Shoppers indulge in some retail therapy, while retailers go ‘green’

News and views about the Retail sector in India

Organic food retail is coming into its own, with a boom in the ‘healthy food’ segment. Metro plans two more stores in Mumbai and Kolkata, while Dabur launched its maiden retail venture “newu”. Noida’s Sector 18 market feels the heat with shoppers changing direction and wandering in the friendly neighbourhood mall.

Chillibreeze Business Research Team

General Plans and Information

The Greens revolution

Indians have traditionally been growers and consumers of organic food. However, the evolution of farming techniques led to greater use of pesticides and chemicals in the food cultivation process. Today, the time has come, quite literally, to go back to one's roots.

The organic farming, export and retail segments, all of which are interwoven, have made a comeback. All because of customer awareness and a growing international market for organic produce from India. The global retail market for organic food has grown to $100 billion from $35 billion in the last three years, says Sanjay Dave, director of the Agricultural and Processed Food Products Export Development Authority (APEDA ). The domestic market too, has been growing steadily.

Presently, it is estimated that only around 5% of farmers are engaged in organic farming techniques. However, with more NGO and government intervention, these numbers have been growing. Most modern retail chains have entered into deals with farmers to procure and retail their produce in their stores.

Some players, like Navdanya, one of the oldest kids on the block, even have their own farms. Navdanya has a 21-acre farm in Dehradun where crops like jowar, bajra, millet are grown, and sold at its retail outlets in Delhi and Mumbai. It also sources products from other growers in the Dehradun valley and Bundelkhand. Big retailers are yet to open their minds and shelves to organic food.

According to the industry experts, the organic food industry has a long way to go in terms of positioning itself as a viable alternative to conventionally-grown food in customers' minds.

The boom in the 'healthy food' segment is heartening. However, since most of these organic foods come at a slightly higher price tag (around 10-50% over conventionally grown produce), customers are slow to react. But as Tiwari says, 'consuming organic food is no longer a fashion statement'.

March 16, 2008
Source: Economic Times

ICRIER report on organised retail likely by July 15

The Commerce Ministry mandated ICRIER study to assess the impact of transnational retailers on mom and pop stores is likely to be ready by July 15.

The Indian Council for Research on International Economic Relations (ICRIER) is carrying out the study on organised retail, focusing on its effects on small retailers and vendors in the unorganised sector.

The parameters include organised retail’s impact on employment, consumers, farmers, manufacturers and on pricing. Till the study is complete, the recommendation to allow 51 per cent foreign direct investment in niche retail sectors such as consumer electronics and sports goods has been put on hold.

The Prime Minister’s Office (PMO) had directed the Department of Industrial Policy and Promotion under the Commerce Ministry to conduct an impact study in early February. The survey is being carried out among consumers, retailers, and malls across India in two phases.

In the first phase, the study will be conducted in 20 cities that already have malls. In the final phase, the ICRIER will study the response of small shops and consumers in cities where organised retail is at an early stage. Technopak will be assisting ICRIER in the study.

Researched reports indicate that as much as $35 billion will be invested in the Indian retail sector alone in the next five years. The domestic retail market is expected to grow from $336 billion in 2006 to $590 billion in 2011.

Assuming that the share of modern retail grows from the current level of four per cent to the estimated 16 per cent in the next five years, the absolute market size of traditional retail will also grow from $324 billion in 2006 to $493 billion in 2011.

March 13, 2008
Source: The Hindu Business Line

Big players - plans and investments

Biyani to buy 70% in Godrej Aadhaar

Kishore Biyani-led Future Group is picking up a 70% stake in Aadhaar, Godrej Group’s rural retailing initiative. Sources said Aadhaar, a part of Godrej Agrovet, will be spun off into a special purpose vehicle. Godrej Group will hold a 30% stake in the entity.

The deal, likely to be done through Pantaloon Retail, is likely to be sealed in a fortnight. The Future Group will initially scale up Aadhaar on the lines of ITC’s e-choupal, as a supply-chain of commodities and agri-produce. Aadhaar may also become a distributor of the group’s financial products like consumer finance and insurance in the rural markets.

