Indian Retailer

1. End your slow sales periods by planning ahead. Plan to add extra bonuses, hold a sale or package your product with other products.

2. Make more commissions off the affiliate programs you join by giving your personal endorsements for the products. They usually pull more sales than ads.

3. Speed up your internet access. You can get your online business tasks done faster which will help you stay ahead of your competition.

4. Allow people who do not have time to explore your site to download your web site in ebook format. This will allow them time to view it offline.

5. Use tons of headlines and sub headlines on your web site. This will keep their attention and keep them at your web site longer.

6. Take advantage of popular fads. If something is popular at the current time, put up a web site about it. Just promote your main site on the fad web site.

7. Allow your prospects to chose between a retail or wholesale price. Charge people a membership fee to always get the products at wholesale cost.

8. Allow other related web sites that don t have a chat room to link to yours. They ll get use of a free chat room and you ll draw extra traffic to your site.

9. Increase the perceived value of your free stuff or bonuses by including the retail dollar amount the freebie would normally sell for.

10. Create your own web ring. You will gain highly targeted traffic to your web site and others will link to your site because they ll want to join the ring.

When you walk through the local shopping mall, what attracts you to one store over another? Is it strictly your needs at the moment, or is there more to it? Are you more likely to enter a store that's light, airy and inviting, or one that's kind of dark with narrow aisles and cluttered shelves? Eye appeal counts.

Learning from bricks-and-mortar establishments

For decades, marketing specialists have studied the buying habits of people shopping in bricks-and-mortar establishments using everything from focus groups to discount coupons to see what works. Based on accumulated data, these sell-pros know what works.

For example, the displays at the end of the supermarket, called end caps, are considered prime real estate on the shopping floor. In fact, manufacturers pay stores, or provide other incentives, just to get their ketchup displayed in an end cap. The store sells more, the manufacturer sells more and you've got a bottle of ketchup in the cupboard.

Marketing experts also know that products at eye level sell more than products on the bottom shelves and, again, eye-level shelf space comes at a premium. The next time you're in the supermarket, notice where the Coke is shelved. It's at eye level and the Coca-Cola Company knows it and offers stores a better wholesale price to get that shelf space.

Everything from the lighting (soft and natural, even if florescent) to the music playing in the background (tunes that wouldn't offend an aged grandmother) are all intended to entice you to buy at the supermarket, jewellery store or any place else that takes plastic (or cash, for that matter).

Making your website more tempting

These same, time-tested principles can be applied to ecommerce sites. When they are, you create an online environment that not only delivers the products visitors are looking for, but provides a pleasant experience as well. And, guess what? When that happens, the visitor-to-buyer conversion rate increases - and you start showing more profit in less time. So, what can you do to make your site more tempting, more attractive and more user-friendly?

Site design

The first rule is quite simple: know your buyers. If your target demographic is senior citizens, the dripping red pentangle against a black background is probably not your best choice of colour motifs. Perhaps something in the pastel area, soft colours. On the other hand, if you're targeting the 18-35 male buyer, go with the pentangle. It'll be something most of your expected foot traffic will recognize, and it definitely makes a statement. Colours count. Younger buyers want them bright, day-glo and totally wicked. The over 30 crowd wants something a bit more mature.

Text should be easily readable by anyone. This involves three considerations: font style, font size and text/background colours. Choose an easy to read font - Verdana or Arial often fit the bill. Consider font size. Banners should be at least 16-point, 20-point if it'll fit. As a general rule of thumb any font size less than 12-point is strictly off limits, except for fine print (e.g. legal mumbo-jumbo) which can be in 8-point to save valuable screen space. Finally, the combination of font colour and background colour is critical.

Site structure & layout

Keep your homepage simple and inviting. A cluttered homepage can quickly lead to sensory overload and send any buyer screaming for the virtual doorway, a mouse click away. Use large, well-labelled links for ease of use. Forget your 'artistic vision' for a moment and forget everything you learned in graphic design for print. Keep it simple, understated, well labelled and well organised. That way visitors will be more inclined to stick around, browse and, ultimately, buy.

