328 malls coming up in India by 2010

News and views about the Retail sector in India

The number of malls and hypermarkets is set to increase by leaps and bounds. According to the ASSOCHAM Investment Meter, organized retail will penetrate tier II and III cities, which are attracting a lion’s share of the total investment.

- Chillibreeze Business Research Team

General Plans and Information

328 new malls by 2010: retail report

Some 328 new shopping malls are expected to come up in metros and so-called tier II and III smaller cities over the next two years, forcing developers to find innovative ways to attract stores and maintain foot traffic from shoppers.

A report titled Upcoming malls—2008 and beyond, compiled by real estate consultancy firm Jones Lang LaSalle Meghraj, says northern India will lead the retail boom, with 136 new malls by 2010.

While New Delhi is expected to get 15 malls, its suburbs, Faridabad and Ghaziabad, will get seven new malls each. Mumbai leads the pack among individual cities with 30 malls planned in the next two years. Real estate firms, such as DLF Ltd, Akruti City Ltd, Nirmal Lifestyle Ltd and Oberoi Constructions all have retail plans in the western and central suburbs of the country’s financial centre.

Kolkata, probably one of the last metros to be hit by the retail boom, has 18 malls lined up. The landmark Statesman House in central Kolkata, which would be turned into a 2 million sq. ft shopping destination by Emaar MGF Land Ltd, is one of the biggest malls coming up in India.

Some experts are sceptical about the numbers. Retail consultants note only 22 new malls became operational in 2007 nationally. For example, just three of the slated 15 malls opened in Mumbai last year, because the others are still in various stages of completion.

Still, the Jones report points out a large number of emerging hot spots—smaller cities and towns that will get their first malls by 2010.

For instance, with 15 new shopping malls being set up by film director Prakash Jha, who has ventured into mall development, several areas in Bihar and Jharkhand, such as Patliputra, Sitamarhi, Hazipur and Bettiah, would soon feature for the first time on the Indian organized retail map.

In southern India, Kochi in Kerala is expected to have 13 malls by 2010, just one less than a shopping hub such as Bangalore. With huge townships and residential ventures, such as Sobha Developers Ltd’s largest township in Maradu, Kochi developers are upbeat about the city prospects.

The study forecast both local and national developers setting up malls in previously unlikely places. The business strategy of EWDPL India Pvt. Ltd, a three-year-old developer, revolves around setting up first-time malls in small towns.

“We are finalizing a deal in Kottayam which would be the smallest town to get a shopping mall, and scouting for land in Alleppey in Kerala,” said Avnish Hasija, a director. The firm is developing malls in Belgaum (Karnataka), Bilaspur (Chhattisgarh) Kolhapur and Nanded (both in Maharashtra).

March 24, 2008
Source: Livemint

Retail biggies discover future in hypermarket format

Hypermart is the flavour of the season. The big guns of organised retail have entered new markets with small-sized supermarkets and branded convenience stores. Now they are ready for bigger investments and larger formats.

Reliance, Aditya Birla and Tata’s Star Bazaar are focusing on large European-style hypermart roll-out while old hands like Spencer’s and the Future Group too are scaling up their hypermart formats. Hypemarket are the next stage in retail revolution for some brands. They will get higher margins, volumes and more brand recognition.

“The supermarts have already established brands, now hypermarts can levearge that brand recognition and create a captive customer in smaller markets. European style of hypermarket with roomy isles and white lights seems to be favoured by the new players in India”, says a marketing consultant attached to an Indian retail business house.

According to a Technopak study, 66% of the total domestic investments in retail (estimated to be at $1,011 billion by 2017) would be done in hypermarts and supermarts formats. In the next five years, 32% of the new investment in retail is expected to be in the hypermarkets, says the study.

The Tata, Reliance and Aditya Birla groups have by co-incidence of design launched their hypermarts in Gujarat during the beginning of this year. For most, it was a combination of easy availability of property in a reasonably mature market. “There was property easily available since retail development had commenced in Ahmedabad.

Since the hypermarket business was new to us, we wanted to test in a market that was value-conscious and gauge the results before spreading our footprint across the country,” Smeeta Neogi, brands head, Trent, told ET. Russell Burman CEO, hypermarkets, Aditya Birla Retail, says that the Gujarat opening and timing of hypermart is a coincidence.

“We have been planning it for sometime. It has more to do with which property developed early,” he said. More is planning to open some dozen hypermarts this year in NCR and across tier two cities in India. Reliance, which has already opened two hypermarts in Gujarat, is also rolling out the retail model across the country.

March 24, 2008
Source: Economic Times

Corporates optimistic on retail boom; line up huge investments’

As the investment rate of 36.3 per cent is driving the Indian growth story, corporate retailers across the country have announced investments plans amounting to Rs 1,31,804 crore in the past six months for expanding their network of stores in the next four-five years to cash in the retail boom, according to the ASSOCHAM Investment Meter (AIM).

According to AIM — which has been tracking investments from September 2007 to February 2008 — the organised retail, growing at an estimated 25 per cent, is set to penetrate the tier II and III cities like Pune, Chandigarh and Hyderabad, as they are attracting a major share of investment announcements worth Rs 27,550 crore.

