Retail sector feels the impact of inflation

Inflation is felt everywhere, retail was among the first sectors to be hit. The Indian potential has not been met, and inflation is only partly to be blamed. Retailers are discovering more about the Indian customer, and are going back to the drawing board to sketch new plans.

-Chillibreeze Business Research Team

General Plans and Information

Retailers Take a Slower Road in India

India's expected retail boom hasn't taken off, leaving companies large and small to rethink their expansion plans.

Wal-Mart Stores Inc., which unveiled plans to enter India with a joint-venture partner two years ago amid great fanfare, will open its first wholesale store next year, but it won't comment on future plans. Three Build-A-Bear Workshop Inc. franchises in India opened by Murjani Group have closed. Straps, a chain run by India's Oswal Group that featured Wonderbra lingerie from U.S.-based Hanesbrands Inc., has closed its more than 20 stores. Big German retailer Metro AG, after five years here, operates only four wholesale stores; the company says it is taking its time developing its Indian business.

India's retail industry -- including everything from carrots to cars -- clocks around $350 billion a year in sales. That figure had been expected to double in the next seven years. But now, some retail executives are taking a closer look. Growth is less than hoped for. And thousands of new shops have sprouted in the past few years, so there are more players competing for the same consumer.

Just three years ago, an explosion of conferences, analyst reports, Web sites and magazines predicted the arrival of a new Indian consumer who would change the global retail landscape. The first modern retail stores here were so popular that many entrepreneurs thought people would buy almost anything at any price. They were wrong, as both large and small retailers are discovering. For some, the forecast retail boom that promised jobs for Indians and a new market for global retail giants is already a bust.

"I was an eternal optimist; now I have become a realist," says Kishore Biyani, chairman of Pantaloon Retail India Ltd., India's largest retailer by sales, which has revamped its expansion plans as it discovered more about Indian consumers. "Everybody has miscalculated."

Most retailers say they are grappling with the same problems: rising costs and fewer buyers. In the early days of the boom, retail rents and salaries soared, though recently they have started to come down a bit. Many outlets discovered that consumers didn't really want their products. And unlike shoppers in Asia's other booming economy, China, Indians are rarely willing to pay three to 10 times more for an international brand than for its domestic equivalent. The average Chinese consumer has more disposable income, and more than a decade extra of experience with international brands.

Ritu Sureka opened her home-furnishings store "All Living" in the Grand Sigma Mall, Bangalore's newest, in 2005. She was sure the Indian tech capital's programmers and call-center workers would spend their rising salaries on stylish lamps and pillows for their new homes. Now she is advertising a 70%-off sale, and still doesn't make enough money to cover the rent. "I think this retail thing has been a failure," the 45-year-old says.

Nevertheless, India still generates excitement among some investors. Earlier this month, both British retailer Tesco PLC and Vornado Realty Trust, one of the largest mall developers in the U.S., announced plans to enter the country with local partners.

Some retailers, especially those catering to budget shoppers, are thriving. And deep-pocketed companies like grocery-store chains are willing to shoulder losses for a few years, assuming Indians will become accustomed to mall and supermarket shopping instead of buying at the country's millions of mom-and-pop stores.

Shoppers Stop Ltd., one of the first companies in India to attempt modern clothing and houseware chains, has posted net losses for the past two quarters. Some companies that still have big plans, including Indiabulls Financial Services Ltd. and Aditya Birla Group, have changed tack, closing some stores and making management changes.

"We all have to go through some restructuring and shake-up," says Thomas Varghese, chief executive of the Aditya Birla retail unit, which has more than 500 grocery stores. Most were built in the past two years, and few are profitable yet. "The Indian consumer is a damn tough customer."

If retail growth sputters, India will lose an important avenue for growth to trickle down to the masses: the jobs retail provides.

The country's recent economic expansion has been fueled largely by its service sector, and hasn't created millions of manufacturing and export jobs in the way China's boom has. But the Indian government had counted on retailing to soak up millions of rural and young job seekers. Two years ago, Mukesh Ambani, chairman of Reliance Industries Ltd., projected that thousands of his new stores would provide jobs for "500,000 young boys and girls in the next few years." Since that speech, the company has built around 700 stores, an impressive number but far from earlier targets.

