would be good for the Indian economy as they would source most of their raw materials from within the country and generate employment."Indian market is huge and there is option for everyone. If good companies with proven expertise come in, they raise the bar and they improve standards," he added.

Bharti-Walmart currently sources its private labels from 120 Indian companies.But Neeraj Poddar of Ludhiana-based Asian Lakto Industries Ltd that supplies packaged juices to several local modern retailers, including Bharti-Walmart, is not worried about competition from global bigwigs. He said the learning from foreign suppliers would be useful to the Indian industry.Wal-Mart has been sourcing products from suppliers in India for at least 20 years for its global operations.

Major categories sourced from Indian suppliers include home textiles (including towels, shower curtains, bath mats, accessories, bedding sheets, kitchen linens), apparel (including wovens, knitwear and leather footwear), fine jewellery, tableware and home decor products."We are also partnering SMEs (small and medium enterprises) in India to grow their businesses by upgrading their processes, developing new products and leveraging Wal-Mart's global sourcing network," the spokesperson said.

Future Group: Value Retail Unit May Consider IPO

2010-01-07T11:37:00.001+05:30

India's Future Group may look at options including an initial public offering if its discount store business needs to raise funds, the chief executive of its retail operations said Wednesday.

"An IPO is a possibility," Rakesh Biyani told Dow Jones Newswires. "But there are no such plans now."

Future Group operates Pantaloon Retail (India) Ltd., the country's largest listed retailer by market capitalization and revenue.

Pantaloon Retail separated its discount store business, which includes the Big Bazaar hypermarket and the Food Bazaar supermarket businesses, into Future Value Retail Ltd. with effect Jan. 1. The company had in October said the move will enable capital infusion into the business.

Pantaloon Retail has raised about 7.50 billion rupees ($163 million) so far in the current financial year, Mr. Biyani said. He didn't provide details on the fundraising.

It had raised 5.00 billion rupees via a share sale to institutional investors, while a banker had told Dow Jones Newswires in July that Pantaloon Retail was looking to sell 2.50 billion rupees of bonds.

Mr. Biyani said while sales for the October-December quarter were on the "positive side," they took a hit as stores had to be shut for almost nine days in the southern Indian state of Andhra Pradesh due to political unrest.

The company has a significant presence in Andhra Pradesh, which has witnessed protests and demonstrations over plans to divide the state into two.

"There has been a significant impact there," Mr. Biyani said, without elaborating on loss in sales.

Pantaloon Retail had posted an 18% rise in net sales from a year earlier to 17.77 billion rupees in the three months ended Sept. 30.

The company projects its net sales for the current financial year ending June 30 to rise more than 30% from the year-earlier period's 76.69 billion rupees because of a strong rebound in India's retail sales.

"Sentiment (overall) is extremely positive," Mr. Biyani said.

Titan to triple topline in five years

2010-01-06T11:47:00.002+05:30

India’s biggest watch and jewellery retailer, Titan Industries, is looking to triple its topline from Rs 4,600 crore this fiscal to Rs 14,000 crore over the next five years. Bangalore-based watch and jewellery arm of the Tata Group, which did not alter its expansion plans during recession, plans to strengthen its presence in the wedding jewellery market and divert focus to smaller international watch markets such as Vietnam, Oman and Qatar.

“We did not project ambitious sales growth this fiscal due to rise in gold prices which impacted our volumes. But the next five years presents a big opportunity as we project our revenues to grow from Rs 4,600 crore to Rs 14,000 crore,” said Titan Industries MD Bhaskar Bhat.

These views were expressed before the company went into its silent period. Titan Industries has built up a portfolio of strong lifestyle brands, including the top-end jewellery brand Tanishq, fashion accessories brand Fastrack and the watch brand Xylys.

Titan, which has been selling Tommy Hilfiger and Hugo Boss range of watches in India, drew up its five-year plan in April 2009. It launched three formats including lifestyle accessories chain Fastrack, high-end diamond jewellery boutique Zoya and pure-play watch retail format Helios, which is being ramped up to 50 outlets by FY13.

Over the next five years, the topline growth will still be led by Tanishq, with the division expected to contribute Rs 10,000 crore. Diverting focus from the US market—where it closed two Tanishq stores while navigating recessionary pressures—Tanishq will adopt a highly design-led, diamond-robust and large store intensive strategy.

“The opportunity is still very large in India as the jewellery market is expected to grow from Rs 80,000 crore to around Rs 1,25, 000 crore by 2014-15. We don’t want to renew attention on international markets yet, “ Mr Bhat added.

Tanishq, which has been offering relatively low-ticket value products for convenient every-day wear, is slowly edging into the wedding jewellery market. An additional 50-store rollout plan, driven by a number of large-format (15, 000 sq ft) stores, will see it compete in a market that is heavily skewed towards plain gold designs that are often made-to-order for brides.

The watchmaker is, however, switching gears in its international strategy for watches. It has zeroed in on newer smaller markets such as Vietnam, Oman and Qatar as opposed to existing market Dubai, which underperformed this year. The company intends to aggressively invest in advertising while growing its distribution presence beyond traditional watch stores within these markets. The Middle East, South East Asian and African countries together account for 10 per cent of the watch division’s turnover.

Even in India, Titan harvested growth from selective markets where the sales grew. Together with significant overhead cost cutting, Titan will see a reasonably good bottomline this fiscal, Mr Bhat said. In fact, this improved profitability is also a function of its revamped mass-market strategy that saw Sonata watches undertake a major stock correction in April. This was done to balancing out inefficiencies in the brand’s distribution system.

“Once the investment by the trade was brought down, with sales remaining the same, profitability improved. After that, we focused on consolidating the business,” Mr Bhat added.

Future group mulls listing value retail entity

2010-01-06T11:46:00.000+05:30

Kishore Biyani-led Future Group, which recently hived off its value segments —Big Bazaar and Food Bazaar— into a separate entity called Future Value retail, is now looking to list this company independently. Future Group director & CEO-retail Rakesh Biyani said this was one of the options the company would seriously consider for funding its growth.

"With the subsidiarisation of the value retail business, one option is to list it independently. If there is a listing, it should happen this year," Mr Biyani told ET.

Earlier this week, Kishore Biyani-led Pantaloon Retail (India) in a filing on the BSE had said that it had transfered its value retail business — both Big Bazaar and Food Bazaar — to its wholly-owned subsidiary Future Value Retail (FVRL).

The transfer of the two chains to the value subsidiary came into effect on January 1, along with all its assets, rights and obligations and employees.

Mr Biyani was in town on Tuesday for the launch of Wilson’s new range of tennis rackets, in tie-up with Winner Sports, a subsidiary of Pantaloon Retail India which has exclusive rights to distribute the product in India.

On the source of funds, Mr Biyani said that the group has a total requirement of Rs 1,800 crore, of which Rs 750 crore has been raised so far. "Listing the value retail business is one of the options we are looking at to fund our growth."

On the impact of food price inflation and whether there will be a price hike of any of its private label products, Mr Biyani said they were trying to sustain prices as low as possible. "There are good indications that inflation might come down so we will hold onto prices even at the expense of margin. We will take a call in the next 4-6 weeks on prices."

Pantaloon transfers value retail biz to Future Value Retail

2010-01-04T11:26:00.000+05:30

Kishore Biyani-led Pantaloon Retail (India) today said it will transfer its value retail business to its group company, Future Value Retail.

The company's committee of directors at a meeting held on December 31 approved transfer of value retail business of the company to Future Value Retail--a wholly-owned subsidiary, Pantaloon Retail (India) said in a filing to the Bombay Stock Exchange.

Pantaloon's value retail business would be transferred with "all its assets, rights, liabilities or obligations of all nature and kind, along with its employees related to value retail business on an on-going concern basis," it added.

The value retail business would commence with effect from today in Future Value Retail Ltd, it said.

Global tie-ups, private labels to be buzzwords in retail this year

2010-01-04T11:24:00.000+05:30

Tie-ups with international retailers and brands, emphasis on profitable growth and increased focus on private labels are set to be key trends in the Indian retail sector in 2010, say retailers and consultants Business Standard spoke to.

Though foreign direct investment in single-brand retailing and cash-and-carry ventures are allowed along with franchising and licensing pacts as of now, 2009 saw most of the foreign retailers focusing on manage the business in their home countries, where they were seeing declining sales.

“In 2010, a lot of international retailers and brands are most likely to look at India as global markets have stabilised and the Indian economy has proved to be better than most other countries. These factors give a lot of confidence for them to invest in India,” said Arvind Singhal, chairman of Technopak Advisors, a business consultancy.

Wal-Mart has set up its first unit in the country and Tesco, the UK’s largest retailer, is providing back-end support to Tata’s hypermarket Star Bazaar, Carrefour is said to be talking Kishore Biyani’s Future Group for a possible tie-up.

Industry sources said a number of international brands are also holding talks with Future Group, Reliance Retail and Spencer’s Retail for tie-ups.

Devangshu Dutta, chief executive of business consultancy Third Eyesight, believes franchising and licensing agreements could be a major avenue used by overseas brands to enter the country.

“Our research shows that 45 per cent of fashion and lifestyle brands, which have entered India in the recent past, have used this route because it gives a quick entry and allows tie-ups with partners who have good real estate capabilities,” Dutta says.

A profitable growth Though retailers such as Reliance Retail, Aditya Birla Retail and Spencer’s Retail closed hundreds of stores or shifted stores to economical locations in 2008 and 2009 and took various steps to cut costs, they are likely to continue to focus on profits and boosting margins in 2010.

Shoppers Stop’s top management took 15 per cent salary cuts, while 300 floor-level staff were not replaced. The company shrank its office space 20 per cent and corporate office expenses by 40 per cent to cut losses.

Delhi-based Vishal Retail, which has been battling cash woes and mounting debt, relocated 25 stores in the financial year 2009 and 10 stores since April 2009. It is now planning to close 20 more and go only through the franchisee route.

“In 2010, our strategy is to increase margins, reduce costs and boost revenues. In 2009, we mostly focused on controlling costs,” says Thomas Varghese, chief executive officer of Aditya Birla Retail, part of the Aditya Birla group. “We will watch the situation and open stores,” Thomas adds.

“Retailers will not book properties at ridiculous rentals and look at private labels to boost margins. Growth with profitability is the main mantra in 2010,” says Singhal.

Private labels to rise Most retailers like Future Group, Spencer’s Retail and Aditya Birla Retail, among others, are stepping up their private label plans to boost margins. The reason: Private labels in food and groceries carry margins of 25-35, while private labels in apparel and accessories offer more than 40 per cent margins.

Future Brands, which manages the private labels of Future Group, is expecting a turnover of Rs 750 crore in 2010 (the group’s flagship Pantaloon’s financial year ends on June 30), 14 per cent growth.

Private labels contribute 30 per cent of its sales in FMCG and 25 per cent in personal care products. The group is expanding its private label portfolio further. It is planning to launch its own brands in lingerie and a toothpaste brand ‘Sach’, according to Future Group CEO Kishore Biyani.

Aditya Birla Retail, which has more than 400 products in its private labels, plans to take its share of private labels in overall revenues from 19 per cent to 25 per cent next year.

RPG’s Spencer’s Retail is also planning to double the contribution of private labels and fashion to its overall revenues in the next couple of years.

Spencer’s plans to launch several new private labels across categories. Under its brand ‘Smart Choice’, the company will launch floor cleaners, savories and chips, wines, air-freshners and cakes in the next two months. Under its ‘Livin Smart’ brand, the company has launched categories like quilts, handloom towels, dining accessories and, under its ‘Gerat’ brand, Spencer’s recently launched a mixer grinder and plans to launch a DVD player soon.

Reliance Retail to open 45 books & music stores by Dec 2014

2010-01-04T11:21:00.002+05:30

Mukesh Ambani-led Reliance Retail Ltd plans to open a total of 45 stores of its books and music retailing business -- Reliance TimeOut -- across India over the next three to five years.

The multi-format retailer, which operates seven stores of TimeOut, said it wants to tap India's Rs 3,500-crore book retailing industry, of which only 40 per cent is organised.

"In the next 3-5 years (or December 2014), we will have a total of 45 TimeOut outlets across four states - mainly in western and southern India. Our strategy is to first saturate a town, then a state followed by the entire region," Reliance Retail, Business Head, Reliance TimeOut, Deepinder Kapany told PTI.

He said the next couple of months will see five stores being opened in Mumbai.

"The next few stores in (calender year) 2010 will come up in Delhi, Ahmedabad, Mumbai and Bangalore. We want to saturate Gujarat, Maharashtra, Karnataka and the National Capital Region (NCR)," Kapany said.

This is part of an overall aggressive expansion strategy by the format, which will enter Pune, Nagpur, Hyderabad, Mysore, Mangalore, Ahmedabad, Baroda and Jamnagar.

Reliance Retail will expand through the cost-effective model of revenue-sharing format with property owners.

Retail: The wonder decade

2009-12-31T10:50:00.000+05:30

The transformation of retail in the post-liberalisation decade was dramatic. It not only forever changed our consumption habits and patterns, but also left indelible imprints on the landscape of our cities in the form of monstrous malls and superstores.

THE FIRE’S HERE

Organised retail grew at a blistering pace. In 2000, it was so small that formal estimates of the industry’s size are unavailable. But in 2002, it grew to a $2-billion industry. Today, according to consultant KPMG, the sector has an annual turnover of $37 billion, while the retail industry is at about $350 billion. This year, consultant AT Kearney ranked India as the most attractive emerging retail destination in the world

THE RISE OF ORGANISED RETAIL

In 2000, today’s marquee retail chains were fledgling operations, with one or two stores. Piramal Group’s Crossroads, considered India’s first mall, started operations in 1999. For retail chains such as Pantaloons, Big Bazaar, Shoppers’ Stop, Spencers and FoodWorld, it was a decade of scorching growth

Big profits spawned ambitious expansion plans, many of which ran into roadblocks when real estate prices zoomed ahead of the economy. Retailers started hurting further when consumer confidence levels took a hit following a nasty economic downturn in major Western economies in September 2008. Some retailers, who did not recast plans in time or weren’t nimble enough, went out of business, or are teetering on the verge of insolvency

The decade that created a major new industry is ending with many of the players in the sector in disarray

POLITICS AND FDI

The rise of organised retail and the thorny issue of foreign direct investment made headlines as small ‘kirana’ store owners’ concern that organised retail would put them out of business became a political issue. Violent protests erupted across the country; Uttar Pradesh even banned the operations of Reliance Retail

Global majors such as Wal-Mart and Carrefour, facing slowing growth in home markets, forged partnerships in India, where foreign capital is allowed only in cash and carry stores, or stores catering to other businesses and not the end consumer

ET Comment

FDI in retail a distant dream

Foreign Direct investment in multi brand outlets will continue to be a political hot potato even as domestic retailers shed their animosity towards their foreign counterparts and say they can benefit from the transfer of technology, superior supply chain management and logistics expertise, apart from capital, of foreign retail groups. The next two years will see consolidation in the Indian market. Chains with less than 100 stores will either merge with large players or shut shop. Furthermore, shoppers are unlikely to see the mindless expansion of the past two years.

Retail realty yet to recover fully

2009-12-31T10:48:00.000+05:30

Indian retailers may be rejoicing at better sales in the October-December festive season, but a full recovery of the retail real estate sector still hinges on availability of spaces at competitive rates and improvement in consumption, global consultant C B Richard Ellis has said.

“The retail sector will take some time to fully recover, depending on the economic growth or improvement in domestic consumption , consumer sentiment and availability of retail space at competitive costs,” CB Richard Ellis (South Asia) chairman and managing director Anshuman Magazine said in a statement here on Wednesday.

Improving consumer sentiment and competitive retail rentals had, however, resulted in the sector “ambling towards better activity levels, especially in Tier I cities” , he added.

The global real estate consultancy firm also expects an oversupply of new office spaces across the country, which will keep rentals flat in 2010 despite positive indicators that demand for commercial real estate was improving.

“On the office market front, demand is expected to improve although the rentals are expected to remain flat in the medium term due to the forecasted large supply of office space,” Magazine said.

The year 2010 may, however, see “some sustainability in the residential market as activity levels have improved,” he said.

Prices for residential, retail and commercial real estate across the country plummeted in 2009 as a global economic meltdown and tight liquidity froze demand.

Residential sales declined significantly and demand for office spaces saw a substantial drop, triggering a decline in rentals and postponement or cancellation of projects , while retail real estate was also significantly impacted.

However, each of these three segments have witnessed an improvement since the previous year as reduction in prices, softening of interest rates and an improvement in the economic sentiments led buyers back to the market, the consultancy firm said.

Biyani to hive-off value segments into Future Value Retail

2009-12-27T16:44:00.001+05:30

Kishore Biyani-led Pantaloon Retail India Ltd (PRIL) will hive-off its value segments — Big Bazaar and Food Bazaar — into a separate company called Future Value Retail from January 1.

