WalMart Cash & Carry store to open in June in Ludhiana

Retailers are looking at online and catalogue shopping options offering choice and convenience to customers. The Aditya Birla group has big plans, while Wal-Mart is set to enter India soon. ITC’s Choupal Fresh brings customers farm fresh vegetables - proof that supply chain management is improving. Retail shrinkage continues to be high in India.

Read all this and more in this edition of the weekly retail news from Chillibreeze.

Chillibreeze Business Research Team

General Plans and Information

Fresh approach: from farm to shop, old ways get a new twist

Every tomato and cauliflower at ITC Ltd’s Choupal Fresh store here tells a tale and therein lies a larger tale—one about how modern retail initiatives are slowly but surely starting to transform India’s famously leaky farm-to-kitchen supply chain.

Most customers at ITC’s fruit and vegetable stores here seem to barely notice the small flyers, which talk of how the vegetables got there, but that’s fine by the company, better known as India’s largest cigarette maker.

What matters to ITC is the perception of freshness that it has been able to create and, more critically, how it has been able to improvise a system, at least locally, that allows the budding retailer to bring fresh produce at more attractive prices to customers even as farmers get better prices and much more certitude in their life.

Amid swirling and unanswered questions about the good and bad of organized retail in India and the impact it might have on existing systems of buying and selling, especially fruit and vegetables, many big industrial houses have jumped into food retailing.

Many of them have ambitious plans to either create their own supply chains or partner with others to dramatically cut down on what many believe is significant—up to one-third—wastage of fruit and vegetables in India today. Meanwhile, several industry estimates have food and grocery as the fastest growing among all segments of organized retail. Currently just 1% of all fruit and vegetables sold in India are estimated to be through modern retail.

While critics of organized retail have pointed to the lack of cold chains and other transportation infrastructure as evidence of modern retail only paying lip service to farmers, companies such as ITC are looking at creative local loops to develop more reliable—and profitable—ways to link farmers to their customers.

For the Choupal Fresh stores in this city, the story actually begins at Anil Kashith’s eight-acre farm in Yadgaon village, where the Kashith brothers grow vegetables and grapes.

Every morning, Kashith gets a phone call telling him which vegetables ITC needs that day and in what quantity. When the company truck rolls in at around 10am, he harvests exactly what was needed and loads the vegetables on to the truck.

The truck then does the rounds of some 300 similar farms and gets to the ITC’s collection centre at Manchar around noon. Here, the final destination of the produce is clearly marked and the produce is weighed, sorted and stacked for each store. The farmers are paid and the produce moves on to the stores by 1pm.

By 3pm, Kashith’s vegetables are in Pune’s store shelves and billed as Today’s Harvest. It is proving to be a draw, says S. Sivakumar, chief executive of ITC Agri Business. “We tell people where the vegetables came from in part to improve the assessment of freshness that consumers make.”
February 4, 2008
Source: LiveMint

Checkpoint survey cautions against retail shrinkage

It's that time of the year again when retailers gear up to woo their customers with the best of everything -- from lucrative merchandise, great offers to excellent services. Everything is at its peak this season. But on the other hand, the dark side to retail is called "retail shrinkage" is also at its highest point this season.

Shrinkage losses are caused mainly by people stealing goods or money from the company (by customers, employees) and also by a range of small or large process errors, accounting lapses and pricing mistakes that produce apparent inventory losses. According to a recent global research conducted by Centre for Retail Research, UK and sponsored by Checkpoint Systems Inc, shrinkage cost the world's retailers $98.6 billion, representing an annual "tax" on honest consumers everywhere of $287.70 per household.

The Global Retail Theft Barometer Survey Information Report deals with all retail sectors and vertical markets in India, Australia, Japan, Singapore and Thailand. The survey information was provided from 103 large retail businesses of these countries. They operated 16,230 retail stores with combined retail sales of $65,418 million, equivalent to 6% of retail sales in these five countries. The highest shrinkage rate was found in India, 2.90 per cent, a reduction of 9.4% over last year's 3.20%.