A site map is a useful tool, especially if you've got multiple links off the homepage, followed by assorted drill-down screens before users find the products they're looking for. A site map is easy to build - basically a plot of the site, with direct links to specific features.

A secure checkout is also a must, even if you have to go the PayPal route. Online buyers are becoming more and more savvy so, no encryption, no sale. Your site should make it easy to shop with a shopping cart that can be changed with a click, a fast secure checkout and an invoice in the e-mail box (with a confirmation number). Do this and you're building a base of buyers who'll be back because you had the goods and you made it easy, convenient and fun.

Keep in touch with your users

If possible, give your users something for free. Check out sites selling e-books and other niche information. You'll often find a free 10-page report on 'everything you need to know before buying a turtle as a pet'. Naturally, the teaser provides just enough information to let buyers know they now need the £19.95 download on the ABC's of Turtle Care.

This can also provide potential buyers with the opportunity to 'opt-in'. The 10-page teaser can require buyers to enter an e-mail address, thus opting in for additional e-mails from you in the weeks and months to come. That's what the auto-responder business is all about - keeping your site's name in front of buyers.

With an opt-in, you can also deliver a monthly newsletter, the tip of the week or even the daily horoscope. This provides useful (or at least entertaining) information to keep your visitors' awareness of your site high, and their feelings about you good. After all, you're giving them something for free in the hope that they'll be back to buy. Good will goes a long way, even in the cold, transistorised world of ecommerce.

A final word

Eye-catching, convenient, uncluttered, easy-to navigate, easy-to-read and something for free - it's like a trip to the old local, corner market where Mr. Mishkin would give you a free Fireball when you came in with your mother.

There aren't any tricks or secrets to increasing your conversion rate. Ask yourself what you expect from any store you visit. Then, translate your wishes to site features to accommodate even the fussiest buyer. After all, even in cyberspace the customer is always right.

This article was written by Frederick Townes. Frederick is the owner of W3 EDGE, a web design company.

 

Promoters have got a go ahead from shareholders to pump in Rs 293 Cr through equity and convertible warrants.

 

Promoters of India’s largest retail firm Pantaloon Retail India have got a go ahead from shareholders to pump in Rs 293 crore ($60 million) into the company. The transaction involving sale of equity and convertible warrants will also help Kishore Biyani and family to raise holding in the company upto 53%.

At present promoters hold 46% in Pantaloon of which around 16% is pledged. As per the transaction they will be issued 11 million equity shares at Rs 183 a share, raising Rs 201.3 crore and a further 5 million warrants at Rs 183 each, to raise Rs 91.5 crore. The promoter holding will increase to 51% through the equity issue and if warrants are converted into equity it would go up further to 53%.

BCCL TO AVERAGE OUT

In addition private equity investor Bennett Coleman & Co Ltd (media firm which invests through ad for equity deals) will be issued 4.1 million shares at the same price to raise Rs 75.03 crore. BCCL is an existing investor and the allotment would help it bring down the original cost of investment.

As per VCCircle calculations BCCL’s average cost of acquisition of Pantaloon shares is pegged at Rs 264. This is excluding the bonus Class B shares that it received few months back for free (and partly sold in March 2009 for Rs 6.2 crore). It currently holds 5.9 million common shares of Pantaloon which will become 10 million shares after the new allotment. Its cost of purchasing the shares would come down from Rs 264/share to around Rs 230/share. Pantaloon scrip was at Rs 225 at BSE in early morning trade.

In the meanwhile, it appears BCCL had sold some shares of Pantaloon at a loss in the previous two quarters. Its holding came down by around 1 million shares between October-December 2008 when the shares traded between Rs 200-275 and further came down by 1.7 million shares in the January-March quarter when the price ranged Rs 100-250. This means BCCL indeed made a loss

over its actual investment cost. It would have partly made up for this loss by the sale of class B shares in March 2009.

Pantaloon is one of the biggest investment (besides Videocon — another notional loss making investment--) for BCCL which strikes ad for equity deals through its private treaty group. The media group is estimated to have put in as much as Rs 230 crore till date and with the new transaction its investment would cross Rs 300 crore in Pantaloon.

The current value of its investment is Rs 135 crore (including Rs 2.25 odd crore through ownership of class B shares). The cost of purchasing the shares is estimated at Rs 155 crore.

