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
HR News
Unique formats
Government Policy
Sector specific

General Plans and Information

1. Low cost sourcing not likely to last for long
Global retailers who are focusing on sourcing products from India and China might have to rework their strategy. According to the Deloitte 2007 Global Powers of Retailing study, the combination of political and economic factors will have an impact on increasing the cost and reducing the access to imports heading to the US, Japan and Europe, which will force retailers to look for domestic sources which will be at higher prices.

The report states “China, Mexico, Brazil, India and even Vietnam are places that run large trade surpluses with the rest of the world that in the aggregate are no longer sustainable.” According to Sudhir Dhingra, MD of Orient Craft, which supplies apparel products to companies such as the Gap and Banana Republic, “India has barely scratched the surface. It is China which has run a huge trade surplus, driving corporations to spread their sourcing across the world. India continues to enjoy the preferred destination status.”
Monday, March 19, 2007
Source: The Economic Times

2. Retail majors surplus finds it way to wholesalers
Excess inventory from organized retail stores is finding its way to wholesalers and is often being sold at an even greater discount. There seems to be an informal cash-and-carry business building up, where organized retailers are dumping excess stock to wholesalers. According to KS Ramesh, the former COO of CavinKare, “Dumping stocks back into the channel is a regular method to get rid of the excess inventory. But it’s mainly companies that don’t have a strong management direction that would let this continue.”
Friday, March 23, 2007
Source: The Economic Times

Big players - plans and investments

1. Future Group and Planet Retail might separate
The joint venture between the Future Group and Planet Retail Holdings is reportedly on the verge of breaking up. The Future Group is likely to offload its 49% stake in Planet Retail Holdings and exit the joint venture. While neither company wanted to comment on the situation, sources close to the matter felt that neither company was being able to take advantage of the joint venture.

When the joint venture had taken place, the Future Group was looking for an international partner which Planet Retail was since it was based out of Indonesia, to bring in International brands while Future would provide real estate, administration etc. Now, the Future Group is well established in bringing in brands on its own, such as Lee Cooper, Etam of France and Alpha Airports, and is in the process of launching Starbucks. Planet Retail has so far been focusing only on European brands and launched Marks and Spencer, Guess, Next, Body Shop, Speedo, Converse, Debenham, Callaway etc and has built up its own network of real estate, thus relying less on Future.
Sunday, March 18, 2007
Source: DNA India

2. Pantaloon plans to double stores
Pantaloon Retail will be doubling its stores with a proposed investment of Rs. 4 billion. Sanjeev Agarwal, the CEO of Pantaloon Retail India Ltd (PRIL) told ET that the company hopes to have 50 Pantaloon outlets opened in tier II and tier III cities by the end of the year. The company has recently restructured its retail business into separate SBUs under PRIL.
Monday, March 19, 2007
Source: The Economic Times

3. Reliance Retail plans to turn Adani outlets into specialty stores
Reliance Retail will be changing the format of its recently purchased Adani Retail stores into specialty stores for jewelry, medicines, eyeglasses, home furnishings, telecom and consumer electrical stores. The company has also taken in some of the executives onto its own team.

According to a senior executive, the stores cannot be converted to Reliance Fresh stores as they are too small, ranging from 2,000-3,000 sq ft, while most Reliance Fresh stores are around 4,000 sq ft in size.
Tuesday, March 20, 2007
Source: The Economic Times

4. Reliance Retail set to push expansion southwards
Reliance Retail will be opening 11 pilot stores in Bangalore this week and there are plans to open additional stores in the city as well as cities such as Mysore, Hubli-Dharwad, Belgaum and Mangalore later this year. With these stores, the total number of Reliance Fresh stores goes up to 80 in just four months since the launch of the first store in Hyderabad. The company is targeting having a store within every 2 km radius. Stores are located in Hyderabad, NCR, Jaipur, Ranchi, Chennai and now Bangalore.
Thursday, March 22, 2007
Source: The Economic Times, Business Standard

International

1. Disney opens stores in India
Walt Disney had tied up with Devyani International Ltd (DIL) some time back and now has opened its first retail store in the country. The licensing deal with DIL has been done to set up 300 Disney stores in India over the next five years with an investment of Rs. 1.5 billion. The first 22 stores will be operational by the end of this year. Disney will open stores in metros and tier II cities like Ludhiana, Jalandhar and Amritsar.
Sunday, March 18, 2007
Source: Rediff Money

2. UK’s retail major Liberty keen to invest in Rajasthan
One of the UK’s largest real estate and retail companies, Liberty International announced that it would be investing around Rs. 10-20 billion in the state of Rajasthan. The company already has ties to the Indian retail sector, via its joint venture agreement with Provogue, a leading apparel manufacturer and retailer of India. David Fischel, the CEO of Liberty International, met the Chief Minister of the state, Vasundhara Raje to discuss plans.
Wednesday, March 21, 2007
Source: Indiaretailing.com

Regional Trends

1. Mall rush in Chennai
Chennai is undergoing a mall construction rush these days with its 20 new malls that will be coming up in the next three years, adding 8.1 million sq ft of retail space. At present there are only three malls of 800,000 sq ft leaving several brands such as McDonalds and Apple no choice but to wait to open in one of the new malls when they are complete.