Sources said the move makes sense for the Godrej Group which may not have been able to allocate the kind of investment required to make the rural retailing business commercially viable. For the Future Group, the move dovetails with its ambitious rural retailing plans.

March 18, 2008
Source: Economic Times

Future Group to expand business in rural markets

Kishore Biyani-led Pantaloon Retail, which operates a number of retail format primarily catering to the urban India, is looking at expanding in the rural markets to enhance its presence. "We are looking at rural markets as well," Future Group CEO Kishore Biyani said.

Asked whether the company would mark its foray into the rural markets independently or in partnership, Biyani said, "There are various options which are being looked at currently."

With its latest plans to focus on the rural side, the Future Group looks set to join the bandwagon along with another major business conglomerate--the ITC Group. ITC also has a considerable presence in the country's rural side with its e-choupal retail initiative, which is basically aimed at providing a support system to the farmers.

March 18, 2008
Source: Economic Times

Metro to invest Rs 300 cr in 2 stores in Mumbai, Kolkata

Metro Cash & Carry India, the arm of Europe's second largest retailer Metro AG, would invest around Rs 300 crore in two stores in Kolkata and Mumbai. "We have a plan for two stores - one each in Mumbai and Kolkata" Metro Cash & Carry India head corporate relations, Vishal Sehgal said adding that "tentative investment for each store is around Rs 150 crore including cost of land".

With these two new stores, the total number of Metro Cash & Carry stores across the country would be five. Currently, there are three operational stores, two in Bangalore and one in Hyderabad.

Sehgal said the timing of the opening of the two new stores has not been finalised yet, but it would be sometime around the middle of this year. According to sources, the Kolkata store is likely to open by May-June this year. The store was scheduled to open in 2007, but land related issues had delayed the process.

Asked about the expansion plan beyond 2008, Sehgal said the Indian company board would meet soon after the results of the parent company were announced on March 17.

As per the specified format, each store would be a ground structure on six to seven acre and would have ample parking space. Being cash and carry, a typical Metro store did not cater to individual buyer. It is a members-only store with customers needing to register themselves on the basis of their trade registration number, be it CST or VAT.

March 16, 2008
Source: Economic Times

Dabur enters retail space with flagship store ‘newu’

Dabur India has rolled out its maiden retail venture ‘newu’, which is its wholly owned subsidiary. It plans to add 30 ‘newu’ stores by 2008-9.

The flagship health and beauty store in Rajouri Garden offers customers leading international and national beauty and health brands. The core categories are complemented with pharmacy, personal care, babycare, fashion accessories and male grooming.

The 4,500 sq. ft store is being pegged as a one-stop destination for all beauty, health and wellness needs. It has merchandising of over 13,000 SKUs. In addition, ‘newu’ stores will introduce exclusively to the Indian market several leading international cosmetics and personal care brands.

Speaking at the launch, Chief Executive Officer, Mr Peter Baker, said, “This store will offer easy access to the latest and the best products from the world of beauty, health and wellness.”

The ‘newu’ brand image presents a new dimension to lifestyle branded retail in India, designed by Pikefell, UK-based brand agency. It may be recalled that Dabur had earlier earmarked Rs 140 crore towards its retail venture.

The company is planning to rapidly expand its presence in the organised retail market throughout India. “In the coming months, in addition to further stores in Delhi/NCR, we will open stores in Hyderabad, Bangalore, Chandigarh and Ludhiana and growing the ‘newu’ presence to about 30 stores by the end of the 2008-09 fiscal,” Mr Baker said.

March 14, 2008
Source: The Hindu Business Line

Spencer Retail to invest Rs 250-3,000 cr in 2008-09

RPG group's Spencer Retail on Friday said it will invest Rs 250 crore to Rs 3,000 crore across the country in 2008-09 which also includes setting up 35 stores in Gujarat.