PANTALOON RESTRUCTURING

Last month Pantaloon received permission for restructuring, involving the transfer of the ownership of retail and fashion divisions. According to this Pantaloon Retail (India) Ltd will now be renamed Future Markets and Consumer Group, a new holding company for businesses such as financial services, insurance, logistics, knowledge services and media. It will have a wholly owned subsidiary, called Future Fashion Merchandising Ltd. This was viewed by analysts to get private equity investment at the subsidiary level.

The fund-raising is also aimed at bringing the down the debt to equity ratio, which has been steadily rising. The ratio has gone up from 1.17:1 in fiscal year 2007 to 1.21:1 in FY 2008 and is expected to be around 1.4:1 in the current financial year which ends on June 30 (the company follows the June reporting cycle).

According to managing director Kishore Biyani, the restructuring will create three distinct business segments of fashion, retailing, and FMCG and consumer durables.

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As I see it, the initial brouhaha about the retail industry has quickly faded, the silken robes have now begun to give way to tattered rags, with most of the retail companies in India sitting on piles of stock and mounting debt situations.

Most of the large retail companies that scaled up massively in the last two years – the likes of Reliance Retail, Aditya Birla Retail had the same consultants who sold them similar business plans with inflated returns and profitability. SPSF for supermarkets were estimated between INR 750 – 1,200. The reality is hurting at closer to INR 500.

To aggressively scale up, no one bothered about rentals till yesterday. Business Development teams had targets not in terms of number of stores at x-rentals, but only in terms of number of stores at whatever rentals.

The order of the day was scale up and do it fast. Get a valuation and go public. This scaling up also meant hiring people in droves and hiring double that what were needed as companies fattened their benches, “to scale up fast”.

That dream is now bust.

Reality has set in and order of the day seems “austerity”. Companies are closing non-performing stores, reducing bench strengths, in some cases closing almost all stores and showing almost all their employees the door (as in India bulls). Others as Subhiksha are looking for financing and facing legal battles with FMCG companies, who have taken them to court for payment issues. What is surprising is one of their bankers has done that too, who had presence on their board!

No one said retailing is easy, but what takes the Mickey out of me and everybody else is – why the heck were Indian companies emulating established retailers in developed countries and modelling businesses at their returns. Not learning from their mistakes and learning's that they have had in the last 30 years. Not taking best practice lessons from them. Basically not doing their homework right in each and every way possible, and only modelling businesses at consultant opinions!

So where are we headed now – Re-evaluations. Which means back to the drawing board for most, bust for many and sell out for others.

Coupled with recession, it may take a year or more to come out of the current situation. For those of you reading this blog who have been laid off, take heart in the knowledge that things should start improving in the next 3-6 months once markets start stabilizing and some form of buoyancy returns and customers start shopping again.

Till then, focus needs to be on optimizing costs and getting the most out of a single paisa.

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Cotton Council International (CCI), a global non-profit organisation working towards the promotion of cotton fabric, is looking at tying up with India’s organised apparel retailers.

CCI is planning to allow such retailers, who showcase 80 per cent cotton apparels in their stores, to use its mark of quality.

“In 2003, we launched a similar scheme. However, we later found that some small retailers had started misusing our mark. Now, India’s retail sector is quite matured and the number of organised retailers is also on the rise,” CCI representative for India, Pakistan and Sri Lanka Sachit Bhatia told Business Standard.

CCI has launched its ‘Cool with Cotton’ campaign to help generate awareness about the benefits and versatility of cotton as a fabric, especially for India.

The organisation undertakes activities to promote cotton as the best suited fabric, including fashion shows, road shows and TV reality shows. “We also aim to position cotton as a fashionable fabric for today’s youth and have roped in several Bollywood stars to endorse cotton,” he added.

India is the second largest cotton producer in the world after China and produced about 5.3 million tonnes of cotton in 2008.

“About 5 million farmers are associated with cotton farming in India and almost 85 million people are related with its trade,” Bhatia said, adding the genetically modified cotton variety was the need of the hour to cater to rising demand.

