News and views about the Retail Sector in India

Weekly news updates on trends and happenings in the Indian Retail Industry

This week, our focus is on the growing luxury retail segment. From Italian kitchens and home décor to designer wear, wealthy Indian customers demand more. While the UP government’s stand on large retailers is a dampener, experts say that it is par for course and the large retailers had better be prepared for resistance.

- Chillibreeze Business Research Team

General trends and information
Big Players – plans and investments
Support industries
Regional News
Government
e-Commerce

General trends and information

Small retailers organise dry fruit festival to counter malls

It is an experiment the Mumbai Mewa Masala Merchants Association have decided to conduct; and the chances of success are rated high. The association comprises about 60 traders dealing mainly in dry fruits, with retail outlets in Masjid Bunder area, a few minutes drive from downtown Fort area.

For the first time, the association is launching what it calls a mega shopping festival to aggressively sell dry fruits over an extended period of over ten weeks (August 25 till November 14) to coincide with the series of major festivals such as Ganesh Chathurthi, Navrathri and Diwali, when demand for dry fruits expands manifold.

Clearly, small-time dry fruit retailers perceive the mushrooming shopping malls in the city as a threat to their trade; and a shopping festival is one sure way to attract customers and promote sales. Indeed, traditional retail traders in dry fruits business argue that they are better equipped than malls to meet all the specific needs of discerning customers because of the personalised service and the wide variety of items (different qualities, grades, sizes, prices) on sale.

Importantly, the customer at the mewa festival is assured of lower prices than at the malls. The association members offer dry fruits at prices said to be 30 per cent lower than at malls.

August 23, 2007
Source: Hindu Businessline

Retailers to set up multiple services kiosks

Providing multiple services through single platform kiosks - be it ticketing for airline, railways, private buses, and movies or billing for telecom, electricity, natural cooking gas and financial services - seems to be the new marketing mantra among retail giants.

Reliance Retail, Aditya Birla Retail, Pantaloon Retail, Big Bazaar, Shopper’s Stop, InOrbit Mall, Nirmal Lifestyle, Mega Mall and RPG Group’s Spencers are currently talking to the Shapoorji Pallonji Group to set up the group’s new s-commerce venture ‘Suvidhaa’ kiosk within their malls, hypermarkets and retail outlets.

Suvidhaa s-commerce venture is a new click and a mortar model whereby our kiosk operators will provide services demanded by the customers for a transaction fee of Rs 3 to Rs 5. Shapoorji Pallonji is planning to set up 10,000 shop-in-shops and neighbourhood and convenience ‘Suvidhaa’ kiosks apart from 500 to 3,000 flagship stores in the next three years.

August 22, 2007
Source: Indian Express

Organised retailing needs Rs 3 lakh cr investment: IACC

An Indo-American Chamber of Commerce (IACC) study on the issues affecting the farm to retail process in India said that in order to perk up the growth rate to 4 per cent in organised retailing, the government would need to invest Rs three lakh crore.

Farm incomes in India can double if organised retail enhances farmer realisations on food items from the current 30 per cent to 35 per cent of retail price to the international norm of over 50 per cent, the study said. The Indian government has been targeting a growth rate of 4 per cent in the agricultural sector, the actual growth rate of 1.8 per cent over the last few years is much less than the target.

"The price paid to farmers for fresh farm produce is currently about 30-35 per cent of retail prices as compared to the international norm of more than 50 per cent of retail price. This differentiation is primarily due to the farm sector being predominantly unorganised in India. Organised retailing in F&G segment can drastically improve supply chain and boost farmers' incomes and will bring a more structured growth to the whole sector," IACC, National President, Deepak Pahwa said.

August 21, 2007
Source: Economic Times

Big Players – plans and investments

RIL enters strategic partnership with Concor

Reliance Industries (RIL) is entering into a strategic alliance with the Container Corporation of India (Concor), India’s largest container train operator.

Both entities are already in advanced stages of talks and an MoU detailing the agreement is expected to be announced shortly. Under this strategic partnership, RIL will have access to several infrastructural facilities of Concor, which includes almost 60 terminals all over the country.