February 4, 2008
Source: Expressindia.com

Big players - plans and investments

Birla Retail in talks with farmers' co-ops for direct procurement

Even as India's largest business conglomerate Reliance Industries is facing trouble over its retail venture over procurement of farm products, its competitor Aditya Birla Retail Ltd, the retail arm of the $23-billion Aditya Birla Group, is trying to overcome the hurdles by tying up with farmers' cooperative societies.

The company, that has set a target of establishing 1,000-1,500 supermarkets and has earmarked Rs 8,000-9,000 crore in the next five years, is planning to tie-up with cooperatives to procure fresh farm products, vegetables and fruits.

"We are talking with some of the major cooperatives. They (cooperatives) have come to us," said Sanjay Badhe, senior vice-president of Aditya Birla's new retail initiative 'more'.

Meanwhile, the company has also gained access into farm sector by establishing direct links with farmers. Currently, it has around 25 collection centres across the country to procure farm products directly from farmers, said Sumant Sinha, chief executive officer of Aditya Birla Retail.

By the end of March 2008, it will have 500 supermarkets that include the retail chains acquired from Trinethra Super Retail, which are being rebranded under the umbrella of 'more'. In addition to supermarkets, the company would also set up 50-100 hypermarkets, each spread over a minimum area of 75, 000 sq ft, in the next five years.
February 5, 2008
Source: The Financial Express

Trinethras become 'more'

Aditya Birla Retail has announced rebranding of Trinethra stores in Andhra Pradesh into its own format `more'.
Addressing a press conference here on Friday, Mr Sumant Sinha, Chief Executive Officer of the retail company, said the rebranding would be completed by the end of February. The company acquired Trinethra last year from India Value Fund. With this rebranding, the ‘more’ network would now comprise 350 outlets in various cities. Majority of them (278) are in the South. The company plans to open up to 1,500 supermarket format stores and 100 hypermarkets in the next three-four years.
February 2, 2008
Source: Hindu Businessline

Aditya Birla Retail to invest Rs10,000cr

Aditya Birla Retail (ABRL), the retail arm of the Aditya Birla Group, would be investing Rs 8,000 to Rs 10,000 crore in expanding its operations across the country over a period of five years.

The company, which aims to emerge as one of the leading retail players in India, plans to have nearly 1,500 supermarket and 100 hypermarket stores in the next five years. It is also investing in backend infrastructure to develop a robust supply chain, Sumant Sinha, chief executive officer, ABRL said.

ABRL, which launched its first store in May 2007 at Pune, currently has nearly 400 supermarket stores and one hypermarket store. Its retail footprint in South India extended to 275 stores following the acquisition of Trinethra Super Retail stores last year. The company is setting up a hypermarket in Baroda by this month-end. At present, it has one such store in Mysore.

Andrew Denby, Chief Executive Officer (supermarkets), ABRL, said the company's retail stores served 2 million customers last month.
February 1, 2008
Source: Business Standard

Reliance to launch auto speciality stores

Reliance Retail Ltd will open on Thursday the first outlet in a chain of speciality stores that will sell auto accessories, and service cars in a bid to get a share of the wallets of car owners in one of the world’s fastest growing ­automobile market.

The company will launch Reliance AutoZone outlets in the western town of Jamnagar in Gujarat, where its parent Reliance Industries Ltd has a refinery. It plans to open up to 400 such stores nationwide in the next three-four years. Each AutoZone outlet will house a service centre for cars as well as two-wheelers.

The store will also retail electric bikes and the company plans to offer buying and selling of used cars in coming months. The company plans to open many of the AutoZone outlets alongside Reliance Retail’s other formats, including the hypermarkets and supermarkets, as well as having such outlets in independent locations.