“If India forgoes the genetically modified variety, the cotton production would be reduced to 10 per cent. The cotton yield has risen to Rs 567 kg/hectare due to the genetically modified variety,” he added

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Turning happy doesn’t seem to have worked for the retail business of the India-bulls Group, which also has interests in financial services, real estate and power.

The retail unit of Indiabulls recently repositioned its outlets as Happy Store with a new logo that comprised a smiley transposed on a cheerful yellow shopping bag, but according to a senior manager who recently quit the company and two senior company executives, Indiabulls Retail Services Ltd, the company that houses the retail business, has closed all but four of its 42 outlets.

These outlets had been inherited from Piramyd Retail Ltd, the firm that the group acquired in 2007 for Rs208 crore. In the process, Indiabulls has completely exited some cities such as Ludhiana and Jaipur.

The company, however, opened a new store in March in Destination Mall, situated in Faridabad in the National Capital Region. It also runs a multiplex and a food court in this mall.

Indiabull’s website, however, still says the group is “one of the fastest growing retailers having broad national brand presence with 47 stores located in seven cities”.

“Instead of opening five stores and firefighting on loss-making stores where the business deal is not making sense, it is better to do what we are doing,” said Anil Lepps, chief executive of Indiabulls Retail, in response to why the company has shut most of the stores.

An executive, who recently quit, said the company has also retrenched employees from the stores that have been closed and laid off at least 60 more people in the buying and merchandising team in existing stores in the past three-four months. He did not want to be identified. One of the two company executives mentioned in the first instance confirmed that dozens of people across stores and divisions have either quit or been fired in the past three months. “We are working on a very limited team. We are short-staffed,” he said, asking not to be named.

Lepps, however, said the company has only laid off around 10 people in the merchandising and buying team and is currently trying to rebuild the team with new hires.

Meanwhile, the landlord of one of the closed stores in Jaipur has moved a winding up petition against Indiabulls Retail in the Delhi high court. According to Sanjay Jhanwar, the lawyer representing the landlord in the case, the landlord has sought recovery of Rs1.5 crore against unpaid rent for several months.

In recent months, several retail firms here have either gone bust or have been closing down some stores, scaling back expansion plans, even laying off employees in an attempt to cut costs and to beat the acute downturn in the business that began with the slowdown in the economy.

Subhiksha Trading Services Ltd, the country’s largest discount retail chain, for in stance, has completely halted its operations amid mounting debt and a severe cash crunch.

Other retailers such as Pantaloon Retail (India) Ltd, Reliance Retail Ltd, Aditya Birla Retail Ltd and Spencer’s Retail Ltd have also closed stores and shelved expansion plans in the past year or so.

Indiabulls Retail’s Lepps, however, said the firm was still in a better condition than many of its rivals. “While others are bleeding hundreds of crores, our bleed is over because we have shut down all unprofitable stores,” he said, adding that he is currently focusing on the revival strategy.

“My idea is to get perfect with one store and once we get our model right...then we will plan to open a flagship property in Mumbai in one year and that’s when the new beginning of Indiabulls Retail happens,” Lepps said. “We are trying to figure out a differentiator...”

A March report by audit and consulting firm KPMG International said the slowdown in the retail business is expected to last for another 12-18 months. The firm said the sales growth in modern retail stores in December slowed to 11%, from 35% a year ago.

Indiabulls Retail has been plagued by problems, mainly financial, ever since it entered the business by acquiring Pyramid Retail from the Mumbai-based Ashok Piramal Group. Indiabulls officials privately say they inherited a “mess” from Piramal.

Piramyd was making losses at the time of its acquisition. Many investors expected cash-rich Indiabulls to turn around the company, but it has not happened thus far. On the contrary, the company has had to close down a majority of the inherited stores.

Indiabulls Retail’s stock sank nearly 90% to Rs14 on Thursday, from a peak of at least Rs200 in December 2007. It, however, rose 10% to end at Rs16.30 on the Bombay Stock Exchange on Friday. The firm has also been under fire from vendors in various cities who have accused it of not paying their dues for months together.

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For Kumar Mangalam Birla, ‘More’ means more even in a downturn that has made many a retail venture stop on its tracks.