In the Grand Sigma Mall, not far from Ms. Sureka's shop, an outlet that sold VF Corp.'s Wrangler Jeans has pulled out. On the ground floor, other stores are empty, including a former Reebok store.

"Everything is overpriced here," says Vignesh Vishwanath, 21, a computer programmer for Microsoft, drinking coffee with a friend at the mall. "This coffee, for example, is 85 rupees here. At the cafe near my house it is only 60 rupees. You can never compete with the local market."

August 25, 2008
Source: The Wall Street Journal

As deadline for Marathi signboards nears, protest brews among retailers

With just four days to go before the deadline for all shop owners in the city to ensure that their signboards display their names in Marathi also, several large groups of retailers are set to protest what they call the “high-handedness” of the Maharashtra Navnirman Sena (MNS).

The Federation of Retail Traders and Welfare Association (FRTWA) along with All India Retailers Association, All India Business Council, Maharashtra Chamber of Commerce, the Chemist Association, Bombay Retail Clothes Dealer Association and several other organizations will meet on Tuesday to discuss how to protest. “We have adhered to the BMC’s rule, but despite that we have been threatened by MNS people, to not only change the signboards, but to conduct our entire business in Marathi. This is unacceptable in a democracy,” said Viren Shah, owner of the Roopam chain of stores and also joint secretary of the FRTWA.

Shah claimed that for the last couple of months, MNS activists have been sending them letters demanding that signboards with their names displayed prominently in Marathi should be displayed. “The BMC’s rule is to put Marathi sign boards along with other languages, we have already done that. But now they have threatened us that we should follow Marathi culture strictly or face action. How can this be done in a cosmopolitan city like Mumbai? What is more surprising is that the ruling party is not taking any action,” said Shah.

The MNS remained unperturbed by the impending protest. “What is the big deal if we have asked them to give prominence to Marathi in their signboards? It is the local language, after all. Those who are protesting do not know about local people’s aspirations,” said MNS general secretary and spokesperson Shirish Parkar. He denied allegations that party workers had instructed stores to conduct all their business in Marathi.

The FRTWA, meanwhile, has sought the help of criminal lawyer Majeed Memon to advise them on the legal aspects of the matter. “I have been invited by the FRTWA. I will be looking at all the papers and will advise them accordingly on the legal aspects of their protest,” said Memon.

August 24, 2008
Source: Express India

Malls’ day yet to come

Malls are not yet venues for `serious shopping but are more a haunt of the window shopper, impulse purchaser and the cinema goer. That most cities in India are yet to see a well managed mall is partly to blame.

Except for a handful of malls most do not offer customers the experience and delight they promise. In some regions such as the NCR they have been ‘over built’— another reason malls are not doing well.

These were among the sentiments expressed by a group of leading retailers participating in a panel discussion on consumption trends, organised by the international property consultants Jones Lang LaSalle Meghraj at a launch of their report on Leading High Streets of India last week.

But the malls’ day is coming if not sooner definitely a few years down the line… if they can pull their act together, was the general feeling among the participants. And that does not take much — follow traditional wisdom and know that ‘customer is king,’ they said.

Among them were retailers from a wide section of products and commodities, including Mr B.A. Srinivasa, Director, Vivek Ltd, the leading chain of white goods retailer; Mr S.B.P. Pattabhi Rama Rao, President, Australian Foods India Pvt Ltd, a company marketing the leading brand of Australian cookies — Cookie Man; Mr T.S. Ashwin, Managing Director, Odyssey, a chain of bookstores; and Mr Nathella Prapanna Kumar, a leading jeweller and a popular name in the city over the last several decades.

Moderating the group was Mr Anuj Puri, Chairman and Country Head, Jones Lang LaSalle Meghraj. Inflation not withstanding, the sale of white goods was growing at about 15 per cent year on year and computers and other IT products at about 25-30 per cent. says Mr Srinivasa, dismissing inflation as a ‘momentary demotivation.’

As for malls as a location for white goods store — “Malls are okay for window shopping, impulse purchases and garments,” he says. Viveks has an outlet in a leading mall on the arterial Anna Salai where footfalls are high but the chain’s leading outlet is the one in Mylapore — one of the oldest residential areas in Chennai which is now a mix of residential and commercial segments. Buyers still like to pick out the exact piece of their choice and not have it delivered from a central warehouse.