The stores in Gujarat would come up at Surat, Rajkot, Anand, Nadiad, Mehsana, Vapi Ahmedabad and Bulsar, its Group President and CEO (retail) Sumanta Banerjee said.

Talking to PTI after launching Spencer's first hyper mart in the city today, Banerjee said that they have been planning to invest about Rs 250 crore to Rs 3,000 crore in the hyper mart format.

Spencer has 400 outlets with 15 hyper markets, 11 super markets and 374 daily and express stores across 55 cities in the country. The company will also launch hyper marts in Bihar and Jharkhand, Banerjee said.

RPG group's retail outlets which include Music World, Books and RPG Cellucom currently stand at 550 in number and is expected to grow to 2,000 stores by 2009 and 5,000 stores by 2011, Banerjee added.

March 14, 2008
Source: Economic Times

‘Imported Bazaar’ now in Big Bazaar stores

Seeing growing consumer interest in imported goods, particularly in the foods and wellness segment, retail major Future group has decided to open shop-in-shops with the brand name ‘Imported Bazaar’ at all its Big Bazaar outlets in phases.

To begin with, the company has opened two such shops-in-shops in Hyderabad. It has tied up with Sankalp Retail (Future Group holds 28 per cent in Sankalp) to set up these stores. Next week, it will open two such outlets in Bangalore.

Addressing a press conference here on Thursday, Mr Soumitra Ghatak, Chief Executive Officer of Sankalp Retail Value Stores, said the company would open 150 such shops-in-shops by the end of 2009. “There is a huge appetite among the Indian consumers for the segments we are looking into. It is going to be a destination store for all our customers who have an eye for popular international brands,” he said.

March 13, 2008
Source: The Hindu Business Line

Regional

Noida market loses footfall to new mall

Will large malls finish small retailers? While the debate goes on in academic circles, a visit to Noida in the suburbs of Delhi settles the issue.

Once quite the bustling shopping square drawing hordes of people, the Sector 18 market in Noida now watches shoppers making a beeline across the street. It has for its immediate neighbour the largest mall in town — The Great India Place (GIP) — casting a halo the market would love to wish away. Since the GIP opened shop, footfall in the market has plummeted by as much as 60 per cent (as estimated by the store owners).

Industry experts feel that while the concerns of decreasing footfall and its effect on sales are here to stay, it is possible to salvage some of the damage because consumption power is on the rise. However, the absence of an active market association, and hence a concerted effort, promises to make the going tough.

Efforts are being made by the individual stores to win back customers by resorting to rebates or increasing the product range. Most of the shops are seen flaunting ‘on sale’ boards more often.

With a store full of shoppers made curious by the ongoing sale, Anand Goel, store manager of Cottons by Century, says that there has been a marked difference since the GIP’s advent, with a 40 per cent decrease in footfall.

To shore up sales, the company plans to step up its advertising and offer swipe cards by tying up with banks to let customers avail of discounts at restaurants, much like the loyalty bonus offered by the anchor stores in malls. Increasing the product range by introducing a women’s line is also on its radar.

Beon, the company outlet for Action shoes (and a part of Action Retail Venture), bang opposite the GIP, has seen sales dip by almost half. Umesh Sharma, the store manager, informs that the company has lined up discount schemes, promotional SMSes (it sends thousands of them), gift coupons and frequent ads in a bid to lift dipping sales. But “the future lies in the malls”, Sharma says.

The management of Home (C&R Textiles Pvt Ltd), a home décor store in the market, is set to introduce promotional schemes, such as bundle offers and free gifts, with purchases. Paul Shoes, a local chain of footwear, with shops at South Extension in New Delhi and the Sector 18 market, found the first couple of months hard with a decline in both footfall and sales. However, according to Sachin Mahajan, the store owner, it didn’t take long for the regular customers to return.

“The smaller shops make you feel at home, while for the stores in a mall or a hypermarket you are just one of the numerous customers,” says an expert. Stores like Vijay Sales in Mumbai, Kurta and Saree Stores in Kolkata or a traditional jewellery store typify the personalised treatment and astute product knowledge that staff of the organised retail stores lack. But good customer relations and discounts are not proving sufficient for these shopkeepers. The notion that malls are only for window-shopping owing to a steep price range is fast evaporating.