His Aditya Vikram Birla Group, which runs ‘More’ chain of supermarkets and ‘More Mega’ hypermarkets in the Indian retail market is in the process of relaunching its 640 stores, starting this month. The plan is to take it to 2,200 by 2015.

“The exercise will involve revamping of the stores based on a best practices study that the company has carried out”, said Thomas Varghese, CEO, Aditya Birla Retail Limited.

“We will have 720 supermarket stores by end of 2010. The hypermarket count will go up to 8 to 10 by end of March 2010 and 70 to 80 by end of 2015”, said Varghese.

After acquiring the 167 stores from Trinethra in 2006 and aggressively expanding to about 710 stores, the group had shut down 70 stores across the country after carrying out an evaluation exercise based on scorecards that saw poor performers out.

Its private label brands are present across 350 stock keeping units in processed foods (Feasters, Kitchen’s Promise and Best of India) and home and personal care products (110 %, Enriche, A U 79, Fresh-o-dent, Prarthana, Paradise, Pestex, Germex). “Our private label business contributes to about 4 to 5 per cent of the total turnover”, said Varghese.

Private labels are a good bet for retailers as it offers them good margins without having to spend a lot on mass advertising.

Varghese said that the retail business of the Aditya Birla Group will turn profitable at the end of five to six years. Varghese has been with the Aditya Birla Group for the past 10 years and was given the mandate to turn around the group’s pulp and fibre business before taking charge of the retail operations.

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State-run BSNL is looking for tie- ups with big retail chains in the country to sell its products and services under an aggressive

marketing strategy. The company is inviting proposals from interested retail chains directly or through consortium to sell BSNL's products and services from their outlets, a senior official of the PSU said. The initial agreements will be entered into with the successful retail chain or with the lead partner of a consortium for two years, which can be extended further as per performance. BSNL has operations across India except Delhi and Mumbai.
The retail chains will get upfront payment for basic commission and discounts ranging from Rs 150 to Rs 1,500. The chains need to have a minimum 50 outlets and pan-Indian operations with annual turnover of minimum Rs 50 crore for the past two years. The outlets will sell SIMs, instruments and other telecom products and will have to verify customer identity as per the government norms.
All blank Customer application forms supplied by BSNL will have to be collected by the retail company after being filled by customers along with requisite payment and identity proofs and verified by authorised signatory.

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How about enjoying evening coffee at mobile Alto Cafe mini-van parked in your neighbourhood or trying out the newest flavour of fruit

juice at Revive Juice outlet — the coffee and juice retail brands from France and the UK — in your very own city? Well, this may soon be possible.

Several American and European retail brands in segments as varied as fashion, cosmetics, lingerie, food & beverages, among others, are preparing to make their presence felt in the Indian market through franchise route, as a result of sharp drop in sales in these markets following economic slowdown. Certain brands from countries like the UAE, Brazil and Thailand are also eyeing Indian market.

“Drop in retail sales in Europe and the US markets are leading to this phenomenon. Retail brands that built great amount of manufacturing capacities are under pressure to offload excess inventories and are therefore entering into alternative sales practices by setting up their franchise in large-sized markets like India,” Gaurav Marya, franchising expert and president, Franchise India Holding, told ET.

Following the collapse of the international retail markets, several brands like Beverley Hills Polo (USA), Spa Siam (Thailand), Taman Gang Restaurants (UK) and others entered Indian market through franchise route.

Others like Revive Juice Bars (UK), Mrs Fields Cookies (USA), Jamba Juice (USA), fashion brand Jules (France), cosmetics brand Mikyajy (UAE), lingerie brand Nayomi (UAE), car-wash service brand Moly Company (Thailand), food & beverages brands Habibs (Brazil) and Herfy, BBQ Chicken (Singapore), Pizza Company and Spicchio Pizza (both Thailand), Marina Furniture (UAE), and Alto Cafe (France) are learnt to be at various levels of negotiation to start their services in India.

Companies that have long nurtured ambition to enter retail-friendly markets like India and China are finding this a convenient time as sales in their own countries have tapered. They are trying to convert this as an opportunity to taste Indian waters, which they plan to do for 2-3 years before they decide on their future plans in these countries, says business strategy specialist Harish Bijoor.