According to sources, RIL intends to utilise these facilities as key warehousing points for its mega retailing venture—Reliance Retail. In addition, Concor will also provide multi-modal connectivity to RIL, through its rail and road network, for the movement of both the bulk commodities and other imports, sourced for its retail venture.

August 25, 2007
Source: Economic Times

RPG scouts for foreign partner in new venture

The Rs 11,000-crore RPG group on Friday said it was looking for a foreign partner for a new retail venture.

RPG Enterprises Vice-Chairman Sanjiv Goenka said that it would invest Rs 1,000 crore for Spencer's expansion and was contemplating IPO to part finance the capex plans. He added that their first mall to be built here at a cost of Rs 300 crore would be the best in South Asia. The group already has retail venture brands, Spencer's, MusicWorld, Cellucom, Books & Beyond.

Goenka unveiling telecom and IT product retail brand, RPG Cellucom's plan, said the company would increase the number of stores to 500 across the country by 2008. RPG Cellucom would cover Asansol, Bardhamman, Kharagpur, Durgapur, Siliguri.

On the tie-up with the USD 350 million Cellucom group, Goenka said it would have an option to take a stake in the RPG Cellucom India if the government allowed FDI in retail.

August 24, 2007
Source: Economic Times

Spencer's talking to global retailers for joint venture

Spencer’s Retail, promoted by the Rs 11,500 crore RPG group, is in talks with international retailers for a possible joint venture (JV) in India. The company is exploring the JV route to introduce new formats.

“The JV will not be in the food retailing since our existing formats function in that area. We are talking to a couple of international players. The new venture will be consolidated by the group. Hopefully, we will be able to take a call on the new venture in a couple of months,’’ said Goenka.

Goenka further said the JV would adhere to the FDI guidelines. He added: “We will locate stores in such a way that they do not clash with business of existing stores.’’ Spencer’s currently has 250 outlets in 40 cities. The company will open 500 stores in the next 12 months and 600 stores next year.

August 23, 2007
Source: Business Standard

Landmark, SPAR sign retail deal

Max Hypermarkets India Private Ltd has signed a licence agreement with Dutch food retailer SPAR International for hypermarkets and supermarkets in India, the latest global brand to enter the fast-growing retail market.

Max will invest $50 million in seven SPAR-branded hypermarkets and supermarkets in cities over two years, the companies said in a statement.

The first hypermarket, measuring 85,000 sq ft, and the first supermarket, at 28,000 sq ft, would open in Bangalore next month.

August 22, 2007
Source: Economic Times

ITC to launch small hypermarkets in rural areas

ITC Ltd on Wednesday said it would set up new small format stores in rural areas on the lines of existing hypermarket chain - Choupal Sagar - by early next year, even as it plans to ramp up its retail operations.

The company was planning a large number of smaller Choupal Sagar stores, which would have a capacity to house 12,000-13,000 units at 40 locations out of 170 across the country, where ITC runs its big format stores.

These stores would cost Rs two crore each and would be set up in small towns and rural areas of UP, Madhya Pradesh, Rajasthan and Maharashtra. ITC was also looking for a multi-fold increase in the number of e-Choupal - a platform where villagers can access internet - in the next 5-6 years.

The company also plans to open around 200 new Choupal Fresh outlets in major towns of the country, including metros, to expand its presence in urban areas. The urban retail chain focuses on stocking fresh horticulture produce like fruits and vegetables, for which ITC has set up cold chain.

Currently, there are three Choupal Fresh stores in Pune, Hyderabad and Chandigarh and the number is likely to go up to 50 in these three cities by this fiscal. In the second phase, ITC plans to set up 140 new stores in other cities including Kolkata, Delhi and Mumbai.

August 22, 2007
Source: Economic Times

Support industries

Retailers get technology to ‘track’ their customers

In a first for Indian retailers, mushrooming retail outlets will soon be equipped with ‘track-o-meters’ — a customer traffic counting technology that provides integrated retail information services.