Car makers currently sell 1.4 million cars a year in India and the figure is expected to touch 2.2 million units by 2010. Reliance says it has not tied up with any of the auto companies and will go it alone.

Reliance has picked Jamnagar to roll out its first 12,000 sq. ft AutoZone outlet as the company has space next to the hypermarket that it opened there this week.
January 31, 2008
Source: LiveMint

Landmark Group plans expansion

The Landmark Group will be investing $500 million to expand its operations in India by the year 2010. The Dubai based chain will invest to expand its Home Centre stores, Lifestyle stores, Polynation, which are its food courts, SPAR supermarkets and its entertainment zones by the name of Fun City.

Currently, the company has 13 Lifestyle outlets, 5 Home Centre outlets and Babyshop stores located in Ahmedabad, Chennai, Bangalore, Gurgaon, New Delhi, Mumbai, Hyderabad, Pune and Vashi. The company will set up 35 Lifestyle stores and 15 Home Centre stores over the next three years.

According to Micky Jagtiani, chairman of the Landmark Group, “Both India and China are growing markets. However, the retail industry is still in a nascent stage in India, when compared with Spain and the UK where we are growing rapidly. We intend to become a $1 billion company by 2012.”

The company will also be setting up hotels, family entertainment centers, coffee shops and specialty restaurants. Its first hotel in India is due to open this year itself. The company will be bringing in Gloria Jean’s Coffees to India and will be opening its first store in Mumbai this year.
January 31, 2008
Source: Business Standard

Arvind Brands to launch large format stores

VF Arvind Brands announced that the company would be opening up large format retail stores as an effort to combat high rentals. The company, which is a joint venture between the VF Corp and Arvind Mills, will be unveiling its new outlets later on this year. Properties for the new outlets are in the process of being taken already. Most outlets will be in the range of 3,000 to 6,000 sq ft.

The company will be selling brands such as Jansport along with denim brands such as Lee and Wrangler, so that all brands complement each other.
January 30, 2008
Source: The Economic Times

International

Wal-Mart poised for cash & carry foray

The Bentonville-based retail giant Wal-Mart has finalized the business model for its cash & carry (wholesale) business in India.

The first warehouse (distribution centre), which will be up and running in Ludhiana, Punjab, by this June, will have a format similar to Wal-Mart models in the US. However, the product profile will be different from the US stores.

Wal-Mart’s cash & carry business, which is a 50:50 joint venture with the New Delhi-based Bharti group, is meant for large institutional or wholesale buyers and is not for retail sales.

Ted P Huffman, director of supply chain and logistics for Bharti Wal-Mart, said, “The distribution centre will be similar to Wal-Mart centres in the US, but it will be smaller.” While centres in the US are spread over 1 million sq ft —two football fields put together—the Indian centre will have a size of 80,000 sq ft. He says high real estate costs are the reason for smaller distribution centres.

Under the terms of the joint venture, Bharti will use Wal-Mart's back-end supply chain technology to sell to wholesale retailers. This includes the inventory system, logistics technology, cold chain infrastructure, truck tracking programmes and fuel management.

According to sources in the know, Bharti Wal-Mart had made plans for rolling out the technology for the distribution centre by the end of 2008 and Wal-Mart CEO Lee Scott had personally asked for the Indian operations to up and running by the end of the next quarter.

Further, the company is studying other locations across India to set up distribution centres. The Ludhiana centre will have 30-50 employees to sort goods for dispatch to different stores in North India.
February 3, 2008
Source: Hindustan Times

Regional

South City shopping mall a big draw

The number of people visiting the South City shopping mall on Sundays has already hit the 75,000-mark, says Mr Sanjeev Mehra, Vice-President, Mall Operations.

With the Spencer’s anchor store having opened recently — and the six-screen Fame multiplex scheduled to be operational soon — the footfall at South Kolkata’s newest shopping destination is all set to go up further.