“Several brands are looking for green pastures, and India having a decent GDP growth of 4.3% holds lots of potential for them. They are taking up franchise route as they cannot risk coming on their own at this juncture. This also means a big chunk of business coming in for entrepreneurs,” Mr Bijoor said.

Several brands are targeting grade B and C cities rather than expanding in metros, as smaller cities are more brand hungry and retail is not much hit here, say experts.

“With the presence of limited brands in India markets, the country holds big opportunity for these brands as this would also help them re-route inventories and orders to new markets and keep their sagging sales volume intact. At the same time, their Indian counterparts are finding this a right opportunity to strike negotiations to their advantage,” added Mr Marya.

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The Walt Disney Company today announced a direct-to-retail model for its home entertainment business in India.

The business will be supported by a newly formed home entertainment team which will handle the sales and marketing for DVD business in the country.

'Tinkerbell' from Disney's Fairies franchise will be the first DVD released under this new model, a company release said.

"The identification of effective distribution strategies will help us best to meet customer needs and continue to build our brand in India," said Mahesh Samat, senior Vice President and MD, Walt Disney (India).

"Disney has a firm stake in developing the family entertainment sector in this country and we continue to strengthen our market presence by extending our franchises across multiple lines of businesses," he said.

Disney's home entertainment team will focus on providing content, stories and characters from across Disney's extensive content library. The team will also look for local content development opportunities while making sure international content is made available in local languages, he added.

Source: PTI

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“To close unviable stores; expansion to be funded from internal accruals, debt and possible equity.”

Department store chain Shoppers Stop plans to open 12 more outlets with a total area of 650,000 sq ft in the next three years by taking advantage of the fall in mall rentals, reversal of service tax thereon and possible revival in the economy, a top company official has said.

The company required a capex of Rs 91 crore on the store openings (Rs 1,400 a square feet) and Rs 32.50 crore on the inventory (Rs 400-500 a square feet) for these 12 stores, the official said.

The company was planning to fund the expansion from internal accruals, debt and possible equity infusion, the official said.

The company plans to open four stores this fiscal, in Bangalore, Ahmedabad and Hyderabad, and four each in the next two fiscals, each store measuring around 55,000 sq ft. Mall rentals have fallen 35 to 40 per cent in some cities from their peak in the past couple of years.

“Property rates make it lucrative to expand. We also have undrawn limits of Rs 90 crore,” Govind Shrikhande, chief executive of Shoppers Stop, said during a conference call today.

While expanding their network, retailers have shut unprofitable stores and unviable ventures to save cash during the downturn. Shoppers Stop closed down over a dozen unviable stores in FY 2009.

Shoppers Stop recently pulled out of a catalogue retailing venture with UK’s Home Retail group under the Hypercity-Argos brand. It also moved out of the food business after announcing that its Café Brio outlets would be replaced with Café Coffee Day outlets over the next couple of months.

“We have taken a call to close those ventures which are taking a longer time to break even,” said BS Nagesh, managing director, at the call.

In March, the company closed three of its ‘Crossword’ book stores – one at the Mumbai airport and two in Chennai and New Delhi. The company also closed its airport retail store, ‘Stop & Go’, at Mumbai airport.

Most big retailers have shut stores to remain profitable. While Aditya Birla Retail has closed 75 stores so far, Reliance Retail has shut 45.

“The last fiscal was one of the toughest for retailers and we feel the first quarter will also be difficult. We expect things to pick up after Diwali this year and a good year thereafter,” Shrikhande said.

Besides 26 Shoppers Stop stores, the company runs speciality formats such as Home Store, Mother Care, Crossword and Arcelia, among others, and an airport retailing venture with Nuance, a European firm.

However, the company does not have plan to expand its speciality business in a big way this fiscal, according to Nagesh.

The company’s stock went up by 3.73 per cent to close at Rs 115.50 on Monday.