Mr Rao felt that there was more to the slowdown than a passing phase, there has been a definite drop in footfalls since April and it is severe in the ‘overbuilt markets of the NCR’ and also in Ahmedabad. The South, though, is on an upswing but there has not been an increase in the number of malls in Chennai, Bangalore and Hyderabad.
But one positive outcome of the slowdown in offtake of space is that the landlords, the mall owners, are willing to talk to those taking up small areas, such as Cookie Man’s, that can manage with as little as 300 sq.ft. Malls are starting to work better — they can no longer get away with being ‘mousetraps,’ he said.

Mr Gibson G. Vedamani, CEO, Retailers Association of India, is confident that by year-end retailers are not likely to report a serious drop in sales. But outlets may take a business decision to change locations because they need to be efficient. Malls are just beginning to get their act together, though some of the early players did not get their business model or location right.

Mr T.S. Ashwin, Managing Director, Odyssey, a store that is present in all formats – malls, neighbourhood shops and high streets — reports a noticeable drop in sales in the mall outlets. But there were no issues in their shops on the high streets.

He has a bone to pick with mall developers, their rental models are never transparent, he says. But a high street option is always a more transparent deal. Also, he complains, he has a two-page long list of outlets proposed in malls but the mall space is yet to be delivered — the money is stuck and the plans are delayed. But in a high street, even a built-to-suit project is ready in less than a year.

Mr Ramesh Nair, Managing Director, Chennai Region – JLLM, says in Chennai, particularly, there is slow supply of mall space. The delay in approvals is partly to blame. Paper work can take up to two years. The suburbs are also growing at a slower pace than expected.

If the reactions to a mall as a location are mixed for these people, Mr Kumar, the jeweller is clear — no more malls for their jewel shops. Jewellery buying is ‘serious business’ and malls simply do not have the proper ambience for it, he says. He was among the earliest to get into a mall on Anna Salai but four years later he exited and never thought of setting up shop in a mall, Mr Kumar said. The Nathella chain of shops prefers its own locations, not even rented ones. “Mall footfalls have a different mindset,” he said.

But there are happy stories in malls, points out Mr Rao, and these are the top few that have got their location, management, and their rent right. These are malls that are run by experienced mall operators who know their business and not the security guards — that is when shops run after the care takers begging them to turn on the air-conditioning, he commented.

Cookie Man is careful to go with the established names in malls. The emphasis in a successful mall is on customer experience — providing adequate car parking, ambience, ensuring customer delight and where the “the customer is treated like a king,” Mr Rao said.

August 24, 2008
Source: Hindu Business Line

Big players - plans and investments

Reliance to push retail in countryside

After having scaled up its retail operation in cities, Reliance Retail is now looking at rural India. It is piloting a rural-business-hub (RBH) model in a Gujarat village, which if successful and implemented could rival that of DSCL’s Hariyali Kisan Bazaar and Future Group’s Aadhar.

RBH would offer farm input, food, grocery, consumer durables, and financial and health services. It will also provide farmers a platform to sell their produce, an equivalent of village haat. A community hall and entertainment facilities will form part of the hub.

A typical RBH would be spread over 3-5 acre and require an investment of around Rs 5 crore, besides the cost of land, a Reliance executive told ET. The company plans to set up at least 40 hubs in Gujarat alone in the first phase.

RBH will serve twin functions for Reliance rural retail as well as sourcing for its urban retail centres. RIL Chairman Mukesh Ambani has talked of fomenting agriculture revolution in the country and giving farmer their due by cutting middlemen and directly procuring from them for company’s retail stores. Reliance has over 40 collection centres in Rajasthan, Jharkhand, Tamil Nadu, Gujarat and Madhya Pradesh. The company feels rural hubs may not initially turn profits, but is banking on big volumes to sustain the business.

For its RHB business, the company aims to avoid difficult states such as UP, West Bengal and Bihar. Despite this, riding into hinterlands may not be easy for India’s biggest business house, as managing politics at village level is not that too easy, with each village being dominated by politics of a different hue.

Moreover, getting an efficient health services in place in rural India has been a major challenge for almost all governments in the country. Despite huge resources at their disposal, state governments have not been able to get doctors to the villages, as most doctors prefer a better life in city.