The BSE-listed company has completed all formalities and gained shareholders approval through a postal ballot to hive-off this segment, the company Managing Director, Mr Kishore Biyani, said on Wednesday.

“The postal ballot and other processes are complete and we are looking at January 1 as the starting date for Future Value Retail,” Mr Biyani told reporters on the sidelines of a conference here.

The value retailing segment of the company consists of supermarket Food Bazaar and hypermarket Big Bazaar, which constitutes up to 55 per cent of PRIL’s total revenues.

“At the company level (PRIL), we are expecting growth to jump by 30-40 per cent,” Mr Biyani said, indicating that the Indian retail industry has finally crawled out of the woods.

The company has plans to open 140 Big Bazaars and Food Bazaars over the next 4-5 years in addition to the 120 stores it already operates across the country.

Mr Biyani said that Pantaloon Retail will spend close to Rs 400 crore in the rest of this fiscal (till June 2010) for expansion. — PTI

Vishal Retail cans small-format store plans

2009-12-22T10:34:00.001+05:30

Vishal Retail, which is undergoing a Rs 730 crore debt restructuring exercise, is exploring all revenue channels, including renting out shop-in-shop space to regional food and beverages players in its hypermarket stores across the country. The retail chain, while is in no mood for expansion for obvious reasons, will be relocating a few stores in hinterland which failed to deliver according to expectations.

It is looking at Rs 50-100 crore working capital for the next one year, which it hopes to mop up through its corporate debt restructuring (CDR) proposal.

Vishal is also putting on hold all its small-format stores. It has closed all its around 12 Corner Marts set up within HPCL petrol pumps and kept plans for speciality stores in apparel, footwear and electronics on the backburner, according to group president Ambeek Khemka.

"Hypers are our focus area as of now. We are putting all our speciality store formats on hold," Khemka told DNA.

The company had started with a couple of speciality stores including Fashion Marts in Delhi but these have also been closed down, said a company insider.

Out of 204 stores across northern and western India, about two dozen have been closed. Only 171 are in operation, Khemka said.

Vishal started going through a rough patch July-August 2008 onwards when it planned to open 100 additional stores with bank funding.

For this, the company had undertaken merchandise purchase from vendors when the slowdown set in.

"While there was an inventory pile-up in its warehouses because the new stores did not start rolling out, bank funding started drying up. They also wanted to recall their funds.

The markets looked gloomy and Vishal had to drop plans for a follow-on issue," said a source.

Khemka said that losses in the last two quarters amount to Rs 150 crore.

Other plans in the pipeline are stake sale to a strategic investor and, if a good deal comes then the promoter, R C Agarwal, is open to selling out his 64% stake, Khemka hinted.

"All options will be studied and the best one will be opted for," he said. But, under the corporate debt restructuring exercise, the company has time till mid-February to finalise its proposals. Khemka said that the company wants the average interest rates reduced to around 7% from the current 12%, the tenure of repayment at 9-10 years and a moratorium period of up to four years. The repayment was supposed to have happened this year. Lenders to Vishal include the State Bank of India, HDFC, ING Vysya, Bank of India and Uco Bank.

Birla, SBI tie up for co-branded cards

2009-12-21T17:02:00.000+05:30

The Aditya Birla Group has forged an alliance with SBI Cards to rollout co-branded cards. The group plans to launch these cards in the next four to six weeks.

This tie-up would cover group companies and look at strengthening its financial services play through this partnership, said Ajay Srinivasan, Chief Executive, Financial Services, Aditya Birla Group. Co-branded cards are credit cards, which are associated with a particular firm such as an airlines or retail outlet. They offer benefits like frequent travel points and special discounts.

Srinivasan said the aim is to reach 60 million retail customers being served by group companies like idea cellular and other retail businesses. The $29-billion group has substantial retail customers in financial services – insurance and asset management, telecom.

SBI Cards official said its outstanding card base is 3 million. It would like to cover one million Birla group customers in the medium term, he added. Co-branded card constitute 20-30 per cent of its card business.

SBI Cards is a 60:40 joint venture between State Bank of India and GE Capital has a market share of over 12 per cent. It has similar partnership with organisations like Indian Railways and Spice Jet.

Shopper's Stop to invest Rs 350 crore in 5 years

2009-12-17T13:39:00.000+05:30

Retail chain Shopper's Stop plans to invest Rs 350 crore to set up 32 stores and augment its pan-India network, taking the total to 60 over the next five years, a top company official said.

"We have drawn up investment plans of Rs 200 crore for adding 18 new stores with about three million square feet in the next three-years period," President & CEO of Shopper's Stop Govind Shrikhande told PTI here.

The stores will be opened at Ahmedabad, Amritsar, Mysore, Mangalore, Aurangabad, Chandigarh and other Tier II cities, Shrikhande said.

A further Rs 150 crore has been earmarked to add 14 more stores but plans for this are still in the preliminary stage, he said.

At present, the retail chain has a network of 28 stores in 12 cities all across the country over an area of 1.88 million sq feet.

Gitanjali buys mid-size retail chain

2009-12-17T13:25:00.000+05:30

The Gitanjali Group is stepping up its focus in the organised retail segment. The company has acquired a 76 per cent stake in Salasar Retail, a chain of mid-size departmental stores across India and will soon re-brand the Salasar stores as Maya.

These outlets will offer jewellery and different lifestyle products including apparel. Gitanjali is expecting to clock a turnover of about Rs 1,000 crore from Maya stores over the next three years, with nearly 70 per cent coming from jewellery sales.

Mehul Choksi, CMD of Gitanjali Group, says that the acquisition would help Gitanjali to expand its retail footprint and grow its jewellery business.

Gitanjali, which owns jewellery brands like D'Damas, Asmi, Sangini, Nakshatra and Gili, has nearly 1,250 outlets. It also has more than 500,000 sq ft of retail space and is planning to increase it up to 1.5 million sq ft within the next three years. Gitanjali also operates 143 retail jewellery stores in the US through the acquisitions of Samuels Jewelers and Roger Jewelers.

With Salasar’s 10 stores, the groups adds about an estimated 200,000 sq ft operational area, in cities like Delhi, Cuttack, Kanpur, Gwalior, Guwahati and Indore. Devasish Dutta, CEO, Gitanjali Lifestyle, says “There will be a revenue sharing model for national and international brands that will be retailed through Maya stores.” Gitanjali has roped in various leading mall developers under the revenue sharing model.

The average ticket size in Maya stores in the tier 2 and 3 cities should be about Rs 25,000 per customer for diamond jewellery. The company expects jewellery to remain the major selling item in Maya stores.

Lifestyle appoints new managing director

2009-12-16T10:08:00.000+05:30

Landmark Group's Lifestyle International has announced the appointment of Kabir Lumba as the Managing Director effective from December 2009.

As MD, Lifestyle International (P) Ltd, Lumba would be heading Indian businesses of Lifestyle, Home Centre, Bossini and Splash brands.

He has been associated with the group for over 5 years and was appointed as executive director - Lifestyle in April 2006. He joined the group as president - Buying and Merchandising in May 2004. Prior to that, he was working as chief operating officer with Proline India Limited and Pantaloon Fashions (India) Private Limited.

He started his career in retail industry with Little Woods International Private Limited in 1993.

Pay per day: New rental plan for retailers

2009-12-15T18:13:00.000+05:30

While retailers are still working with the option of cutting costs and negotiating rentals to gear up for expansion, mall owners, who are vital for the organised retail sector, are experimenting with a new method - rent on a daily basis.

Atul Ruia-owned Phoenix Mills Market City mall has already implemented the system at a few of its locations, while others such as Inorbit and Nirmal Lifestyle, are actively considering it as an innovative option for their forthcoming malls.

Currently, the fixed rental or revenue share scheme is widely practiced with minimum gurantee money, depending on the brand, product and location of the space. Fixed rental was much preferred till the liquidity crisis spread and the global demand slump hit both retailers and mall owners.

“We are receiving quite positive response and have planned to implement it (the daily rental model) across the country,” says Phoenix Market City managing director Atul Ruia. “It is a viable option in an industry that is just recovering from a period of uncertainity.” India’s organised retail market, roughly estimated at Rs 20,000 crore, and which is closely connected with malls, was among the first sectors in India to be affected by the crisis as consumers postponed purchases. As a result, many retailers and mall owners started looking at various options including revenue sharing and a minimum guarantee amount.

Under the new process, the retailer will have a joint account with the mall owner and at the end of each day, the share of mall owner is debited to his account.

In the previous method - the revenue sharing model - percentage rents were payable annually, quarterly, monthly, or upon achieving breakpoint sales.

“We believe any innovative method that could streamline the system and synergy between the owner and the retailer is welcome,” says Inorbit CEO Kishore Bhatija. “We are looking at implementing first at our Hyderabad mall.”

Like Phoenix, Inorbit too has been in favour of the new model for its malls at Hyderabad, Pune and Bangalore. Inorbit’s mall at Hyderabad, which opened in October this year, has seen 66% occupancy on the revenue sharing model, while the remaining would be on daily basis, Mr Bhatija added.

Phoenix was first off the blocks, implementing it at its new malls in cities such as Mumbai, Pune, Bangalore and Chennai. Phoenix has three malls operational and plans to open seven in next three years, where this method will be applicable. It is now implementing in Tier-I cities and latter will be in other cities too. Phoenix also plans to open malls in smaller cities like Lucknow, Agra and Indore.

Nirmal Lifestyle, which is all set to launch its second phase of expansion next year, has planned for 30% remaining space at its new mall at Mulund, a Mumbai suburb. Chairman Dharmesh Jain says this model will evolve as a realistic method of revenue collection. “It would be beneficial with much transparent transaction between the two,” Mr Jain added.

However, the industry sees this practice at a very nascent stage. Jones Lang Lasalle Meghraj managing director (retail) Shubhranshu Pani says, “Though this method would derisk the retailer from the pain of high rentals, it will take another two three years to be widely used. “Retailers are pressing for better options before signing revenue sharing agreements rather than going for pure rental arrangements with mall owners,” Mr Pani added.

Marks and Spencer Scaling Up in India

2009-12-15T18:11:00.000+05:30

British retail major Marks & Spencer is looking at scaling up its India operations and plans to open at least 50 more outlets in the country over the next few years.

The company, which is present in India through a joint venture (JV) with Reliance Retail, is also looking at increasing its product range in the country.

"We currently have 14 stores across seven cities in India and further plans to open at least 50 new stores in India over the next few years," Marks & Spencer Reliance India Pvt Ltd Head of Marketing Nandini Sethuraman said in an e-mailed response to PTI.

"Marks & Spencer believes India offers significant expansion opportunities and the potential is huge with a wider range of products, bigger M&S stores and a better brand experience overall," she added.

Sethuraman said the initial investment in the JV was of 29 million pound (around Rs 220 crore) and both the partners may put in more money in future.

"The total value of the initial investment into the JV will be up to 29 million pound sterling, wherein M&S invested up to 14.79 pound sterling and Reliance Retail invested up to 14.21 pound sterling. Both parties will provide further funding in the near future," she said, without giving more details.

Hamley's to open store by February

2009-12-14T09:25:00.000+05:30

Famed British toy retailer Hamleys will make its India debut with a 22,000-square-feet store at the popular Phoenix Mills in Mumbai, by February next year.

Reliance Retail, which has a 20-year-franchise agreement with the retailer, will set up 20 stores in the first seven years of the agreement.

Besides Mumbai, other cities on the retailer's list include Delhi, Bangalore and Chennai in the first phase of the launch. The second store, says Bijou Kurien, president & chief executive, lifestyle division, Reliance Retail, will be launched in Chennai by June next year. This will be a smaller store, roughly 12,000-square-feet in size. “Stores in Delhi and Bangalore will come up next, but we will first monitor the performance of the first two stores,” says Kurien.

Hamleys’ flagship store in Regent Street, London, is a five-storey-structure, over 54,000-square-feet in size. Other Hamleys stores in the UK and rest of the world are slightly smaller. The franchise agreement with the 248-year-old retailer will allow Reliance Retail to use the latter's branding, store design and best practices when setting up outlets in the country. “They will also provide training to staff in soft skills etc,” says Kurien.

Hamleys was acquired by Baugur, the Icelandic investor that also owns Oasis and House of Fraser, for £47 million in 2003 and has since set its sights on international expansion. However, so far, the group only has a small presence in Denmark but has opened a few stores in West Asia.

Brand experts said as a British institution that may possibly be as well known overseas as at home, Hamleys is likely to enjoy a head-start in many of its planned new markets. The Regent Street shop is in fact one of London's 10 most popular tourist destinations and is visited by four million people a year. Moreover, Hamleys prides itself on a history of breaking down cultural barriers. In 1909, for instance, it became the first store in Britain to sell a novelty from China called ping pong.

Reliance Retail will not only stock Hamleys merchandise, but also products that are exclusively available to the UK retailer.

Besides, allied national brands from manufacturers such as Mattel, Funschool etc will also be available at the outlets. “The overarching branding will be Hamleys. But there will be space available in the store for allied brands,” says Kurien.

Some of the 20 stores will be located in tier-two cities as well.

The toy retail market in India is roughly Rs 2,500-3,000-crore in size. Of this, about 25 per cent comprises the branded market. The balance 75 per cent is made up of imported toys and products manufactured locally. The total toy retail market, say experts, is growing at 10-12 per cent per annum in the country. But the branded portion has the potential to grow even faster at 25 per cent, they add.

Bharti Retail Expansion Plans

2009-12-12T13:40:00.000+05:30

According to a top official of Bharti Retail, post completion of its rollout in northern zone, Bharti Retail will look at expanding in the western and southern zones.

"From January 2011, we will expand in different regions and are considering options now," Bharti Enterprises vice-chairman and managing director Rajan Bharti Mittal said.

Although we have not finalized the regions yet, but it is a toss between south and west, he told reporters on the sidelines of a Federation of Indian Chambers of Commerce and Industry (FICCI) meeting here.

Bharti Retail currently operates 27 Easy Day stores and 2 Easy day mini hyper markets in Punjab and Haryana.

"We are targeting 200 stores, mostly Easy day by 2011 in the northern region with a 1000cr revenue target. By December the total store count is expected to be 70," Mr Mittal said.

Packaged healthy snacks for weightwatching consumers

2009-12-09T10:11:00.004+05:30

Snacking comes naturally to Indian consumers. With the mind boggling variety in mid-meal snacks, the pakoras, batata wadas or chaats have always lived happily besides the chivdas, the potato wafers and the kachoris.

In recent times, the happy co-existence has come under threat. India has already managed the dubious reputation of becoming the diabetes capital of the world.

The threat of heart diseases is also alarmingly high. These numbers are ringing alarm bells, among a section of educated urban elite, and of course, brand marketers. For this set, a well-rounded belly that was once 'a sign of prosperity', is now a call-for-action. Not that everyone jumps on to the treadmill overnight, but there's a huge intent among consumers to be on the right side of the weighing scale.

"The desire and obsession to stay fit and increase in awareness levels of health concerns have helped grow the category," agrees Anuradha Narasimhan, category director, health & wellness, Britannia. But as Deepika Warrier, executive director, marketing, Frito Lays warns, consumers need the best of both worlds. "Indian consumers are clearly looking for choices that enable them to snack smart with absolutely no compromise on great taste," she says. It's this sentiment that marketers are playing on as conscious consumers are attracted like magnets to the calorie contents on branded snack packs.

For the organised Rs 3,000 crore branded snacking segment, that's both a threat as well as an opportunity. Because, as consumers are trying to stop unhealthy eating habits, there's an overpowering urge to stray in between meals. It's that temptation that the health snacks segment that caters to your cravings for a quick snack is hoping to conquer.

According to industry estimates, the segment is currently Rs 450 crore (15% of the entire snacking category) and is among the fastest growing category segments.

Prashant Pandey, GM, marketing, Horlicks that extended the milk beverage brand into cereal bars says, "Packaged healthy snacking is a fairly new segment, still at a nascent stage." But his company has ambitious targets and expects cereal bars to be worth Rs 100 crore in three years.

That assumption is being made on the fact that with rising incomes, fast paced lifestyles and irregular food habits, the need for health snacks is getting stronger. Pandey adds that growth of modern retail formats will be another factor in growing this business.

Naturally, the latent potential is drawing the attention of the biggest names in the business and also newer players. Among those attracted to this space include Britannia, PepsiCo foods, Parle Products, Kellogg's and even beverages players like Parle Agro, GSK Consumer and consumer goods companies like Marico.

Even other established names like Nestle Maggi are offering healthier options like wheat and rice based noodles targeted sharply at the health conscious.

What's helping these entrants is the changing and erratic, eating patterns particularly of working and college going urban consumers. Marketers agree that in urban India the time devoted to a full meal is increasingly under pressure.

