Discount retail chains prosper as prices soar

Gourmet cuisine and high living rubs shoulders with discount retailing. There is a lot happening at both ends of the retail spectrum. Organized retailers are also focusing on private labels, which offer them better margins and have become more popular with customers on account of inflation. Finally, while it can no longer claim to be “Only Vimal”, the brand has resurfaced in a new avatar.

-Chillibreeze Business Research Team

General Plans and Information

Australian food, beverages to hit Indian supermarkets

From Australia's iconic vegemite to virgin olive oils, snack foods to gourmet sauces, and wines to fresh juices, quality Australian food and beverages are coming to Indian supermarkets this festive season.

Three Indian supermarket chains, SPAR, Hypercity and Nature's Basket, and Indian import and distribution company Epicure Foods, have spent 10 days in Melbourne, Tasmania and Sydney to source quality Australian products for their fast-growing stores.

Cookies, confectionery, cereals, canned vegetables, juices and other products from 22 Australian companies are already on SPAR's shelves in Bangalore. "Many Indians are travelling the world and looking for international brands back home. About 35 to 40 percent of snack foods are imported," SPAR Max Hypermarket India's business manager Satish S V told media. SPAR expects to import up to A$1 million (US$ 863,000 or Rs 37 million) worth of Australian products over the next year.

"Each of SPAR's new stores will have two permanent gondola ends continually selling Australian products," New South Wales (NSW) Minister for Primary Industries, Energy and Mineral Resources Ian McDonald said. The supermarket officials have met over 45 Australian companies and experienced first hand what Australia has to offer.

"There is a general understanding in India that Australian food is clean, green and healthy," Australian food consolidator Bemco Australia managing director Helen Pilakis told IANS.

The visit, organised by Bemco with support from the NSW Department of State and Regional Development (DSRD), follows a successful "Taste Australia" promotion held in Bangalore last November that introduced Indian consumers to more than 120 new food and beverage products from 22 Australian companies.

Most Australian products are targeted at India's growing middle class, with huge disposable incomes, looking for ready and convenience driven products. "Revolutionised retail with more shelf space is opening a new market where Indian customers are constantly looking for something new," says SPAR's senior category manager Nanda Kishore.

Many Australian companies are producing food targeted at people with special dietary needs. Real Foods feels there is a market in India for its gluten-free rice cakes.

Another Australian company, Sweet William's (William's) makes vegan, gluten and nut-free, halal, kosher and sugar free chocolates. "With high incidence of diabetes in India, people are looking for sugar-free chocolate bars. However, the prohibitive aspect of our product is the 60 percent customs duty on chocolates," the company's marketing and sales manager, Carol O'Halloran, told media.

Godrej-owned Nature's Basket has already placed an order for salad dressings and sauces, cereals, honey, olive oils, biscuits and crackers. "The products should be on our shelves by Diwali. Many of these products would be ideal for gift hampers over the festive season", the company's operations manager Sudhir Kadav told media.

Supermarkets are looking at products that cater largely to the much travelled Indian clientele, non-resident Indians and the large number of expatriate Indians. Mumbai-based HyperCity's category managers for ready, gourmet and instant foods, Shweta Mohile and Y V Rao, said their company was looking at unique products, Australian Leatherwood honey, Macademia nuts, shortbreads, which can capture a niche market.

As Australia becomes more aggressive in its exports to India and the Indian retail market grows, Epicure Frozen Foods and Beverages managing director Sanjay Tandon and CEO (Operations) Murali Shankar said in the coming years, Australian products would be represented far more in their product range.

August 31, 2008
Economic Times

Slowdown is manna for discount chains

As mainline retail players slug it out with steep discounts and wafer-thin profit margins, value retailers, which sell only discounted merchandise, can’t stop smiling.

Though relatively new to the game, value retailers already account for almost 50% of the industry turnover and are now looking to cater to a larger price-sensitive clientele by expanding into hinterland.

Jay Gupta, managing director, Loot India Pvt Ltd, which runs a multibranded retail chain by the same name, said in July sales soared to Rs 4 crore compared with Rs 2.5 crore in the same period last year.