Store managers, such as Ritesh Gupta (at the Levis outlet in the market), are only too aware of the losses as “walk-ins are necessary to convert new customers and expand the customer base”. Gupta has suffered a 30 per cent slump in sales, with a Levis’ store, like most of the brands in the market, present in the GIP as well.

The market’s ambience too doesn’t help, fraught with an open sewerage and roads choking with haphazard traffic that double as pedestrian walkways.

Azam Khan, manager of the United Colours of Benetton store, adds: “The shoddy drainage systems and the nagging power shortages are the biggest problems in this area. We have to pay separately to clean the drains”. Other store owners put the blame of the market’s depleting visitors squarely on the lack of solidarity among the members.

“The Noida Development Authority doesn’t do much either,” adds another store manager. The market has witnessed quite a few attempts at ordering the traffic by the local police but in vain.

It is perhaps the lack of concerted effort that is proving the undoing of the shops in this popular market. An active trader’s association would not only have heard the shop-owners’ grouses about a drab surrounding, but could have drawn strength from numbers.

Caught in the catchment areas of some very large malls (DLF’s Town Square is coming up next door), the Sector 18 market has to think on its toes. Its personalised customer servicing can create a distinct positioning while a concerted effort at consolidating the shops’ supply chains and marketing efforts can provide the proverbial boost.

March 18, 2008
Source: Business Standard

Home Furnishings & Solutions

Nilkamal to launch its 13th store in Coimbatore

Nilkamal has announced that Nilkamal's @home, the mega home store extend its imprint to North India and continues it foray in the South with the launch of its 13th store in Coimbatore.

Nilkamal is the world's largest manufacturer of moulded furniture and India's leading manufacturer of material handling systems. Nilkamal pioneered in the home retailing segment with its chain of complete home solution stores across the country. @home recently forayed in the North with the launch of their 12th store in Ghaziabad, on the 29 February 2008. This was closely followed by the opening of its 13th store in Coimbatore on 14 March 2008.

@home Coimbatore stretches over 25,000 sq.ft. of ingeniously designed layout. It is a perfect one-stop solution store for home planning, with finest quality furniture, soft furnishings and home accessories. @home stores are a visual treat; it won the VM and RD retail design awards 2008 in the home improvement category in February 2008. ®home has 13 stores across India at Mumbai, Bangalore, Chennai, Hyderabad, Pune, Nashik, Ahmedabad, Surat and Ghaziabad. The stores have an average size of 22,000 sq.ft.

March 17, 2008
Source: NDTV Profit

Telecom

The MobileStore Opens 500th Outlet

Rajiv Agarwal wants to see his red and black signed The MobileStore within 2 kms of wherever a customer is in all the Tier 1 and 2 cities of India. Having just opened the 500th store at Beck Bagan, Kolkata this week, he plans to roll out 2500 outlets by 2010 in about 600 cities and towns across the country. “Wherever there is a lakh of population, we will be there,” says Agarwal.

Going international is not ruled out. “We are evaluating global opportunities and may want to be in buoyant markets of the world,” says Agarwal, who is CEO and director of the one-stop mobile solution store.

Kicked off 11 months ago, The MobileStore owes its retailing concept to a joint initiative between Virgin and Essar, with whom Agarwal has been associated since 1997.

The handset market is estimated at Rs. 40,000 crores and growing at 60% per year. Dotted over India are about 80,000 generic outlets that sell mobile terminals and about half a million that sell connections. In addition, mobile operators’ own brand shops also do connections. But this chain of slick shops, in the mould of Virgin Store and Carphone Warehouse in the UK, is a novelty to India and a bellwether for the ‘lifestylization’ of the mobile phone.

