Latest news and events from the Indian Retail Sector

Weekly Retail News from India

General Plans and Information
Big players – plans and investments
International
Regional Trends
Support Industries
Government Policy
Sector specific

General Plans and Information

1. Research firms predict: ‘Organized retail to touch $45 billion’
A joint study conducted by top global research firms such as AT Kearney, Ernst & Young, PWC, Technopak, KPMG, ICICI, AC Nielsen-ORG Marg, Synovate, Cushman & Wakefield, predicts that the organized retail in India is going to reach Rs. 1000 billion in the next four years from Rs. 350 billion in 2005. The annual growth rate of the organized retail sector will be about 30%.

The joint study was for the second edition of the India Retail Report 2007, which is brought out by Images F&R Research. The report added that India was the place where all the global majors were rushing to, "With escalating consumerism, unprecedented awareness and a youth-heavy customer base, India is the 'Promised Land' for global brands and retailers.” According to the mister of Commerce and Industry, Kamal Nath, who released the report, the boom in organized retail will create 10-15 million jobs for Indians in the next five years.
Monday, January 08, 2007
Source: The Economic Times, siliconindia.com

2. 40 retail players to spend $25 billion in next four years
In a study conducted by Technopak, it has been estimated that organized retail will receive investments of more than $25 billion from 40 retail players, increasing the size of the retail industry to $75 billion by 2011. About 60-65% of the investment will come from domestic retailers with a major amount of investments coming in the supply chain area.

In a presentation at the announcement of the study results, Arvind Singhal, chairman of Technopak, said that "India is attempting to do what in 10 years what took 25-30 years in other major markets in world." The organized retail market is worth $300 billion at present as is likely to grow to $427 billion by 2010 and $637billion by 2015.
Tuesday, January 09, 2007
Source: Business Standard

3. Wal-Mart’s effect on India
At the 2 day seminar on ‘Managing in the networked economy’ organized by the Asian School of Business (ASB) at Thiruvananthapuram, Prof Amiya Chravarty, Philip R McDonald Chair Professor in Operations and Technology Management at North Eastern University, Boston said that Wal-Mart’s entry to India will change the industry and create ‘new benchmarks for suppliers’. The event was attended by professors from several universities in the US and many CEO and CIOs. The key factor for change would be the supply chain.
Thursday, January 11, 2007
Source: The Hindu Business Line

4. S Kumars post an increase of 29%
S Kumars Nationwide (SKNL), one of the country’s leading textile and apparel companies, announced that it had posted an increase of 28.8% in its net profit for the December 2006 quarter. In the same period, the company’s sales increased by 33.7% to Rs 8.57 billion from Rs 6.41 billion.
Saturday, January 13, 2007
Source: Business Standard

Big players – plans and investments

1. Aditya Birla Group signifies intent to become leading player in retail industry
With the acquisition of Trinethra Super Retail Ltd, the Aditya Birla Group has made its intention clear that it plans to be the leader in the retail industry. Its purchase of the 172 store food and grocery chain, gives its retail venture immediate momentum. According to industry analysts, "It is a good move because the Birlas have been late to enter the retail arena and they can leverage Trinethra's relationships and learning’s quickly."

AT Kearney has estimated the food and grocery sector to account for more than 70% of the $320 billion retail market in the country, although the organized sector is worth only 2% of this, so the scope for growth is enormous. According to Raman Mangalorkar, Principal, Consumer and Retail Practice at AT Kearney, “Like the others, AB Retail too needs to get as close to the farmer as possible."
Monday, January 08, 2007
Source: Rediff Money

International

1. Bharti, Wal-Mart to announce plans next month
Bharti enterprises and Wal-Mart will be announcing their retail venture plans next month, along with financial details and roll-out plans across the country. Sunil Mittal, chairman of Bharti told reporters that, "Complete details, including financial details, about the retail business will be announced next month jointly by Bharti and Wal-Mart." He added that the company was planning to open outlets in clusters, starting with north India and Bangalore.
Tuesday, January 09, 2007
Source: The Economic Times

2. Starbucks venture under scanner
Starbucks Corporation’s India venture for which it has tied up with New Horizon Retail is being scrutinized by the commerce and industry ministry. Initially Starbucks will only hold 18% of stake in the JV, which will gradually rise to 51%. According to Ajay Dua, industry secretary, "We have sought more details on the nature of business they want to do and the nature of arrangement that they have." The government is also interested in knowing whether Starbucks will be operating only coffee shops or restaurants.
Wednesday, January 10, 2007
Source: The Times of India

3. Tesco in talks with Tata’s
The world’s third largest supermarket chain and the UK’s largest retailers, Tesco has been holding talks with Tata’s to form a joint venture to enter the country’s retail market. The company had earlier been in talks with Bharti Enterprises, which then decided to team up with Wal-Mart.