August 26, 2008
Source: Economic Times

Reliance Retail goes on austerity mission

Reliance Retail, part of India’s largest private sector company Reliance Industries, has initiated an ‘austerity’ drive. The company has issued strict guidelines on unnecessary travel, mode of travel, courier despatches, use of stationery in office, use of cabs and type of accommodation while on tour, and even on the number of times employees can have tea and coffee. Senior managers have been asked to use AC Indica cars instead of luxury sedans on outstaion tours.

While Reliance Retail (RRL) is the focus of this cost-cutting exercise, a senior official said the austerity measures are being extended to the mainline oil and gas business as well. Although, there is no directive, there are advisories to cut down avoidable costs.

A Reliance spokesperson said: “We strongly deny any such development. Your information is baseless and false.”

However, according to sources, RRL is taking its austerity drive very seriously and has described it as a “mission”.

In a communication posted on the internal RRL intranet, a senior HR manager of the company has said, “Let us stop all unnecessary and avoidable expenses, challenge every cost element and every person who is incurring it, and completely protect the interest of our organisation.” Had the company not been so serious, some of the cost-cutting measures would have sounded comical. It has decided to issue only blue and black ball pens. It will not give calculators, tissue boxes, gel pens and uniball pens. Employees are being encouraged to go for pen refills and not to print in hurry to avoid unnecessary wastage of paper.

Reliance has also issued some strict pantry rules. Tea and coffee is on self-service basis. It will be served only in meeting rooms and visitor’s rooms, and water bottles will be filled only once in a day in morning.

It is not a surprise that RIL has taken up high costs as a major issue, especially in its subsidiary RRL. The company, which promised to invest Rs 26,000 crore in its new retail venture and hired thousands of people, some with astronomical salaries, has now asked its format heads to justify their respective employee strength. It has also asked them to justify role of each employee in the retail venture.

Sources said the company has already sunk in a huge sum in the project without any returns in sight. The supply chain is yet to stabilise and the company is seeking joint ventures with foreign retail companies, wherever possible, to sort out this critical issue. At the same time, industry experts give RRL the credit for the fastest expansion plan. Experts said 600-plus stores across formats in less than two years is no mean target.

August 21, 2008
Source: Economic Times

Regional News

Lulu group begins shopping mall project in Kochi

The UAE-based Lulu Group International has commenced construction of a mega shopping mall-multiplex-aviation tower and hotel complex at Kochi.

This would mark the entry of the Rs 4,500-crore Emke Group into the shopping and retail trade in India. The Lulu Group has over 70 shopping malls in the UAE and Gulf countries and has 16 offices worldwide.

Addressing a press conference, Mr Yusuffali, Managing Director of Emke Group of companies, said: “The iconic project is being built as per the best international specifications by world renowned consultants WS Atkins of UK and will house more than 300 national and international brands of fashion, jewellery, electronics lifestyle, home furnishing, furniture and accessories, bookshops and footwear. It will also have seven theatre multiplex, family amusement centre with bowling alley, six restaurants, 50,000 sq ft food court and coffee shops as well as other usual amenities.”

The project, estimated at a cost of Rs 1,200 crore, which is coming up on a 17-acre plot at a conjunction of three national highways has already incurred an expenditure of Rs 350 crore and will have a total built up area of 20 lakh sq ft. The project would also house a 300-room five-star hotel, which will be managed by the global brand, Marriot Hotels. With this, Marriot chain forays into Kerala.

August 26, 2008
Source: Hindu Business Line

Cherma’s to add three stores in AP every year

Cherma’s, the Hyderabad-based retail chain of readymade garments, is planning to add three stores — one in Hyderabad and the rest in other parts of the State — every year from now on, according to Capt. K.F. Pestonji, the Chairman of the group.

He told reporters here on Friday that Cherma’s, established in 1980, currently has seven showrooms — five in Hyderabad and one in Vijayawada and Vizag each.

He said Cherma’s had also set up manufacturing facilities — first in the Apparel Export Park, Hyderabad, for export purposes with a capacity of 3 million garments an annum and subsequently in 2003, another unit with a capacity of 1.5 million units an annum. He said the group was providing employment to 5,000 people directly or indirectly.

Capt. Pestonji said that Cherma’s had always focused on providing fashion and quality to the customer at an affordable price. “For a long time, ours was the cheapest readymade chain in the State. Now customers are more appreciative of Cherma’s more, as both on quality and price, our garments stand out,” he claimed.