But if consumers are spending less time on each meal, they are eating less but more frequently. Narasimhan says, "There's an increase in the number of eating occasions for consumers from 3 main meals to 6 snacking occasions." Increasing the share on multiple occasions is what prompted players like Britannia to extend its NutriChoice range to variants like 5Grain, Arrowroot and Digestive biscuits and so on.

It's for a similar reason that Kellogg's, known otherwise as the "breakfast" cereal major decided to seek an opportunity as the afternoon snack — a space where Maggi was entrenched among school going kids. The company retails Kellogg's K-Pak, a low fat cereal at attractive price points. Anupam Dutta, MD, Kellogg India says, "K-Pak was launched to address the problem of affordable nutrition in India. The brand has grown well due to accessible pricing and widespread distribution."

While Britannia's success in digestive biscuits led to the launch of Parle Digestive biscuits about a year back, this year a clutch of companies came with interesting offerings to indulge and tempt the senses of healthy eaters.

While GSK entered the arena with Horlicks Nutri Bar, Parle Agro launched Hippo, PepsiCo with Aliva; Parle Products introduced Monaco Smart Chips and Marico extended Saffola into Zest baked snacks.

Horlicks Nutri Bar is targeting the young working adult segment for the cereal bar. Pandey claims that the early indications from the market are quite encouraging. For global foods and beverages major, Pepsico that started transforming its entire portfolio a couple of years back, the launch of Aliva in India is part of that transformation process.

Deepika Warrier, executive director, marketing, Frito-Lay says, "Aliva is the result of over 3 years of extensive consumer insight work & local product development in close sync with Frito-Lay's global product development expertise." Aliva joins Cheetos Whoosh — a wholegrain range and the 'snack-smart' Frito-Lay's range.

Parle Agro with Hippo and Parle Products with Monaco Smart Chips are the newest entrants in the health snack market. While Hippo was launched in June this year, Monaco Smart Chips came in this November.

Monaco Smart Chips is looking at expanding the consumption base of the mother brand Monaco, which "is a salted biscuit and snacks in India are predominantly salted," explains Shalin Desai, senior brand manager, Parle Products.

Parle has signed on Aamir Khan to endorse Smart Chips, as his health-conscious image lends well to the brand. Like Aliva, Smart Chips is also a cracker, baked and available in four flavours. Meanwhile, Hippo that marks Parle Agro's entry into the snack food category is shy of calling itself a health snack, to counter the danger of alienating a certain set of notso-conscious consumers. Nadia Chauhan, CMO, Parlo Agro says, "Health has different effects on different people's mind.

Many are scared by the preposition and most think it is expensive." She adds that Hippo's made a conscious attempt to steer away from health talk in its communication. "If someone finds out that it is healthy, they will be happy to know that they are eating healthy," she says. Apart from not harping on the health plank, Hippo is also looking at enhancing its distribution in hotels and to be stocked in mini-bars, so that it reaches the right audience.

Of course, many are picking up lessons and making changes. Saffola which had entered the health snack category with Zest early this year has taken the product back to the drawing board to make changes based on customer feedback. "To attract large segments of consumers to this market, the right range of product offerings at the right price will have to expand as well," explains Pandey.

That pricing is key, is a fact that everyone agrees. Most brands are in the price band of Rs 5 to 10, with Aliva being the exception at Rs 12. Right price, perfect taste and healthy too — for consumers, this is clearly a case of having one's snack and eating it too.

Chirag logs in to light up PC market

2009-12-09T09:56:00.002+05:30

At a time most businessmen across industries were groping in the dark for ideas to survive the global meltdown, the face of 34-year-old Kaustuv Ray stayed all lit up, as if he was blissfully unaware of the turmoil. Hooked on to his laptop, the Kolkata-based businessman was watching his ‘Chirag’ shine bright and emerge India’s third largest domestic PC brand after HCL and Zenith.

“The recession came as a big blessing as it was during this time that we started bagging large-ticket PC contracts from government, corporates and the education sector. As most of the PC spenders were looking for cheaper options, it helped us to come up with extremely competitive pricing vis-à-vis the MNC brands,” says Ray, lead promoter and chairman of the Rs 520-crore Kolkata-based RP Group.

During the last nine months, Ray doubled the national market share for his Chirag brand to five per cent. Chirag computers are sold through 92 exclusive brand stores and more than 1,000 retail points across the nation. Today, Ray’s order book is full till February 2010. So much so, he is now running three shifts in his two factories at Howrah (near Kolkata) and Himachal Pradesh. He is not only setting up a second plant in Himachal, but also eyeing a turnover of Rs 880 crore by March 2010.

2009 has truly been a worthwhile year for the company. RP Group bagged large clients for the first time such as Reserve Bank of India, State Bank of India, Bank of Baroda, Central Bank of India, BSNL, Indian Railways, Coal India, Information and Broadcasting Ministry and Ministry of Defence.

There’s more. The group recently inked a deal with India’s largest retail chain, Future Group, to sell Chirag nettops at Big Bazaar and other group formats.

“This is an exclusive deal whereby Future Group outlets will only sell nettops priced at Rs 11,990. We are also in talks with others like Metro Cash & Carry and Croma,” says Ray.

A couple of months ago, RP Group also entered into an OEM deal with chip giant Intel. As a result, the company will now be privy to Intel’s upcoming products, technology roadmap, special price consideration, joint brand building and sales pitch for big deals. “With this, we are now in the same league with the MNCs like Hewlett-Packard, Dell, Acer and Lenovo,” says Ray.

No wonder, Chirag’s rise has caught the attention of industry watchers. As frontline IT research firm IDC India senior manager (computing products research) Sumanta Mukherjee says: “No doubt, Chirag lately has been quite visible in government deals, the nettop space and some billboards as well. It is a welcome move to see such regional PC brands gaining national ambitions.”

However, analysts warn the challenges for regional brands like Chirag may be quite a few. “While MNC brands always enjoy huge benefits of scale with multi-country manufacturing, it could be quite a task for a regional brand to match up to such scale in the marketplace. Plus, brands like Chirag would also need deep pocket as they have to build service infrastructure at par with MNCs. This could be a big challenge since margins in hardware are not just thin but eroding every year,” says Mukherjee.

Ray, however, is determined to make it big. “Today, whatever Chirag has achieved is due to long hours of work since 1999. Challenges has been all throughout, but proper strategising always pays,” he says.

With the likes of former ONGC chairman Subir Raha in the company’s board and providing strategic input, Ray’s confidence is today sky-high.

It all started when Ray, hailing from a Bengali middle-class family, dared to leave his secured job at Kolkata Port Trust, joined hands with an old friend, Shivaji Panja, and try the path of entreprenuership with a meagre capital of Rs 25,000. His business then was to supply paper rolls for telephone meters installed in STD booths. In fact, it was in one of such booth where Ray chanced to meet someone who wanted to buy a PC.

“I gave a lower quotation and bagged the deal. Still, I made a profit of Rs 13000,” gleams Ray. It was then the assembled PC market was at its peak. It took seconds for Ray to realise his gold pot. His strategy was simple: bulk purchase of computer components and sell the finished product at the lowest cost. However, there was a burning desire in Ray to develop his own brand.

“But I soon realised expenses involved in brand building were huge,” says Ray. It was then Ray thought of erecting billboards across Kolkata and also floated a TV production house.

“It helped me to reduce my costs of branding for Chirag. In fact, I still run the advertising and TV production business which too have emerged as additional revenue stream,” says Ray.

The group also floated its own soccer club, Chirag United Sports Club, in 2006 as a way to build the Chirag brand. Today, the club is in the third position of national football league, playing across India, and has become a good vehicle for brand building.

“Today, I own a cross-media platform for building the Chirag brand most cost-effectively. The return on investment through this approach has been much higher and has helped me reach to aam aadmi who constitutes my prime consumer segment,” says Ray.

RP Group also had roped in Sourav Ganguly as Chirag’s brand ambassador from 2006. However, the contract got over this September.

Ray has now drawn his future business plan. He plans to cross the Rs 1,000 crore revenue mark for the PC business by 2010-11; launch a laptop at Rs 12,990; acquire a software company to emerge as a complete system integrator and bag bigger commercial deals; and enter the big business of servers next year.

“My next big dream is to make Chirag an Indian MNC PC brand. And I have started working on it,” Ray signs off.

Retail sector to grow to $410 billion by 2010: Assocham

2009-12-07T19:57:00.000+05:30

The Indian retail sector is expected to grow at a rate of 5.5 per cent to $410 billion (around Rs 19,03,844 crore) by 2010 from the present about $300 billion, Assocham said today.

The chamber said that organized retail, which at present accounts for nearly 5 per cent of the overall retail market, is likely to touch $13 billion (around Rs 60,375 crore) by 2010 from $9.23 billion (around Rs 42,000 crore) currently.

"The size of Indian retail sector is estimated to grow by a compound annual growth rate of 5.5 per cent, to become $410 billion market by 2010," it said.

India has one of the largest number of retail outlets in the world. The sector is witnessing exponential growth with retail developments taking place not only in major cities but even in tier-II and III cities, Assocham President Swati Piramal said.

Over 100 malls of over 30 million square feet are projected to open in India by 2010 end, it added.

DLF has cleared its intentions to come up in retail segment with 500 luxury lifestyle stores across India within five years, while Tata Sons are expanding their business activities with 100 new Croma stores under their retail head Infiniti retail within three years, it said.

It also said that the retail sector income may grow by 22.7 per cent and 30.25 per cent in the third and fourth quarter of 2009-10 respectively.

Indian FMCG players again look for buys, in niche segments

2009-12-07T19:55:00.001+05:30

Indian fast moving consumer goods (FMCG) players are once again on the prowl to acquire companies, as the economy picks up.

Deal activity in the recession-proof FMCG sector was a bit subdued this calendar year, as well as last year. The number of reported transactions, according to research company Grant Thornton which tracks mergers and acquisitions, were 10 last year and nine this year, till November. In 2007, however, it was as high as 32.

Unlike their counterparts in the international arena who have gone for multi-billion dollar deals (for instance, Kraft’s and Nestle’s reported bid for Cadbury is over $16 billion), Indian FMCG companies appear to be targeting smaller transactions to fill gaps in their product portfolios or get a needed foothold in a new segment or a new market.

Consider Emami, reportedly in talks with Godrej Hershey’s for the latter’s beverage brands, Jumpin and XS. If it fructifies, the deal will give the Rs 755-crore skincare and healthcare major an entry into the beverage market, a new segment. Emami, among players such as Marico, Godrej Consumer Products Ltd (GCPL) and Wipro Consumer Care and Lighting, is also eyeing the Simple skincare brand in the UK. If that works out, it will give the company the much-needed foothold it is seeking in the UK market.

Other players, too, are seeking growth outside their traditional markets. So, most of them are keenly looking for brands on the block. “Typically, these brands may not be doing too well, or the promoter may be wanting to exit the business altogether,” explains Srividya C G, partner, specialist advisory services, at Grant Thornton.

In Simple’s case, the latter appears to be true, with its promoter, private equity player Duke Street Capital, wanting to offload the brand, valued at over Rs 1,900 crore, from its product portfolio. Simple is one of the largest skincare brands in the UK.

A meaningful presence overseas is something most FMCG players, especially the homegrown companies, have been eyeing keenly. Which is why offshore M&A is a more active area than onshore M&A, say analysts. “There is a fair bit of seriousness in that space,” says Jaibir Singh Sethi, analyst, consumer & retail, Noble Group.

Most homegrown FMCG companies have done some key acquisitions abroad in recent years. GCPL, for instance, wrapped up the acquisition of Keyline Brands in the UK a few years before for Rs 130 crore. Then, it went on to acquire Rapidol and Kinky in South Africa for Rs 50 crore and Rs 152 crore, respectively.

Marico, another aggressive acquirer, did a few buyouts in Egypt and Bangladesh. This included HairCode and Fiancee in Egypt, which together cost the company over Rs 100 crore to acquire. The Bangladesh acquisitions included two soap brands, Aromatic and Camellia, which together cost the company approximately Rs 50 crore.

“The company,” says Saugata Ghosh, chief executive officer, Marico, “has the Middle East, Africa and South Asian markets on its radar.”

De Beers finds out that diamonds aren't forever

2009-12-06T10:03:00.001+05:30

The diamond industry has been hammered by the recession, with prices down by as much a third over the past year. No company has felt the pain more deeply than South Africa-based De Beers. Analysts estimate that its production will fall by around 50% after a collapse in sales in 2009, amid a slump more severe than most people can remember.

At the height of the slowdown earlier this year, De Beers closed all four of its mines in Botswana because the "sightholders" – independent diamond-factory businesses that buy rough diamonds and cut, polish and sell them on to the retail trade – that it dealt with were being starved of credit by the banks. Its workforce has been reduced by 23%, with payroll numbers down from about 20,500 to just under 16,000 in 12 months, with thousands of miners made redundant.

Profits fell 99% to $3m (£1.8m) in the first half, while borrowings stand at $3.5bn. De Beers needs to refinance $1.5bn of debt by 10 March 2010, but lenders are understood to be demanding punishing interest rates as the price of a restructuring deal.

But an agreement with its three main shareholders should give the company increased bargaining power with the banks. Its biggest investors – mining group Anglo American, the diamond-entrepeneur Oppenheimer family and the government of Botswana, have agreed in principle to subscribe to a $1bn rights issue, raising much-needed cash to cut the group's indebtedness.

For years, De Beers was the diamond industry, speaking for 90% of world production. But new players from Russia, Canada and Australia have entered the market, reducing its dominance. Competition authorities in the EU and the US have also clamped down on the company's ability to control prices and supply by restricting its rights to sell on behalf of other diamond producers.

In South Africa itself, the company has cut investment, while diversifying abroad to hedge against the political uncertainties unleashed by the ending of apartheid 15 years ago. Nicky Oppenheimer, the Harrow-educated chairman of De Beers, was obliged to sell 26% of the company to a black empowerment group under legislation passed by the African National Congress.

Like others, De Beers has taken account of the changing reality by ring-fencing its South African operations inside a company called De Beers Consolidated Mines and moving its capital abroad.

But it is still the world's single biggest diamond producer, at 40%, and remains a force to be reckoned with. It owns shops in world capitals such as London and New York and is behind a huge worldwide marketing operation designed to prop up demand for diamonds. The language on its website is both compelling and gushing. "For thousands of years diamonds have been valued for their beauty and rarity, entrancing us with their fire and brilliance. Symbols of power and inspiration, diamonds are also a token of love and personal expression of our hopes for the future."

But consumers have lost their appetite for the gems, which has serious implications. About 90% of rough diamonds end up being bought by ordinary punters in their polished form; industrial consumption of diamonds is relatively small.

De Beers drastically cut production to support a price recovery, with output of 1.1m carats in the first quarter down 91% year-on-year. Many mines have now reopened as the worst of the slump appears to be over, but De Beers cannot escape the chill winds of recession. In the US, which accounts for about half of world consumption, retailers are taking a big hit. Tiffany has seen profits drop by 75%, while 1,000 jewellers across America have gone out of business. Neither are the macroeconomic signs encouraging: US unemployment may not peak until 2011 and home foreclosures are not expected to peak until late 2010.

The slump in US demand reverberates to places such as India, where thousands of workers in diamond polishing factories have been laid off. About 60% of diamonds cut and polished in the Indian state of Gujarat are sold to the US, with the region accounting for more than two-thirds of the international processed-diamond industry.

De Beers has been forced to seek fresh streams of revenue. Recently, it launched a global campaign to convince investors that diamonds are an alternative to gold as a safe investment. But analysts and investors say that the closed nature of the diamond market made them a much less attractive option than gold.

Brock Salier, mining analyst at Ambrian, a London-based resources investment bank, admits the uncertainty that has gripped equity and currency markets had sparked demand for "hundreds of millions of dollars of something they can stick in a vault" – such as diamonds. But he warns they represent a much riskier investment than bullion. Traded through auctions and private tenders, the stones have no public market price and there is no instrument investors can use to hedge against fluctuations.

Despite a rebound in rough diamond prices in the past two months, Des Kilalea, a diamond analyst at RBC Capital Markets, reckons that 2010 "will be challenging, although, like most things, the industry's fortunes turn largely on what happens to the global economy".

But the green shoots of recovery are coming through: Rio Tinto is saying it will shortly restart expansion work at its Argyle diamond mine in Western Australia. De Beers reported recently that rough diamond prices were heading up, but were still well down on the highs of 2008, while sale trends at its marketing arm were improving. A spokesman said: "We've seen strong demand for rough diamonds since the half year which has meant we've cancelled planned Christmas shutdowns at our operations in Canada and reopened one of the mines in Botswana earlier than planned."

Now that prices are picking up again, there are hopes that Christmas, the most important time of the year for jewellery retailers, won't be as bad as last year.

A spokesman for the Antwerp World Diamond Centre says: "A diamond is a luxury product, and that's what people tend to skip from their list. With the recession easing, we're hopeful the festive season could prove a turning point."

But in hard times, no one is displaying unbridled optimism.