Real estate majors like Unitech and DLF have drawn massive plans to cater to the burgeoning demand of the shopping malls.

Capex amounting to Rs 65,000 is planned to be invested in real estate development for retail space in the next four to five years while ‘food and grocery’ is the next big retail segment with an investment plan of Rs 22,100 crore.

With inflated metropolitan land prices and the growing untapped consumer markets in smaller cities, tier II cities such as Hyderabad, Kochi, Goa, Chennai, and Chandigarh are becoming the preferred destination for investment by these leading real estate players for exploring retail business opportunities, said ASSOCHAM President, Mr Venugopal N. Dhoot.

With more and more corporates investing in the sector, the prospects of job creation will surge in the next five years in cities like Hyderabad, Pune, Surat, and Chandigarh, among others.

March 24, 2008
Source: Hindu Business Line

Retailers line up big investments for expanding stores

Riding on the retail boom, corporate majors, including Reliance Retail, Aditya Birla Group and DLF, have unveiled plans to invest Rs 1,31,804 crore for expanding network of stores in the next 4-5 years, industry body Assocham said.

Reliance Retail has announced plans to invest Rs 24,000 crore for setting up hyper marts and Rs 12,700 crore for establishing grocery stores. According to the Assocham Investment Meter, which tracked investments for September-February period of this fiscal, the Aditya Birla group will pump in Rs 8,000 crore for setting up chain of stores across the country.

Companies such as Wadhawans Food Retail, Subhiksha, Dabur have also made investment announcements worth Rs 1,500 crore, Rs 300 crore, and Rs 200 crore respectively in smaller cities.

The past six months have witnessed a major expansion in the textile and apparel segment by large retailers, including Provogue, Trent, Arvind Mills which have lined up plans to invest Rs 7,900 crore for setting up new stores.

March 23, 2008
Source: Economic Times

Big players - plans and investments

Shoppers’ Stop to stick to core business

Having crossed the Rs 1,000-crore turnover mark, Shoppers’ Stop would continue to target the top 12 per cent of the market, positioning itself as a premium retailer in the country. In fact, the retail major plans to stick to its core business instead of making inroads into new retail-related businesses.

Speaking to Business Line, Mr B.S. Nagesh, Managing Director, Shoppers’ Stop, said, “We are catering to the top 10-12 per cent of the market and these are consumers who do not need loans for buying goods.”

Staying away from offering easy credit to its consumers, although it continues to have a co-branded card with Citi Bank, Shoppers’ Stop does not believe in entering the area of financial services unlike its close competitors such as Reliance Retail and the Future group who are seeing it as a logical extension of their retail business.

Mr Nagesh said, “Financial services is a different business and we are not sure whether being a retailer we would be successful in it. As we do not have a credit validation process for giving loans, there is no need for us to get into financial services.” But in the case of Shoppers’ Stop promoted company HyperCity, there are categories such as consumer durables which could be financed through loans.

With plans of scaling up its number of stores, Shoppers’ Stop recently launched a rights issue to raise Rs 500 crore. Denying market rumours about Shoppers’ Stop being up for sale with the possibility of retailers like the Future Group and Aditya’s Birla’s More retail chain picking up stake in the company, Mr Nagesh added, “Our promoters, the Rahejas, have never diluted their stake and there is no question of selling stake at this stage.” With seven new stores planned this year, Shoppers’ Stop expects to grow at a faster rate of 50 per cent compared to the previous years when it had growth rates between 30 and 35 per cent.

Meanwhile, there is another feather in the cap of this retailer as Mr B.S. Nagesh has become the first Indian retailer to be inducted into the World Retail Hall of Fame for 2008. The Hall of Fame includes veterans such as Giorgio Armani, Jack Cohen and Anita Roddick.

March 25, 2008
Source: Hindu Business Line

Shoppers’ Stop is planning to cart in Macy’s products

If things go as per plans, shopping for Macy’s products at Shopper’s Stop outlets could become a reality soon. K Raheja Corp’s Shoppers Stops’ is said to be holding parleys with Macy’s Inc, the world’s largest retailer of fashion apparel, cosmetics and home furnishing merchandise, for retailing the US chain’s private labels in India.

Govind Shrikhande, CEO, Shopper’s Stop told DNA Money: “There have been some basic discussions on product placement.” Due to Macy’s “internal problems,” the discussions hit a roadblock. “But, the idea of retailing Macy’s products can become a possibility in the future,” Shrikhande said.

Macy’s retails 1,000-odd brands. Previously known as the Federated Department Stores, it also owns the upscale Bloomingdales stores. It initiated a name change last year to become Macy’s Inc considering that this brand contributes 90% of its sales. More than 850 stores under the Macy’s and Bloomingdales branding operate across 45 states in the US, the District of Columbia, Guam and Puerto Rico.

Shrikhande said Macy’s already sources products from India and Shopper’s Stop’s proposal was to stock those products that the US chain already sources from here.

