Latest News and Events from the Indian Retail Sector

Weekly Retail News from India

General Plans and Information
Big players - plans and investments
International
HR News
Unique formats
Sector specific

General Plans and Information

1. Not all upbeat in the retail sector
While the Indian retail industry is growing by leaps and bounds, there are lots of pitfalls and pressures along the way. Some of the main pinches will be high cost of rentals, lack of people as well as higher costs associated with them and rising interest rates.

According to one retail sector analyst, “Over 90% retailers usually take the rented or long-lease route to set up stores with a few exceptions of owned properties. We estimate the rent costs to surge from anything between 15% -20% on account of expensive real estate. Adding to the retailers’ woes in the coming financial year will be the new 12% service tax on rents and the additional 3% surcharge.”
Thursday, March 29, 2007
Source: DNA India

Big players - plans and investments

1. Future Group plans cash-and-carry business
Kishore Biyani’s Future Group is likely to enter the cash-and-carry business to compete directly with Reliance and Wal-Mart/Bharti. Its new business will be called KB’s Wholesale and is likely to open next month itself. The company is looking to open around 15 stores in the next 18 months with the first store coming up in Burdwan in West Bengal and the second one in Mathura in April.

It was essential for Future Group to get into the wholesale business to stay competitive with Reliance and Wal-Mart since both companies are developing their back-end supply chains very strongly. According to consultant, “Wal-Mart cash & carry will obviously sell at a preferential rate to Bharti’s retail business than to say a Pantaloon,” which creates the need for it to become a wholesaler itself.

Having a network of wholesale stores is also profitable for the future when FDI restrictions are eased. According to London based marketing research and intelligence firm, Euromonitor, “When the restrictions on retail in India are lifted, international retailers will be in prime position to easily convert their cash-and-carry stores into highly profitable supermarkets and hypermarkets.” Currently there are two cash-and-carry companies, Metro of Germany and Shoprite of South Africa.
Wednesday, March 28, 2007
Source: The Economic Times

2. Reliance Retail to soon open electronics stores
Reliance Retail will open its 100th Reliance Fresh store in either Delhi or Pune and alongside is readying to open its consumer durable chain with its first store in Delhi most likely. Its 99 Reliance Fresh stores have a total space of 250,000 sq ft since it opened its first store in November 2006 in Hyderabad. Average business at its stores ranges from Rs. 350,000 to Rs. 400,000 per day.

Reliance Retail had announced its entry to the retail sector early last year and had set aside Rs. 250 billion by the year 2012 and is looking to achieve revenues of Rs. 900 billion. The company will be opening stores in a wide range of formats, including hypermarkets, supermarkets and specialty stores.
Wednesday, March 28, 2007
Source: Financial Express

3. RPG Enterprises expects 25-30% contribution by retail divisions by 2011
One of the largest retail groups in the country, RPG Enterprises is likely to see its retail divisions contributing up to 25-30% of its total revenues in the future. At present its retail divisions account for only 5% of its revenues. According to Sanjiv Goenka, RPG Enterprises vice chairman, “Going forward, retail business will contribute a substantial chunk towards the group’s turnover in terms of revenue.”

The company is making plans to grow its retail business substantially by opening around 2000 new outlets, which will cover around 1 million sq ft of space by 2009. At present there are 400 outlets, of which there are 8 Spencer’s Hypermarkets, 5 Spencer’s Fresh Stores, 5 Spencer’s Express Stores and 104 Spencer’s Daily Stores. The company is most likely to use a cluster model of expansion and will be opening stores in tier I and tier II cities.
Friday, March 30, 2007
Source: The Economic Times

International

1. Shoppers’ Stop to launch Build-A-Bear in India
Shoppers’ Stop CEO Govind Shrikhande announced that it will be launching the interactive children’s workshop Build-A-Bear in it’s stores soon. Initially Build-A-Bear will only be available at shop-in-shop Shoppers’ Stop stores and will open at standalone stores at a later date. The company will have a non-exclusive tie up for three years with the Murjani Group that is bringing the Build-A-Bear brand to India.
Thursday, March 29, 2007
Source: The Economic Times

2. Kirby Building Systems keen on retail sector
The Indian subsidiary of one of the largest business houses in Asia, Alghanim Industries, Kirby Building Systems is keen on entering the retail sector. The company is reportedly interested in becoming a multi-brand consumer durable retailer although FDI is not permitted in that area. According to Srikant Gokhle, CEO of Kirby India, “Our retail plans are still very preliminary. We are exploring ways to enter Indian retail in tandem with existing policy regulations.”
Thursday, March 29, 2007
Source: The Economic Times

3. French luxury brands keen on potential of India
French luxury brands are keen on India and the representatives of brands such as Chanel, Louis Vuitton, Lanvin and Cartier who are currently visiting the country are excited about the prospects of growth. According to Damien Vernet, General Manager for West Asia and India for Louis Vuitton, said, "India is a very strategic market, and the market is close to fulfilling its potential."