Top N Town wins gold awards at Great Indian Ice Cream Contest

2009-12-06T10:00:00.001+05:30

Top N Town, is not growing in size, but also in its reputation & recognition. Such success and scorching growth cannot go unnoticed for long! And true to the Indian spirit of Ice Cream Industry, Arun Ramani of Top N Town (Ramani Group) scooped two gold awards and special award of Best of its kind "for its Product Innovation" and "Premium Ice Cream" at Great Indian Ice Cream contest held at Delhi under the aegis of Indian Dairy association (IDA), the apex body of the dairy industry in India.

The leading Ice Cream brand of India got exalted response when it fetched one more award under the title of "Best in Category" for Moments, the Ice Cream cake product category.

Delighted and proud Arun Ramani, Managing Director, Top N Town (Ramani Group) says Great Indian Ice Cream Contest is one of the most important events as it recognizes the achievement of the Ice cream industry in every sphere.

"This award is really special, for it comes from the industry and our customers" he added.

Around 48 Industries from all over India took part in this grand event.

Top ’N Town has strong presence in seven States, Chhattisgarh Maharashtra, Rajasthan Punjab, Orissa, Uttar Pradesh and Madhya Pradesh. Top N town ice cream is available in many delightful flavours through its retail chain of more than 7500 outlets and 100 plus parlours.

Last but not the least Top ’N Town has determined to become a brand that becomes synonym for Happiness & Sweetness.

Indians cast net for expat CEOs

2009-12-06T09:58:00.000+05:30

Ratan Tata’s recent revelation that his successor could be a foreigner may have been too much for other Indian businessmen to swallow. Few, after all, are ready to turn their business over to a professional to run, let apart a foreigner. Yet, many of them have begun to appoint foreigners in key leadership positions.

Religare Enterprises, the financial services venture of ex-Ranbaxy promoters Malvinder and Shivinder Singh, has hired old Dresdner, Deutsche Bank and CSFB hand Martin Newson as the head of investment banking. He is based in London and apparently draws a salary higher than CEO & Managing Director Sunil Godhwani. Even the general legal counsel selected by the company is an American gent. The company has global ambitions and therefore wants on board people who have the relevant exposure and domain knowledge. “My job is to get the best person for each job,” said Godhwani.

Domain expertise seems to have played a role in Mukesh Ambani hiring Gwyn Sundhagul from Tesco Thailand to run Reliance Retail . Sundhagul will come with four more expats in key positions. Organised retail is still new in India and sufficient expertise is not available locally in key areas like supply chain management, display etc.

Max Bupa, the health insurance venture of Analjit Singh, has Damien Marmion in the corner office. This, mind you, is not the first time that Singh has hired a foreigner to run his company. In the past, Gary Bennett has led his life insurance venture, Max New York Life. The Aditya Birla Group has hired Italian Lucas Fontana to head the Aditya Birla Science & Technology Corporation. Nikos Kardassis is at the helm of affairs at Jet Airways, having after Wolfgang Prock-Schauer, another expat, left the Naresh Goyal-owned airline.

Headhunters said the demand for foreigner CEOs is coming from companies that have developed a global footprint and sectors which do not have enough talent in the country — hospitality, insurance, retail and power, for instance. They are meant to fill a need gap and are not just trophies on display.

For example, Raymond Bickson has run the Tata-owned Indian Hotels Company for a while. Ranbaxy, when it was Indian-owned, had hired Brian Tempest of England as the CEO because he brought with him several years of global experience. He, of course, had to soon make way for Malvinder Singh.

At least one company has hired a foreigner for his expertise in India! Videocon brought ex-LG India boss Kwang Ro Kim to run its consumer electronics business.

Kim had built LG in India from scratch. When it started in the late-1990s, LG’s brand recall in the country was zilch and Korean products were considered poor cousins of Japanese brands like Sony, Hitachi and Sanyo. In a few short years, Kim had made LG the largest consumer electronics company in India.

Expats can be hired at reasonable prices. Human resource experts said that a foreigner CEO may cost only slightly more than an Indian with similar credentials. Most Indian businessmen want expat Indians first, said K Sudarshan of EMA Partners, a headhunting company. Knowledge of global markets then comes with cultural affinity. “But it is more difficult to convince Indians to come back, unless there is a compelling reason like to stay with old parents,” he said.

Also in demand are expats who have spent time in emerging markets like China and East Europe and not just in the US or England.

But it is still early days. Most Indian-owned companies are still run by Indians, though they might have sizeable business abroad. This, experts said, is partly because of better availability of managerial talent in the country than other countries. Dubai, for instance, has become a total expat market for CEOs. Even Indonesia and Malaysia have more expats at leadership positions than India. Ratan Tata could perhaps blaze a new trail.

Gucci set for single-brand India foray

2009-12-04T11:55:00.000+05:30

Italian designer goods maker Gucci can now go ahead with its plans to enter the Indian retail market through single brand stores with the government allowing it to pick up a majority stake in its Indian franchisee Luxury Goods Retail.

The government has cleared a proposal by Luxury Goods Retail for foreign equity participation of 51% by Gucci Group NV, Netherlands with an investment of Rs 1.04 crore for retailing Gucci brands in the country.

Luxury Goods Retail currently sells products under the Gucci brand in India under a franchise agreement. Gucci India had in 2006 entered into a franchise agreement with Murjani Retail for selling its products in the country. The pact was terminated in July 2009 and replaced with a new franchise.

In India, the company has two stores located in Delhi and Mumbai. It had last year announced plans to expand to other metros, including Bangalore, and expand its product range in the country to house its men's and women's collections of ready-to-wear, handbags, shoes, watches and other accessories. Gucci product are sold in over 50 countries through stores owned by Gucci Group and also through franchisee agreements.

Three IT firms bag $600 mn WalMart deal

2009-12-04T11:51:00.002+05:30

Walmart has selected three IT vendors in India — Infosys Technologies, Cognizant Technology Solutions and UST Global — for multi-year contracts worth over $600 million (around Rs 2,750 crore).

The amount is roughly equivalent to the value of goods — textiles, handicrafts and other products — that the world's largest retailer sources from India every year.

This development is expected to boost the IT outsourcing landscape in India, given that Walmart typically prefers to develop its retail applications in-house. Walmart gradually started buying packaged retail applications from leading software vendors such as Oracle, HP and SAP only towards the end of 2007. It had, however, given Infosys and Cognizant pilot projects about five months ago.

Initially, the three vendors are expected to earn Rs 250 crore to Rs 300 crore, each, annually. The figure is set to grow as Walmart increases outsourcing of work from its main merchandising division. Infosys and Cognizant are expected to garner a larger share of the pie between them.

“What is more important is that these three vendors have now got a ticket to be in the club of Walmart's list of preferred vendors which will help them in growing this account in the long-run,” said a source close to the development.

According to the contract, Infosys and Cognizant will be responsible for application development and support, while UST Global will be responsible for specific testing of these applications.

Asked about the deal, Infosys and Cognizant declined to comment. “As a policy, we do not comment on speculation in the marketplace,” spokespeople from both companies said. A UST Global spokesperson in India said the company does not comment on any client specific information as “we have non-disclosure agreements with most of our clients”.

UST Global is part of the $6 billion US-based business conglomerate Comcraft Group, with a major presence in India.

Walmart's media relations director John Simley replying to an e-mailed query said: “We have a large and growing business and productive relationship with many Indian companies. We do not comment on speculations about the nature of any business relationship.”

Walmart, the largest private employer and grocery retailer in the US with revenues of $404 billion (2009), selected the vendors after a competitive bidding process in which most Indian IT services companies participated, except TCS, India’s largest IT services firm.

TCS failed to qualify for the bid because it has an exclusive partnership with Target, another American retailer, who is into direct competition with Walmart. Among the bidding companies, Walmart shortlisted six contenders of which three were finalised based on their level of competency in various processes.

Unlike other retailers, Walmart does not want to open its own captive centre in India, even though the company has established a huge sourcing office in Bangalore sometime back.

Some of the world’s leading retailers like Tesco, Target and Supervalu have their own software development centres in India. Tesco’s Hindustan Service Centre which went live in May 2004, employs close to 3,000 people. In 2006, Supervalu which is the third-largest grocery retail chain in the US, also set up a captive development centre in India for new applications development, technical operations and testing of applications.

Pantaloon to spend Rs 360 cr this fiscal, to add 2.4 mn sqft

2009-12-03T12:14:00.001+05:30

Future Group company, Pantaloon Retail India (PRIL) is planning to invest Rs 360 crore this year to add up to 2.4 million sqft retail space at the existing operations.

"We have a capex plan of Rs 360 crore to add up to 2.4 million sq ft of retail space...that is in the Pantaloon Retail balance sheet and not in the subsidiaries. That's the plan for the balance 7-8 months (of this financial year)," Pantaloon Retail India Ltd's managing director Kishore Biyani told reporters at the company's 22nd AGM here today.

The company's financial year starts in July. While Future Group operates 15 million sqft of retail space across India, Pantaloon Retail with its multiple lifestyle and value chains runs around 13 million sq ft.

Pantaloon Retail is also looking to hive off its value retail chain Big Bazaar into a separate subsidiary, which may eventually go for an initial public offer (IPO).

"We are looking at subsidarisation of Big Bazaar into a separate company... if we need capital, probably we can raise capital (through a public issue)," Biyani said.

He said the company will open 155 Big Bazaar stores by 2014, increasing its total network to 275 stores.

PRIL also plans to deploy a part of the Rs 500 crore, raised through a QIP issue last week, into expansion and for debt reduction.

Australia explores opportunities in Indian dairy market

2009-12-03T12:13:00.000+05:30

Australia, which accounts for an estimated two per cent of the world's milk production, is looking at India to export its premium dairy products.

"In India we are exploring opportunities and bilateral ties available in the niche segment like specialty diary cheese, cultured dairy powders and other products that are not traditional," International Market Development Program, Victorian Department of Primary Industries Manager, Peter Myers told PTI.

The Australian delegation met several leading retail chains like Spencers, Reliance Fresh in the country to explore the opportunities in Indian retail space.

Victoria, which accounts for 80 per cent of Australia's dairy exports, is also interested in promoting the technical know-how to enhance domestic production, Myers said.

There are possibility of tie-ups for manufacturing Australian dairy products in India in 2-3 years time, he said.

Timberland ties up with Reliance Brands

2009-12-01T11:13:00.000+05:30

The Timberland Company, a leading outdoor footwear and apparel company, on Monday announced an exclusive partnership with Reliance Brands Ltd, a part of Reliance Industries, to distribute Timberland footwear and apparel in the Indian market.

Through the collaboration, Timberland products will be available through Timberland retail stores and premium department stores in major cities throughout India, a press release issued here stated.

The Timberland brand represents four decades of product engineering and innovation, and a deep commitment to preserving the outdoors for which their products are designed, it said.

“With rapidly-growing fashion and retail sectors, we believe India will become a key market for us. Reliance Brands has a wealth of experience in launching and successfully distributing international brands in India, Timberland President and CEO, Jeff Sw artz, said.

“They have a clear understanding of the Timberland brand and consumer, and are as committed as we are to our ideology and passion for the outdoors,” he added.

Spencer’s Retail to launch private labels food products

2009-12-01T11:12:00.001+05:30

Spencer’s Retail, a leading Indian retail company, will soon launch private label processed food products like potato chips, biscuits, pasta and is currently testing standalone stores of fish and meat.

“In fast moving consumer goods (FMCG), we want to quadrapule contribution from private labels in the next 18 months. We enjoy 40% share in the nectar category in juices. We are launching potato chips, biscuits, pasta and so on. We are testing standalone stores of fish and meat,” Mr. Vineet Kapila, President,Spencer's Retail, said.

Mr. Kapila said that the growth primarily depends on how much more space you have added and what is your same-store sales growth. While the latter is going up, the amount of sales has not gone up significantly; we have not added much, as we were addressing challenges before us. But we will add space now. In food and grocery, we are seeing same-store growth ranging from single digits to double digits. But we are struggling in discretionary verticals such as durables. There are challenges on margins, too — we are not getting the kind of margins we would want to have.

“We are focusing more on category margins, category assortments and so on to build top line and margins. We are building partnership, strengthening our private labels portfolio, choosing geographies carefully, building back-end in certain categories to improve our margins,” Mr. Kapila said.

He said, “We neither want be nor do we aspire to be the biggest retail player in the country. We want to be among top three in whichever market we enter in. Based on this criteria, we expand or vacate. We will open larger stores. Currently, we have an equal number of large and small stores. Going forward, it will be more skewed towards large stores, which will be 70-80% of our store count”.

“In the past 12-18 months, we had thought hard on these, such as what cities to enter, size of stores to be opened, cost structures, including rentals, and so on and rectified these. We also built a strong technology platform to link all of this. Till the challenges were understood and corrected, there was no point in going ahead with expansion,” Mr. Kapila added.

Aditya Birla Retail mulls IPO

2009-11-30T14:18:00.001+05:30

Aditya Birla Retail, the country’s second biggest supermarket operator, is considering an initial public offer (IPO) and will time it as soon as the company starts spinning profits.

“We will definitely be open to an IPO but it will be closer to the time of profitabillity... Around 2012 or maybe even before that, when we sight profitability,” Aditya Birla Retail Ltd (ABRL) CEO Thomas Varghese told PTI here.

He said the company had still not determined the amount of equity it would dilute.

“We want to get the maximum value for the equity we have and that we will get only when we are able to show profitability and demonstrate long-term growth potential,” Varghese said.

The company, which operates over 650 supermarkets and three hypermarkets across the country, is also open to bringing financial investors on board.

“We are not opposed to diluting our stake marginally to give it to a private equity player, as long as his background profile meets our own aspirations. We want a passive financial investor,” he said.

Varghese has charted an ambitious growth plan for the company over the next five-six years and plans to make Aditya Birla Retail a $2-billion entity by 2015-16.

“We are resizing the supermarket business. Our network will have 1,600 or 1,700 supermarkets by 2015-2016, hopefully. And, we should have 80-100 hypermarkets by then,” Varghese said.

The mom-and-pop store chain is present in 14 Indian states with major operations in the south — Karnataka, Andhra Pradesh, Tamil Nadu and Kerala.

“Our strategy at this point in time is to deepen our cluster. We are hoping that most of our supermarket networks will become Ebitda-positive this year and that as a retail company, we will become Ebitda-positive in 2012, which will be our fifth year of operation,” Varghese said.

ABRL has a whopping count of 160 supermarkets in Andhra Pradesh alone, while the Karnataka network boasts of 107 outlets. The company recently rolled out a hypermarket in Indore, in addition to the existing ones at Baroda and Mysore.

“We will probably close the year with 680-690 stores. Not more than that, because we are planning to wind up quite a large number of stores even now, as part of our cleaning up process,” he said.

“We are already careful and not putting up stores which we think will not turn profitable within a year’s time,” Varghese added.

ABRL is eyeing a sales turnover of about Rs 1,600-1,700-crore in FY10, a 45 per cent jump in growth compared to the previous year.

Indian retail market to reach $535 bn by 2013: Report

2009-11-30T14:16:00.001+05:30

India's retail market is expected to reach $535 billion by 2013, says a report on fashion and lifestyle franchises released here on Thursday.

"With anticipated $30 billion fresh investment over the next five years, modern retail will show impressive compound annual growth rate of 40 percent," said the Fashion and Lifestyle Franchise Report 2009-10.

"With this growth rate, the market is expected to reach $535 billion by 2013," added the report compiled by Franchise India Holding Ltd, a franchise solutions provider.

"The growth of organised retail will be driven by the franchise model in future," said company president Gaurav Marya while releasing the report at the two-day Franchise India summit on retail trade that began here Thursday. "In fact, that is the reason that many big companies going into retail mode are adopting it," Marya said, adding that he expected business deals worth Rs.150 crore would be struck at the summit.

About 250 firms including 30 foreign brands are participating. India's franchise segment is growing at 38 percent annually with the market size, currently valued at $7.2 billion, expected to reach $20 billion by 2013, the report said.

There are 1,200 active franchise concepts and over 110,000 franchisees in India, it added, and identified apparel retail, education and food leading the pack.

Wal-Mart has not applied for retail stores-India min

2009-11-26T14:06:00.000+05:30

Wal-Mart Stores, the world's largest retailer, has not sought to invest in retail stores in India, the junior trade minister told parliament on Wednesday.

The U.S. firm has also not sought any changes to India's ban on foreign holdings in multi-brand retail, Jyotiraditya Scindia said in a written reply.

India does not permit foreign direct investment in multiple-brand retailers, and caps foreign holdings in single-branded retailers at 51 percent.

Wal-Mart currently runs cash-and-carry operations in India in partnership with Bharti Enterprises.

Trade Minister Anand Sharma told parliament the government had no plans to review foreign ownership rules for the retail sector.