The country is seeing a boom in the retail sector and retailers are keen to monitor the customer’s ways. Little surprise then, both domestic and international players are entering India to tap the opportunity. Navin Makheja, operations head (India), Experian Solutions which recently launched Footfall in India, said, “India is an emerging market, where modern retailing is in a nascent stage. We are close to signing deals with big Indian retailers and mall developers for installation of Footfall in their stores and malls.”

The technology generates information like conversion ratio - an indirect measure of performance of sales staff and average spend per visitor in addition to providing operational indicators like forecasting for seasonal holidays rush and staffing pattern during peak and average sales. For any retail outlet or even the huge shopping malls, it can predict advertising and marketing efforts, store design and remodeling projects, merchandise changes, training programs and other budget-intensive strategic initiatives.

August 25, 2007
Source: Indian Express

Apparel & Footwear

Primus Retail buys Weekender for Rs 95 crore

Retail chain Primus Retail has acquired clothing brand for youth and children, Weekender, for about Rs 95 crore, as part of its plans to enhance product portfolio through the inorganic route.

Weekender belongs to the Jagadish Hinduja family, owners of Gokaldas Images and has been in the clothing line for youth and children. It has a licensee arrangement with Disney and Warner Brothers in its portfolio. Currently, it has more than 50 stores with an annual business size of Rs 45 crore.

The Bangalore-based Primus plans to renovate the existing Weekender stores besides adding more in the next 12 months, a company release said. “We want to create a new look and feel for the brand. With our reach and infrastructure, we hope to grow the brand more than 100% over the next 18 months,” Mr Bhat said.

Primus has more than 150 retail stores across 40 cities. It operates exclusive stores and factory outlets for brands like Levis, Adidas and Nike. It also sells MTV gear and Adidas accessories to around 3,000 mom-and-pop stores across 200 cities.

August 24, 2007
Source: Economic Times

Wills Lifestyle planning 60 new look stores

Wills Lifestyle, the lifestyle retailing division of ITC, is planning a major image makeover this financial year through a range of new-look stores to offer product innovation in synchronization with changing consumer preferences. 
 
US-based FRCH, an international architecture and design firm serving the retail, entertainment, restaurant, corporate and hospitality markets has been hired to design the new format stores. 
 
The firm will assist Wills Lifestyle in terms of architecture, interior design, graphic design and brand strategy to help create distinct customer experiences. 
 
Wills started linking up with designers last year. Currently, sales of designer-based ranges contributed close to 15 per cent of Wills Lifestyle’s overall sales. 

Wills Lifestyle posted a sales growth of 52% in 2006-07

August 24, 2007
Source: BharatTextile.com

GHCL plans Rs 125 cr retail foray

Gujarat Heavy Chemicals (GHCL), which is into home textiles and soda ash, has announced plans to enter the Indian retail arena. The company is expected to enter the home textiles segment through the franchisee model.

The company will be opening 100 retail stores in three years at an investment of Rs 125 crore, according to sources.

August 23, 2007
Source: Business Standard

Regional News

RPG Cellucom opens 4 outlets in Kolkata

RPG Cellucom India Pvt Ltd has unveiled plans for 500 retail outlets across the country by December 2008. The company, which has, currently, 75 retail stores located in five cities across the country, today opened four RPG Cellucom outlets in Kolkata.

RPG Cellucom stores will showcase 200 mobility products and 75 models of cellular phones. These will include brands such as Nokia, Motorola, Sony, Erricsson, Samsung, HP/Compaq, Toshiba, Lenova and Acer, among others. Besides mobile phones, the stores will have on offer PDAs, notebooks, mobile enhancements, mobile entertainment, IT accessories and peripherals and connectivity solutions.

August 25, 2007
Source: Hindu Businessline

Milleret opens 2 outlets in Pune

The Swiss-made Milleret brand of jewellery watches opened outlets in two P N Gadgil stores in Pune on Thursday, and is set to expand its retail base in India to 35 jewellers’ outlets across the country by the end of the year.

The high-end gold and diamond studded watches were launched in Mumbai late last year, and are now available at 18 jewellery stores in Mumbai, Chennai, Goa, Coimbatore, Delhi, Bangalore, Surat, Goa, and Pune. The other cities on the map are Jaipur, Ahemdabad, Baroda, Chandigarh and Kolkata.