Igor Baschet, area manager for Cartier, who is in India to identify projects and partners, said, "The elite in India are growing at 20 to 30 per cent. India already has about 36 billionaires, with 14 of them who are new to the list."
Friday, March 30, 2007
Source: The Hindu Business Line

HR News

1. Reliance Retail changes its HR policy once again
Reliance Retail changed its HR policy to a more comprehensive manpower management policy in an effort to streamline both recruitment as well as retention of employees. The new policy is to focus on acquisition, transformation, design and concept of the HR in the company. Reliance Retail president and its chief people officer, Bijay Sahoo, is in charge of creating the new policy.

Reliance Retail currently has 89 outlets and plans to increase the number of its stores to 120 in April 2007. The company has huge requirements for retail talent and plans to have 500,000 employees by 2010. At present it only has 6,000 employees. There has been an ongoing tussle for the limited number of retail executives at the top level. According to a company official, “We may have lost some seven to eight top guys in the war for talent, but the proposed HR policy will aim at stopping attrition in the senior and middle management level.”
Wednesday, March 28, 2007
Source: The Economic Times

2. Retailers using Esops to retail talent
While most companies are losing their interest in giving Employee stock options plans as a fringe benefit due to the decision to include them in the tax net, retailers are finding them a useful tool in holding on to employees. Provogue is the latest retailer to come up with an Esop plan that is likely to be revealed soon. According to Salil Chaturvedi, promoter of Provouge, “Besides controlling attrition, Esops help in aligning the interest of the managers with those of the owners. Whatever be the outcome of FBT on Esops, I feel Esops are worthy of investment in our human resources.” Other retailers using Esops as a benefit are Reliance Retail, Shoppers’ Stop, Future Group and Piramyd Retail.
Thursday, March 29, 2007
Source: The Economic Times

Unique formats

1. DCM Shriram to hive off Hariyali Kisaan Bazaar network
DCM Shriram’s board decided to hive off its rural retail business, Hariyali Kisan Bazaar into a subsidiary. The company will be expanding its operations from its 65 at present to around 200-250 in the next 12-15 months, when it will be listed on stock markets to attract private equity. According to Vikram Shriram, vice chairmand and managing director, “The expansion of Hariyali Kisaan Bazaar would be roughly Rs. 1.5-1.8 billion. It will be primarily funded through the internal accruals of the company.”
Wednesday, March 28, 2007
Source: Business Standard

2. Gitanjali to invest in luxury malls
The Gitanjali Group announced that it would be developing luxury malls under the name ‘Luxury Connexions’, with an investment of Rs. 1 billion in the next three years. The new malls will come up in cities such as Hyderabad, Mumbai, Bangalore, Delhi, Kolkata, Ludhiana, Chandigarh and Chennai and will feature global brands, world-class restaurants, spas, jewelry and specialized stores for weddings and events. According to Mehul Choksi, Chairman of Gitanjali Group, "India is emerging as one of the biggest markets for luxury goods. With the growing pay packages and increasing disposable incomes, the spending power especially on luxury products is on an upsurge. To capitalise on the potential, we have decided to enter into the luxury retail segment."
Thursday, March 29, 2007
Source: The Hindu Business Line

3. Pyramid forms JV with realty company
Chennai based movie theatre company, Pyramid Saimira Theatres (PSTL) has entered a joint venture agreement with Baderwals Infraprojects, a real estate firm, to set up 200 integrated leisure and shopping complexes with an investment of Rs. 1200 billion. The projects are going to be evenly divided between larger cities and small tier II and tier III cities.
Friday, March 30, 2007
Source: The Economic Times

Sector specific

Apparel & Footwear

1. The Loot plans IPO for 2009
The Loot chain of stores will be going public in 2009, it was announced by its promoters Jay Retailing and Merchandising. While the company has yet to decide the size of the funds it will be raising, one of the factors determining it will be its sales turnover of Rs. 1 billion. The Loot currently has 10 stores in cities such as Mumbai, Delhi, Hyderabad, Nasik and Pune and will be expanding to additional 15 stores by the time it goes in for an IPO in 2009. The company is targeting capital cities, suburbs near airports and other cities with a population of over 600,000 to open its stores.
Monday, March 26, 2007
Source: nasdaq.com

2. Gokaldas in talks with retailers for supplying apparel
Gokaldas Exports Ltd, the country’s leading exporter of garments is in talks with top domestic retailer to supply apparel to them. The company has already set up a domestic division to cater to domestic demand. According to Rajendra J Hinduja, executive director of Gokaldas, “Both Reliance Retail and Bharti have evinced interest in sourcing apparel from us. The Aditya Birla Group too is interested in sourcing apparel from us for its retail operations. We have asked them to submit a time-bound 12-month programme to us. We do not mind dedicating separate factories to them.”

The company is expecting to receive bulk orders in the range of 1-2 million apparel items per month. At present the company has 46 factories in South India, with close to 60,000 employees and annual revenue of Rs. 500 million. The company supplies garments to retailers such as Metro Cash & Carry, Pantaloon, Madura Garments, Benneton, Shoppers’ Stop, Reebok, Nike and Adidas.
Thursday, March 29, 2007
Source: Business Standard

3. Westside opens in Mysore
Tatas retailing venture, Trent Ltd. opened its first store using an experimental franchisee format in Mysore. The outlet has been formed in association with Srinivas Enterprises, a Mysore based company. If this unit is successful, the company will open more franchisee based stores in the rest of the country.

