News and views about the Retail sector in India

This week, we focus on how retailers in India are pushing private labels and are changing the way shoppers make purchasing decisions. Once considered lowly and cheap, private labels now come in a wide range of styles and prices. Get all the news about this and much more in this edition of the weekly retail news from Chillibreeze.

Chillibreeze Business Research Team

General Plans and Information

Reliance Fresh on Watch list by Orissa government

Reliance Fresh could be facing the same problems in Orissa that it did in Uttar Pradesh, as the state government has reportedly assured a delegation of India FDI Watch that it would scrutinize the permission given to Reliance Fresh to open outlets in the state again. According to Dharmendra Kumar, Director of India FDI Watch, “We have been assured by a senior state government official that all possible steps would be taken for the rehabilitation of roadside vendors. The permission given to Reliance Fresh for opening outlets would also be scrutinized.”

The India FDI Watch is an association of small traders that has been opposing the entry of large retail players. In the meantime, Orissa has offered roadside vendors a special zone for them to operate in. Reliance Fresh opened in the state last September and has faced difficulties since it’s start, with a lot of protests from local traders.

Date: Tuesday, January 29, 2008
Source: The Economic Times

Retail rise in India pushes society to newer brands

Indian consumers are getting used to being wooed by a variety of brands. There has been a rise in the number of brands that are now available and for the customer; there has never been a better time to go shopping. Where at one time, Ansals Plaza was the only mall in the capital, now there are any number of malls in Gurgaon, Noida and in the capital as well, with many more opening up soon.

Two malls that are fast becoming the most popular malls in the country are Ambi Mall in Gurgaon and the Great India Place located in Noida, which are seeing a fast increase in the number of footfalls they receive. Specialty malls such as the Wedding Mall and the Gold Souk are also seeing a popularity wave, as consumers visit the malls for specialized wedding shopping.

One of the main reasons retail is undergoing a boom is the rise of the working youth. As a younger set of people set off into the workforce, they are deciding to spend the money they earn, since most of it is disposable income. The easy availability of credit has also changed the way people shop, as now it is no longer required to save up money to buy are car or a fridge. The use of credit cards and loans has changed the very way that people now shop. The number of working women has also increased and so products that are marketed to women have been seeing a rise in sales.

Date: Saturday, January 26, 2008
Source: The Economic Times

Retail biggies cash in on patriotic fever

Retailers are realizing that Republic Day and the sense of patriotism it generates, is a great day to cash in on creating special sales for consumers. The biggest of the sales takes place each year at Big Bazaar outlets, which holds one of its annual “Sabse Saste teen din” (the years cheapest three days) sale, and offers a wide variety of discounts.

The sale will continue on January 27th as well. The company netted around Rs. 100 crore on single day sale two years ago. Last year, sales for the three-day period reached Rs. 150 crore and the company is hoping for a record sales figure this year as well.

This year Delhi based grocery chain Big Apple created a sale where it sold 26 items for Rs. 26 only. Reliance Trendz also had a special offer for 59% off on certain products in celebration of the country’s 59th Republic Day. Spencer’s created an offer of winning free cars, bikes and holiday packages, while Ritu Wears offered a discount of 26% on merchandise already marked at 50% off.

Date: Friday, January 25, 2008
Source: The Economic Times

Retailers negotiate with farmers for supplies

Organized retailers are working to create a link with farmers so that they can bypass the mandis altogether. Most farmers don’t have enough clout to attract retailers directly, so are creating a co-operative, which will deal with the retailers. Farmers in Nandani in southern Maharashtra’s Sangli district, has 5,000 members and is keen on dealing with retailers directly, and will be signing a MoU with Foodland to be able to do so.

Date: Wednesday, January 23, 2008
Source: The Economic Times

Big players - plans and investments

Aditya Retail witnesses growth in South

The Aditya Birla Retail was seen a significant growth in retail in south India, as compared to other regions of the country. The south Indian market is growing faster due to organized retail being in the region for a longer period of time. The company also saw greater growth in the region as it bought local chain Trinethra in January 2007, which already had a strong regional presence with its brands FabCity, Fabmall and Trinethra.

