Reliance to re-work sourcing plans; Subhiksha to engage all stakeholders

Protests against organized and big retail continues and gathers momentum. It appears that the retail majors are also regrouping and re-working strategies. One wonders how long before the third (and as affected) stakeholder – the customer and common man - wades into the fray.
- Chillibreeze Business Research Team

General Trends and Information
Big Players – plans and investments
Unique Formats
International
Support Industries
Apparel & Footwear
Food & Grocery
Regional News
Lifestyle & Luxury Retailing
Public Protests / Government Action
e-Commerce

General Trends and Information

Big retail still gung-ho on expansion

Even in the face of protests from trade groups, escalating real estate costs and pressure on margins, the march of domestic retail chains continues unabated.

Led by Reliance Retail, Pantaloon, Subhiksha and Spencer’s, these retail businesses are going ahead with their plans to set up about 2,500 stores, which, according to Technopak Advisors, will entail an investment of Rs 20,000 crore by December next year.

Organised retail in the country is growing at 30-40 per cent a year, according to management consultancy firm PricewaterhouseCoopers, fuelled by robust 9 per cent economic growth that is putting more disposable money in consumers’ pockets

October 10, 2007
Source: Business Standard

Indian Retail Protest May Attract 100,000 Shop Traders, Vendors

As many as 100,000 Indian shop owners and street vendors may protest in Mumbai today against the entry of companies such as Wal-Mart Stores Inc. and Metro AG into the country, the rally's organizer said.

The protest also opposes the expansion of India's Reliance Industries Ltd. and Bharti Group into retailing and is against foreign investment in the sector, said Vyapaar Rozgar Suraksha Kriti Samiti in a statement. The organization represents about 750 unions and small business associations.

Expansion plans of Reliance, Pantaloon Retail India Ltd. and other retailers are being threatened as opposition intensifies from street vendors and family-run stores across India. Sales through store chains in the world's second-most populous country may increase by more than eightfold to $97 billion by 2012, according to consultant Technopak Advisors Pvt.

The Uttar Pradesh state government ordered the temporary closure of Reliance stores in two cities after a group of traders ransacked some of the company's outlets on Aug. 22.

Stores owned by Reliance and Subhiksha Trading Services Ltd. have also been vandalized in the eastern states of Orissa and Jharkhand. In the southern province of Kerala, the state government plans to restrict the number of stores that big companies can open.

Store chains will account for about 16 percent of total retail sales in 2012 compared with 4 percent this year, according to Technopak projections.

October 10, 2007
Source: Bloomberg.com

Indian brands may get to wear retail FDI

Home-grown brands like Park Avenue, Wills Lifestyle, Parx, Tanishq and ColorPlus will get a leg up as the government plans to encourage flow of foreign direct investment (FDI) into retailing of Indian brands. Top government officials said creation of new brands for the domestic market would also be allowed through the single-brand retail FDI window which is the only avenue available for foreign investment into retail.

Today, FDI through the single-brand route is flowing into retailing of foreign brands such as Louis Vuitton, Fendi, Lladro, Hermes and Nike. There will be no hitch in allowing FDI in Indian brands if the merchandise is branded during manufacturing and the same brand is used if sold abroad, the officials added. “Indian brands should not be denied the benefit of foreign investment. Over a period of time, they can grow into global brands. As of now, not many Indian brands have made it to the global stage,” they said.

In view of the growing political opposition to FDI in retail, officials want to be cautious in promoting foreign investment, and the feeling is that encouragement to domestic brands and companies would be welcome. While FDI in retail is not allowed, the government has been facing criticism over foreign investment in wholesale trading and single-brand retail.

October 4, 2007
Source: Economic Times

Big Players – plans and investments

Future Group entering marriage services sector

The Future Group is planning to enter the largely unorganised marriage market with a retail service under the brand – ‘Vivah’ – at its Big Bazaar stores. A pilot project is being initiated at a couple of its stores initially with a marriage service desk which would provide marriage related products and services.

Mr Rajan Malhotra, CEO, Big Bazaar, told Business Line, “Being mass retailer, it was an opportunity for us as marriage is estimated to be a Rs 20,000 crore industry. There are already a lot of brands meant for the marriage market and we would be the first organised retailer to get into this business.”

From providing marriage related financial services to arranging honeymoon travel, Big Bazaar is expected to draw synergies from the Future Group’s other businesses to make a foray into this lucrative market.