The new store in Mysore is located n Kuvempunagar, the new store covers 10,000 sq ft and is spread over two floors. Trent plans to open 11 stores this year in both metros such as Bangalore and tier III cities such as Ludhiana, Jalandhar and Rajkot. Bangalore will also get the company’s first Hyper Bazar soon.
Friday, March 30, 2007
Source: Business Standard

4. Arvind Brands to reintroduce Flying Machine jeans
Arvind Brands will be re-launching its Flying Machine brand of jeans after a long pause. Initially the brand will be launched only in India, although there are plans to take it international after a year. Flying Machine was the number 1 brand of jeans in India, before the advent of the international brands and the company hopes to win back some customers by offering cutting edge fashion at reasonable prices.

Prices will start at Rs. 1,000 and besides jeans; there will be other items such as cargo pants, knit, shirts etc on offer. The company has brought in international design firm JHP from London to design its Flying Machine stores and will be opening 25 stores in the major cities by May this year. By 2009 there will by 100 stores across the country.
Friday, March 30, 2007
Source: The Hindu Business Line

Books, stationary and gifts

1. Archies to open 200 new stores in 3 years
The country’s leading card and gift retailer, Archies will be expanding its footprint to open 200 stores over the next three years. The expansion is expected to cost Rs. 200 million that will be raised by issue of equity shares. There are 83 stores in India at present, which will be increased by another 50-55 stores by March 2008. Archies has also launched a new store called Stupid Cupid for fashion accessories and high-end gifts.
Thursday, March 29, 2007
Source: Financial Express

Food & Grocery

1. Heritage Foods to open 30 stores in Bangalore
Hyderabad based dairy products company, Heritage Foods announced that it would be setting up a minimum of 30 stores under its Fresh@ brand around the end of the year in Bangalore. The first few stores will be coming up in Indiranagar, Jayanagar and Basaveshwaranagar areas of Bangalore. Stores would be in the 2,500-3,000 sq ft range, with 40% of the area devoted to fresh fruits and vegetables.

At present, Heritage Foods already operates 12 stores in Hyderabad and is launching stores in Chennai. By the end of the year, the company is looking to have 100 stores and will then expand its footprint to tier II cities.
Friday, March 30, 2007
Source: Business Standard

2. Flurys and Spencers tie up for Kolkata market
Kolkata’s iconic confectionery and tea room Flurys has tied up with Spencer’s Retail to open 11 outlets in the company’s smaller outlets called Spencer’s Dailies. The first of these outlets will be opening in Tollygunge at the end of the month. Flurys is a Kolkata institution and was re-launched in 2004, after several years of decline, and is currently owned by The Apeejay Surrendra Group who has been looking after it for the past 40 years.
Friday, March 30, 2007
Source: Business Standard

Jewelry & Watches

1. Titan plans to launch global brand in India
Tata Group’s Titan Industries is planning to launch 2-3 global brands in the next few years in India, after the success of the Tommy Hilfiger brand that it also launched in the country. According to Harsh Bhatt, Titan Industries CEO, “Tommy Hilfiger has done well in the past year and seen a growth of more than 60% year on year. We have plans to bring in two to three more licensed brands into India in the next two to three years including at least one in the next one year.”

The company plans to open a new manufacturing facility in Rourkee where it will manufacture 2-3 million watches. This facility is likely to be open later this year and will see an investment of Rs. 100 million. The company has also opened a sourcing office in Hong Kong to outsource watches from China, Korea and other countries.
Monday, March 26, 2007
Source: The Economic Times

2. Titan launches its eyewear segment
Titan Industries launched its prescription eyewear brand Titan Eye+ and announced its plans to open 150 new stores in the next 3-4 years. Its Fastrack brand of sunglasses will also be sold at these new stores, along with several global brands. Besides retailing eyewear, these stores will also conduct eye tests and consultations on style of eyewear.

The first of these stores will open in Banglaore, with a total of 5 stores coming up there as well as Nagpur by the end of April 2007. Most stores are being targeted at tier I and tier II towns. Titan has tied up with international vendors such as Essilor and Nikon for lenses and several reputed names for its eye frames. The total eyewear segment in the country is worth around Rs. 18 billion and is growing at 10%.
Friday, March 30, 2007
Source: Business Standard

Luxury and Lifestyle

1. Lladro plans to open more 4 outlets
Spanish porcelain figurine manufacturer Lladro SA will be opening 4 more stores in India by the end of the year. The company operates through a JV, Lladro India Limited and currently operates 5 boutiques in India, with two stores in Mumbai, and one store each in Chennai, Bangalore and Hyderabad. New stores will open in Mumbai, Delhi and Kolkata in the next two months.
Friday, March 30, 2007
Source: Business Standard