The entry of multinational retailers like Wal-Mart into India has been mired in controversy, with moves to open up the sector opposed by leftist parties and small traders fearful of job losses.

India's fragmented and tightly controlled $400-billion retail industry is forecast to nearly double in size by 2015, but less than 5 percent of the market is in the hands of modern retailers.

More foreign players in the textile sector in 4-5 months

2009-11-26T14:05:00.000+05:30

While the global slowdown may still be far from over, the Indian textile industry is expected to have tie-ups with foreign companies in the next four to five months. The foreign investment through the direct route is likely in apparel sourcing, fabric manufacturing and textile machinery manufacturing.

The foreign joint ventures are expected to fructify following Union Minister of Textiles Dayanidhi Maran’s recent visit to Europe along with an industry delegation to attract FDI into the sector. The delegation held meetings with textile companies in Switzerland, Italy and Turkey. Talks with some companies have progressed which is expected to result in foreign textile players setting up bases in India in varying capacities.

Most investment would be in the form of joint ventures between Indian and foreign companies. However, a foreign player is expected to set up a green field machinery manufacturing unit on its own accord.

Some of the prominent companies the delegates had held discussions with include Italian companies Gruppo Coin, Radici Group and Miroglio, among others. For investment in the textile machinery sector, the delegation held discussions with Swiss companies like Beninger, Reiter, Jacob Muller, among others. Other prospective investors are Turkish companies Bilsar and Yunsa Yunlu san Tic A.S. "Currently, all prospective investors with whom the initial talks were done are exploring how big the Indian market is and the right time to enter into partnerships. In the next four to five months you will see agreements being signed in both the machinery and the apparel sector," said Prashant Agarwal, vice-president in consultancy agency Technopak. Agarwal was part of the minister’s delegation.

Investments are expected, however, to be slow in the areas of apparel retail as policy restrictions, limited understanding of the Indian retail market and apparent lack of suitable domestic players for joint ventures act as major hurdles.

"Foreign players are interested to invest in India in varying capacities. They are interested in setting up green field machinery (textiles) units as India really lacks in this sector. Apparel sourcing hubs are also one of the sectors which are attractive for foreign players. There are some players who want to set up retail outlets but sourcing hubs are more popular," said M Senthil Kumar, chairman and managing director of Tamil Nadu-based Palladam weaving park and a member of the trade delegation.

Countries like India and China have acted as sourcing hubs for foreign players primarily due to the cost-effectiveness of the locations. India, however, has constantly lost to China as a contender for location for sourcing hubs as Indian manufactures are unable to satisfy the large volumes needed by major brands. However, major foreign retailers like JCPenney, Nautica, Dockers and Target have their own sourcing network in India. Foreign players are less apprehensive about setting up sourcing bases than setting up retail outlets as it is considered a safe venture, as many foreign players have already established themselves. Even as many major global retail brands have announced their intention to enter the Indian market, several high-priced international apparel brands were earlier forced to close shop due to sluggish demand. Few other brands like Jimmy Choo and Bottega Veneta changed hands from the Murjanis to Genesis Colors and Springfield in order to sustain growth.

"Sourcing is one of the most lucrative options for foreign players in India and they can use it as their export base too. Foreign players are apprehensive about retail ventures as there are already established players and brands and some functioning through franchisee outlets," said the chairman of another mid-sized textile firm requesting anonymity.

Sourcing hubs use the Indian base to source their fabric and export them to other countries. Sourcing hubs do not cater to the needs of the domestic market. However, some players like the Kohlapur-based Tessitura Monti India Private limited, which began its business in India as a sourcing hub, also established a brand for the domestic Indian market.

The Indian textiles sector has been able to attract only $200 million, which is a mere 0.6 per cent of the overall FDI of $33 billion, in the year 2008. In comparison to India’s dismal figures, the Chinese textiles industry has been able to attract foreign investment of $10 billion during the same period.

Francorp eyes 40-50 clients in India; to bring global brands

2009-11-26T14:04:00.001+05:30

US-based franchise consultant Francorp International today said it expects to secure 40-50 clients in India by next year-end, besides introducing 10 global brands here.

"We expect to have at least 40-50 domestic clients, specially from the education, retail and food and beverages segments in the next one year," Francorp Chairman and CEO Donald Boroian told PTI on the sidelines of the Franchise India 2009 summit here.

The company, he said, is eyeing a revenue of up to $5 million as franchise consultancy fee from the deals.

The firm is also working with some international brands and hopes to bring in at least 10 of them to India next year.

"Many firms from US and other countries, who are our clients overseas, are exploring options to foray into India and we expect at least 10 of them will launch operations here during 2010 under franchise arrangements with local partners," Boroian said.

He, however, refused to divulge the name of brands citing confidentiality but said each international client would bring up to one million dollar as fee.

The company, which has a 40 per cent share in the US franchise consultancy market, last year formed a strategic partnership and licensing arrangement with the Franchise India Holdings (FIHL) under the name of Francorp India.

According to experts, the $7 billion Indian franchise market is growing at 25-30 per cent annually

"We want to tap its immense scope, basically in franchise consulting and sales. Besides, helping Indian firms to grow and brining international ones to the country, we will also offer Indian firms to venture abroad but it will take some time," Boroian said.

The company is also looking to expand its footprints by opening offices in all four metros.

"Currently, we have only just one office, located in Delhi. Next year, we plan to open our office in Mumbai and then venture to Kolkata and Chennai," he said.

Francorp, which operates in 45 countries across the world, has global client base which include companies like American Express, Du Pont, Kodak, Ford Motor Company, Hall Mark cards, Shell Oil and KFC among others.

Tomato rates more than double in a month

2009-11-25T14:59:00.000+05:30

Hitting hard the consumer already reeling under high food prices, retail prices of tomato have jumped to around Rs 45 a kg in New Delhi within a month on soaring demand after the marriage season coupled with low supply.

The wholesale rates of tomato, a key ingredient in many an Indian dish, have also risen during the period but the hike is not as sharp as retail rates.

Retail prices of tomato are ruling at over Rs 45 a kg, against Rs 18 a kg a month earlier.

In the wholesale market of Azadpur, tomato was available at Rs 24.80 per kg on Saturday last week, against Rs 12.86 a kg on October 26, according to data by the Delhi Agricultural Marketing Board.

Vishal Retail In Debt Talks After Loan Default

2009-11-25T14:57:00.000+05:30

In the second such move by a major Indian retailer this year, Vishal Retail has announced that is will under a corporate debt restructuring (CDR) process, after failing to repay its loans. The announcement comes just 10 months after discount chain Subhiksha said it would begin a similar process – one that has still not been completed.

Vishal Retail, which operates hypermarkets across India, said it will look to restructure Rs.7.3bn ($157m) of loans. According to CDR rules, the entire process has to be completed within 120 days, during which period no creditor can take a unilateral action against the company.

Reports said the group is looking for a moratorium on payment of both the interest and principal amount it owes to lenders. The company has an annual interest payment obligation of Rs.1.0bn ($21.5m). Group President Ambeek Khemka told a local TV station, “Lenders are very sure that the company will be in a position to service its debt. However, there would be some kind of sacrifices which the lenders might have to make. The company would have to ensure that the business is running by bringing down the financial cost.”

Mom-and-pop stores unfazed by organised retail entry

2009-11-24T13:43:00.000+05:30

Even as the controversy over the entry of multi-brand retail continues, the Government on Monday said that the rate of closure of unorganised retail stores due to competition from organised retail is minimal at 1.7 per cent per annum.

In a written reply to the Lok Sabha, Mr Jyotiraditya Scindia, Minister of State for Commerce and Industry, said that a sample survey conducted by the Indian Council of Research on International Economic Relation (ICRIER) has indicated that a majority of mom-and-pop stores are keen to compete and remain in business. The Minister also pointed out that there was no evidence to suggest that overall employment has declined followed by the entry of organised retailers.

“There has been some decline in employment in the north and west regions, which however, also weakened over time,” he said. The study also said that the rate of closure of unorganised retail shops in gross term is about 4.2 per cent.

“Unorganised retailers in the vicinity of their organised counterparts experienced a decline in volume of business and profits in the initial years,” Mr Scindia said.

Retailers hitting the country road

2009-11-24T13:42:00.000+05:30

Large retailers including S Kumars Nationwide, Reliance Retail, Arvind Ltd and Spencer's Retail are hitting the country road in their quest for higher margins which are dwindling in the larger but saturated urban markets.

The $390 billion Indian retail industry, which is projected to grow at a compound annual growth rate of 8-9% over the next 4-5 years, is finding a greater comfort level operating in villages where rentals are a fifth than that of the urban areas and manpower costs much lower.

Ramesh Srinivas, national industry director (consumer markets) at KPMG Services Advisory, said, "There are number of towns where well-known retailers do not have any retail presence, reflecting a significant growth potential."

In smaller towns it will be the large-format stores that will rule the roost for retail giants and help them break even. Around 315 hypermarkets are expected to come up in tier I and II cities by 2011, according to a study by KPMG and industry body Assocham.

Smaller towns should be on the radar of retail majors today if they plan to set up stores in these towns three years from now, the study says. More, the Aditya Birla Group promoted retail chain which is looking for a pan-India presence in a short time, will open at least half of 33 new stores it plans to start by the end of this fiscal, in small towns.

"Smaller towns are major revenue contributors and business is growing at 40% compared to 10% in metros," Thomas Varghese, CEO, Aditya Birla Retail, said. Currently, the firm has 656 outlets across the country.

Spencer's expects smaller towns to contribute 50% of the revenue going ahead. The firm plans to roll out three hypermarkets in the next 8-10 months in tier I and II towns. Spencer's currently has 251 outlets across India.

"The break-even is much faster in smaller towns and we expect to be profitable within 12 months at the store level," Vineet Kapila, president, Spencer's Retail, said. S Kumars Nationwide, the textiles firm, plans to penetrate into the smaller towns through its economy brand Belmonte.Arvind Ltd derives 30% of its revenue from tier II and III cities and plans to roll out 30 stores by the end of the current fiscal.

Cadbury aims for a bigger bite of Indian market

2009-11-23T14:56:00.000+05:30

Even as US-based Kraft Foods Inc. and other likely bidders emerge for the world’s second largest confectioner, Cadbury Plc is renewing its own bid for the Indian consumer with hopes to raise its market share in the subcontinent.

Over last three years, Cadbury’s Indian arm has logged higher profits by doubling sales growth through its presence in more retail outlets through a wholesale network that has grown as it increased reach into smaller towns.

Smaller packs and variants of existing brands starting at Rs2 boosted sales in the last few years, but the aim now is to energize the category by attracting new customers via a new avatar of Perk, the wafer chocolate introduced in the 1990s to counter Swiss multinational Nestle SA’s successful launch of KitKat.

The new Rs5 Perk, which is bigger than the version it replaces, boasts of having glucose energy and is aimed at bringing more on-the-go teenagers looking for a low-cost hunger buster.

“The increase in size is important for the new consumers,” said V. Chandramouli, director of human resources and strategy for Cadbury India Ltd. “At the same time, the product went through multiple rounds of evaluation to make sure we do not alienate existing buyers.”

Cadbury’s switch to the fast lane happened with the arrival of Anand Kripalu, whose mantra even at his former employer Unilever was to kick up not just market share but to lift the entire category.

“If you have super brands and star talent, then that combination has to make us bigger than what we are,” said Kripalu, Cadbury India’s managing director who interacts informally with his employees every quarter via an open house.

The London-headquarted company, which also sells bubble gum Bubbaloo and milk-food drink Bournvita, has dominated the Indian market for over six decades with around 80% share of the chocolate business in the 1980s.

With the entry of Nestle in the 1990s, its share slipped and now stands at 71% of the Rs2,000-crore chocolate market, according to research group AC Nielsen. Nestle, which is more popular for its dairy products, Nescafe coffee and Maggi noodles, has a close to 25% share of the chocolate pie, and Gujarat Cooperative Milk Marketing Federation, widely known for its Amul butter, milk and ghee, and imported chocolates take the remaining 4% share.

“While I would applaud Cadbury by saying that they have put up barriers to entry, I think that their position today is not so much of their own making as much as the fact that nobody has chosen to give them an iota of a fight in the market because competitors have other businesses that are far more profitable,” said Sharda Agarwal, a director at brand consultancy MarketGate.

Cadbury’s brand share in India may be the highest in the world but that ranking lacks sheen as annual consumption of chocolates by an Indian is just 54g, against 10.5kg in the UK and 5kg in the US.

So, three years ago, with a multifunctional team of sales people with distributor focus, marketeers intuitive of consumer needs and the scientists in the product and packaging research and development lab, the move to create a chocolate magnet for new customers that would push per capita consumption began.

Meanwhile, Sunil Sethi, Cadbury India’s director of sales, pedalled hard to improve supply chain efficiencies by chiselling away more than half of the distributors to remain with the most productive ones and connecting their computers to the corporate server, enabling electronic order placements and shrinking unreliable paper bills.

Next came offering-specific assortments, as against the entire brand basket, to retailers via distributors based on the customers they attracted, which reduced inventory at the distributors and also improved their cash flow.

The result: a 700% jump in the number of wholesalers that the distributors serviced and an average of at least 20% annual growth in sales along with a nearly 30% jump in profit.

“We’ve freed up money from blocked inventory, and as a result, you have made your distributor far more profitable,” Sethi said. “Today, most of my retailers are earning a 24% return on investment versus earlier when it would vary anywhere between 15-25%.”

With the launch of the new Perk, which has a more cost-effective recipe along with cheaper packaging, the firm expects to double its retail presence to two million outlets in another two-three years, inching closer to reaching all the 4.6 million outlets that stock confectionaries. It is also offering the new Perk in a more affordable Rs100 trade pack versus Rs145 earlier.

FIPB defers Gucci’s stake buy proposal

2009-11-23T14:55:00.000+05:30

Italian designer goods maker Gucci’s proposal to pick up a majority stake in its Indian franchisee has been deferred by the government after Department of Industrial Policy and Promotion (DIPP) sought further examination.

Gucci had approached the Foreign Investment Promotion Board (FIPB) with a proposal to pick up a majority 51% stake in its Indian franchisee, Luxury Goods Retail Pvt Ltd (LGR). The proposal sought equity participation by Gucci Group NV, Netherlands, for retailing Gucci brands in the country and it would have resulted in FDI inflow of Rs 1.04 crore.

Luxury Goods Retail Pvt Ltd currently retails products under Gucci brand in India. Sources said Department of Economic Affairs (DEA) — despite granting no-objection to the proposal — asked DIPP to examine the foreign holding in LGR, apart from looking into some other issues. DIPP requested for time to further examine the proposal, following which Foreign Investment Promotion Board decided to defer it.

India currently allows 51% foreign direct investment in single brand retail but none in multi-brand retailing. Gucci India entered into a franchise agreement with Murjani Retail on January 9, 2006 for sale of Gucci products. The pact was terminated on July 31, 2009 and replaced with a new franchise with the investing company.

Gucci product are sold in over 50 countries through stores owned by Gucci Group and also through franchisee agreements.

Global luxury apparel retailers eyeing Indian mkts

2009-11-23T14:53:00.000+05:30

The fashionista dream is alive and kicking. But it’s no longer strictly elitist! With the US and Europe still grappling with recession,global luxury apparel retailers are eyeing markets like India, which has put itself firmly on the path of recovery.

Reworking their business model by focusing on affordable luxury, international majors are in talks with Indian players to target aspirational but value-conscious consumers.

While retail chain major Shoppers Stop is all set to launch Playboy brand of unisex wear, textile conglomerate S Kumars group is bringing in three international brands by the end of this fiscal.

Several high-priced international apparel brands were earlier forced to close shop due to sluggish demand. Few other brands like Jimmy Choo and Bottega Veneta changed hands from the Murjanis to Genesis Colors and Springfield in order to sustain growth.

Now, global brands are relying on Indian retailers’ understanding of the local market while Indian retailers are reworking the price in accordance with preference of the consumers.

“Indian retailers, tying up with international brands, are giving them an insight of the Indian market and taking the responsibility of marketing on franchisee basis, which is being preferred by the overseas brands,” says Rahul Mehta, president of Clothing Manufacturers Association.

Shoppers Stop, which had launched foreign brands like MAC, Mothercare and Austin Reed among dozen of global brands, and now plans to add about half-a-dozen international labels soon.

“We have recently introduced European jeanswear brand Mustang and will be launching Playboy apparel (Avinix Fashion) and luxury cosmetic brand Guerlain (Baccarrose),” says Govind Shrikhande, chief executive officer of Shoppers Stop. India is seen as a key growth market and is getting positive response from several international brands, added Mr Shrikhande.

S Kumars group, which tied up with Italian brand Oviesse this year, is in talks with other international brands. Nitin Kasliwal, managing director of S Kumars Nationwide (SKNL), said, “We are in advanced stage of talks with international apparel brands keen to tap the Indian market soon. Some of these brands are top-end luxury brands.” Brandhouse Retails, apparel retail arm of SKNL, will look after the retail expansion and marketing of these brands in the country.