“September-January accounts for over 60% of our annual revenues,” he said.

Loot is aiming at a turnover of Rs 100 crore by 2009. The chain, which has 38 outlets across India, is looking to go public next year to raise over Rs 300 crore to finance expansion. It plans to enhance presence in Tier I, II & III cities by March 2009.

The flurry of discount sales by bigger chains have not rattled the cut-price players.

The bullish outlook comes even as they hiked discounts recently to outdo the bigger chains.

For example, Brand Factory, Future Group’s discount retail format store, increased discounts from an earlier 30-35% to 40-45% now. “Value retailing is the next big thing with more footfalls coming its way,” said Rajesh Seth, vice-president, marketing, of both Central and Brand Factory stores.

Viney Singh, managing director of Max Hypermarket Ltd, the Landmark Group’s discount store, said consumer response has been “overwhelming”.

“We plan to take it to next level now,” Singh said. The company has rolled out 2 hypermarket stores is last 10 months and sees a footfall of 120,000 every month.

B Vijayalakshmi, assistant vice-president, retail and consumer goods at Evalueserve, a consultancy, said discount chains in the country will grow at an annual rate of around 40% over the next five years.

In contrast, the industry is projected to grow at just around 35%. The organised retail industry does a business of Rs 26,000 crore every year, while the value retail segment is pegged at Rs 12,000 crore, according to Evalueserve data.

Apart from firming up of plans to enter the car accessories market, Brand Factory plans to increase outlets from 7 now to 50 by 2010-11 at an estimated investment of Rs 500 crore. It is eyeing a turnover of Rs 250 crore this year.

Despite slender margins, efficient supply chain management and lower unit value and operating cost ensures these retailers are able to grow their revenue kitty without taking a hit on bottomlines.

The Grab Stores, which made its debut in Mumbai early this year, will be testing waters in value retailing in other metros and Tier II & III towns. It has earmarked Rs 400 crore for setting up 50 outlets measuring a minimum 5,000 sq ft each over the next 2-3 years.

The company sells 55 brands and offers 25-80% discounts throughout the year. “We try to maintain our margins by increasing the volumes,” said Sanjay Tayal promoter, Krishna Group, which owns K Lifestyle.

August 28, 2008
Source: DNA

Big players - plans and investments

Vishal Retail plans big push on small formats;2k stores by '10

Diversified retail player Vishal Retail is going to give a big push to its small format stores with plans to set up 2,000 such outlets across the country by 2009-10.

The company, which has around 140 hypermarkets in 84 cities under the name of Vishal Megamart, is expecting the small format stores to contribute as much as 25 per cent to its overall turnover.

"We launched our first small format store at Indore last week. We are now planning to have 250 such stores across the country by end of the current fiscal and then take the numbers to 2,000 by end of 2009-10," Vishal Retail Group President Ambeek Khemka told PTI.

He said the small formats stores would all be under the franchise model and of 1,000-3,000 sq ft size. The Vishal Megamarts, on the other hand, are of 20,000-25,000 sq ft area.

"We are looking for a turnover of around Rs 180-200 crore from the new small format stores this fiscal," Khemka said. The new format stores would be located at metros, besides Tier II and III cities, he added. The small format stores would have different branding for different product segments.

"The FMCG stores would be called 'Vishal Daily Mart', while the apparel stores would be known as 'Vishal Fashion Mart' and the durables and IT stores would be called 'Vishal Technomart'," Vishal Retails Head, Franchise Operations, Dipankar Guha said.

While most of the investments would be made by the franchise operators, Vishal Retail would be funding the entire marketing and branding campaign which would "come to around two per cent of the topline investment".

September 1, 2008
Source: Economic Times

Reliance's retail biz to focus on private labels

Like all organised retail players, Reliance Industries’ retail business is also focusing on private labels. The CEO of its hypermarkets business, K Radhakrishnan, said they derive around 80% business in the large format stores from private labels, particularly in the garments business.