The group had no plans to set up any more manufacturing units. “We are also exporting on a small scale but our aim is to target the domestic market, especially in AP, and then only we will think of other States,” he said.

He said the group’s retail turnover is Rs 135 crore and export turnover Rs 40 crore.

August 23, 2008
Source: Hindu Business Line

Phoenix Mills to set up mall, IT park in Chennai

The Mumbai-based Phoenix Mills, a leading developer of malls and retail space, is setting up a Rs 850-crore mall and IT park in Chennai.

According to company officials, the company is setting up a 2.5-million sq ft mall and IT Park at Velachery, a major destination in the southern part of Chennai for retail space with major IT developments happening in the neighbourhood. The company had sometime back acquired 17-18 acres from the pharmaceutical company Raptakos Brett here.

The project, Phoenix Market City, will have 1.7 million sq ft of retail space designed by leading architects Rockwell, New York. It will have an 8-10 screen multiplex, 5-6 department stores, a large hyper-market, a home store format and one food court, apart from a fine dining restaurant, officials said.

The IT Park will be spread over six lakh sq ft and the contract has been awarded to JMC Projects. The facility will also have a hotel, Chennai’s first Shangri-La, the Hong Kong-based hotel chain with which Phoenix Mills has a hotel management agreement. Shangri-La Hotels and Resorts is an international group that manages over 53 hotels in the five-star Shangri-La brand and the four-star Traders brand.

Phoenix Mills has announced plans to set up commercial projects in Mumbai, Bangalore, Chennai, Pune, Raipur, Agra and Indore. The company has a 30 per cent stake in EWDPL India Pvt Ltd, a mall space developer that concentrates on Tier – II towns and cities.

August 23, 2008
Source: Hindu Business Line

HR News

Retail sector sees big ticket exits

Some big exits in the recent times have shaken the retail sector. Big ticket exits including Mr Andrew Levermore of HyperCity Retail, Mr N.C. Venugopal of Nilgiri’s and Mr Sumant Sinha of Aditya Birla Retail have created a stir in the industry.

While some HR experts term it the “natural end of the growth cycle for these professionals,” others say it’s a fallout of hyped up expectations. “The sector is following a path where the cost curve is ahead of the growth curve. As the sector is witnessing sluggish growth, there will be top-level exits,” says Mr K. Sudarshan, Managing Partner, EMA Partners International, a global search firm.

The industry has disappointed its top leadership with its slow growth, agrees Mr Sunit Mehra, Country Manager, Hunt Partners India. “This is very typical of the Indian situation for any new industry, where expectations of potential are always far higher than reality.”

For retail in India, it’s been five steps forward and three steps backward, says Ms Gauri Padmanabhan, Partner at search firm Heidrick & Struggles. Although the churn in leadership is to some extent a result of puffed up expectations, several companies also brought in experienced expatriate leadership like Mr Levermore as a short-to medium-term strategy to build expertise and bring in some best practices into the business.

“Expatriate leadership have been frustrated by the slow pace of growth and decision making — they came here expecting more,” she says. But the good news is that in many cases the reins would now be taken up by leaders with a longer-term stake in the organisation, feels Ms Gauri.

Companies are also reorienting business strategy for its second phase of growth. Mr Mehra of Hunt Partners suggests that promoters need to adjust their expectations with market realities. “Tempered expectations need to be sold to professionals at the time of joining so that they are not misled. Both the promoters and the professionals need to be aligned on targets.”

August 21, 2008
Source: Hindu Business Line

Support Services

Sequoia Capital to invest Rs 120 cr in Cotton County

Embarking on an aggressive expansion plan for its flagship brand Cotton County, Cotton County Retail Ltd will receive an investment of Rs 120 crore from Sequoia Capital India, which manages $1.1 billion in funds.

Cotton County, engaged in ready-to-wear apparel retail business, is an integrated player across the entire value chain of manufacturing and retailing. It has a presence in over 350 cities. With existing more than 500 exclusive outlets, Cotton County is planning to increase its retail footprint to over 1,000 stores by 2010.

Kamal Oswal, Vice Chairman and Managing Director, Cotton County Retail said, "the investment will be used to consolidate the market leadership position of our brand, and its foray into newer segments."