MobileStore is scaling up at the rate of 2 stores per day. Turnover exceeds Rs.100 crores a month and sales are growing 15% monthly. Margins are still skinny, says Agarwal, “the lesson from the West is that investment takes time to mature.” By its second anniversary, the MobileStore aspires for a market share of 35% of the organized retail market and 10% of the total telecom retail market.
 
March 18, 2008
Source: Telecom Tiger

Apparel

Wrangler goes green

The urban cowboy has now joined the green bandwagon. Wrangler for the first time in India has taken a ‘green’ step forward, doing its bit for a better tomorrow with the launch of ‘Naturally’, a range of organic clothing.

“Organic clothing, new to India, is already catching in the Western world with brands such as Nudie Jeans, Loomstate, Levi’s Eco, 7foralmankind and Sling and Stones,” says Anshul Chaturvedi, Marketing Manager. Wrangler is well known for roping in leading designers such as Prasad Bidapa and Rajesh Pratap Singh for its denim ventures. “This time, they’ve chosen Salli Deighton, a designer based in London, to work on the Naturally campaign,” he adds.

So, what exactly does Naturally have in its wardrobe? The collection has a wide palette for top wear for men this season – in fabrics like linen, viscose and bamboo blends. Echoing the Naturally theme, there’s a line of denims in fabrics such as natural indigo and organic cotton. The girls’ top wear too ranges from the classic shirts to more feminine ones such as empire line cuts, halter necks and strappy tops.

Starting off as a Rs 3-crore brand, Wrangler has been steadily growing 40-50 per cent year on year. Wrangler is well known for exploring non-traditional media for its marketing. Just like the ‘Truly Clean Jeans’ campaign, once again it will opt for a 360-degree campaign with a multimedia approach with stress on newer media. In a characteristic style of Wrangler, the marketing strategy would lay emphasis on below the line activities, with nearly 15 per cent of its marketing spend credited to it.

March 18, 2008
Source: Hindu Business Line

Support Services

Sat nav trolley that makes shopping simpler and stress free

Shopping in supermarkets will be a new experience all together with a sat nav new trolley that will make shopping a much easier exercise for shoppers, besides flashing a warning if your groceries have too much fat in them.

The trolleys have been fitted with sat nav, which facilitates an on-board computer that help plan the best route to buy what you want and suggests meal recipes based on it. The trolleys, which are set to slash the time it takes to do shopping, could be introduced in Britain next year.

They use technology from computer giant Microsoft and are the brainchild of Texas-based firm MediaCart.

Customers can insert a supermarket loyalty card containing details of their previous shopping lists. The location of each item on a list is then shown on a 12-inch screen at the end of the trolley.

If you need something not on the list you can ask the machine. Voice-recognition software processes the request and shows where the item is. And if it is stolen from the supermarket it has the technology to "phone home" with its location so it can be collected.

March 15, 2008
Source: Economic Times

Unique Formats

Navneet launches Automatic Vending Machines

Navneet Publications (India) Limited, the leader in the stationery arena and pioneering name in marketing innovations has tied up with Grabbit, a vending Division of Empire Industries Ltd. Navneet Publications is the first stationery company in India to acknowledge this advance in technology. The commencement of the initiative was launched at Fun Raghuleela Mall- Andheri by Mr. Jagdeep Kapoor, Chairman & Managing Director, Samsika Marketing Consultants.

Grabbit vending machines have been launched by Empire Industries Ltd. and are primarily available for the food & beverages category. However due to this distinctive partnership these machines will provide Navneet’ s world class stationery range like Long Books, Note Books, Drawing Books , Colour Pencils and a variety of products to its consumers round the clock at the click of a button.

Apart from Navneet, Grabbit machines are currently providing services for Agni Jewellers and Bisleri as well, at different locations in Mumbai.

In the initial phase the machines are placed at 7 malls : Fun Republic – Andheri, Raghuleela – Kanadivali and R-Mall-Mulund .By the end of February 2008, Navneet’s automatic vending machines will also be placed at City Centre - Mumbai Central, Milan Mall – Santacruz , Eternity Mall -Thane and Inox - Nariman Point. 

March 18, 2008
Source: Moneycontrol.com