While its private labels in the commodity foods segment are Reliance Value and Reliance Select, it is launching, in a phased manner, private labels in the nonfood FMCG category. It has launched floor cleaning products under the Expelz label in Delhi earlier in the month, with plans to launch private label products in the personal care segment by September.

Like other players in organised retail, Reliance , too, is setting up stand alone stores, to cater to separate products. The first of such stand-alone stores in the household segment will be opened in Aurangabad, in September , called Reliance Houseware, a company spokesperson said.

It already has four stand alone stores, called Time out for books, music and gifts, three Reliance Footprints (for footwear), and Reliance Trends, for mens wear. Reliance Lifestyle, for furnishings etc, is another stand alone category that is being considered.

Mr Radhakrishnan said they will open their first hypermarket, a Reliance Super, in Mumbai in the Bombay Central area next week. He was speaking to reporters after inaugurating the company’s first hypermarket , a Mart, in Pune. This is its first hypermarket in the state.

Explaining the formatting of its hypermarkets , Mr Radhakrishnan said, “Stores that are between 10,000-25 ,000 sq ft are Supers while those over 25,000 sq ft are Marts, which is our highest category. We will open another Super in Pune by September, so that we will have one each of Super and Mart in Pune by December. By March, we plan to have a total of four hypermarkets in Pune, which is our first market in Maharashtra for the large format.”

August 30, 2008
Source: Economic Times

Max to open 27 stores by ‘09

Dubai-based Landmark Group’s Max Retail plans to open 27 stores across India by March 2009 in tier I and II cities, said Mr Shekar C.S., Vice-President, Retail Operations. “Each store needs an initial investment of Rs 5 crore and we intend opening stores in Bangalore, Hyderabad, Mumbai, Delhi, Indore and Bhopal,” he said. Each store will be of 8,500-10,000 sq ft in tier II cities and of 10,000-15,000 sq ft in tier I cities, he added. Most of the stores will come up in malls as owning a good high street outlet is not viable at the high rentals, he said. The store focuses on apparel, besides offering footwear and home furnishings. Currently, Max has 15 operational stores.

August 29, 2008
Source: Hindu Business Line

Titan to have 200 Eye Plus stores by 2010-11

Tata group company Titan Industries is embarking on a major expansion of its eyewear retail business with plans to have 200 showrooms across the country by 2010-11.

The company, at present, has 28 exclusive Titan Eye Plus outlets in nine cities and plans to add another 172 stores during the next over two-and-a-half years with a view to emerge as the leader in the estimated Rs 1,500 crore Indian eyewear market.

"We have just opened three showrooms in Delhi, taking the total number of showrooms to 28 across nine major cities. Our plan is to set up another 172 showrooms by end of 2010-11 and spread to more than 40 cities," Titan Industries Chief Operating Officer (Eyewear Business) S Ravi Kant told media.

He said around 85 per cent of the new showrooms would be of franchise model, while the rest would be company owned. Of the company's 28 existing stores, eight are company owned and the rest 20 franchises.

He, however, refused to disclose the investment plans of the company.

The company started its retail eyewear business in 2007. Kant said the company is looking for a turnover of around Rs 500 crore by 2010-11.

"The Rs 1,500 crore Indian market is witnessing a growth of around 15 per cent annually and we want to emerge as the market leader with at least 25-30 per cent share," he said.

Titan Eye Plus is present in major cities like Mumbai, Delhi, Kolkata, Hyderabad and Bangalore.

"Our plan during the next two-and-a-half years is to spread our presence into Tier II and II cities," Kant said.

August 28, 2008
Source: Economic Times

Trent plans Rs 2,000 cr investment for Star Bazaar expansion

Trent Ltd, the retail arm of the Tata group, is likely to invest around Rs 2,000 crore in the next five years for rolling out 50 Star Bazaar hypermarket stores.

"We will invest around Rs 2,000 crore in the next five years for the roll out of 50 Star Bazaar hypermarket stores, which is usually of around 50,000 sq ft," Trent's Chairman F K Kavarana said on the sidelines of the company's AGM on Wednesday.