So while Future Money – the retail financing arm of the Future Group would be roped in to provide financial services, Star & Sitara, its beauty and wellness services brand would offer bridal makeup services. For travel related services, Cleartrip.com, its travel partner, is creating special travel packages for marriage related travel.

Added Mr Rituraj Verma, Chief Manager, Customer Insights, Future Group, “From giving products ranging from gifting to rituals, we would also be helping in locating marriage partners by tying up with a matrimonial site at a later stage.”

October 10, 2007
Source: Hindu Businessline

Max Hypermarkets to invest Rs 200 cr

Max Hypermarkets which launched its first Spar store in Bangalore last week is actively working on making shopping a daily activity for its consumers.

Mr Viney Singh, Managing Director, Max Hypermarkets said that the 75,000-sq ft hypermarket is aimed at making shopping a ‘hassle-free experience and provide good value for money.’

The Spar Hypermarkets in India is the result of a licence agreement between the Landmark Group’s Max Hypermarkets India and Spar International, a Netherlands-based brand which is present in 34 countries. Max will have access to Spar’s best practices and technical knowledge in international retailing.

Spar is also one of the leading food retailers globally and this will help us in our food retail, which is a lead section in hypermarkets, Mr Singh said.

Max Hypermarkets plans to invest around Rs 200 crore to launch seven hypermarkets across metros in the country by end- 2009, according to Mr Singh. “We intend to have a national footprint through locations in South and North India first,” he said.

October 8, 2007
Source: Hindu Businessline

Reliance bags marketing & distribution deal for Apple

Reliance Retail has clinched an exclusive marketing and distribution deal with the $19.3-billion iconic maker of iPods and Mac computers, Apple, for standalone iStores. This is Reliance Retail’s first exclusive alliance with an international brand. The partnership was sealed on Monday. The first store, to be called iStore by Reliance Digital, will come up by October-end in Bangalore.

This is the first time Apple is tying up with a big corporate house for distribution anywhere in the world. The iStores would be standalone stores selling Apple products ranging from Macintosh computers to iPods and later, once it’s launched in India, the latest cult offering from Apple, the iPhone.

The standalone store, which will be opened just ahead of Diwali, will be spread over 2,000 sq ft and is currently under construction. Globally, Apple stores are not mere retail stores, they feature a theatre for presentations and workshops, a studio for training with Apple products, and a Genius Bar for technical support and repairs, and also offer free workshops to the public.

The Mukesh Ambani-controlled Reliance Retail will open 10 iStores by the end of the calendar year. Apple would invest in market development, said sources.

October 6, 2007
Source: Economic Times

Dutch retail firm ties up with Landmark Group

Dutch retail giant SPAR has tied up with Landmark Group for hypermarket foray in India. The $37-billion behemoth has signed a licensing agreement with Max Hypermarkets India, a part of Landmark, to set up big box shops under the SPAR brand.

The first SPAR hypermarket, spread across 70,000 sq ft, has been launched in Bangalore. SPAR International had earlier tried entering India with Mumbai-based Radhakrishna Foodland, but the tie-up feel through. SPAR International is currently present in 34 countries, across different formats — convenience stores, supermarkets and hypermarkets.

SPAR will handle the merchandising and display for the chain. The hypermarket will also have its own products under the brand SPAR. It is believed that landmark had earlier explored tie-up options with several global retail giants, including UK’s Tesco.

Meanwhile, Landmark group, which operates 12 Lifestyle Stores, five Lifestyle Home Centres, one Baby Shop and 10 Max stores in India, plans to invest $500 million on expansion plans over next three years. This investment includes expansion of its retail, hypermarkets, leisure and hospitality businesses in India. Landmark looking at adding 26 Lifestyle, 10 Home Centres and 50 Max stores in next four years.

October 6, 2007
Source: Economic Times

Reliance Retail, Subhiksha may modify back-end plans

The outcry from farmers and the traders lobby across several states appears to have upset the organised agri-retail applecart for a whole cluster of retail majors. Nearly all of them, including Reliance Retail, Subhiksha and Spencer’s are treading the ground carefully.

Mum’s the word at an official level. But information trickling in from the industry indicates senior executives are getting into a huddle in trying to thrash out future course of action. Some options under review include reworking the existing sourcing mechanisms and fate of the front-end expansions as well as of the proposed investments in the supply chain.