August 26, 2008
Source: Economic Times

Bharti Retail and IBM Announce Strategic Collaboration

Bharti Retail Limited and IBM India today announced a wide-ranging ten year strategic partnership under which IBM will provide technology and services that will enable the consolidation, transformation and management of a comprehensive IT infrastructure for Bharti Retail by IBM India. This collaboration is a progression of an existing four-year relationship between the Bharti Group and IBM. Further strengthening this relationship, Bharti Group's retail company, Bharti Retail will leverage IBM's worldwide expertise in the retail sector and introduce best practices and innovations to support Bharti Retail's business goals and enhance Bharti Retail's competitive advantage in a dynamic and competitive retail market.

Vinod Sawhny, President and Chief Operating Officer, Bharti Retail Ltd., said, "In a dynamic and fast evolving retail sector, Bharti Retail's association with IBM will provide a distinct competitive edge that will assist the company's vision and growth plans. Our partnership lays the foundation on which future business functions can be supported in the course of the next 10 years. This alliance is in line with Bharti Retail's efforts to be a customer-centric and trusted retailer."

"We are delighted to further strengthen our relationship with IBM. The creation of the IT Community of Practice with IBM in 2004 has led to one of the fastest integrations of IT anywhere in the globe," said Dr Jai Menon, Director Bharti Airtel & Group CIO, Bharti Enterprises. "We look forward to replicating the unprecedented success we have had with them in the telecom sector by consolidating, managing and delivering business process transformation that will drive innovation and enhance value for all Bharti Retail customers."

The current scope of the deal includes Project Management, Infrastructure for Data centers, Applications, Security and Network, and Support for End-user Services. The scope of work will keep evolving as Bharti Retail's business continues to grow. This partnership will provide Bharti Retail with a differentiation in the market place including faster product to market and cost efficiencies.

August 25, 2008
Source: CNN Money

Best offers on shopping cart at Reliance Retail

Next time when you go to a Reliance Retail store the shopping cart might apprise you of the discounts and offers. Tech startup Blink Media has signed a deal with Reliance Retail to offer technology to power an intelligent interactive shopping cart. Apart from the shopping cart, Blink will develop products for other Reliance Retail formats such as Reliance TimeOut, Reliance Mart, Reliance Digital and Reliance Trendz. To optimise its offering, Blink has got access to Reliance Retail’s loyalty customer and transactions data.

To execute the contract, Blink is looking at venture funding of around $2 million for which “we are willing to dilute up to one-third in Blink”, says co-founder Devang Raiyani. This will fund the expansion of their product team, marketing efforts and help them grow their data mining and analytics division. Blink already has a term sheet from a VC in hand. “We are open to angel funding as well as a non-VC strategic funding by an existing company,” informs Mr Raiyani. Blink was started in 2007 by Hemang Shah, Devang Raiyani and Sawan Ruparel.

The technology uses an RFID-based sensor to track shoppers’ location inside a store and based on that location drives content to an interactive screen mounted on the shopping cart. Shoppers will get ads and offers on specific products as they pass through shelves. “The idea is to track the life-time value of a customer and see how we can make the customer more valuable for the store. We do this by analysing the customer and transaction data we have got from Reliance Retail,” he says.

For fashion retail, Blink has developed a large interactive vertical screen called ‘magic mirror’, which senses your presence in front of it and asks what you are looking for. It visually shows you the apparel, which you could pair with others to see if they work well and whether a particular size and style is available. Here you could take a picture of yourself and using your mobile send it to a friend for advice.

Blink has developed a non-interactive version of the intelligent shopping cart for Future Media that will be devoid of the location-based ads or touch interface. “These are being designed to be used in small town locations as the cost will be lower and therefore ROI will be better,” says Mr Raiyani. They haven’t agreed on pricing with Future Media yet but hope to close the deal soon.

Rajeev Karwal, founder and CEO of Milagrow Business and Knowledge Solutions, recently bought a stake in the startup. Blink is looking at tapping international retail brands in markets such as Singapore, Malaysia, Dubai and Europe which are strong retail locations. “The return on capital is much higher in these mature markets,” says Mr Raiyani.

August 23, 2008
Source: Economic Times

Consumer Durables

Godrej eyeing Rs 4,000 cr target in 5 years

Leading consumer durables company Godrej and Boyce Manufacturing Co Ltd on Tuesdaysaid it would invest up to Rs 200 crore to expand its store network over the next five years, by when it hopes to have a topline of Rs 4,000 crore.