The market for jewellery watches in India is estimated to be around Rs 650 crore. Milleret’s diamonds-set-in-gold watches range from Rs 50,000 to Rs 5 lakh, with the limited edition Squeleton (Rs 2.75 lakh) proving the most popular amongst Indian buyers. Around 80 high-end watches were sold last year.

August 25, 2007
Source: Hindu Businessline

Lifestyle & Luxury Retailing

Just in Vogue venturing into new areas

Just in Vogue, a luxury retailing company that sells premium products such as watches and writing instruments, is planning to expand the basket of offerings.

“We are carrying out research on new areas such as high-end leather products and crystals,” Mr Manoj Subramanian, Head (Marketing) of Just Lifestyle Pvt Ltd, said. Mr Manoj was here in connection with the launch of Milleret range premium watches at its Banjara Hills outlet here.

The company, which registered a turnover of Rs 100 crore last year, runs 14 outlets in seven cities.

Stating that the response to luxury retailing had been growing up in the urban areas with increased incomes, he said the company believed in exclusivity of the products it sold.

Aug 24, 2007
Source: Hindu Businessline

Timbor Home bets on growing market for modular kitchens

Timbor Home Pvt Ltd, the Ahmedabad-based manufacturer and marketer of modular kitchens, is launching wood-less, eco-friendly doors in the country in markets such as Gujarat, Maharashtra and Karnataka next month. The new offering was a major effort to tap the Rs 5,000 crore door-manufacturing market in the country.

It is adding 46 new stores, to its existing 54 exclusive franchisee stores in nine States, to increase its share of 12 per cent in the Rs 200-crore modular kitchen market. Its stores are connected online to the company’s plant in Ahmedabad to provide solutions to specific needs. The company imports all its hardware mainly from the US, France and Germany, and markets its products under the brand name Timbor Cucine, by modifying Italian modular kitchens to suit the ‘wet’ cooking and food habits of the Indians.

Timbor’s modular kitchens are priced between Rs 20,000 and Rs 5 lakh.

August 24, 2007
Source: Hindu Businessline

Genesis Colours to form luxury retail JV

Genesis Colours, the marketer of Satya Paul brand, is forging a luxury retail joint venture with Sports Station International (SSIPL). The JV –Genesis Luxury – will roll out retail chain across India, exclusively dedicated to luxury brands.

The two partners are exclusive Indian licensees for some of the world’s biggest luxury brands, which will get transferred to the new company. While Genesis Colours holds licence for Canali in India, SSIPL is licensee for luxury labels such as Paul Smith, Aigner, Rosetti.

The proposed venture will ride an investment of Rs 18-20 crore in the first year of operation that will go into setting up of stand-alone single luxury brand outlets and shop-in-shops in key metros such as Delhi Mumbai, Bangalore and Hyderabad. Subsequently, the chain will enter other key cities. Over three years, the JV plans to have 50-70 outlets in all major Indian cities, with 6-10 exclusive retail stores for each of the JV’s licensee brands.

August 23, 2007
Source: Economic Times

Government

CII:UP govt to reconsider retail decision

Expressing fears that the recent orders by the Uttar Pradesh Government to close the Reliance Fresh stores will have adverse impact on the pace of inclusive growth of the country, the Confederation of Indian Industry (CII) appealed to the Mayawati Government to reconsider its decision.

In India, there is a huge wastage of fresh fruits and vegetables- between 24 percent to 40 percent of the total produce. In this scenario, the Large-Format Retail provides the all important infrastructure to carry the farm produce to the consumers with lower wastage. In this process, the farmers get better returns and the consumer better quality and price, said the CII in a statement today.

It went on to say that the move will be detrimental on several grounds- lower returns for farmers, higher prices for consumers, reduced job opportunities and erode investor confidence. It added that this move would deprive the state of the benefit of modern infrastructure in the form of cold chains, logistics, transport and retail outlets.