Compared to other cities, the number of malls in Chennai is much less. Mumbai has 45 malls (although a lot of malls are not traditionally organized malls), NCR has 42, Bangalore and Pune have eight malls each and Kolkata is fast catching up with its 6 malls. Chennai’s conservative nature is said to be the main reason for its limited number of malls, but as younger people are entering the workforce, the image is changing.
Friday, March 23, 2007
Source: CNN-IBN

HR News

1. The next generation takes charge at Siyarams
The Rs. 15 billion Siyaram Group is slowly but surely being run by the next generation of the Poddar family. Two of the new entrants are Avnish Poddar and Gaurav Poddar to have joined Siyaram Silk Mills at the trainee level and will have to prove their mettle before moving up the ranks. According to Ramesh Poddar, vice president and MD of Siyaram Silk Mills, “We are focussing on expanding and consolidating our existing businesses and will leave new business planning to the younger generation. They will be free to run the business as they wish.”
Tuesday, March 20, 2007
Source: Business Standard

2. Retailers head for agri-universities and specialized institutions
The hunt for retail talent is taking retailers to agricultural universities and specialized educational institutions. Graduates with agri-sourcing background are highly sought after by retailers to streamline their entire process of procurement, quality control and handle other logistical factors.

Damodar Mall, president and CEO of the Food Business division of Future Group has tied up with universities and colleges that offer specialization in agri business in Maharashtra, Rajasthan, Uttaranchal and Punjab. Other institutions where retailers are picking up talent are the Indian Institute of Plantation Management in Hyderabad, National Institute of Agricultural Marketing in Jaipur and the Institute of Agri Business Management in Bikaner.
Tuesday, March 20, 2007
Source: The Economic Times

3. Wal-Mart interesting in employer-branding
Tired of all the bad press that follows it around the world, Wal-Mart is looking for an advertising agency who will help build its image as a responsible and employee friendly organization. The concept of employer branding has traditionally used in the IT industry but is also applicable to the retail sector as both have high attrition rates. Just for its operations in India, the company is said to require close to 2,500 people at several levels of expertise.
Thursday, March 22, 2007
Source: The Economic Times

4. Two executives leave Reliance Retail for Wal-Mart
Two senior executives have left Reliance Retail and will be joining Wal-Mart. S Ramesh, head of buying operations at Reliance Retail and will be joining Wal-Mart as its head of sourcing operations. The second executive is Abhinandan Shukla who looked after confectionary at Reliance Retail and has also left to join Wal-Mart.

Wal-Mart is currently looking to add to its team and is offering a 30% flat hike over existing salaries as well as a five day work week, a rarity in the Indian retail industry. Reliance Retail has a six-day workweek and Pantaloon has a six-day workweek twice a month.
Thursday, March 22, 2007
Source: The Economic Times

Unique formats

1. Subhiksha and vJive tie up
Subhiksha has tied up with vJive Networks for an integrated out-of-home media solution for all their stores in the country. VJive Networks is the country’s largest broadband-based out-of-home media and digital sign company with a network across the country. Subhiksha has 650 stores in 30 cities and has plans to expand to 1000 stores by the end of the year.

According to the agreement between the companies, vJive will supply Subhiksha with audio and visual banners, which will display advertisements to shoppers, carried on an Internet based system that will simultaneously stream advertisements to screens all across the country.
Tuesday, March 20, 2007
Source: The Economic Times

2. Damas and Flemingo to set up duty-free shops
Dubai based Damas Jewelry and Flemingo International’s Indian division will be setting up duty-free shops in the country, where they will sell products like jewelry and watches. The company has been given permission to set up shops at Chennai, Trivandrum and Jaipur international airports, where operations will begin in a month. Damas is a well-known brand of India where it operates D’Damas.
Wednesday, March 21, 2007
Source: The Economic Times

3. Social retailing is here to stay
After social networking, its now time for social retailing or social buying. Retailers across the world such as Bloomingdale’s are already testing the concept in their stores. Social retailing is essentially letting customers involve people such as family and friends who are not physically present in the decision making process. An interactive mirror is placed outside trial rooms, letting consumers send their picture or video to others and get their opinions. Retailers in India are yet to add such technologies to their stores, since shopping is essentially a family exercise already.
Thursday, March 22, 2007
Source: The Economic Times

Government Policy

1. Kerala government may curb entry of international retailers
The state government of Kerala is considering imposing limitations on international and national monopolies of retailers. The announcement was made by the Finance Minister of the state, TM Thomas Isaac, who added that these companies would also have to pay state taxes.
Monday, March 19, 2007
Source: The Economic Times