"We are planning to have larger Star Bazaars which would be more than 50,000 sq ft," he added. The company also plans to add another 6-8 landmark stores by the next year.

At present, the company has around 18 stores operational, he said. On Westside, he had said the company has around 30 stores in 20 cities. About fund-raising, Kavarana said, "presently the company has no plans to do so".

The roll out plans, like in the previous year, continue to be impacted adversely due to the inability of developers to hand over premises in the contracted time frame, he said.

August 27, 2008
Source: Economic Times

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. It couldn’t be ascertained how much Reliance has earmarked for its RBH project, but the company executive said it could run into hundreds of crores. 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.

August 27, 2008
Source: Economic Times

Regional News

Vimal unveils first Premium Franchise retail store in Kolkata

Vimal, the flagship textile brand of Reliance Industries Limited opened its first Premium Franchise retail store at N.N. Dutta Road, Tollygunj, Kolkata. Eminent director, Shri Rituporno Ghosh inaugurated the Tollygunj, Vimal store at an event held in Kolkata.

Built on an area spanning 2600sq feet, designed to cater to the large through put of customers who can experience the new décor, designs and layouts of the Vimal showrooms, which will offer a never-before retailing experience to customers. In addition to premium and innovative products at delightful prices, Vimal will offer its customers premium shopping experiences and enhanced facilities, such as custom tailoring and styling – through these newly redesigned Vimal exclusive stores.

Vimal has over 77 stores in the East, which are witnessing major growth, in footfalls as well as revenue year after year. The company is confident that with increased presence, it will be able to offer 'the unmatched Vimal experience' to more and more customers in Kolkata.

Apart from the launch of Tollygunj store, Vimal is also opening five SIS (shop-in-shop) in Khadims-Egaroo, Kancharapura - 2nd Sept, Khadims-Egaroo, Bhawanipur - 3rd Sept, Khadims-Egaroo, Howrah - 4th Sept, Regent Fashion, Barasat - 5th Sept and Regent Fashion, Haldia - 6th Sept 2008.

Commenting on Vimal's expansion plan, Mr. Anand Parekh, President Reliance Textile said, "We see a huge potential for growth in the Eastern markets. These new openings will further strengthen our commitment in the East market and promote our wholesale and retail business."

Vimal has also started advertising campaign for Puja festivals from 25th Aug with 34 hoarding in the state, TVC's and various print campaigns. Since October 2007 after the successful re-launch of its iconic textile brand, Vimal with a new look, new logo and new offerings, total nine showrooms have been opened till now, one in Ahmedabad, two in Bangalore, Mumbai, Chennai, Kochi, Coimbatore, Madurai, & Ludhiana. Vimal have also opened two Factory outlets one in Ahmedabad & another in Nagpur. In the next two quarters Vimal is planning to launch another six stores nationally.

The first Indian textile brand that ruled the hearts of millions is back with contemporary products that will appeal to the consumers and offer contemporary shopping experience. The redesigned Vimal showrooms reflect the bold new spirit of Vimal, along with its brand new identity. An international retail design and architecture expert was involved in this redesign of the Vimal exclusive showrooms to ensure that the showrooms were designed on the lines of international retail centers in a modern, trendy and contemporary way.

These Vimal showrooms will now offer not just the latest fabric collections for premium menswear, but also the Vimal range of men's apparel – shirts, trousers, suits and jackets. This apparel would be available under three sub-brands, which will appeal to different sections of the male audience, as follows:

September 1, 2008
Source: fibre2fashion.com

Reliance Retail second hypermarket

Reliance Retail has opened its second hypermarket `Reliance Mart' in Andhra Pradesh here at Tolichowki. The company opened its first hypermart in Tirupati early this year. The 50,000-sq ft Hyderabad facility would have a range of over 11,000 products in different segments, including fresh produce, books and music, gifts and toys, footwear and eyewear, Mr Raghu Pillai, President and Chief Executive Officer (Operations and Strategy), said here in a press release. - Our Bureau

August 28, 2008
Source: Hindu Business Line

Get ready to splurge on big brands
(Jamshedpur)

Now the dream of owning that desired pair of branded denims and stylish leather boots is only a retail mall away. After Ranchi, big retail joints have set their eyes on Jamshedpur.