Tata’s discussions with Tesco have surprised many, as the company has earlier stated that they were not interested in food retailing. According to Krishna Kumar, director of strategy at Tata Group, “We may have had some exploratory discussions with Tesco but that does not mean we have made any decisions on either strategy or partner.”
Wednesday, January 10, 2007
Source: MSN News

4. La Opala makes deal with major retailers
Crockery brand La Opala has tied up with major retail brands in a move to increase its turnover and visibility. The company is hoping to double its turnover to Rs 1 billion with this move. According to L Shridhar, President of the company, "We have recently tied up with Reliance, Lifestyle, Pantaloon, Metro, Pyramid and Shoppers Stop for catering to customers of the mall culture."

La Opala is not interested in setting up its own stores and with this tie up with retailers; it can get feedback from customers and their choices. The company hopes to double its production capacity when its new automated plant located in
Sitarganj in Uttranchal becomes fully operational in May 2007.
Thursday, January 11, 2007
Source: The Economic Times

5. Burger King in talks with Pantaloon
Pantaloon is holding talks with Burger King who is said to be “exploring the marketplace”. Sources suggest that the company is likely to follow a franchisee model, which it has been using in other countries as well. Burger King has restaurants in 65 countries and in December 2006 announced that it will be starting operations in Japan in mid 2007.
Thursday, January 11, 2007
Source: Business Standard

6. Italian brand Friuli announces launch
Italian furniture brand Friuli in now in the Indian market and has been brought in by Bangalore based Ikian Furnitures. Friuli’s range includes everything for the home, modular kitchens, wardrobes, sofas, chairs, beds, lighting accessories etc. According to Ramesh Kumar Dugar, CEO of Ikian Furnitures, “The growth potential is phenomenal. We are targeting all categories of customers. Bangalore being the centre of IT industry, we look for more business from the city. We have already bagged orders from a few IT firms.” After Bangalore, the Friuli brand will be available in Chennai and Mumbai, expanding to 10 showrooms by 2008 in cities such as Ahmedabad, Kochi, Goa and Hyderabad.
Thursday, January 11, 2007
Source: Business Standard

7. UK’s Home Retail Group declines comment on India report
UK’s Home Retail Group declined to comment on reports in the media that its division, the Argos catalogue was close to signing a joint venture deal in India. Retail Week, a trade magazine had reported that Argos could be signing a deal with the K. Raheja Corp. that owns the Shoppers’ Stop and HyperCity brands.
Friday, January 12, 2007
Source: Yahoo News

8. Puma to open 25 shops in India
Puma Sports India Pvt. Ltd. announced that it will be opening its first exclusive store in Mumbai, which will be its eighth outlet in the country since it begun operations in January 2006. According to Rajiv Mehta, managing director of Puma, the company was waiting for the right location. The company will be opening Puma stores in 25 locations in metros and mini-metros such as Pune, Hyderabad, Chandigarh, Ahmedabad and Jaipur.

Puma will be focusing on building its brand using television, print and online space for promoting its products. The company does not have any brand ambassador and has no plans to appoint one as it feels the brand is strong enough to sell itself.
Friday, January 12, 2007
Source: The Hindu Business Line

9. Starbucks will form JV with Pantaloon
After the Indian government put its proposal under the scanner, Starbucks has tied up with Pantaloon and VP Sharma, head of its Indonesian franchise to enter the Indian market. The Seattle based company will now form a venture with Sharma, president and director of PT Mitra Adiperkasa, Indonesia and Kishore Biyani, managing director of Pantaloon Retail India.