2. Jayalalitha against corporates entering retail sector
AIADMK chief Jayalalitha said that she is against corporates entering the retail sector as it would cause small vendors and traders to lose their livelihood, as large corporate houses have the leverage to sell commodities at lower prices. She added that large retailers had wiped out small retailers in countries such as Japan, China and Canada and the same was likely to take place in Tamil Nadu too.
Thursday, March 22, 2007
Source: The Economic Times

Sector specific

Apparel & Footwear

1. Siyaram plans to open 150 stores
Siyaram Silk Mills announced that it will be opening 150 exclusive outlets that will be called F2F and will retail all the company’s in house brands such as Oxemberg, Mistair and J.Hampstead. According to Ramesh Poddar, Vice-Chairman and MD of Siyarams Silk Mills, the company is looking at mall locations for the most part, since there are not too many players in the mid-price segments that sell branded fabrics there.
Sunday, March 18, 2007
Source: The Hindu Business Line

2. Pantaloon Retail pulls out from Gini & Jony
Pantaloon Retail India Ltd (PRIL) has officially pulled out of Gini & Jony, a children’s wear brand and one of the first brands that Kishore Biyani, MD of Pantaloon had invested in. Sources report that while the financial arrangement with Gini & Jony will continue, it will break off all operational ties.

Pantaloon had invested in the company with the thought that it would “drive business on its own” but unfortunately, it has not been able to work in a cohesive manner with Pantaloon and become dependant on it. Ultimately Pantaloon had to even depute top management, including the CFO to take care of it’s functioning.
Monday, March 19, 2007
Source: The Economic Times

Home Furnishings

1. Godrej plans to open boutique stores
The Godrej Group will soon be launching specialty stores in four categories: home appliances, home furniture, office furniture and non-apparel lifestyle products, through its flagship company Godrej & Boyce Manufacturing Co. The first 20 of these stores will be opened by 2010 in major retail markets such as Mumbai, Kolkata, Delhi, Chennai, Bangalore, Pune, Ahmedabad and Hyderabad. The company will keep the identity of its Godrej Lifespace stores, which is also run by Godrej & Boyce separate from these stores.
Tuesday, March 20, 2007
Source: The Economic Times

Consumer Durables

1. Infiniti Retail to open Croma outlets in Gujarat
Infiniti Retail announced that it would be opening its Croma stores in Gujarat. Infiniti Retail is the joint venture between Tata Sons and Woolworths of Australia for consumer durable retail. Each Croma store in the state of Gujarat will stock more than 6,000 products. The chain was launched last year and is the first cohesive consumer durable chain that will function on a national level. The company will be investing Rs. 4.5 billion to set up a chain of multi-brand consumer durable stores across the country in the coming financial year.
Tuesday, March 20, 2007
Source: The Hindu Business Line

2. Consumer durable retailers focus on small formats
Consumer durable retail chains such as Croma and Next are looking to buyout small retail chains across India in an effort to consolidate their business. The companies are holding talks with smaller regional players such as Sumaria, Sony Mony and Kohinoor in Mumbai, Shah’s and TMC in Hyderabad and Shubham in Bangalore.

Some of the larger regional players like Vivek’s and Vijay Sales are looking to tie up with international retailers such as Dickson or Best Buy. The recent Gudi Padwa festival showed that consumers prefer organized formats such as Croma, Next and Vijay Sales where sales were much higher than small consumer durable stores.
Friday, March 23, 2007
Source: The Economic Times

Food, Grocery & restaurants

1. Café Coffee Day plans domestic and international expansion
Amalgamated Bean Coffee’s café chain Café Coffee Day will be expanding on the both the domestic and international front. Café Coffee Day’s director Naresh Malhotra says that the company will use a variety of formats and locations to expand on the domestic front. Some of the formats that the company will be opening in are cafés on the highways, malls, college campuses and in gardens. Cafés will also be targeting vegetarian customers and on airlines such as Air Deccan and GoAir.

There are 400 Café Coffee Day outlets at present in India and the company plans to expand this figure to 650 by the end of the financial year. It also has 535 Coffee Day Xpress kiosks that will be increased to 800 and its 3,700 coffee vending machines will be increased to 10,700 vending machines by March 2008. On the international front, the company has 2 outlets in Karachi, Pakistan and three in Vienna, Austria. New stores are being planned for Lahore and Islamabad in Pakistan and also for Switzerland, Czechoslovakia, Germany and Austria.
Sunday, March 18, 2007
Source: DNA India

FMCG

1. Dabur to tie up with kirana stores
Dabur announced that it would be tying up with kirana or local mom-and-pop stores to increase its visibility. Dabur will be using a concept such as Hindustan Lever Ltd. (HLL)’s system of allowing kirana’s to join their Super Value Store programme. For its initial testing, the company is using local kirana stores in Ahmedabad, Chandigarh and Ranchi.
Friday, March 23, 2007
Source: Business Standard