Increase in the purchasing power has given rise to a strong middle-income group that doesn’t mind spending extra on branded clothes and luxury goods.

After opening a retail space in metropolitan cities, companies are shifting focus to smaller towns. Soon the steel city would get its first flagship Reebok store. The 1,600sqft showroom coming up in Bistupur would open doors to shoppers by mid-September.

Besides Reebok, other brands invading the silent retail scene in Jamshedpur are Pantaloons and Big Bazaar — both part of the Future Group.

“The economy is booming. The youth are conscious about their lifestyle. We have plans to open stores across India and now we have shifted our focus to Jharkhand. The market in smaller cities has to be explored and if everything goes according to plan, we will have a store in Jamshedpur by next year,” said Rajat Gupta, the general manager (marketing) of Big Apple, a fruit, vegetable and grocery chain based in New Delhi.

Television and Bollywood have contributed to the growth of the retail sector. Big budget movies, designer clothes and brand ambassadors have generated an awa-reness about foreign brands in the country. Jamshedpur already houses John Pla- yers, Lee, Woodland and Koutons.

“People in smaller cities want to advance and grow. In recent years, income opportunities have multiplied and there is more money in the hands of the consumers. For retailers, this is a step towards expanding our business but for those in smaller cities, it is more of a wish fulfillment,” said Atul Takle, the general manager of corporate communications of Pantaloons Retail (India).

Students are also ready to jump on the brandwagon. “Students or professionals, who come from metros to work here, have few options. I would not mind spending a little extra on clothes that last long, colours that don’t fade and designs that are trendy,” said Rim Bhattacharjee, an architect with a design firm in Jamshedpur.

“There are few stores but we need more,” said Amborish Chowdhury, an MCA student.

For shoppers in the city, good days are in store at retail stores!

August 28, 2008
Source: The Telegraph

Apparel & Accessories

Trigger Apparels firms up plans to enter retail segment

Trigger Apparels, part of KG Denims, plans to enter the retail segment in a big way following the splurge in demand in the domestic market for jeans and casual wear.

Trigger Apparels marketing director N Rajagopalan said it plans to open 100 retail showrooms by March 2009.

September 2, 2008
Source: Economic Times

RIL wants to be sourcing partner to apparel giants

The textile division of Reliance Industries (RIL) has identified the private label sourcing business for global retail chains and apparel brands as its future growth driver. It has recently signed a string of such deals to supply men’s ready-to-wear (RTW) formal apparel in the US and the UK. This includes categories like trousers, suits and jackets.

The company is talking to various global brands with whom it has a supply arrangement for fabrics. “We supply fabric to several international brands like Marks & Spencer and JC Penny. The bigger opportunity now lies in being their sourcing partner for RTW apparel,” RIL president (textiles business) Anand Parekh told reporters here on Monday.

Reliance is undertaking production of RTW apparel for the sourcing business in Bangalore. “It is the sourcing business that will contribute to the export revenue of textiles business in the days to come. Currently, around 50% of our revenue is generated from exports,” said Mr Parekh.

This comes at a time when Reliance is betting on its re-positioned Vimal brand to garner 35-40% share in the domestic menswear segment in two years. “We have around 15% share. The strategy is to emerge as the category leader in the menswear segment in two years,” Mr Parekh said.

As per the strategy, Reliance plans to venture into the women’s RTW segment. “This is one segment we are studying. There are plans to expand our male RTW segment further by acquiring brands in this category,” Mr Parekh added. Reliance’s male RTW portfolio includes formals in shirts, trousers, suits and jackets. It has three sub-brands—Vimal Red (mass market), Vimal White (premium range) and Vimal Black (super-premium range). “We might roll out exclusive stores for some of these sub-brands. Vimal is available in some 3,000-odd retail points,” said Mr Parekh.