Covering an area of more than a million sq ft, the South City mall on the Prince Anwar Shah Road is one of the largest shopping facilities the city has ever seen. It has more than 650,000 sq ft of retail space and over 134 retail outlets. “We are registering a footfall of over 20,000 on the weekdays. On Saturdays it is going up to 45,000, with the figure reaching its highest level on Sundays,” says Mr Mehra.

The Fame multiplex will be operational in another 10 days. Some other popular outlets such as Shopper’s Stop are all set to open soon, which will draw an even larger crowd. The mall has a nine-level car park that can accommodate almost 1, 350 vehicles.
February 4, 2008
Source: Hindu Businessline

Reliance Mart in Jamnagar

Reliance Retail Ltd on Wednesday launched ‘Reliance Mart’, a hypermarket, at Reliance Greens, Motikhavdi in the Jamnagar district of Gujarat. Reliance Mart would also cater to the needs of the staff of the Reliance refinery.

Spread across 83,000 sq ft of shopping area, the new Mart will offer a range of over 35,000 products catering to the entire family. This is the second Reliance Mart to be launched in Gujarat.
February 1, 2008
Source: Hindu Businessline

Support Industries

Cogito Consulting to launch retail practice

Cogito Consulting, an independent brand consulting company from the Draftfcb+Ulka group, will now offer specialist retail advice to aid marketers and retail companies maximise on the retail boom.

The brand consulting company and the Shopper Marketing Division of Draftfcb will be bringing global tools and its learning to the Indian market. As part of this initiative, Mr Jim Lucas, Executive Vice-President and Director Shopper Marketing Division, is in India to bring to Cogito his learning on retail.

Acknowledged as founder of the science of retail ecology, Mr Lucas has helped retailers, manufacturers and service providers to motivate shoppers through value-added experiences. His clients have included Burger King, CVS, Frito-Lay, Kelloggs, KMART, Kraft, Kroger, McDonald’s, Mervyns, Procter & Gamble, Quaker Oats, SCJ, Sears, Target, USPS, and Walgreens.
February 2, 2008
Source: Hindu Businessline

Future Capital’s logistics fund slated for launch in March

The financial services company of the Future Group, Future Capital Holdings, will launch its logistics fund in March in a move that will help the group’s flagship company, Pantaloon Retail India Ltd, India’s largest listed retailer, and other retailers looking for modern storage infrastructure as they expand across the country.

The fund will invest between $700 million and $1 billion to set up warehouses across India’s seven key metros in two-three years. This investment vehicle will be the largest in Future Capital’s portfolio, which includes three other private equity funds. A hospitality fund is in the pipeline.

The fund will invest in setting up 18-22 million sq. ft of warehouse space across India. Pantaloon will likely be an anchor tenant at the warehouses, taking 10-25% of the portfolio.

Future Capital will list on the stock exchanges on Friday, weeks after its Rs4,900 crore initial public offering was subscribed 133 times.
February 1, 2008
Source: LiveMint

Unique Formats

Catalogue-shopping a hit in metros

Big retailers seem to have hit upon a smart way to keep their cash register ringing by attracting customers through catalogue-shopping.

For the first time, Hypercity Retail India Ltd, along with Shoppers' Stop, has entered into a franchise agreement with the UK-based Home Retail Group, Argos, to offer multi-channel shopping experience to its customers. Hypercity Retail India would offer this facility under the brand name of Hypercity Argos.

"This unique format of catalogue shopping is definitely suited for metros like Mumbai where retail space is expensive and has been a deterrent for retailers to reach out to a larger consumer base in a cost-effective manner," Hypercity Retail's CEO, Andrew Levermore, said.

Hypercity Argos' integrated multi-channel capability encompassing stores, home shopping and the Internet, would provide consumers a new horizon to shopping, he said.