According to Suman Sinha, CEO of Aditya Birla Retail, the acquisition of Trinethra propelled the company into having a strong presence in south India, in the states of Andhra Pradesh, Tamil Nadu, Kerala and Karnataka. The company has 275 stores in the south of which 68 are Fabmall stores that are located in Karnataka. Aditya Birla Retail also has 60 stores in the city of Bangalore in Karnataka, 8 stores in Mysore and 10 stores in Mangalore.

The company plans to re-brand all of its Fabmall stores by the end to January to its own brand called More. The company will also be looking to open stores in smaller tier II and tier III cities. Aditya Birla Retail is also keen on launching its own specialty formats, for segments such as footwear, consumer durables, discount stores and jewelry.

Date: Saturday, January 26, 2008
Source: Business Standard, The Hindu Business Line

Reliance Retail to tie up with international retail giants

After its marketing and distribution agreement with Apple Inc., Reliance Retail is now looking to form similar agreements with other international retailers and is already holding talks with 3-4 companies to create an exclusive tie up in the specialty format arena.

According to Bijou Kurien, president and CEO of Reliance Retail (Lifestyle), “The tie-ups for speciality retail will be in non-food, non-FMCG categories such as apparel, footwear, consumer electronics, home and interiors and furniture among others.” The company is reportedly in talks with Lowe, the US based home improvement retailer. The company’s tie up with Apple to open its iStore in Reliance Digital has already started operations in Bangalore.

Date: Friday, January 25, 2008
Source: The Economic Times

Big Bazaar plans to become independent entity

The Future Group’s flagship format, Big Bazaar will be turning into an independent entity and is currently planning an aggressive expansion for the next two years. According to Rajan Malhotra, CEO of Big Bazaar, “We plan to invest substantial amounts in the next one-and-a-half to two years in order to increase our footprint to 300 by the end of June 2009.”

There are 80 Big Bazaar stores at present and has signed property agreements to open 140 more. The company will be investing Rs. 3,000 crore over the next two years for its plans. Big Bazaar will also be focusing on in-house labels for further growth and will be promoting its own labels to the mainstream.

Date: Friday, January 25, 2008
Source: The Hindu Business Line

Reliance to open 45 TimeOut stores in next 3 years

Reliance Retail will be adding 45 Reliance TimeOut stores in the country in the next three years, These stores will stock everything from books, stationary items, music, toys etc. According to Bijou Kurien, President and CEO of Reliance Retail (Lifestyle), the company will be looking to open stores across the country, even in tier I and tier II cities.

At present the company has launched the store as part of a pilot project in Bangalore and Gurgaon and another store would be opening in Kochi in March this year. The company will be investing Rs. 3-20 crore per store, depending on the size and location of the store.

Date: Thursday, January 24, 2008
Source: The Economic Times

‘Political opposition less than expected’: Mukesh Ambani

Owner of the Reliance Industries, of which Reliance Retail is a part of, Mukesh Ambani said that the company had expected stronger political opposition to his concept of setting up retail stores across the country. In an interview On NDTV, he said that whatever opposition was there, has already decreased.

Adding that any new transformation causes resistance and it was no different with Reliance Retail. The company has faced strong opposition from local traders and political parties in Uttar Pradesh, West Bengal, Kerala and Orissa, which has led the company to shut stores there and slow down expansion in other regions.

Date: Wednesday, January 23, 2008
Source: The Economic Times

Arvind Mills to invest Rs. 400 crore in retail business

Arvind Mills announced that it will be investing Rs. 400 crore in the next four years to expand its retail business and reach its target of becoming a billion-dollar company. Arvind Mills will be putting in Rs. 300 crore in large format retail stores and Rs. 100 crore in smaller format stores.

According to the company, there will be 30 large format Megamart outlets opened and about 200 small format Megamart stores opened in 100 cities by the year 2012. Each outlet will receive Rs. 8-10 crore as investment. The first of the company’s Megamart Outlet Center’s was launched, and will be opening second Megamart outlet in Pune at the end of May.

Date: Wednesday, January 23, 2008
Source: Financial Express

International

Esprit gearing up to launch new products

Casual wear company Esprit will be introducing a new range of products such as sportswear, home furnishings, cosmetics and footwear in an effort to launch itself as a lifestyle brand instead of just a clothing brand. The company will also be unveiling its large format stores, which will be around 8,000-15,000sq ft of space, which will be run by Madura Garments. The company expects to reach revenues of Rs. 75 crore this financial year.