Following up on its tie-up with UK-based Mother Care, Shopper’s Stop is now looking out for exclusive tie-ups with large overseas retail chains for products and brands, according to Shrikhande. These would be particularly in the apparel and cosmetics space. “We are not specifically looking at licensing deals but tie-ups,” he said.

March 24, 2008
Source: DNA

Subhiksha in world 50 local dynamos list

Boston Consulting Group has included organised retail chain Subhiksha in its list of World's top 50 local dynamos. The other Indian companies in the list include ITC Ltd, ICICI Bank, Amul, CavinKare Group, Apollo Hospitals and SKS Microfinance, reports Our Bureau.

The study features companies that have understood and tapped the dynamics of their local markets through innovative business models.

Founded by first-generation entrepreneur R Subramanian, the ten-year old retail chain Subhiksha increased customer footfall and growth by selling products at discounted prices. "The consistently better value that we offer to our customers, coupled with a no frills approach and multiple stores in every city not only en-dears us to our consumers but has made our overall robust business model the centre of attention for many others," said Mr Subramanian in a press release.

Subhiksha currently operates 1,110 outlets spread across ten states. The BCG study has 15 companies from China, including the Internet search engine Baidu.com. The study includes companies from Indonesia, Malaysia and Mexico.

March 22, 2008
Source: Economic Times

Telecom

Subhiksha opens 50th mobile store

Subhiksha, the Chennai-based retail company, has crossed the 50-shop mark for its mobile retailing network in the twin cities of Hyderabad and Secunderabad. The 50th store came up in Vikrampuri (Secunderabad). The mobile retail format offered mobile handsets and accessories of different companies at a discounted price, Mr R. Subramanian, Managing Director of Subhiksha, said here in a statement.

March 25, 2008
Source: Hindu Business Line

Food & Grocery

McDonald’s plans a bite of Chennai market

Global food giant McDonald’s, after setting up its first outlet in India eleven years ago, is planning to set foot in the Chennai market in the first week of April with an outlet at Ascendas, a swank office complex off the IT corridor here.

It also plans another 39 outlets in the South during the calendar year envisaging an investment of around Rs 150 crore, Mr Abhijit Upadhye, Director (National Supply Chain), McDonald’s India, said during a visit organised by the company to its supply chain facilities in Mumbai.
According to Mr Upadhye, each outlet will require an investment of Rs 2.5-3 crore, excluding real estate cost, and would employ 60-80 people in each outlet.

Globally, Big Mac has over 30,000 restaurants in 119 countries. It entered the Indian market through two equal joint ventures — with Hardcastle Restaurants Pvt Ltd for the West and South and with Connaught Plaza Restaurants Pvt Ltd for the North and East — and opened its first restaurant in Delhi in 1996.

Currently, it has 132 outlets, of which 53 are in West and Southern States and the remaining (79) are in the North and East. In the South it has 11 outlets — 7 in Bangalore and 4 in Hyderabad. Overall, Big Mac employs close to 4,000 people in India.

It sources almost all products from within the country, from around 40 suppliers spread all over. To ensure quality and freshness of ingredients, the joint venture companies and their supplier partners have so far invested over Rs 500 crore in establishing an exclusive supply chain in the country.

March 22, 2008
Source: Hindu Business Line

Support Services

Future Group, Cisco in tie-up talks for retail RFID project

Kishore Biyani-promoted Future Group, owner of brands such as Pantaloon Retail, Big Bazaar and Food Bazaar, is all set to enter into a tie-up with Cisco Systems, one of the world’s largest networking companies, to implement Radio Frequency Identification (RFID) technology across all its retail formats in India. According to sources, both the companies are in advanced level of talks and an agreement is expected to be reached later next month.

The move is significant considering that this will be the largest RFID implementation mandate in Asia. The investment in the RFID technology, close to Rs 200 crore, will be made through Future Knowledge Services (FKS), another Future Group company which specialises in high-end analytics. According to sources, almost 1 million Stock Keeping Units (SKUs) out of a total of 3 million will be tagged with RFID chips.

Says Future Logistics CEO Anshuman Singh, “We were the first ones to experiment with RFID technology at our Tarapore warehouse four years back and we intend to be the pioneers in its implementation in India.”

Experts believe that this is a strategic move by Future Group and is analogous to Wal-Mart’s shift to RFID technology in 2004. Says GS1 India CEO Ravi Mathur, “The move makes a lot of business sense for a huge retail venture like Future Group and will offer competitive advantage.” GS1 is a global organisation dedicated to the design and implementation of the most widely used global standards and solutions to improve the efficiency and visibility of supply and demand chains.

Future Group can accrue various benefits from RFID technology implementation. Says Mr Mathur, “RFID increases efficiency levels as it offers complete visibility in the supply chain and will be very effective in decision making or dealing with goods that age or perish.”

In fact, once RFID is implemented by Pantaloon Retail, it puts pressure on various suppliers also to switch to the technology. However, experts believe that while this is a tall claim in the present scheme of things, this is the manner in which the market will evolve finally.

March 25, 2008
Source: Economic Times