"Roughly we can expect a turnover of Rs 4,000 crores over the five years time," Godrej and Boyce Manufacturing Co Ltd Vice-President and Business Head (Retailing Division) Shyam Motwani told reporters here today.

"Currently we have set a target of Rs 150 crores for the year 2008-09," he said adding last year the company recorded Rs 120 crores. For achieving the target, the company has planned to set up 150 stores across the country by 2014.

"We want to set up 100 stores by 2010 and subsequently increase it to 150 by 2014", Motwani said. For the expansion, the company would invest Rs 150 - Rs 200 crores over the next five years, he said.

Currently it around 58 stores across the country and 40 per cent of the business came from South India, Motwani said. In Tamil Nadu, the company had five stores in Chennai and one in Coimbatore. Out of the Rs 60 crores generated from South India, Tamil Nadu contributed Rs 12 crores, he said.

Referring to a new marketing initiative which the company had planned to implement after conducting a survey in eight cities, Motwani said the aspirations of people have increased today.

"They want to attach their bedrooms and kitchen with their moods," he said. To facilitate this concept they have planned to offer their services through 'Mood Consultants' who would be present in the stores offering 'mood tips' to consumers. Based upon their (customers) requirements, we will offer the services, he said.

August 26, 2008
Source: Economic Times

Luxury & Lifestyle Retail

Welspun to hike prices as cotton, crude rates soar

Come September and Welspun Retail, a Welspun India subsidiary, is set to hike prices of its home furnishing products by 5 per cent. The new price range for bed sheets will be Rs 209-734 apiece from the existing Rs 199-699 while that of a towel will be Rs 83-524 from Rs 79-499, according to Dipali Goenka, Welspun Retail director.

The spurt in cotton and crude prices have affected the textile manufacturer’s bottomline and forced it to raise prices of finished products, she said. “Even though the inflation has badly hit the retail sector, we see better sales in the later half of the year,” she added. In the past three months, cotton prices have risen 30 per cent. Welspun Retail has been planning an IPO to raise long-term resources but feels current market conditions are not conducive. “We may take a while before launching an IPO,” Ms Goenka said.

The company will invest around Rs 50 crore to expand its network. It will set up 450 stores of its mid-end home furnishing stores, Welhome and 40 outlets of Spaces, chain of high-end stores. It will also set up 100 shop-in-shops. The expansion programme will cover 110 cities. The company has presence in 23 cities. The company will fund the expansion through internal accruals.

In addition, it is planning to scale up its exports which are now confined to the US. It will soon start selling its products to Saarc and Asean countries. Its institutional clients include the Taj and Oberoi group.

August 25, 2008
Source: Economic Times

Apparel & Accessories

Reebok India plans 55 more Classic stores by year end

Footwear and apparel major Reebok is planning to open 55 additional stores of its exclusive lifestyle brand Reebok Classics in the country by end of the current fiscal year.

"We have already opened 20 Reebok Classics stores till now in key cities of NCR, Mumbai, Bangalore, Hyderabad, Chennai, Jaipur, Chandigarh and Pune, and plan to take the tally to 75 by end of 2008-09," Reebok India Managing Director Subhinder Singh Prem said.

He said the brand, which is present in the international market since many years, would carry 'edgy' and 'stylish' collections from the domain of Reebok International like the Scarlett Johannsons Hearts collection, DGK skate, NFL and the Evolution range.

"It would also consist of Indian origin collections like the Dance inspired collection being promoted by Bipasha Basu, Dhoni 7 collection designed with inputs from MS Dhoni himself and Fish Fry for Reebok designed by Manish Arora," Prem said. The expansion plan is a follow up to the company's foray into the lifestyle segment, he added.

"Reebok has been there in the lifestyle space for quite some time now and we started off by foraying into lifestyle last year with niche initiatives like Fish Fry for Reebok by Manish Arora ... And launch of some very stylish collections like DJ shoes and Canvas collection," he said.

Prem, however, refrained from divulging company's investment plans for the brand in India. "It is difficult to pin-point a figure for investment right now. We will focus on retail expansion and building the brand over the next few years with the objective of delighting the consumer and providing him easy access to the brand," he said.

August 25, 2008
Source: Business Standard