Reliance Retail is exploring options to modify its back-end plans. The company, with a nationwide network of some 100-plus collection centres for direct sourcing of agricultural produce from farmers to achieve price competitiveness, has started tapping mandis for such farm produce. Though a Reliance Retail spokesperson declined to comment, company officials said sourcing from the mandis would further gain steam till the situation becomes normal.

Subhiksha too intends to engage itself with all its stakeholders. “In absence of any clear policy guideline from the government, we have to be flexible in our business model. Though not a much preferred option, we may even work with middlemen in the back-end and derive efficiencies from it,” Subhiksha managing director R Subramanian said. “Any deviation from such direct sourcing models may not be a pragmatic approach since a retailer needs to have a certain level of control over the supply chain.

October 4, 2007
Source: Economic Times

Reliance cuts troubled retail plans further

Reliance Industries Ltd has ended the services of about 400 franchisees for its planned retail operations in West Bengal and has shelved a rollout in neighbouring Orissa because of protests from small traders.

The moves come after Reliance Retail, a subsidiary of India's biggest listed firm, last month laid off 1,000 staff in northern Uttar Pradesh after the state shut 10 Reliance Fresh supermarkets, following protests and attacks by small traders.

There have also been protests in other, mostly northern and eastern states, while communist-ruled southern Kerala state is drafting a law to restrict Reliance to protect jobs.

October 3, 2007
Source: Economic Times

Unique Formats

Amway India has launched a Rs 15-crore television campaign from September 19, which is managed by Rediffusion DYR. While the company has been regularly advertising in the print medium, going television was a conscious decision keeping in mind the rise in popularity of television as a medium, said William Pinckney, MD and CEO.

For the sixth year running, Amway India has launched a ‘limited edition festive gift catalogue’ range of products. It includes the Amway ‘coreline’ products specially packaged for this category and some ‘non-coreline products’ (co-branded).

The number of products in the two editions — Spring Catalogue in March and Gift Catalogue in September — this year adds up to 40. Among those partnering in the co-branding exercise are Cookie-Man of Australia, Leonardo Pomace Oilve Oil, the Noritake premium range of dinner sets of Japan, and Arrow ties.

“Past experience has shown us that these catalogue products (though available only for a limited period or till stocks last) contribute to about 5-7 per cent of the total revenue. This year, we expect them to fare better,” Mr Pinckney said.

Amway India is all set to launch the colour cosmetics segment before the end of the year. “We will be launching a set of six nail enamels, six shades of lipsticks and one shade of eyeliner. These colour cosmetics will be launched and sold under the brand name of Attitude, which is the indigenous brand of cosmetics developed for the Indian market.

International

S Kumars is to launch its first overseas retail stores in West Asia within the next six months, Mr Nitin S. Kasliwal, Vice-Chairman and Managing Director, told Business Line. They will be exclusive brand outlets for the company’s brands Reid & Taylor, Belmonte and Carmichael.

“West Asia, because the market there is similar to India and Reid & Taylor as a brand is already doing well there. Besides, the cost of setting up a single outlet is Rs 1 crore, just a little more than the 50-60 lakh required for a store in India,” he said.

S Kumars operates 150 stores in the country and intends to set up 1,026 stores within the next three years, of which 650 will be co-operated and the rest will be franchised, he said. The retail arm of the company, Brand House Retail, is projected to do sales of Rs 330 crore by the end of the current fiscal, against Rs 65 crore in the last fiscal.

The New York-based retailer Steve and Barry’s is planning to enter the Indian market through the FDI route by picking up a 51 per cent stake in a new joint venture. The balance stake would be held by a local partner, Mr Avirat Sonpal, Managing Director, Unisource Group and Vice-President, Steve and Barry’s.

Making use of the single brand retailing norm, the US retailer is expected to announce its operations for the Indian market within the next four to six weeks.

The Unisource Group has been Steve and Barry’s sourcing company based in India for the past six years and is also funded by the international retailer Mr Sonpal said, “I will be Steve and Barry’s local partner when it enters the Indian market as a retailer. The single brand retailing route would be used under the Steve and Barry’s brand name. We will announce our operations within the next few weeks.”

The US-based retailer, which dabbles in categories such as apparel and footwear, is expected to enter the Indian market in the same segments. With intentions of being a ‘value-based’ retailer, Steve and Barry’s is expected to compete with the local Indian retailers on the basis of its pricing strategy.