Arvind Brands, which has a licence to market premium segment men’s wear brands such as Arrow and Gant, has launched ‘Izod’ in India, a label of global apparel firm Van Heusen. In line with others, Murjani Group, that brought brands like Calvin Klein, Tommy Hilfiger, Gloria Vanderbilt and French connection funky wears for youngsters FCUK, has also launched an on-line sales service for the brand.

Industry analysts contend that earlier the global luxury brands, which came in India, were highly priced for the Indian consumers. Now, in order to sustain in the market, most of them have started discount selling. The big brands Mega Carnival in Mumbai recently offered almost 80% on international brands like Roberto Cavalli, Givenchy, Davidoff, Chopard and Calvin Klein, to name a few.

“Market for luxury brands is yet to develop in a country like India, where demand is rising with consumers’ purchasing power,” said Tarun Joshi, managing director Brandhouse.

According to industry analysts, the market for luxury and premium brands in India is estimated at about Rs 6,000 crore- Rs 7,000 crore and growing at about 25-30%. However, luxury is still in its nascent stages as only 8-10% of the Indian population in metros is exposed to such brands. Overall, organised apparel retail contributed more than 35 % of the entire organised retail market aggregating over $ 60 billion.

Retail rentals: Revenue sharing new buzzword

2009-11-22T12:45:00.001+05:30

There is a new vocabulary evolving with retailers and their landlords in Pune. With a “market correction” on the rental front, the talk now is of MG (i.e minimum guarantees) and rev share (i.e. revenue share).

For landlords, rev share, a pre-determined precentage share of sales at the store, is emerging as a better option than vacant space. The trend has caught on at most of Pune’s premier high street areas, except the traditional market of Laxmi Road due to high demand and low availability.

“The highest correction in rentals has been on the Jangli Maharaj and MG Road high street shopping areas, where the correction has been up to 30%,” said Anand Dutta, who heads the retail practice in Pune for property consultants Jones Lang LaSalle Meghraj (JLLM).

Retail rentals in the city, based on carpet area, are now in the range of Rs 20-40 per sq ft. However, the prime high street locations offer rates at the upper end of the range.

Mr Dutta said more retailers are now looking at hiring space after the correction, but using the MG and rev share model. “The number of transactions is up as landlords become more practical, having discounted rentals by 30-40% with an 8-12% of revenue share,” Mr Dutta said.

One example of a retailer modifying his strategy is the 3 lakh sq ft Ishanya Mall in Yeravada area, near the airport. The retailer is believed to be re-working the rental strategy in line with market demand. Market sources said the mall, developed as retail business of Deepak Fertiliser and Petrochemicals Corp (DFPCL), is working out such a model with its two or three largest anchor tenants, having already re-worked its rentals.

“Arrangements like rev share are usually entered into with large retail chains which have books of account which they are willing to share so that the landlord is not done out of revenues,” market players explained. Office spaces are usually rented by MNCs and this segment is now back in the market.

However, JLLM managing director (west India) Pawan Swamy says: “Over the last six-eight months, MNCs have shown large requirements for office space. This is more for rent rationalisation or consolidation of operations. This is not new space hiring so don’t read a revival in this because office space is not reviving. It is still flat.”

The consolidation opportunity is bigger in Pune than rent rationalisation as MNCs are using the current opportunity to consolidate all operations in one place. Also, they might be relocating to a lower rental location, using the current price correction. Across the country, office rentals have fallen by 25-40% from the high of mid-2007.

Bucking the more cautious trend of the MNCs, Indian companies are expanding and in their traditional manner, preferring to buy rather than lease office space. Industry sources added that some real estate developers are changing the end use of some of their projects, in anticipation of an expected over-supply of retail space in the city in the next three years.

Pantaloon's tie-up with an international retailer in final stages

2009-11-20T12:08:00.000+05:30

Pantaloon Retail is looking at acquiring a food led fast moving consumer goods (FMCG) business. It is in the final stages for Big Bazaar tie-up with international player.

Here is a verbatim transcript of Haresh Soneji’s comments on CNBC-TV18.

The company is into value unlocking thing. So it is going in for a holding company kind of structure where in all the businesses apart from retail business is unlocked and transferred to a holding company. Hence, pure retail will remain under Pantaloon Retail and the shareholders of the company will receive shares in the swap ratio which will be decided. A postal ballot is already on and the decision will be announced on December 16.

Apart from that, the company is close to an international tie up with an European retail major. This will help the company get into a Hyper Mart as well as cash and carry business. Pantaloon is looking at acquiring a food led FMCG business. Its private labels in the FMCG space, which do around Rs 125-130 crore annually and the acquisition in this space will help Pantaloon go in with logistics of that food led FMCG business. This is how they will see growth multiplying in this segment. We might see a deal announced soon on the e-zone front.

In the E-zone segment, which is an electronic bazaar segment of Pantaloon, ICICI Ventures and Bajaj, it holds close to about 33% stake. Tata Croma’s private equity (PE) deal is also likely. Hence, a PE player will come in and ICICI Ventures and Kotak Mahindra will find an exit. The market is clearly excited on the stock.

Indian pharmaceutical market is over Rs 55,000 cr

2009-11-20T11:48:00.000+05:30

Indian pharmaceutical market, which has registered robust growth in last few years, was valued at over Rs 55,000 crore in the last fiscal, the Lok Sabha was informed today.

"As per the information available with Pharmaceutical Department through ORG-IMS (market research agency), April 2009, moving annual total (MAT) value of Indian Pharmaceutical market is Rs 55,454 crore," Minister of State for Chemical and Fertilisers Srikant Jena said while replying to a written query in Lok Sabha.

This includes retail pharmaceutical market at maximum retail price, companies not tracked by ORG, hospitals and institutional sales (except government procurement), direct doctor purchase, over the counter products and diagnostic chemicals, Jena said.

The average MAT value of Indian pharmaceutical market for the 2006-07 fiscal is around Rs 43,904 crore, for 2007-08 is around Rs 50,410 crore and for 2008-09 fiscal is Rs 55,454 crore.

Sunglass Hut targets 30 outlets in India by 2012

2009-11-19T18:15:00.001+05:30

The world's largest eye-wear retail chain Sunglass Hut said on Thursday that it is looking to take the number of its exclusive outlets in the country to 30 by 2012 as part of its expansion plan.

Besides, it also plans to venture into Tier II cities. "Sunglass Hut has got great response in India so far. We plan to create a chain of 30 outlets in the next three years across key cities like Delhi, Kolkata, Mumbai, Bangalore and Chennai, besides foraying into Tier II cities like Amritsar, Ludhiana and Jalandhar," said Sunglass Hut Brand Manager Pradeep Bhanot.

He, however, did not disclose the company's investment plans.

Sunglass Hut, owned by Italian firm Luxottica, had ventured into India in 2008 under a franchise agreement with realty major DLF’s retail management arm DLF Brands.

The chain today opened its fourth Indian outlet at Hyderabad.

"The Indian eye-wear market is worth hundreds of crores of rupees, of which only a small segment is organised. It gives us immense scope to increase our business," Bhanot said. The chain offers over two dozen premium international brands including Versace, Bulgari, Burberry, Prada, Tiffany, Persol, Revo and Salvatore Ferragamo.

Sunglass Hut has over 2,000 outlets across markets including the United States, Canada, the Caribbean, Europe, Australia, New Zealand, Hong Kong, Singapore, Middle East and South Africa.

Pantaloon Retail eyes small food cos

2009-11-19T18:13:00.000+05:30

The Future Group-owned Pantaloon Retail is looking at acquiring small foods companies in India to bolster its portfolio in the category.

‘‘We are in talks with several small companies in the foods domain. These are Indian companies and have a clearly demarcated role to play,'' said Kishore Biyani, founder and CEO, Future Group.

Though Biyani refused to divulge the names of companies with which the group has initiated talks, industry sources said that it could be an existing third-party supplier from whom the group sources products. ‘‘With an existing supplier, the group would already be aware of the pitfalls involved in the company,'' said a source.

Future group had embarked on a strategy to boost its private label brand business which has achieved a scale in excess of Rs 100 crore. It plans to more than double its private labels business in foods. The move comes in sync with the large thrust given to its private labels FMCG business.

Dubai chains X-cite and Jumbo look to exit Indian retail

2009-11-19T18:10:00.001+05:30

Three years ago, retail was the happening thing for corporates. Everyone wanted a slice of the ‘future.’ Now, after months of downsizing and desperation, many are hurtling to the exit door. The first ones to trigger the consolidation phase in the retail sector could be West Asian chains X-Cite and Jumbo.

According to sources, Dubai-based Jashanmal group’s X-cite and Manu Chhabria-founded Jumbo Electronics, also based in Dubai, are looking at winding up their Indian operations.

X-cite, a consumer durables chain, is negotiating with Reliance Retail for a sellout, sources told FE. In 2008, Tony Jashanmal, a promoter of the business group, had entered into a franchisee agreement with Kuwaiti conglomerate Alghanim to launch large-format multi-brand electronics retail chain in India. The chain was launched through an Indian firm, Impact Retail. X-cite was eyeing close to 30 stores across the country by 2009, investing more than Rs 200 crore, but could open only eight.

Details about the chain’s negotiations with Reliance are not immediately available. A Reliance retail spokesperson, when contacted, said, “We don’t comment on market speculation.”

Jumbo Electronics, with stores in key metros, is considering an exit from the Indian market, sources said. “Unlike in the West, Indian market is highly fragmented and organised retail has been a very hard learning even for established players. For instance, in the electronics segment, the market is still controlled by suppliers or manufacturers. Unlike neighbourhood stores, organised retail chains can’t give spot discounts as they have small inventory and operate on very small margins”, an industry expert told FE.

Analysts say Reliance Retail, which targeted Rs 1-lakh-crore business by 2011, has managed just 4% of that as turnover so far. The story is no different for the AV Birla group, which operates about 600 stores under the More brand. These companies, however, have deep pockets and can sustain losses for a few years. But smaller chains do not have the cash comfort. Subhiksha and Vishal MegaMart are already gasping for breath. Vishal has filed for corporate debt restructuring with the lenders.

“Retail was hit essentially due to the high rentals, and then, funds dried up. Now, retailers are a lot more cautious about signing properties and we are willing to wait for the right price. As for consolidation in the industry, there would be a lot of people in need of funds, and so, strategic partnerships might indeed be on the cards for a lot of players in the market”, Raghu Pillai, CEO, Reliance Retail, told FE.

“Compared to the previous years, there has been only a marginal rise in the sales of the organised retail segment this year. On the cost side, retailers have managed to cut costs but the rentals are still very high. A few retailers have been able to sign properties at 10-20% lower costs. But, by and large, there has been no strategic dip in the rentals. Developers still command 30-40% margins. Outlook is still difficult for the retail sector as a whole. It will take some more time”, Pinaki Ranjan Mishra of Ernst &Young said.

Mishra said there was a strong business case for consolidation and the industry could see much activity in the coming months.

Kishore Biyani, group CEO, Future group, said, “The footfalls compared to the previous year are improving slowly and we are optimistic that growth would gather steam.”

Hardware mkt poised for double digit growth

2009-11-18T10:59:00.001+05:30

India's computer hardware market, which includes servers and desktops, is set to regain double digit growth rates from next year, as customers seek to establish new data centres and invest more in expanding their operations.

Top hardware vendors such as IBM, HP and Acer have already started seeing a revival in their sales, and experts forecast the hardware market to rebound by next year.

“Enterprises from the sectors of BFSI, automotive, retail and pharma are in forefront of making increased hardware investments primarily to remain globally competitive as well as to get better agility at the marketplace,” said Diptarup Chakraborti, principal research analyst, Gartner.

“We expect these companies to increase their spend in 2010,” he added. With new phone firms such as Unitech Wireless and MTS launching their operations, demand for computer servers and other infrastructure is indeed looking up.

According to research firm IDC, the overall PC market unit shipments in the second quarter of 2009 touched 1.7 million units recording a quarter-on-quarter (QoQ) growth of 5.2 per cent indicating the market is indeed headed towards a recovery.

“The India PC market performance in Q2 CY2009 has shown, what may be termed as early signs of a revival, as the decline in overall PC shipments year-on-year reduced from a high of 22.7 per cent (Q4 CY2008 vs Q4 CY2007) to 15.3 per cent in the current quarter (Q2 CY09 vs Q2 CY08),” Kapil Dev Singh, country manager, IDC India said recently.

Individual consumers and educational institutions are driving the recovery, Mr Singh added. Rival research firm Gartner has also projected that PC market in India will grow at 18.6 per cent in 2010, much higher than around 1.5 per cent growth this year.

Indeed, vendors such as IBM and HP are beginning to see their sales rise. “I do expect the India systems (hardware) market to be robust, Indian institutions are stronger than ever and companies continue to invest in both domestic and abroad,” said, Elly Keinan, general manager, system and technology group, IBM Growth markets.

The computer server market, which declined by almost 38% during second quarter of this year, looks to achieve positive growth from January next year.

“The Indian PC market has rebounded post the slump in the early part of this year. We are extremely bullish about the market going into next year and expect the Indian market to show a double digit growth in 2010. In the overall PC (notebooks and desktops) market, HP retains the top spot with a market share of 17.8 per cent, followed by HCL and Dell.

Reliance Retail to expand in new cities

2009-11-18T10:58:00.000+05:30

Mukesh Ambani-led Reliance Retail is in the expansion mode and is looking to take its food-to- fashion chains into newer Indian cities as well forge new strategic alliances.

"I am pleased to report that we have done extraordinarily well, despite the tough economic conditions.

Having achieved critical scale, Reliance Retail is now working on expanding its coverage. This expansion would encompass new cities, new markets and new strategic alliances," Reliance Industries Chairman and Managing Director, Mukesh Ambani, told shareholders at the company's 35th Annual General Meeting.

Reliance Retail is an unlisted and wholly-owned subsidiary of energy giant, Reliance Industries Ltd (RIL).

Concurrently, Reliance Retail would focus on continuously innovating to enrich the shopping experience, through customised offers, private labels and 'value-for-money' merchandise, he added.

Reliance Retail today serves over five-million customers in 86 cities across 14 states. The fashion-food-gadgets chain operates nearly 1,000 stores.

"We are developing an ecosystem, which will strengthen our offering, while bringing wealth to our stakeholders, primarily marginal farmers, small transporters and vendors," Ambani said.

Indian logistic cos boost capacity, eye economic recovery

2009-11-18T10:56:00.001+05:30

Logistics firms in India are expanding capacity and boosting investments eyeing business from sectors like retail and infrastructure, but high operating costs remain a worry.

Organised players in the largely fragmented industry are expanding operations in warehousing, port and air services, aiming to boost their share of the logistics business to 14% from the current 6%, industry participants said.

One of the major contributors to the logistics industry would be warehousing sector, which, in turn, will be driven by a growth in retail and agriculture, said Abhishek Kiran Gupta, Associate Director, Research, at real estate consultant Jones Lang LaSalle Meghraj.

"The size of warehousing will increase as more niche and specialised stores open and requirement for food increases, the retail sector that had taken a beating, will bounce back," he added.

Future Group, Gati, AFL and Safe Express are among logistics firms pumping in about Rs 50 billion over the next three years to expand warehousing operations across the country, Tushar Jani, Chairman, Confederation of Indian Industry (CII), Western Region Logistics Sub-Committee, said.

Jani, also the former chairman of logistics major Blue Dart, said the investment will lead to development of 30 million square feet of warehousing space in India over three years, even though the country would still face a deficit of 50 million square feet. India's total warehousing capacity stands at around 9,700 million square feet.

Infrastructure is another key driver for the warehousing sector, Jones Lang LaSalle Meghraj's Gupta said.

The government has proposed a USD 494 billion investment under the Eleventh Five Year Plan (2007-12) in developing of infrastructure that would have a directly impact on the sector.

Air, Ports

Blue Dart Express is ramping up air and ground infrastructure by investing Rs 10 billion over 5-7 years.

"We would keep investing in infrastructure and technology to ramp up our operations, reach and transit times. We would invest in air and ground infrastructure with transit hubs, hi-tech material handling equipment and aircraft," Blue Dart Managing Director Anil Khanna said.

Private port developer Mundra Port & SEZ is investing in development of port infrastructure that would help in fostering the logistics industry, said Sandeep Mehta CEO, Container and Logistics business at the firm. But high costs are already beginning to hurt.

"Fuel prices (both ATF and diesel) keep fluctuating, which drastically affect our operational expenses inflationary trends in security, air-side and off-site congestion have also impacted us. All these factors knit together have enhanced our operating costs manyfold," said Blue Dart's Khanna.

Gati is trying to control costs by replacing its existing fleet with younger vessels and reaching out to newer geographies like Rangong (Thailand), said Atul Srivastava, head (commercial).