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From jaded showbiz personalities endorsing 'divine gemstones' and miraculous 'weight reducing products' at unearthly hours to 24 hour shopping channels, the virtual retail market on the idiot box has come of age. Selling almost everything from latest gadgets to beauty products with on-air demonstrations and multiple ordering options, shopping channels on television look set to don the cap of potential virtual sellers, say market experts. The launch of Network18 group's Home Shop18 last year, added a new dimension to this genre of shopping. Boasting of India's first 24 hour shopping channel, it is an online and on-air platform operating on the web, catalogue and print in tandem with TV. Joining this new shopping bandwagon is another leading media and entertainment company, Star TV. The company has announced a 50:50 joint venture with CJ Home Shopping, a Korean based regional home shopping group to launch a 24 hour home shopping channel in India, along with an online version in the second half of 2009. "India remains a fast growing retail market and the formation of this joint venture represents yet another step in our growth trajectory," says CEO of Star TV, Paul Aiello. PTI

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India has moved up from 44th spot last year to 39th in terms of being the preferred designation ranking, according to global real estate consultant CB Richard Ellis (CBRE), which also adds that the ranking, does not justify the size of the country’s economy.

UK tops the global list while China is numero uno for the Asia Pacific region followed by Japan; India earns the 11th spot, Chairman and MD Anshuman Magazine  of CBRE reportedly said in a statement.

He said even China has moved to the 6th position globally from 10th place last year. Among the Asia Pacific countries too, India is behind the smaller countries like Singapore and Indonesia.

“This ranking is not only because FDI in retail is not allowed but also due to relatively lower purchasing power, cost and availability of real estate, besides infrastructure and supply chain management issues,” Magazine said.

However Magazine cautioned the retail business corporations outside India that adding a market like India could be not ignored too long and it would continue to move up in the ranking and attract more and more international players.

Addition to the organized retail will be a boom in disguise to the wine industry as it will increase the availability and ease the distribution blockages existing at the present moment. It is expected that states like Delhi will soon follow the example set by Maharashtra, Karnataka, Haryana, Punjab and Chandigarh

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“The firm is also experimenting with at least two pilot projects in different markets to figure out the quickest way to reach a positive operating profit, besides looking to greater consolidation”

As part of a new strategy, Aditya Birla Retail Ltd (ABRL), which operates the More chain of stores, is betting on its 350 private labels to nudge the firm to profitability by the end of fiscal 2010.

The firm is also experimenting with at least two pilot projects in different markets to figure out the quickest way to reach a positive operating profit or Ebitda (earnings before interest, tax, depreciation and amortization), besides looking to greater consolidation.

ABRL almost doubled its turnover from Rs500 crore to Rs1,150 crore at the end of March. Its revenue target for this fiscal is Rs1,700 crore.

“We at ABRL now believe in experimental learning,” said Thomas Varghese, who took over as chief executive officer eight months ago.

Varghese said the firm has enough private labels in products ranging from noodles to home care, to take on leading consumer goods players.

The labels are priced 10-15% lower than competing brands with comparable, if not better, quality, he claimed, adding that the firm has 70 employees to track quality standards.

On 3 March, the company launched an experiment across 30 stores in Visakhapatnam in Andhra Pradesh. Titled Project Vizag, after the colloquial name of the port city, the strategy places private labels in 25-30% of a store’s shelf space, against a mere 4-5% earlier, Varghese said.

The difference is a fourfold increase in sales, he claimed, and that sales numbers have held up for April, too.

The move to stock stores with private labels might also work, said Arvind Singhal, chairman of KSA Technopak Advisors Pvt. Ltd, a management consultancy firm, because private labels provide significantly higher margins, and make sense in India because the penetration of brands per se is very low.

However, ABRL’s project is not new, or unique. Private labels typically account for about 20% of sales for organized retailers.

According to Raghav Sehgal, a research analyst at Angel Broking Ltd, Shoppers Stop gets 20% of its sales from private labels while Future Group gets about 24-25%. “India is still an under-branded country and in each category there is still a lot of scope for growth, this is where the private label comes in.”

Globally, private labels contribute 17% of retail sales with a growth of 5% per annum, said a recent KPMG study, titled Indian Retail: Time to change lanes. “International retailers like Wal-Mart of USA and Tesco of UK have 40% and 55% own label brands representation in their stores, respectively.”