September 2, 2008
Source: Economic Times

Koutons Retail India to launch footwear collection in October

Gurgaon (Haryana)-based apparel maker Koutons Retail India Ltd is set to launch its footwear collection across the country from October under the brand name Koutons.

“As per the initial plan, the footwear collection will be launched at all the family stores of the company across the country. We have tied up with a manufacturing company in Uttarakhand and will also be depending on some imports from China,” Mr Balvinder Singh Ahluwalia, President, Koutons Retail India Ltd, told reporters after the launch of the company’s first family store in Hyderabad. The company intends to invest around Rs 50 crore in its footwear division during the current financial year.

Mr Ahluwalia also said that the company plans to launch its innerwear brand next month. “The idea behind the diversification into various segments is to give a family all their requirements under one roof at the family stores,” he added.

The company, which has 1,350 outlets including 89 family stores, intends to have 1,800 stores by the end of this financial year, including 100 family stores. Mr Ahluwalia said that the company has assigned Rs 100 crore for the financial year to store expansions and the investment would be raised from internal accruals.

Koutons Retail India, which has 18 units in and around Gurgaon, expects its garment sales to be around 1.5 crore pieces this year as against one crore sold last year. The company meets around 65 per cent of its requirement from its units.

According to Mr Ahluwalia, the company expects revenues to be between Rs 1,100 crore and Rs 1,200 crore by the end of this fiscal, as against Rs 800 crore achieved for the financial year ended March 31, 2008.

August 31, 2008
Source: Hindu Business Line

Koutons launches its largest Family Store in Hyderabad

Koutons Retail India Limited, the manufacturer of readymade fashion wear brand on Saturday inaugurated its 89th Family Store in Hyderabad, billed as its largest store in the country. The store was inaugurated by Balwinder Singh Ahluwalia President, Koutons Retail India Limited.

Koutons offers a wide range of apparels in men, women and children wear along with stylish range of fashion accessories, a company release said.

The Koutons family store at Hyderabad is a one stop shopping destination for fashionable apparels at affordable price. The store is spread over 10100 sqft area offering the latest contemporary designs. Along with the brand Koutons, the all new collections "Les Femme" and "Koutons Junior" exclusiely for ladies and kids are also available at the store.

Speaking on the occasion, Ahluwalia said "the inauguration of this store is part of our aggressive retail expansion plans across the country as we plan to make operational in addition 100 such family stores by end 2008, taking our total count to 1800 stores.

August 30, 2008
Source: Economic Times

Reliance Footprint sets foot in Chennai

Reliance Footprint Ltd, Reliance Retail’s footwear retail chain, is planning to close the current fiscal with at least 30 stores across the country.

According to Mr Gopalakrishnan Sankar, CEO of Reliance Footprint, all these will be large format (6,000 – 10,000 sq ft), company-owned and company-operated stores. “We are planning to open a minimum of 30-35 stores every year,” he said.

Mr Sankar, who was in town to launch the company’s seventh outlet and the first in Tamil Nadu, here today, said the next store will be in Kochi, and it will be followed by outlets in Mumbai, Jaipur and Amritsar within the next 20 days. The first footprint store was launched in Bangalore in November last year. Currently, apart from Chennai, Footprint stores are present in Bangalore, Hyderabad, Delhi, Noida, Mangalore and Ludhiana. Footprint plans to open at least five more stores in Chennai “in the next three to four years”.

Talking about the range of brands that are available in these stores, Mr Deepak Chhabra, Head Footwear, Reliance Retail Ltd, said the idea is to offer all premium brands from across the countries. The shop, segmented into casuals, formals, sports and accessories for men, women and children, has premium brands including Nike, Lotto, Reebok, Puma, Aokang, Buckaroo, Franco Leone, Gaitonde and Hush Puppies.

At the entry level price points, Reliance has a range of in-house brands sourced from various vendors in India and China. “We offer private labels for all occasions - Mancini, Tosca, Viviana, Hi Attitude for the family, Monza for the sports’ enthusiast, Frisbee as homewear, Tom Sawyers for school children and Pitter Patter for infants,” said Mr Chhabra.

August 29, 2008
Source: Hindu Business Line