But despite higher costs, officials agree that the sector is poised for growth as increased consumption will lead to greater demand and supply leading to more movement of goods and the current investments will pay dividends.

"Growth in our economy is driven primarily by domestic consumption and not by foreign trade as is the case with many other economies like China. The government is also playing its part by drawing up robust plans for developing and upgrading infrastructure - both air and ground," Blue Dart's Khanna said.

Levi’s, UCB in Rs 500 cr club

2009-11-17T11:00:00.001+05:30

BANGALORE: It’s not easy to live unbuttoned and succeed in India, but Levi Strauss & Co and United Colors of Benetton have done it. The fashion giants are set to notch Rs 500-crore sales this year, making them the first international apparel brands to successfully replicate their global brand appeal here.

Denim jeans maker Levi’s and casual wear brand Benetton, both of which have been around since the 1990s, will cross the Rs 500-crore mark in turnover this year, two industry executives close to the companies told ET. Spokespersons of both the companies declined to confirm the number or comment on the development.

The road to the $100-million mark has been tough for the two fashion majors that figure in most lists of top global brands due to tough competition and an extremely price-sensitive market.

The common thread between Levi’s and Benetton has been their long-term focus on India that has seen them keeping their ears close to the market through local sourcing and production.

As a result, they have been competitively priced—escaping import duties and freight costs—and are able to replenish stock in time to support aggressive store expansions. But breaking into the Indian market was tough for both the firms.

The 1994 entry of the inventor of jeans received a tepid response as Pepe Jeans and Arvind Brands’ Lee locked on to youth connect faster. It was only at the turn of the century that this age group embraced Levi’s as its ‘Low rise-Dangerously low’ campaign, coupled with an altered entry-level pricing and expanding distribution network, found a place in the consumer mind space. From then on, Levi’s made all the right noises, be it ‘Live unbuttoned’ or ‘Diva rules’.

It stirred up the market by spinning off Levi Strauss Signature as an entry-level brand through separate stores, creating a volume generator even in tier II and tier III cities. “We operate the Signature brand in select markets in the world. It is a key pillar on which the future plans of the company in India are built,” says Shumone Chatterjee, MD of Levi’s Strauss (India).

Levi’s has created a fine balancing act of being able to operate at more premium prices than competition at one end, while remaining aspirational to the mid-market segment without diluting the overall brand, says Baqar Naqvi, associate vice-president, retail and consumer goods, at Technopak, a retail an management consultancy.

Its focus on the women’s market backed by celebrity endorsements has helped it grab almost 40% share in the Rs 2, 000-crore Indian branded denim market. Levi’s also has a made-for-India non-denim street wear brand, Sykes.

Benetton, which entered the country through a joint venture with the DCM Group in 1991, too had a slow start. Setting up of a 100% subsidiary in 2004 changed the game for firm renowned for its ‘united colors’ campaigns. The Italian casuals brand has grown over 10 times from a turnover of around $9 million in 2004 as it crosses $100 million in 2009.

Benetton’s USP has also been its ability to cater to varied age groups and needs across its flagship brand Benetton, leisure-oriented Playlife as well as innerwear and childrenswear. It has tied up with Tata Group Company Trent Ltd to penetrate its high-end fashion brand Sisley in India.

“Benetton has fairly understood the Indian market, possibly because it is one of the first international apparel brands to enter the country. The Group has demonstrated this through sharp product pricing and marketing communication that is in tune with consumer perceptions and willingness to pay,” national leader, retail & consumer product practice at Ernst & Young India, Pinakiranjan Mishra said.

The Benetton Group has identified India as a priority growth market. According to the Benetton Group’s nine-month performance review in 2009, the emerging markets grew 13% particularly due to India and China.

In India, there was further acceleration in growth due to continued increase in comparable performance and department stores in prime locations, the review said. The company set up close to 80 stores in the country in the first half of 2009.

Both the global brands are now looking to step on the gas and increase their lead over key rivals — Pepe Jeans, Lee and Wrangler in the case of Levi’s and Madura Garment’s Allen Solly (menswear) and Mango (womenswear) for Benetton.

There’s enough room for growth in the country’s Rs 40,000-crore branded apparel market, growing at an annual rate of 12% over the last five years, according to Technopak estimates.

Makeover time for direct sellers

2009-11-17T10:56:00.000+05:30

NEW DELHI: Amway is changing its way. The largest direct selling company in the world, which has emerged a global retail giant over the last 50 years with minimal advertising and no store presence, will soon start product advertisement as it increases its adspend.

And its showing the way too. The US-based wellness and personal care products firm is part of an army of direct sellers in India that has woken up to the need for complete brand-building exercise through mass media.

Oriflame, Tupperware and Modicare have all started spending more on advertising and even tying up with retailers as India’s Rs 3,300-crore direct selling industry is bracing up for increased competition from traditional players who have added direct selling and e-tailing to widen their reach to rural and semi-urban areas.

Other direct sellers such as international cosmetics brand Jafra and wellness brand New-skin too are looking at advertising their products.

Tupperware, an international brand of food storage, preparation and serving items, recently tied up with the country’s largest retailer Future Group’s Big Bazaar to display its products at select outlets during the festive season.

“We have realised the importance of a complete brand-building exercise,” says Asha Gupta, MD of Tupperware India. The company also tied up with ICICI Bank last month to reach out to the latter’s corporate clients and co-branded Bollywood movies Billu Barber and Namaste London as part of its 360-degree marketing exercise.

Amway has seen its spend on advertisement rise from about Rs 4 crore in 2005 to close to Rs 15 crore this year. “Amway does not traditionally advertise but we realised that India was a different market and that we would need to supplement sales force’s efforts with brand campaigns in mainstream media,” says Bill Pinckney, CEO and MD, Amway India, a Rs 1,128-crore enterprise.

So long, Amway’s campaigns focused on building the corporate brand. Next year, the maker of largest vitamins dietary supplement brand Nutrilite, Artistry skincare products and Persona premium soaps, plans to start product advertisement.

The company is also encouraging its 5.5-lakh distributors to tie up with salons and beauty parlours to sell its range of personal care products. Cosmetics brand Mary Kay has been advertising ever since its entry into the country in 2007. “We utilise outdoor, regional print media and radio advertising to complement the sales forces’ efforts,” says Renuka Dudeja, senior manager, communications and consultant marketing programmes, at Mary Kay India.

The Rs 100-crore FMCG brand Modicare plans to spend over Rs 2 crore on advertisement next financial year, according to Manisha Amol, VP, marketing, at Modicare.

With companies taking the mass media route, India’s 15-member direct selling industry is expected to retain if not accelerate last year’s growth rate of 17%. Way to go.

Reliance Retail awash in red

2009-11-16T14:54:00.001+05:30

RELIANCE Retail is yet to see profit in any of its formats. The company has reported total losses in excess of Rs 450 crore in 2008-09 alone. Mukesh Ambani had launched the retail business in 2006, which now operates under 15 formats.

Data obtained from RIL shows that till March 2009, Reliance Fresh had run up the highest negative reserves of Rs 276.77 crore. The other formats such as Reliance Hypermart (negative reserves of Rs 54.32 crore), Retail Concepts & Services (-Rs 38.37 crore) and Reliance Vantage Retail (-Rs 21.23 crore) have also run up negative reserves.

Reliance Dairy Foods (with negative reserves of Rs 7.63 crore), Reliance Digital Retail (-Rs 15.49 crore), Reliance Footprint (-Rs 10.47 crore), Reliance Trends (-Rs 3.1 crore), Reliance Gems and Jewels (-Rs 5.73 crore) and Reliance Home Store (-Rs 4.54 crore) are among the other formats that have reported accumulated losses.

RIL’s unabridged annual report confirms the consolidated negative reserves and the total loss. The company did not respond to an email seeking comment, possibly because of the silent period ahead of its annual general body meeting.

A part of Reliance Industries, India’s most valuable company, Reliance Retail now runs as many as 900 stores across 14 states in India, spanning the supermarket, convenience store and mini hypermart formats, in addition to specialised units which sell everything from eyewear to jewellery. The business, which encompasses partnerships with firms such as Marks and Spencer, Office Depot and Hamleys, now counts five million customers as members of its business-wide loyalty programme.

Reliance Retail has now struck a strategy to partner with global majors for specialised retail formats, catering to distinct sets of shoppers.

While the retail major has outlined a plan to enhance value for its customers through customised offers, private labels and ‘value-for-money merchandise,’ its shareholders are seeing a rising portion of Rs 4,051 crore invested as equity capital in Reliance Retail erode by way of losses accumulated at each of its subsidiaries.

These firms, which run formats such as the food and grocery specialty store, electronics specialty store, foot wear specialty store and apparel specialty store, have all made losses in the fiscal year 2008-09 (see table alongside). Even support businesses such as Strategic Manpower Solutions have totted up negative reserves of Rs 10.24 crore while Reliance Trade Services Centre has accumulated Rs 21.23 crore in losses. Companies engaged in the supply chain aspects of the retail business too have not been spared.

Reliance Agri Products Distribution had negative reserves of Rs 7.83 crore while Reliance Food Processing Solutions had negative reserves of Rs 37.34 crore and Reliance Supply Chain Solutions Rs 12.9 crore. Firms such as Reliance Loyalty & Analytics, which supports the Reliance One customer relationship management programme, had negative reserves of Rs 6.44 crore till March.

The rising losses in the retail business are learnt to have led to the billionaire Ambani downsizing the ambition for this business, which was expected to bring about a paradigm shift to his oil and petrochemicals commodity venture. However industry experts point out that even other large business families such as the Kumar Mangalam Birla-controlled Aditya Birla Retail too are losing money as they try to get their business model, scale and efficiencies right.

Shoppers Stop to raise funds

2009-11-16T00:28:00.000+05:30

Department store Shoppers Stop is planning to raise funds to acquire 32% in group firm and hypermarket chain Hypercity, a top official said. The company is looking at generating Rs 1 billion to Rs 1.2 billion rupees (USD 21.6 million to USD 26 million) for the acquisition, President and Chief Executive Govind Shrikhande said.

On Saturday, the company's board approved an issue of 4 million shares to institutional investors and also 4 million convertible warrants to founders, but did not specify how much it would be raising. Hypercity is the multi-brand retailing format floated by the founders of Shoppers Stop, which has a 19% stake in it and under an agreement is exercising the option to raise it to 51% by June next year.

Shoppers Stop, with a total retail area of 1.88 million sq ft, operates large format department stores, home stores and speciality stores like bookstore chain Crossword and M.A.C cosmetics stores through a retail agreement with Estee Lauder. It has distribution tie-ups with Britain's Mothercare Plc and German lifestyle and jeanswear Mustang in India.

Earlier this year, it dissolved its catalogue retailing venture with Britain's Home Retail Group as the venture did not perform up to expectations. Shoppers Stop has plans to open 15 to 18 stores in India over the next 40 months with an average investment of Rs 1 billion a year, Shrikhande said.

The company, which reported a Rs 120.6 million net profit in the September quarter versus loss year-ago expects its financial performance to improve in future quarters with an improvement in the retail climate. "Customer confidence is improving, rental rates are coming down and overall costs are also coming down," Shrikhande said.

Rents were down nearly 35-40% compared to a year earlier, while realty owners were now more ready to enter into revenue sharing agreements with tenants than previously, he said.

Shoppers Stop, along with Pantaloon Retail, India's largest listed retailer and Tata Group's Trent dominate the organised domestic Indian retail sector. Large overseas retailers such as WalMart, Tesco, Metro AG, have recently started operations in India with cash and carry ventures. Organised retail, growing at 25-30% annually, constitutes 6-7% of the total Indian retail market, estimated at USD 350 million to USD 400 million.

Retail players have reported better results for the September quarter

2009-11-14T12:01:00.001+05:30

Retail players have reported better results for the September quarter as compared with the year-ago period.

Pantaloon Retail (India)'s numbers were in line with street expectations. Revenues increased 17.5%, driven by higher contribution from the higher-margin lifestyle stores. Same-store sales for value retailing increased by around 7% and for lifestyle retailing by about 11%. Operating profit margins increased 45 basis points (100 basis points make a percentage point) to 10.7%. Operating performance improved on account of staff-cost control and marginally higher gross margins. Net profit increased 21% to Rs 43.82 crore, helped by other income.

Shoppers Stop posted a net profit of Rs 8.67 crore against a net loss of Rs 18.26 crore last year. Profitability was helped by strong operating performance and a decline in depreciation and interest costs. Operating margins stood at 6.63% compared with negative margins last year. Operating performance was helped by much lower growth of 1.7% in total expenditure. Cost-cutting measures including closure of loss-making formats in the last few months resulted in a drop in operating expenses. Revenues increased 9%, driven by a 2.3% growth in same-store sales in departmental stores and 1.8% growth in all formats. Also, the number of customers entering the stores increased 5.3%.

Provogue's revenues increased 9%, primarily led by discount sales, even as same-store sales got back on the growth track. Provogue added three stores in the quarter.

Operating performance was good and margins expanded by 191 basis points to 9.78% last year. Other expenditure declined 6.8% as lease rentals of some properties were revised downwards, which boosted operating performance. Net profit increased 12%.

Trent's net profit increased to Rs 5.26 crore from Rs 3.53 crore last year. Revenues increased 10.2%, driven by more than doubling of other operating income. Total expenditure grew at a relatively slower pace of 6%, as advertising and sales promotion costs increased by just 1.8% and total raw material costs grew 4.6%.

Operating margins stood at 3.78% from almost nil last year.

PVR acquires DLF's DT Cinemas for Rs 60 cr

2009-11-14T11:57:00.000+05:30

PVR, one of the India’s leading retail entertainment companies, has decided to buy out the cinemas owned by India’s largest developer DLF, in a mix of part cash and part stock deal. The total value of the deal is estimated to be around Rs 60 crore.

NDTV Profit reported the story first on August 26. The company will issue 25.57 lakh of its shares to DT Cinemas, representing 10 per cent of the fully diluted paid up share capital apart from making a payment of Rs 20.2 crore to fund the acquisition, PVR said in a filing to the Bombay Stock Exchange.

DT cinemas has 29 screens in Delhi and NCR, of which 26 are operational, while another three screens expected to commence operations in the next six months. PVR has 108 screens across the country.

The deal will be on a slump sale basis (transfer of one or more business undertakings as a result of the sale for a lump-sum consideration without assigning values to individual assets and liabilities), the company said.

Sugar prices up 19% since October on delay in cane crushing

2009-11-14T08:59:00.000+05:30

Retail prices of sugar have risen by up to 19% in the four metros since the start of the new season in October, as delay in cane crushing in top two producing states have affected fresh supply of the commodity.

In the national capital, sugar prices have risen to Rs 38 a kg as on November 12 from Rs 32 per kg on October 1, according to the data complied by the ministry of consumer affairs, food and public distribution.

During the period under review, sweetener prices have advanced by Rs five to Rs 35 a kg in Kolkata. Sugar is selling at Rs 37 a kg in Mumbai and Rs 33 in Chennai, an increase of Rs 4 and Rs 3 a kg, respectively since October 1.

The prices are rising because of delay in the crushing process in the top two sugar producing states -- Maharashtra and Uttar Pradesh.

While in Maharashtra the crushing has been delayed by 15 days, the sugar mills in Uttar Pradesh have yet not been able to start crushing due to farmers' protest who are demanding Rs 280 a quintal for their produce.

Processing of imported raw sugar has also not started in UP as mills have not started their operations so far.

Sugar prices have been rising and have almost doubled since October last year due to sharp fall in production.

In the 2008-09 season, sugar production of India, the world's biggest consumer, fell to 15 million tonnes from 26.4 million tonnes in the previous year.

Big Apple to invest $10 million to expand Indian retail business

2009-11-14T00:02:00.001+05:30

Big Apple, a unit of Express Retail Services Private Limited in India, (a $25 million food and grocery retailer) has announced an investment of $10 million towards the consolidation and expansion of its business.

Big Apple is the Indian version of the popular US retail chain 7-Eleven.

With shopping becoming another casualty of long working hours, Express Retail Services Pvt Ltd expanded its Big Apple chain of convenience stores with 25 stores already merchandising 2,500 products including FMCG, grocery, fruits and vegetables, company managing director Munish Hemrajani said.

With 65 operational outlets in Delhi, Big Apple looks forward to add another 35 stores and take this number to100 in the next phase of expansion. Express Retail Services Private Limited is Delhi's first ever company owned retail chain.

Consumers are now looking at branded groceries and the new retailing fever is redefining grocery and farm produce retail in Delhi.

Big Apple has direct tie-up with farmers in Haryana, Rajasthan, Himachal Pradesh and Uttar Pradesh, provides consumers with uninterrupted and qualitative product supply every single time, it is learnt.

''The objective is not only making profits, also to bring the convenience and money saving shopping experience to Delhites within the walking distance of their homes. The stores are also designed to give hygienic and pollution free environment, which makes shopping experience a real pleasure,'' said Munish Hemrajani of Big Apple.