Esprit currently has one large format store located at the Select CityWalk mall in New Delhi. The company plans to have 10-15 of such stores in the country by 2010 where it will offer the entire range of its brand, not just clothing for men and women. Manjula Tiwari, Brand Head of Esprit India, emphasized that the company was a lifestyle brand globally and wants to present the complete offering in India as well.

Esprit has 30 stores at present and aims to have stores in 21 cities and have 150 stores. New stores will be opened in cities such as Chennai, Kolkata and Hyderabad, and markets such as Bangalore, Mumbai and Delhi where the company already has stores will be further expanded.

Date: Monday, January 28, 2008
Source: The Economic Times

Sears eyes cash and carry format in India

US retail chain Sears is showing interest in setting up a cash and carry business in India as it is the only format where 100% FDI is permitted. Company representatives have reportedly held meetings with officials of the Department of Industrial Policy and Planning so as to better understand the requirements. If all goes through, the company might be setting up in the next quarter.

Sears is the fourth largest retailer in the US and has around 3,800 stores in North America. Since the company already has a large stake in wholesale business in the US and Canada, the company is keen only for the cash and carry format in India as well.

Other international retailers who will be setting up shop in this format include Wal-Mart, which has tied up with Bharti and French retailer Carrefour. Germany’s Metro and South African chain Shoprite are the only two international retailers in the cash and carry format at the moment. Most retailers are keen to get their foot into the Indian retail market, so that when restrictions are lifted, they already have a base established and can swiftly move to consumer retail.

Date: Monday, January 28, 2008
Source: The Economic Times

Carrefour to enter cash-and-carry market in India

French retail giant Carrefour announced that it will be entering the cash-and-carry segment in India and is currently in the final negotiations for its franchisee partner for other retail stores. According to a statement issued by the French Embassy in India, “Carrefour confirms its decision to enter the Indian market with cash-and-carry stores and confirms it is in the final round of negotiation to select an Indian franchisee partner for all other retail stores.”

The Embassy added that the company had short listed 3 companies for its joint venture in India and will be finalizing on its partner shortly. The company will be starting both retail businesses in the country in the second half of 2009. Top officials of Carrefour visiting as part of the French President Nicolas Sarkozy’s business delegation, visited India to finalize on its retail plans for India.

Date: Saturday, January 26, 2008
Source: The Economic Times

Support Industries

Idiom to form independent company

Idiom Design and Consulting will be hiving off its product design unit into a new company. Promoted by Kishore Biyani along with several other promoters, the Rs. 20 crore company will be a wholly-owned subsidiary of Idiom. The company was formed in 2005, with the merger of Tessaract and Esign design firms and has been one of the foremost design firms for the Future Group.

According to Girish Raj, Founder Director of Idiom, “The product design company will be launched in three-four months. We will design the products and the intellectual property of the product will be owned by us but manufacturing will be outsourced.” The company will design electronics, home merchandise and appliances as well as furniture.

Date: Monday, January 28, 2008
Source: The Economic Times

Home Furnishings

Bombay Store on expansion mode

Gift and home retail store Bombay Store is looking to expand its business and will be opening additional outlets in the south and in the west. The company will also be increasing its presence with its website. According to Asim Dalal, MD of Bombay Store, the company will be opening two additional outlets in Mumbai, in Inorbit Mall in Malad and another outlet in a western suburb.

The company currently has four stores, two in Mumbai and one store each in Bangalore and Pune. Six new stores are expected to be ready by December 2008. The company had a revenue of Rs. 24 crore in the 2006 financial year and estimates a 15% growth this year.

Date: Friday, January 25, 2008
Source: The Hindu Business Line

Consumer Durables

Croma looking north

Tata’s consumer durable chain Croma, is looking to expand in north India after having opened stores in several cities in the south and western regions of India. The company currently has stores in Pune, Ahmedabad, Mumbai, Surat and Bangalore. The company plans to open 25 outlets across India by March and is concentrating on larger cities such as Bangalore, Delhi, Mumbai, Pune, and Ahmedabad and will then be opening in tier I cities such as Ludhiana, Chandigarh and Jalandhar.

Date: Wednesday, January 23, 2008
Source: The Hindu Business Line