The company’s venture with New Horizons, of which 51% will be held by VP Sharma and the balance by Kishore Biyani will open its first store in Delhi by the end of the year. With its entry into the Indian market, it is estimated that the company will triple its stores to 40,000. Its competition in India will be Barista Coffee and Café Coffee Day, both local chains which have already begun expansion to compete with Starbucks.
Saturday, January 13, 2007
Source: Business Standard

10. Tesco will move 190 jobs to Bangalore
UK’s largest retailer, Tesco announced that it will be transferring 190 finance processing jobs from its office in Cardiff to Bangalore in the next 12 to 18 months. The move is being done to improve the organization and maximize the excellence of service provided. Those who will be affected by the jobs will get a chance to take up jobs elsewhere in the company or receive compensation if they preferred to leave.
Saturday, January 13, 2007
Source: The Economic Times

11. Louis Vuitton to run duty-free shops
Louis Vuitton (LVMH) has received an approval from the Foreign Investment Promotion Board (FIPB) to run duty-free shops at the international airports in Delhi and Mumbai. The company is expected to invest Rs 400 million initially for the venture, which will operate through DFS Venture Singapore, one of its subsidiaries. Besides shops at the international airports, the company will also be setting up bonded warehouses for its products.
Saturday, January 13, 2007
Source: The Economic Times

Regional Trends

1. Local brands gear up to challenge malls in Agra
With the increasing popularity of the new malls in Agra, local brands and shop owners are gearing up to acquire space in malls to compete on a level footing. One of the largest family run garment chains in the area, the Bachoomal Group is one such company that is already opened in several malls and will be increasing its stores in new malls too.
Thursday, January 11, 2007
Source: Business Standard

Support Industries

1. Gati enters retail sector
Logistics and courier company Gati has opened its first store in Hyderabad. Café Deliver will offer a range of services from Zip, courier, cargo and express. According to Manoj Agarwal, marketing head for Gati, "We booked orders worth Rs 60,000 the first day itself." The company’s second store will be opening in Pune on January 10, 2007, followed by a store in Indore.

Other players in the sector are AFL, DHL, and UPS who are also moving forward into their value chain to add services. AFL has opened Touchworld stores where it offers services such as courier and tickets etc. DHL has its Express Centers which are focusing on pick up and drop off points for express parcels and UPS launched The UPS Store last year in Mumbai and has since opened more stores in the city as well as Delhi.
Monday, January 08, 2007
Source: The Economic Times

2. Railways all set to make deals with retailers
The Indian railways will soon be forming a deal with retailing majors such as Reliance, Future Group, Bharti and Tatas. A senior official at Rail Bhawan said that the draft would be ready in a fortnight. Retailers have been conducting talks with the Railways for setting up agri-retail hubs, cold storage hubs and multi-purpose warehouses on the railways excess land. At present the railways are not interested in the real estate business but will likely tie up with retailers and real estate developers to set up retail hubs across the country, using its land as equity.
Thursday, January 11, 2007
Source: The Economic Times

3. Outsourcing to India gains favor with global retailers
Global retailers are finding newer reasons to be pleased with outsourcing IT operations to India. The use of technology is making global retailers see the efficiency of outsourcing certain specified operations to India that can help in increasing sales, improving customer service and cut costs. Take for example, a technology used to judge if crowds are being build up at the cash registers, from the ambient heat of customers, sending a message to the back office, maybe in Bangalore, to open more cash registers.

Global retailers are looking to constantly fine tune operations and reduce costs, tools that IT companies in India can provide. Some items that are already been used are pause machines, ERP, SCM, smart cards, RFID, thermal sectors that will help retailers connect with customers with greater ease.
Friday, January 12, 2007
Source: The Economic Times

Government Policy

1. PM emphasizes role of organized retail
Prime Minister Manmohan Singh emphasized that companies should be ready for more competition as customs duties would be reduced in the next Budget. He added that the government would provide the infrastructure but would not give more tax breaks. It is through organized retail and agro-processing that he hoped to bridge the rural-urban divide, and food and agro-processing are expected to be given a boost in the next Budget.
Tuesday, January 09, 2007
Source: The Economic Times

2. RBI encourages retailers to involve smaller farmers
In the interest of the retail industry’s growth being inclusive, the Reserve Bank of India (RBI) has asked retailers to include small and marginal farmers to be part of their plans. The RBI executive director VS Das said that FMCG companies that plan to leverage its brand equity by selling branded agri-products should source products from small and marginal farmers.