The confederation said that in this process, several new jobs that have been created are at stake. Running Modern Large-Format Retail is labour intensive and closure of them will affect the entire chain starting from the farm to the store. The move will also deter industrial growth by eroding investor confidence, said CII, adding that any brake on the growth in Uttar Pradesh will ultimately harm the country.

August 26, 2007
Source: Economic Times

Forward Bloc warns of bloodshed over Reliance's entry

The Forward Bloc, a senior partner in West Bengal's ruling Left Front, on Saturday warned there would be "bloodshed" if Reliance entered the agricultural retail business in the state.

"We will not allow the entry with the help of police of Reliance in the agri-retail business in this state. There will be bloodshed if any attempt is made (in this regard by the Left Front government)," senior Forward Bloc leader Naren Chatterjee told a rally of the party's labour body, Trade Union Co-ordination Centre here.

The Forward Bloc, which controls the state's agriculture department, has refused to issue a licence to Reliance on the ground that its retail project would harm the interests of farmers and small traders.

Reliance's agricultural retail project envisages the setting up of complete retail infrastructure, ranging from farms to retail outlets.

August 25, 2007
Source: Economic Times

Reliance Fresh, Spencer’s told to shut shop in UP

In a move that could dampen the retail plans of big corporations, the Uttar Pradesh Government has ordered the closure of modern organised retail chains in Lucknow and Varanasi.

At the same time, it has set up a five-member committee led by Cabinet Secretary Mr Shashank Shekhar Singh to review all aspects governing such outlets.The decision was triggered after Reliance Fresh and Spencer’s retail stores in Lucknow were attacked by a group of traders, followed by reports of similar incidents at outlets in Varanasi.

However, the decision of closure would not be applicable to the malls even though similar products were sold through them, the Government clarified.

August 24, 2007
Source: Hindu Businessline

e-Commerce

New chapter opens for online retail

Cashing in on the boom in the country’s retail sector, leading booksellers as well as publishers are now turning online to boost sales.

After setting up book cafes that offer customers facilities to sip tea, listen to music or browse the net apart from buying books, new-age book stores are now looking to expand their customer base through online sales.

Book Cafe is primarily focusing itself on receiving online orders from different parts of the country and then delivering the books at the customer’s doorstep, whatever it costs the company does not matter! Shop at www.Bookcafe.In and get books delivered at your doorstep.

For the best results in online marketing, the firm has tied up with Sify and Rediff for the vertical shopping as their customer base is increasing everyday from Shillong and Nagaland to Chennai and Andhra Pradesh. They are trying to bring about a change from ‘breakaway model to clickmodel’ of book purchasing.

According to estimates drawn by the Central Statistical Organisation Statistics, 2006, the total books, music and gift retail industry in the country that is currently pegged at Rs 11,500 crore has witnessed an increase of 17.3 per cent from last year.

August 27, 2007
Source: Business Standard

Logix rolls out car sale portal

A year from now, you could buy a car online. The Internet is revolutionising the auto business in the country. Over 40 per cent of prospective car buyers do their research on the Internet before buying a car.

“Online car selling will begin 12 months from now,” said Mr Sanjay Soni, Managing Director, Logix Microsystems, launching auto portal Carazoo.com on Tuesday in the city.

Dealers have taken to the medium as it offers them cost savings – a scheme or campaign can be launched at a fraction of the original cost per thousand.

Car buyers also will find the convenience of the “online auto supermarket” a better option to making trips to showrooms. The consumer will benefit as dealers compete online and greater discounts can be offered.

Following the trend set by various firms such as Indiacar.com, Carwale.com, Indiamart.com, Carazoo.com features comparisons, consumer reviews, blogs, e-brochures and insurance tips.

It features 17 makes and 77 models of cars, including second-hand cars. On the site, interactive ads using animation allow the surfer to take the car for a virtual spin, experience a 360 degree interior view, zoom into the headlight and even view it in all the available colours using the ‘paintbrush colouring’ feature.

Four auto manufacturers are being roped in. And with partnerships with over 50 dealers, the firm expects to sign up with 250 in a few months. Logix has invested Rs 6 crore and expects the site to break even after a year.

August 22, 2007
Source: Hindu Businessline