The company is currently sourcing its Ready to Eat (RTE) food products from Indian leading processed food companies like ITC Limited and Kohinoor Foods.

Indian retail is emerging wiser from the experience

2009-11-12T19:11:00.000+05:30

2008-09 was a year of across-the-board losses for retailers. Shoppers Stop, Reliance Retail and Aditya Birla were some of the big names to post losses, while chains such as Straps, Etam, Subhiksha and Pyramid headed the list of high-profile casualties forced to fold. But now the blues are being shrugged off, and Indian retail is emerging wiser from the experience. When the crunch from the GFC hit India in the second half of last financial year, it surprised as industry too caught up with the good times.

Too many retailers were expanding fast, chasing too many stores and pushing too many products, formats and promotions than what the market was ready for. Too much of focus was on what competitors were doing rather than on viable and sensible market strategies.

Really, at that time, our industry was in a bubble and the result of the downturn was to prick the bubble. It was tough, but it forced businesses to trim fat.

Those that survived have moderated the pace of their store openings. Prudent stock management, focus on proven formats and products, leaner teams, optimising costs are now the mantras for revival. This new self discipline has also helped companies deal with other problems. In reaction to the recent doubling and tripling of power costs, Shoppers Stop has been able to cut power usage by 14%.

A number of external factors have also helped to boost industry’s optimism. At the height of the boom, rental prices skyrocketed. And when the services tax on rent was introduced, rentals accounted for a whopping 35 % of all costs for most retailers. Fortunately, with the downturn, rental prices have normalised and landlords are now open to revenue-sharing agreements in combination with lower minimum rents.

Likewise, key consumption indicators are up again; stock markets have revived & the global economy is slowly recovering.

This combination of improved externals, along with Indian retail’s renewed focus on profitable growth, has not only shrugged off the blues, but has also been a blessing in disguise. At Shoppers Stop, we think we now have a business model that can weather future downturns.

Indian retail industry records highest theft rates....3rd year in a row!

2009-11-12T15:06:00.000+05:30

For the third year in a row, India has recorded the highest rate of pilferage in its Rs3.7 trillion retail industry, according to the Global Retail Theft Barometer 2009 (GRTB 2009) survey that was conducted across 40 countries, and results of which will be released Tuesday.

The shrinkage, or losses caused to the retailer, or shrinkage, caused by shoplifting, employees, administrative error, or vendors, amounted to 3.2% of the total size of the country’s retail industry, including the unorganized sector. The survey is prepared by the Centre for Retail Research, Nottingham, UK, and is funded by Checkpoint Systems Inc., a US-based security systems provider.

“The shrinkage increased by 3.2% over last year,” Dharmesh Lamba, country manager for Checkpoint Systems, told Mint.

At 45.2%,, shoplifting was the leading source of retail shrinkage, followed by employee theft (23.3%). Electronics, cosmetics, alcohol/ food, clothing and jewellery were among the leading items of theft.

FDI plug makes reins in Indian hands a must

2009-10-26T15:50:00.001+05:30

NEW DELHI: The government has started insisting that the power to legally direct the actions of a company should at all times be in Indian hands if the investments it makes in other companies are not to be classified as foreign investment.

The attempt to plug the loophole in the foreign direct investment (FDI) rule follows widespread criticism that the new rules will allow foreign investment in excess of the allowed limit and effectively transfer ownership and control to foreigners even in sectors restricted to them.

The Foreign Investment Promotion Board (FIPB), the apex body that clears FDI into the country, is putting this new rider to ensure that the spirit of the new liberalised FDI norms is not defeated through undeclared arrangements between the Indian and foreign partners in ventures with local companies.

The rider is at the suggestion of the Department of Industrial Policy and promotion which framed the FDI policy. The move is to stall possibilities of foreigners effectively controlling the decisions of the investing company even when on paper the reins of the company stay with Indian promoters.

The idea is to remove the chances of firms in key sectors such as retail and defence being controlled by foreigners above the levels allowed by the law. “This is an added safety measure,” says a member of FIPB. “There are lots of ways to shift control through ‘inter se’ agreements (or the understanding between the partners in a joint venture). The new rider is to ensure that control is actually in Indian hands always,” said the official, who asked not to be named.

Leading lawyers said it is possible for promoters to comply with ownership and control norms in paper, but when the corporate veil is lifted, one might find ownership somewhere else. FDI expert and managing partner of law firm KDB Associates, Sumant Batra, said the new rider makes the letter and spirit of the FDI norms more explicit. It seeks to prevent attempts to disguise the control in a company through shareholder agreements, which are not filed with the government (unlike the articles of association of a company) but are relied upon for enforcement of contracts, explained Mr Batra.

The Board is likely to suggest this condition if it allows Analjit Singh and Asim Ghosh to sell 49% in their two companies to a foreign firm, without these companies’ downstream investments in Vodafone Essar Ltd getting classified as foreign investment, said a person privy to the development.

Lavazza to make India coffee hub

2009-10-25T17:31:00.001+05:30

TURIN: Till now it was just software and small cars. But if Italian coffee giant Lavazza S.p.A has its way, India might soon become the hub for coffee in Asia.

In 2007, Lavazza walked into the country by acquiring the Barista coffee house business and Fresh & Honest Cafe, a company that specialises in serving corporate clients with vending machines and ground coffee products, for a reported sum of 100 million euros. And now, it’s time to expand, according to Gaetano Mele, CEO at the Italian Lavazza Group. On the cards is Lavazza’s first coffee plant outside home and an ambitious plan to expand its business in the Asia-Pacific region.

About 60% of Lavazza’s revenues come from Italy and rest from foreign markets. Asia contributes a mere 5% to its coffers. So, it is no surprise that Italy’s biggest coffee maker wants to use India and its relatively cheaper raw coffee beans as a base to expand into other markets.

“We are making fresh investments in building a coffee processing plant in Chennai on the lines of the one that we have in Turin,” says Mele. “It is our first factory outside Italy and should be operational by the first half of 2011.”

Mele is banking on the country’s young population and its potential disposable income. China is also a budding market. In the pipeline is a range of designer cafes, such as the popular Lavazza Espression where décor and service make an exciting proposition to coffee lovers.

But more important is the money that Lavazza would save on the nearly 110% import duty it goes through by manufacturing its products here. “Around 70% of the retail price of our products is due to the cost of raw materials,” says Attilio Capuano, director, Asia & Pacific, Lavazza S.p.A. “It will be a huge saving for us once we start manufacturing in India.”

At the same time, the Lavazza brand here is undergoing a brand transition with the company’s logo slowly being integrated with the Barista logo. “We don’t want to suddenly intrude,” points out Mele. “It will be a slow makeover.” Incidentally, Barista has not performed according to the expectations of the Lavazza group. “We have still not broken even,” says Capuano.

But the company’s other spearhead, Fresh & Honest Cafe, a part of the Indian coffee vending industry, is going great guns. “We have most of the top hotels as our clients and from only 14 coffee vending machines a month in 2007, we are now selling 100 machines a month, which translates into sales of 50,000 coffee cartridges every month,” reveals Capuano. “We will soon touch a lakh,” he adds.

Today, compared to around 800 stores of close competitor Café Coffee Day, Lavazza has just over 200 stores in the country. “Don’t expect our numbers to go up drastically,” explains Mele. “We are not competing with Café Coffee Day.” Well, that’s how conservatively the Italians “espress” themselves!

Pantaloon Retail's net up 21.11 pc to Rs 43.8 cr in Q1

2009-10-24T23:46:00.000+05:30

MUMBAI: Retail stores operator Pantaloon Retail (India) Ltd on Friday posted a net profit of Rs 43.82 crore in the first quarter ended September 30, 2009, up 21.11 per cent over the corresponding period a year ago.

The company had net profit of Rs 36.18 crore in the September quarter last fiscal, Pantaloon Retail (India) said in a filing with the Bombay Stock Exchange.

Total income of the company increased to Rs 1,781.74 crore in the quarter under review from Rs 1,512.37 crore during the same period previous year, it said.

The company operates multiple retail formats in both the value and lifestyle segment of the consumer market.

It operates over 1,000 stores in 61 cities across the country. Its principal formats include Pantaloons, a chain of fashion outlets, Big Bazaar, an Indian hypermarket chain; Food Bazaar, a supermarket chain , and Central, a chain of seamless destination malls.

Some of its other formats include Depot, Shoe Factory, Brand Factory, Blue Sky and Fashion Station.

Shares of the company closed at Rs 323.35, marginally down from the previous close on the BSE.

Nilgiris revamps to up its general trade sales

2009-10-23T09:59:00.000+05:30

Nilgiris Dairy Farm, the Bangalore-based retail chain, is revamping its channel operations to build its general trade business volumes.

The century-old retail chain, as part of the initiative, is set to launch a new brand — Southern Days, focusing on general trade. Three months ago the company successfully migrated its general trade volumes of bread to a new brand: Southern Days. It will soon expand it’s general trade portfolio to include ‘namkeens’, cookies and a host of stuff within the next few months all under the new general trade brand ‘Southern Days - From the House of Nilgiris’.

Ashish Khera, VP - general trade & private labels, Nilgiris said this is part of the chain’s concerted efforts to eliminate channel conflict and provide the company a platform to aggressively build its general trade business volumes. In due course the products under the mother brand Nilgiris will be sold only at its 100-odd Nilgiris stores.

Nilgiris Dairy, controlled by private equity fund Actis, has been consolidating its presence in the highly-competitive retail market by having a sharp focus on South India, a market in which the brand has a high recall. The company has rather successfully withstood the onslaught of pan-India retail chains, including Spencer’s, Reliance and Aditya Birla-owned More.

Industry sources indicate that Nilgiris in the recent past has closed down a few unprofitable stores and opened a clutch of new stores. It is also constantly looking to expand its footprint through the franchisee network. The company, to increase its focus on the retail chain, has also exited the hospitality business for around Rs 100 crore by selling its prime projects to Chennai-based Shabari Group.

Aditya Birla Retail to take store count to 708 by FY10

2009-10-22T12:53:00.001+05:30

Acting in accordance to the competitive expansion of grocery retailers, Aditya Birla Retail Ltd. (ABRL) leading chain of food and grocery retail – More, incorporated in May 2007 has major expansion plans to have 700 supermarkets and eight hypermarkets across towns and cities by the end of fiscal year 2009,according to a company official.

Speaking exclusively to ImagesFood.com, Thomas Varghese, CEO, Aditya Birla Retail Ltd., says, “ By the end of this financial year we expect to have approximately 700 supermarkets and eight hypermarkets across towns and cities. Our existing hypermarkets are located in Baroda, Mysore, Aurangabad, Bangalore and Indore. We are expecting to open three additional hypermarkets in Thane, Delhi and Hyderabad in the next few months.”

Regarding the break up of the 700 supermarkets by March 2010, he revealed that, the company would have 331 stores in metros, 102 stores in tier I cities remaining 203 stores in tier II cities and 64 stores in tier III cities.

When asked about how lucrative the big modern formats prove to be in tier II and tier III cities, Varghese cited, “Any format which is supported by the right business model and the right rent to revenue ratio will prove attractive. Nowadays customers are brand conscious and extremely price sensitive, they also look for retailers who offer them consistently quality product. Tier II and III cities are within easy reach of the agricultural markets and have good local produce. So customers over here are more quality conscious, relatively while setting up our modern formats we make sure to consistently deliver quality with price to attract these customers, so its proves to be successful over here.”

Currently the company has a retail presence of around 642 outlets in supermarket formats having minimum size of 2,200 sq ft. in 101 cities. Furthermore, the group also operates five hypermarket formats under the brand name More Megastore in Mysore, Vadodra, Indore, Aurangabad and Bangalore, on an average spread of over 60,000 sq ft each offerings of over 60,000 products across fruits and vegetables, groceries, FMCG products.

— Akansha Srivastava

Reliance Industries’ retail arms in the red, reflecting challenges

2009-10-22T12:51:00.001+05:30

By: Satish John

Mumbai: Just how big is the retail business of Reliance Industries Ltd, or RIL?

The answer, according to the company’s annual report for 2008-09: well over half the size of Pantaloon Retail India Ltd, India’s largest listed retailer that set up its first Big Bazaar store in 2001.

Reliance’s first store opened for business in late 2006. Still, Reliance’s retail subsidiaries remain unprofitable, an indication of the challenges facing India’s modern retailers.

The firm’s annual report, released on Wednesday, shows that RIL’s retail businesses ended the year with an aggregate loss of Rs557 crore on a revenue of about Rs4,000 crore. Pantaloon Retail reported a net profit of Rs140.58 crore on net sales of Rs6,341.7 crore in 2008-09.

Among RIL’s retail subsidiaries, Reliance Retail Ltd (RRL) reported a loss of Rs20.24 crore on a revenue of Rs622.31 crore; grocery chain Reliance Fresh Ltd reported a net loss of Rs249.30 crore on revenue of Rs1,778.06 crore; and Reliance Hypermart Ltd reported a loss of Rs51.84 crore on a revenue of Rs372.32 crore. Reliance Dairy Foods Ltd and Reliance Digital Retail Finance Ltd too reported losses.

“The (losses) are small change for a company of RIL’s size,” said an analyst who tracks the company at a Mumbai brokerage and who did not want to be identified. The firm is now scaling up its retail operations.

“Through this year, RRL increased its footprint to more than 900 stores in 80 cities across 14 states in India,” RIL said in its annual report. “Keeping in sync with its multi-format store strategy, RRL added new formats to its spectrum in the last year,” the company said in its annual report.

Several operational metrics in the consolidated annual report for 2008-09 have doubled after the Bombay and Gujarat high courts approved the merger of Reliance Petroleum Ltd with RIL. Its net fixed assets have doubled to Rs1.69 trillion from Rs84,889 crore in 2007-08. Its total assets have surged to Rs2.45 trillion from Rs1.49 trillion and its net worth has increased 55.15% to Rs1.26 trillion. The number of employees in the firm’s roster, however, slipped to 24,679 from 25,487 in 2007-08. Its contribution to the national exchequer also fell to Rs11,574 crore from Rs13,696 crore, although not all of it could be ascribed to tax planning as depreciation rose to Rs5,195 crore from Rs4,847 crore a year earlier.

RIL’s appetite for cash was evident from the fact that it divested its entire mutual fund portfolio of Rs3,058.73 crore even as it received a cash infusion from the balance subscription of Rs15,142 crore.

RIL’s cash and cash equivalents at the year-end stood at Rs25,050 crore, placed in instruments such as fixed deposits or government securities. “The management anticipated the liquidity crisis,” said a spokesman for the company.

RIL’s net gearing was still at a stable 27.8%, even as a bulk of its capital expenditure budgets are in place, said the analyst mentioned earlier. He added that RIL has to de-bottleneck its refinery capacities a bit, which will not entail much funds. The analyst also said RIL is at its peak in terms of the debt burden as its investments in the new refinery at Jamnagar, Gujarat, and in the Krishna-Godavari basin will start paying off from now.

There were some interesting transactions with related entities such as Reliance Gas Transportation Infrastructure Ltd, a company promoted by RIL’s promoters, which is setting up intra-city and inter-city gas pipelines.

RIL invested in 500 million non-cumulative preference shares of Reliance Gas for Rs2,000 crore. As per regulatory norms, RIL cannot invest in the equity of the gas transportation company. RIL had also bought 85,000 shares in the National Stock Exchange for Rs28.48 crore during the year.

The firm decided to levy “manpower deputation charges” of Rs20.81 crore on RRL for 2008-09, against zero in 2007-08. Reliance Trends was levied Rs12 crore under the same overhead, and Reliance Petroinvestments Limited was charged Rs2.75 crore.

The media in recent times has speculated about RIL readying for a major acquisition after a portion of its treasury shares, held by wholly owned subsidiary Petroleum Trust Ltd, was sold in the current fiscal. RIL in 2008-09 invested Rs314.53 crore in Delta Hydrocarbons SA Luxembourg. Gulf Africa Petroleum Corporation, which the firm acquired in 2007, is yet to make a turnaround.

“Significant reductions were achieved in supply chain cost and the operations were integrated into the RIL system,” the report said.

KIT: Book retail in India

2009-10-21T12:29:00.000+05:30

The Indian book retail industry is estimated to be over Rs 3,000 crore, out of which organised retail accounts for only 7 per cent.

The industry is expected to grow by approximately 15 per cent a year.

Book retail contributes only about 1 per cent to the overall retail industry. Text and curriculum books account for about 50 per cent of the sales. Second-hand books are also a big chunk of the book retail market.

In the past few years, several large format book store chains have come up, such as Landmark, Crossword and Om Book Shop.

Book retailers are focusing on improved customer experience. Many book stores have also introduced coffee shops and provide a library-like atmosphere where customers can sit and read, while sipping coffee.

Bharti Walmart Store Locations

2009-10-20T11:50:00.002+05:30