The business model of Steve and Barry’s is based on economies of scale with smaller margins and higher volumes, and the same model is expected to be adopted for the Indian market.

Support Industries

DLF, India’s largest real estate company, is learnt to be close to signing a licensing deal with Italian luxury brand, Giorgio Armani. As per the deal, DLF will have the rights to retail and market the brand in the Indian sub-continent. When contacted, DLF Retail MD Arvind Nair said, “This is an area we are seriously exploring as demand for international brands has grown manifold and consumer expectations far outweigh supply.

The first store is likely to open in Delhi at DLF’s luxury mall, Emporio, in the first quarter of 2008.

Recently, DLF has been one of the most sought after India partner for such foreign brands and retail chains. What seems to be attracting foreign companies to DLF is the landbank the Delhi-based company has in various parts of the country. For any retailer, access to right locations is a primary concern. Plagued by increasing real estate costs, particularly commercial properties, many brands, department stores and fast-food retail chains have even shelved expansion plans in the country.

A major part of DLF’s development will come up in metropolitan cities. This makes the proposition even more viable for a high-end luxury brand like Giorgio Armani. At present, DLF commands a stand-alone landbank of over 13,000 acres. Of this, almost 3,000 acres can be used for commercial purposes.

Apparel & Footwear

Till the mid-1990s, Sanjay Dalmia’s flagship company was GTC Industries, the tobacco company. So much so, that Rothmans wanted to acquire a stake in it. But Dalmia did not want to give up control and the talks fell through. Soon thereafter, Rothmans was acquired by BAT and GTC went sick, landing up on the operating table of the Board of Industrial and Financial Reconstruction (BIFR).

Soda ash then emerged as Dalmia’s claim to fame and riches. In fact, some years ago, Nirma had launched a takeover bid for his soda ash firm, Gujarat Heavy Chemicals. But, Dalmia survived the attack.

Now, Dalmia is putting his money in textiles, which at around $600 million has emerged as his biggest business — soda ash at $200 million is the third in size. At an age when you would expect him to hang up his boots, Dalmia is drawing up multi-billion-dollar plans for his textile business.

The future of textiles, Dalmia says, is not in production, but in retail. With this view, Dalmia plans to set up shop all over the world. He has already spent around $100 million to acquire a retail chain in the United Kingdom (Rosebys) and three firms in the United States that specialise in institutional sales (hospitals, hotels and retailers). Together, these companies sell home furnishings worth $600 million. Dalmia now wants to have retail stores in all major markets, including India, using the franchise route. The brands stocked will be Dan River, one of the three companies he has picked up in the US. On the institutional side, Dalmia says he is close to striking a deal with a global hospitality major to supply furnishings as well as uniforms.

From glitzy khadi plazas to electronic charkhas, the Khadi & Village Industries Commission (KVIC) is all set to roll out a slew of schemes to ensure the natural fabric gains a deeper market penetration, both in India and abroad.

The 50-year old KVIC believes that khadi, considered the symbol of India’s freedom struggle, can still compete with other fabrics, given the right injection of technology, marketing support and incentives to weavers. Says Ms Kumud Joshi, KVIC’s chairperson and former Governor of Andhra Pradesh: “Mahatma Gandhi has even more relevance today than he had in the past and he will have more relevance in the future than he has today. And I believe khadi shares the same destiny.”

In an effort to compete with the swanky retail malls that are mushrooming across the country, KVIC is planning to upgrade and embellish its marketing outlets. As part of this programme, it plans to set up a string of khadi plazas in select cities initially and expand the network in phases.

Khadi, which can boast of being 100 per cent natural and can be termed the ultimate cotton tissue cloth, is also being given a modern shade with the Commission roping in the National Institute of Fashion Technology for this purpose. As the first step towards making khadi more fashionable, KVIC has introduced the Product Development, Design Intervention and Packaging (PRODIP) scheme.

Further, keeping in tune with modern trends and to pander to the new tastes of the young generation buyers, a new strategy has been embarked upon envisaging mission projects on ready to use (RTU) khadi.

KVIC has a network of over 7,000 outlets, managed by more than 5,000 certified institutions (NGOs), including 13 departmental and 40 KVI board aided units. The Commission has also flagged off other promotional measures such as organising exhibitions, buyer-seller meets and incentives for export of its products.