At present, retailers must go through a mandi to buy produce according to the Agriculture Produce Marketing Committee Act, an outdated law. He added that by reducing the supply chain would benefit both retailers and farmers.
Saturday, January 13, 2007
Source: The Economic Times

Sector specific:

Apparel & Footwear

1. Globus plans to expand
Mumbai based apparel retail chain; Globus is planning to set up 21 new stores by the end of the next financial year. The company has had a turnover of Rs. 1 billion last year and is hoping to achieve its target of Rs. 1.45-1.50 billion by the end of this financial year. Globus focuses of its USP of selling products that are designed by its in-house team of 25 designers, instead of selling merchandise that is available in multi-product outlets.
Monday, January 08, 2007
Source: The Hindu Business Line

Bookstores

1. Odyssey plans expansion
At the opening of its first bookstore in Bangalore, Odyssey announced it will be expanding across the country, in an Rs 1.25 billion expansion plan. According to T S Ashwin, managing director of Odyssey India, the brand which is only well known in south India, will be opening stores in other regions. At present the company has 14 stores located in Chennai, Hyderabad, Salem, Coimbatore, Trichy and Varanasi.

New stores are coming up in Noida, Kozhikode, Bangalore, Mumbai, Pune, Ahmedabad, Gurgaon, Nagpur, Thane, Hyderabad, Kochi, Chandigarh, Amritsar, Ludhiana, Mohali, Rajkot, Surat, Mysore, Mangalore, Thiruvananthapuram and Vishakapatnam by the end of this financial year. The company is targeting new cities, IT parks and malls.
Thursday, January 11, 2007
Source: Business Standard

Consumer Durables

1. Tata Croma looks for talent overseas
With the huge shortage of qualified professionals in the country, Tata’s Croma are looking for qualified Indians in West Asia. According to Ajit Joshi, CEO Croma, "We are looking at Indian professionals returning from West Asia, who have an electronics background. These would be people who have already finished their contracts in these markets."

Croma is also looking to recruit staff with technical degrees from training institutes. The emphasis is on getting quality people who will understand the technology as well as the consumer.
Tuesday, January 09, 2007
Source: The Hindu Business Line

Food & Grocery

1. Trinethra will go ahead with its hypermarket plans
Trinethra Super Retail Ltd announced that it will be going ahead with its hypermarket plans that it had made before it was acquired by the Aditya Birla Group. The company will be opening a hypermarket called Fabcity in Mysore in the third week of January 2007.

The hypermarket will cover 50,000 sq ft of space and stock a variety of food and grocery items, cosmetics, personal care products, electronics, home appliances, apparel and home products. After Mysore, the company is planning to open hypermarkets in Bangalore, Coimbatore, Chennai and some tier II cities.
Monday, January 08, 2007
Source: The Hindu Business Line

2. Spinach leverages on local storekeepers strengths
In an interesting turn of events, food and grocery chain Spinach, has hired100 local storekeepers or ‘kiranawalas’ to help them in sourcing, procurement and front-end operations. According to Dippankar S Halder, CEO Spinach, “Retailing is an applied science which cannot be entirely handled by MBAs and high flying executives. Local people will be of great help in procuring the produce at the right price and quality in a particular season.”

The company has also hired part time help from local mandis at its stores in Bandra-Kurla Complex and Andheri, who will be given training in behavior, etiquette, retailing and product knowledge for three weeks. Spinach has 19 stores and plans to increase the number to 50 by the end of the 2007 financial year.
Tuesday, January 09, 2007
Source: Business Standard

Pharma

1. Pharma industry to lower medicine prices
Thanks to tie ups with laboratories and hospitals that will ensure faster turnaround and lower priced diagnostic reports, the pharma industry will soon be able to offer lower prices to consumers. The 32,000 drug retailers who are part of the Retail Dispensing and Chemist Association will see a significant rise in sales as small time chemists will not be able to offer the same discounts that they qualify for.

With all the interest coming from major players such as Reliance, Apollo, Subhiksha and Medicine Shoppe, these chemists are not taking any chances and are offering a host of freebies such as free medical check ups, concessional rates on drugs, testing reports etc.
Wednesday, January 10, 2007
Source: The Times of India