Meanwhile, ABRL is trying out other projects, even while it consolidates its stores through the current fiscal. It has Project 2000 under way at Hyderabad and Pune, which aims to improve sales using smaller size stores.

“We study small store formats such as Ratandeep and Heritage and try to replicate some of the workable concepts. The move will enable a quicker turnaround time, as more consumer choices are made available within a 2,000 sq. ft store, which earlier needed at least 4,000 sq. ft space,” Varghese said.

ABRL currently has 645 stores in the supermarket and hypermarket category, after shutting down at least 70 unviable stores. The size of a supermarket varies between 1,000 sq. ft and 4,000 sq. ft and that of a hypermarket between 50,000 sq. ft and 200,000 sq. ft.

Earlier, the group had hired services of global management consultancy firms such as McKinsey and Co., KSA Technopak and AT Kearney but the company is now moving to a learning-by-experience model, Varghese said, arguing that the Indian consumer is unique.

“ABRL has very good packaging and their product quality is as good as anybody else’s and the pricing is also lower compared to the brands. Customers will take it straight away because they get the reliability of the Birla name,” said Singhal of KSA Technopak. “It (private labelling) is not something retailers are focusing on due to the slowdown in economy but as they hit a certain scale, all retailers tend to focus on private labels.”

The trouble, however, is in the conflict between retailers and brand owners on sharing of shelf space. While brands bring in customers, they also know they need retailers.

Singhal noted that customers come to the stores mainly for brands but will pick up a private label at lower price point if it’s as good as the brand.

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Reliance Retail (RRL) is planning to counter the shrinking demand and rising costs stalking India’s organised retail industry.

company is rebranding some of its existing stores as ‘discount destinations’ reducing the number of products on offer and taking away air-conditioning, according to two people familiar with the matter.

All Reliance Fresh stores in Jaipur, Dharwad, Aurangabad, Hubli, Mysore and Dhanbad will be converted into ‘discount destinations’, which will offer up to 10% reduction on existing price, said an RRL official, who didn’t want to be named. These stores may also be rebranded to reflect the change and are tentatively referred to as Reliance Super Value, he said.

An RRL spokesperson declined to comment for this story, but the RRL official, whom ET spoke, said the company had already started a pilot project in Jaipur and is in the process of evolving finer details of converting Fresh stores into no-frills ones.

As of now, the exercise involves 30 stores and may be completed in a month or two.

The initiative is on the lines of Future Group’s KB Fair Price Shop, a chain of small neighbourhood grocery stores that offer discounts, fewer product categories and no AC. These shops, however, are not limited to small towns, and do not offer carry bags. These austere strategies run counter to those followed by RPG Group’s Spencers and Aditya Birla Group’s More supermarket chains, where shopping experience is seen as important as pricing.

The Future Group, India’s biggest retailer, has championed the cause of value retailing in India, on the lines of international retail giant Wal-Mart, even though prices offered at its stores still may not be as lucrative as Wal-Mart’s.

Reliance Retail, which runs over 800 stores across formats (hypermarkets, supermarkets and convenience stores) has been focusing on lower prices, a strategy that will take wings with the launch of “Reliance Super Value” in select towns.

People familiar with the matter say the retailer will squeeze its margin, cut down on costs by reducing power bill, rental, manpower cost and improve supply chain further to be able to offer lower prices to customers.

In the beginning of the year, Reliance retail has integrated the operations of all its formats. Now there is a centralised sourcing for much of its product categories that gives it better bargaining power with respect to the suppliers thereby meaning lower costs, which could then be passed on to consumers.

India’s most valuable company, Reliance Industries, had announced plans to enter organised retail in 2006, with an estimated investment of Rs 26,000 crore. Since then, it has shaped and reshaped its strategy, closed some stores, tweaked its formats and rationalised manpower to stay course in the retailing game, which has forced some fairly successful domestic retailers to the brink of bankruptcy.

The oil-to-retail company is now better placed to focus on retail with the Bombay High Court allowing RIL to sell gas from the Krishna Godavari region, thus monetising its investments. This is estimated to add almost $1 billion to its bottom-line by the end of the fiscal.

The company also commissioned its second refinery at Jamnagar in December which will add to its revenue and profits.

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