The firm has launched its business with five stores in Thane and would be opening more stores by the end of the first year, Levermore said.
February 3, 2008
Source: The Times of India

High realty costs make catalogue-shopping a hit

Following, Hypercity Retail India Ltd and Shoppers’ Stop; the Bombay Store, is also planning to provide catalogue shopping facility in the next few months.

“It is too early in India, although internationally, it is a well-known concept. It will definitely take-off in the coming years,” Bombay Store managing director Asim Dalal said. While he does not plan to launch catalogue-shopping immediately, he said, “We will be launching it in the next one year.”

However, Mukesh Ambani-led Reliance Retail said it has no immediate plans to launch this offering. “We at Reliance Retail are not planning catalogue- shopping in near future though it is a growing field. Major retailers should do well looking at the stupendous growth patterns,” said Manu Kapoor , head of Reliance Retail Corporate Communications.

Though nascent in India, the catalogue shopping segment is huge overseas. The US market is estimated at around $180 billion, while the European market is pegged at around e50 billion.
February 5, 2008
Source: Business Standard

Electronics

Canon plans to roll out global flagship brand stores in India

Japan’s digital imaging technology major Canon will soon roll out its global flagship brand stores in India. The company intends to set up nine such stores over the next one year which will be a mix of B2B and B2C formats. These stores will fit into the company’s plans to re-position Canon as a lifestyle brand in India.

Canon has appointed Dentsu Communications for developing the brandname for these outlets. “These stores will be set up over 3,000 sq ft and have the same design and decor as stores in Hong Kong. Investment on these stores will be about Rs 20 crore and will showcase the latest products from Canon’s global stable,” Canon India senior vice-president Alok Bharadwaj told ET.

Of the nine stores, Canon will set up three B2B stores which will target institutional and corporates and the balance six outlets will showcase the consumer product range. The first store is slated to come up at Gurgaon in March, which will be the B2B one. The other locations for the stores include Mumbai, Bangalore, Chennai and Kolkata.

On the distribution front, Canon is looking to bolster ties with retail chains. It has entered into commercial arrangements with players like Future Group’s Home Solution & Big Bazaar, Tata’s Croma, Reliance Digital and Metro Cash & Carry. Canon India had clocked revenues of Rs 510 crore in 2007 and expects it to cross Rs 700 crore in 2008.

The company has outlined a marketing budget of Rs 100 crore this year, the highest amongst all the global subsidiaries. The company’s headcount will also increase from 520 employees to 700 this year, with focus on the solution consulting segment.
February 4, 2008
Source: The Economic Times

eCommerce

Consumers favour Net research for gadget buys

Gadget buffs in India are increasingly moving online to research their next consumer electronic products purchase, with an overwhelming 83 per cent of survey respondents citing the Net as their most-tapped resource for such buys.

According to the Microsoft Digital Advertising Solutions’ Consumer Electronics Survey, while vendor sites emerged as the most used resource, portals came second, followed by search engines, and product review Web sites.

The Internet was the preferred choice in India because consumers could find the latest available models (67 per cent) and compare product features (65 per cent), and prices (62 per cent) and because they could do this at any time (61 per cent). Interestingly, quality and price were the key criteria for purchasing consumer electronics, rather than the brand name.

Nearly 10,000 MSN/Windows Live service users were surveyed across 10 markets — Australia, China, Hong Kong, India, Japan, Malaysia, Singapore, South Korea, Taiwan and Thailand — in a poll conducted by Synovate during August to October 2007 for Microsoft Digital Advertising Solutions.

“Consumers in India, by nature, generally prefer to go by recommendations and today they have access to a lot more people and communities on the Internet for advice,” Mr Vineet Gupta – India Marketing Manager, Microsoft Digital Advertising Solutions, said.

Products most often researched by the respondents included mobile phones, laptop computers and digital cameras.

Laptops, mobile phones and MP3 players were among the top three preferred electronic products bought online by Indian users. The purchase decisions for electronics most often appeared to be influenced by children in the Indian households.
February 3, 2008
Source: Hindu Businessline