It was one of the first major players in the textile sector. But with heavy losses dogging it, the Arvind Mafatlal Group got lost in the rat race. Now, the group is embarking on a journey to rediscover and repair its business. Like all corporate houses betting big on the front-end retailing business the Arvind Mafatlal Group is also looking to jump into the bandwagon.

Its strategy? To bring in foreign labels to India where apparel retailing is currently estimated to be an estimated $22-$25 billion opportunity. The group operates through its flagship Mafatlal Industries and Mafatlal Denim. Mafatlal Industries produces cotton and blended fabrics. The retail initiative is driven by Mafatlal Denim (formerly Mafatlal Burlington).

Food & Grocery

Sweet World, the Mumbai-based chain of candy stores marketing a range of imported candies, is planning to enhance its presence across the country.

The company, which inaugurated four outlets for its international Pick ’N Mix candies in Gujarat last month, is setting up four to five kiosks every month to take its current tally of 35 to 60 by the end of 2007, Ms Vrinda Rajgarhia, Director, told Business Line.

Sweet World, which pioneered the international concept of pick-and-mix candies in India in October 2002 by setting up its flagship outlet in Mumbai, imports candies from Belgium, the UK and other countries of Europe, besides the US.

Apart from the 250-odd varieties of confectionery it offers, it also markets about half-a-dozen sugar-free varieties to diabetic patients. The imported candies are priced at an average of Rs 60 per 100 gm.

The range of confectionery offered by Sweet World includes varieties of chocolates, candies, mints, lollypops and toys from around the world.

The candy market in India is estimated at Rs 3,000 crore, including confectionery (Rs 2,000 crore) and chocolates (Rs 800 crore), with an annual growth rate of 10 per cent. India with a population of 110 crore has a per capita consumption of Rs 27 which is likely to grow further with the rising income and consumption levels.

Sweet World has seen an annual growth of 50 to 70 per cent over the last four years.

Regional News

Barely two days after being forced to close its first outlet in Orissa, Reliance Retail (RRL) on Tuesday opened its second store here.

Official sources said that the company opened its second counter at Gopabandhu Chhak close to the Raj Bhavan at 9 am.

Sahu said that RRL's first counter at Kalpana Sqaure was closed down within two hours of its opening on October 7 due to protests from local traders under the banner of All Orissa Roadside Vendor's and Small Shop Association (AORVA).

While RRL officials were confident of running the outlets, AORVA members were getting ready for a showdown, AORVA sources said. AORVA president Pratap Sahu said although the company had opened its second outlet today, nothing could be said about its fate.

Sahu warned that AORVA's suicide squad may strike any time. "They should not take our three hour silence for granted," Sahu told PTI. Meanwhile, a company executive said that though they closed down the outlet at Kalpana Square due to residence from traders, it remained open on Monday.

"We are determined to open at least three Reliance Fresh outlets in the state capital by Dusshera," he said. Efforts were on for opening three similar outlets in Cuttack very soon, he said.

Lifestyle & Luxury Retailing

With spending on luxury witnessing unprecedented growth, a number of foreign brands including French Connection, Sanrio of Hello Kitty fame, Gucci, Jimmy Choo, La Pearla and Calvin Klein have lined up for permission to infuse foreign direct investment through the single-brand retail window. Government sources said proposals under consideration for FDI in single-brand retail include Build-A-Bear brand toys and Tumi brand luggage.

While the government has sought more information on a proposal to bring in FDI for the D&G brand, the other recent proposals for single-brand retail include Diesel readymade apparel, TOD leather jackets and shoes, Groggy sports goods, Signature Kitchen equipment, LA Sovereign bicycles and Forever New.

After the slow pace in 2006, enthusiasm to pump in FDI through the single-brand route has gathered momentum. Officials said the number of queries related to this window — the only option to tap the retail market — was growing. Last year, the government decided to allow 51% FDI in retail ventures that deal with a single brand.

There are 18 proposals under consideration to infuse FDI through the single-brand window, officials said. Out of the 42 applications received since this option was thrown open, the government has cleared 17. While four applications — including that of Starbucks — were withdrawn, three were rejected. Officials said strict norms were being followed in clearing single-brand FDI proposals in view of the strong political opposition to foreign investment in retail.

The state-run MMTC Limited will invest Rs 145 crore to foray into jewellery retail business and set up a medallion and gold refinery unit through joint ventures. The public sector enterprise also contemplates to go for a separate joint venture for setting up of a jewellery SEZ in West Bengal.

Deciding to go for initial public offering(IPO) for the proposed Rs 100-crore medallion and gold refinery project in tandem with a foreign partner, MMTC has already short listed three companies who participated in bidding following an expression of interest, said Chief General Manager, Resources Asish Majumder.

MMTC was in dialogues with Haryana, Maharashtra and Karnataka Governments who had offered land for the proposed project. Planning an initial investment of Rs 45 crore for the proposed jewellery retail business, the company was looking to rope in an Indian partner to set up 50 outlets across the country in three years.

Public Protests / Government Action

Over 20,000 traders, farmers and shopkeepers staged a demonstration here on Wednesday against the entry of private retail giants like Wal-Mart into India.

The protests were the biggest yet against the ambitions of foreign and local companies to introduce Western-style supermarkets into a fragmented $350 billion market expected to double in size by 2015.

The protests reflect wider social tensions in India, where traders are attempting to fight off new retail competition by frequently oppose private investment. Villagers are said to be extremely worried about their land being taken away from them for the purpose of building multinational factories.

Farmers wearing traditional long white shirts and white caps marched in long processions waving posters with slogans like "It's now or never. Wal-Mart quit India."

Past demonstrations had failed to attract large numbers, but retail opponents have managed to force Reliance Industries, India's biggest listed company, to lay off 1,000 staff and close stores after protests in north and east India.

Protesters said they hope the government will take their concerns into consideration.

Retailers fear protests could snowball in India as politicians feel it could win them votes, especially with talk of a snap general election next year. Those against private retail say 40 million jobs will be lost, against the two million that modern retail promises to create.

India must push through further reforms if it is to achieve the government’s objective of double-digit economic growth by 2011, the Organisation for Economic Co-operation and Development warned on Tuesday.

In its first economic survey of India, the Paris-based think-tank said the country’s gradual shift towards a more market-based economy had yielded benefits.

India’s economic growth per capita was now rising annually by 7.5 per cent versus the 1.25 per cent seen between 1950 and 1980.

The faster growth, the OECD said, had resulted in India becoming the third-largest economy in the world in 2006 in purchasing power parity terms behind only the US and China and slightly ahead of Japan.

But it warned India was not fully exploiting its advantage as a labour-abundant economy because of high levels of employment protection that particularly deterred larger manufacturing companies from hiring workers.

It also urged the government to open the economy more rapidly to international trade and to foreign direct investment in tightly protected service sectors, such as insurance and retailing.

Small traders have been holding regular protests against the inroads being made into the fragmented retail sector by big business houses such as Reliance Industries, which plans a $5bn-$7bn investment in a farm-to-fork supply chain.

Maharashtra will see one of the largest voluntary shutdowns of trade on October 10 when retail traders, wholesalers, hawkers and mathadi workers across the state will protest the entry of large foreign multinationals and Indian corporates into the retail sector.

The protest from retailers in the state is coming on the back of similar protests staged by retailers in Kerala, Orissa and UP. Incidentally, Reliance Retail, one of the largest retailers in the country has taken a position to close its operations in UP and Orissa.

Speaking at a press conference, President of Federation of Associations of Maharashtra (FAM) Mohan Gurnani said over two lakh retailers, wholesalers and hawkers will participate in a rally in Mumbai on October 10 at 10 am. A joint action committee formed under the leadership of FAM, representing 750 trade associations will be spearheading the agitation in the state, he said.

As per estimates of FAM, India has the largest density of retailers in the world with over 1.5 crore retail outlets spread across the country. Whereas in England, only 10 retail chains control 60 per cent of the entire retail market.

After big retail, it’s now the turn of cash & carry operations to face the ire of the anti-organised-retail brigade. In a public interest litigation (PIL) filed in the Delhi High Court, the Federation of Associations of Maharashtra (FAM), an ally of India FDI Watch, has sought to restrict the scope of cash & carry.

"People in the cash & carry business are wholesalers. By definition, a wholesaler should sell in bulk to a retailer, who can then sell in small quantities to consumers. B2B customers like hotels, restaurants and canteens are consumers, not retailers, and therefore cash & carry stores should not be allowed to sell to them," the association has argued in the PIL.

If a favourable judgement comes, the restriction in the definition of cash & carry will adversely impact Bharti-Wal-Mart and Metro who are both looking at institutional sales, and have identified the B2B segment as a growth driver. Recently, commerce and industry minister Kamal Nath also said that India’s B2B market alone offers more opportunities to companies like Wal-Mart than the retail market in many countries.

The PIL says FAM is not against FDI in wholesale trade, it’s merely contesting the interpretation of cash and carry. "We are demanding cancellation of licences granted to wholesalers because they have circumvented rules to their advantage.” Mr Gurnani said.

In the PIL, the petitioners have made a mention of the German chain, Metro, alleging that the company has violated certain premises on which it was granted permission to operate in India. “In the PIL, a number of invoices have also been filed to show that Metro is selling individual items in small quantities unrelated to the business of the purchasers. This is a clear-cut violation,” India FDI Watch convenor Dharmendra Kumar said.

At the moment, Metro and the African chain, Shoprite, are the only foreign players operating in the Indian cash & carry business while the world’s biggest retailer, Wal-Mart, has entered into a 50:50 joint venture with Bharti Enterprises. The JV plans to roll out its cash & carry stores early next year and betting on institutional sales to hotels, restaurants and canteens. As foreign direct investment is allowed only in cash and carry, it is seen as an interesting business proposition for global retailers.

e-Commerce

Hewlett-Packard today announced entry into retail photo printing market and launched its consumer online photo service in India to capture the potential of digital photography and the country's swelling mobile phone and digital camera market.

The HP Retail Photo Solutions (RPS) would offer end-to-end digital photography services and the HP Snapfish website could store and share unlimited number of photos free of cost.

V Krishnan, GM, Consumer Sales, Imaging & Printing Group; (IPG), HP India Sales Pvt Ltd said that these would take digital photography to the 'next level'.

Snapfish will offer consumers free online photo sharing, unlimited online photo storage and professionally developed digital camera prints for as low Rs 2.95 (4x6 size). Snapfish will also provide for delivery of printed photos at the doorstep of the customer through HP outlets. According to Industry analyst Gartner, the market size of digital camera in India was USD 110 million in 2006 and is expected to grow 20-22 per cent by 2011. The number of mobile users in India will be more than double in the next five years, growing from 185 million to 462 million by 2011.

Vacation at London, Paris or Patnitop… now hotel check-ins and the best deals anywhere in the world are just a click away!

Mr Anand Rao, General Manager, ITC Windsor – The Luxury Collection, Bangalore, says, “The influx of hotel bookings from the Internet is increasing rapidly. The Internet permits rate/ features comparisons between different hotels with a minimum effort and bookings made on the Internet generate immediate confirmations with no lead times involved.”

Take, for example, Travelguru, a travel portal with over 4,000 hotels in India and 72,000 hotels worldwide on offer. Mr Ashwin Damera, CEO and Founder, Travelguru, says there are more options available in every price-range on a travel portal. “This unlocks value for consumers and gives them alternatives to the conventional 4/5-star hotels.”

It’s a winning proposition not just for the customer. Mr Lemuel Herbert, General Manager, The Park, Bangalore, says hotels are increasingly feeling the impact of these portals on the hospitality industry. “Around 20-30 per cent of our business comes from the electronic media,” he says.

Mr Rao of ITC Windsor says travel portals are also influencing pricing strategies. “The ease with which travellers can now compare rates and amenities has made the pricing strategies of hotel companies more dynamic.” However, Mr Damera feels that as long as demand for hotel rooms is greater than supply, it may not be possible to bring down prices through any channel.

Mr Amit Saberwal, Vice-President for hotels business — makemytrip.com, says travel portals like his have helped the unorganised sector in the hospitality industry, especially serviced apartments, reach end-consumers when hotel rates hit the roof in cities like Bangalore; “hotels were forced to revise their rates downwards.”

But do customers get to enjoy the ‘early bird’ benefit through online booking? One needn’t necessarily book early to enjoy the benefit of low prices, feel industry players. The Web sites have dynamic pricing and hotels can change rates according to occupancy levels, says Mr Saberwal. “This generally translates into a benefit for online customers.”

It is this win-for-all situation that has ensured that hotels have a specific ‘quota’ for online booking through such portals.

Hotels like The Park have also tied up with Design Hotels, a consortium of hotels, for bookings.

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