Stay abreast of the fast moving economic super-power — India!
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Updates on the Latest Happenings in the Indian Retail Sector1. Shoppers’ Stop to open 30 new stores In an interview with Rediff, Shoppers’ Stop CEO, B S Nagesh spoke about how the company’s expansion plans and how it plans to maintain its growth numbers of 30% growth in sales and 45% growth in profit. The company will be opening 30 more Shoppers’ Stop department stores covering 2.7 million sq ft and 20 more HyperCITY hypermarkets covering 2.6 million sq ft. After the expansion, the company will have a total of about 6 million sq ft including 980,000 sq ft of space in Crossword, MotherCare and MAC Cosmetics. Shoppers’ Stop loyalty program First Citizen, is already quite well known in the business and reached 644,500 after a 33% increase in the first quarter of the 2007 financial year. Private labels contributed 21% of sales in the first quarter and the company will maintain its level only up to 25%, so it is able to offer a wide range of international and domestic brands.
2. Local drug stores gear up to face the competition With the impending entry of major industry houses like Reliance Retail, Pantaloon and Fortis in the organized pharmacy trade, local drug stores are trying to organize themselves to face the competition. As a first step, the All India Organization of Chemists and Druggists with 600,000 members is registering itself as a company. Fortis will be opening 500 stores across the country under the Health World Ltd. brand. The stores are likely to be large format stores similar to US pharma chains such as CVS Pharmacy and Walgreens. Some of the expansions that existing companies are doing are Apollo Hospitals expansion to 1,500 stores and Morepen’s investment of Rs. 350 million to increase its Lifespring stores from 10 to 70. Other companies that are entering pharma retail are Zydus Cadila and Himalaya Drugs. Existing players such as Medicine Shoppe, Lifeken, Global Healthline’s 98.4 degrees, CRS Health, Health Glow are already in the market but pale in comparison to the mega bucks that new companies will be investing in setting up their pharma chains.
3. Tesco to finalize entry by October 10 UK supermarket chain store Tesco announced it will be concluding talks with Indian firm Bharti Enterprises and bringing in an overseas grocery store chain to India by October 10, 2006. Under the agreement being worked out, Bharti will most likely become the franchisee for Tesco Plc in India. 4. Reliance Retail’s first outlet to open in two weeks Reliance Retail will be opening their first retail store in Hyderabad in 2 weeks, almost a month later than the original plan. The central team at Reliance Retail is working to open 30 stores by end of September, 2006, 260 by November 15, 2006, 1,000 stores by March 2007 and 3,000 stores by June 2007. The company’s first store in Hyderabad will be a food and grocery store, the smallest format that the company will be bringing out. The first hypermarket is scheduled to open by December 15, 2006 in Ahmedabad and will cover over 100,000 sq ft of space spread over three floors. 5. Odyssey maps expansion plans Chennai based retail chain Odyssey plans to expand to new markets. The retailer has so far been focusing on books, music and toys in southern cities such as Chennai, Hyderabad, Salem, Coimbatare and Trichy. At present there are 13 stores in 6 cities all in the south and the company plans to change this by investing Rs. 950 million and opening stores in another 17 cities. Cities where Odyssey is likely to open are Bangalore, Kochi, Pune, Mumbai, Delhi, Chandigarh, Amritsar, Ludhiana, Mohali, Surat, Mangalore, Thiruvananthapuram, Vishakapatnam and Rajkot. 6. Café Coffee Day plans for Austria The largest coffee chain in India Café Coffee Day will soon be consolidating its presence in Austria by opening another café in Graz by end October. The company had earlier opened a café in Vienna and will be opening another in the city opposite Vienna University as well as in Linz and Klagenfurt. On the domestic front, the company has planned to open 20 cafes each month to reach 512 cafes in 70 cities by June 2007. 7. Pantaloon to enter the logistics arena Pantaloon announced its decision to set up a new division, Futures Logistics providing third-party logistical support to the retail industry. According to sources, initial investment is estimated to be around Rs. 4-5 billion and will focus on efficient modes of transport such as roads and railways. Sea and air modes of transport will be added at a later time. Initially Futures Logistics will cater solely to Pantaloon Retail, but plans to offer services to other companies within 1-2 years. 8. Mary Kay gets clearance to begin operations in India US direct selling cosmetics company Mary Kay was given the go ahead from the Foreign Investment Promotion Board (FIPB) to manufacture and retail its products. The company has been permitted to set up a joint venture with an Indian company holding 49% of the stake in the company. 9. Pantaloon strives to differentiate itself by its ‘Indian-ness’ In an interview with The Economic Times, Kishore Biyani, MD Pantaloon Retail (Future Group) said that Indian-ness is the core value that drives his company. Understanding the Indian consumer and how they spend is what will make Pantaloon different from other companies. 10. Godrej launches its new interiors line Godrej & Boyce Mfg Co Ltd launched its new home furnishings line called Godrej Interio. This new brand will sell all furniture and interior decorating requirements including office furniture solutions. In the future, the company will also cater to stadium seating, healthcare and hospitality furniture as well as those for corporate showrooms. 11. Retail rentals head skywards Rentals for real estate properties are continuing to increase while property prices have stabilized somewhat. At the recently concluded India Retail Forum, developers and retailers brought up several key issues between them. According to Arvind Singhal, Chairman of KSA Technopak, “…lease rentals ideally should be 6-8% of sales for a retailer, in many cases it is 12-18% and even higher, which would keep margins under pressure.” Yogesh Samant, CEO of Inorbit Mall, said that while real estate prices have been weakening, he does not see any corresponding weakening in lease rentals. According to Andrew Levermore, CEO of HyperCITY, retailers especially anchor tenants should not pay more as, “In India, the ratio of lease rental for anchor tenant to the smallest boutique store is 3:9. In developed markets, it is 1:10. In South Africa, instead of paying lease rentals, good anchor tenants were paid to occupy place at malls. We bring footfalls.”
According to a study conducted by the Confederation of Indian Industries (CII), Delhi has the perfect conditions and resources to become the next global shopping destination. Crediting the city’s history of confluence of trade from across the world, Delhi earned Rs. 65 billion from retail alone, from a total of Rs. 110 billion earned by the Government of Delhi. Delhi families spend an average of Rs. 210,000, with more than 40% going towards food, clothes and entertainment, and save Rs. 50,000 each year. The city currently has over 250,000 retail outlets of which 98% are part of the unorganized sector, with 100,000 of these being street vendors. Once organized the Delhi market can become a formidable market. 13. Global brands all heading for India While the retail sector in India is just taking off, the country has been an outsourcing hub for some of the world’s leading brands for almost a decade. After Wal-Mart, Carrefour and Tesco stocking their shelves with Indian made products, now Steve and Barry’s is also purchasing 35% of its items from India. The key specialties for Indian made products are home textiles, furnishing and healthcare. Wal-Mart increased its buying from $300 million to $1.2 billion, Tesco plans to purchase textiles and household merchandise worth £100 million and Benetton sources 98% of its merchandise for its Indian stores from Indian companies. 14. Shagun Wedding Mall plans new stores Kolkata based Shagun Wedding Mall announced that the company plans to open 3 wedding malls in the country, one each in the north, south and west, with an investment of Rs. 150 million each. The new malls are expected to open in 2008-2009. At present the company is only focusing on the urban market. 15. Pantaloon to set up a mega discount chain store Pantaloon Retail will be unveiling a new chain called Brand Factory, which will be a mega discount chain store focusing on branded fashion with factory discount prices. The first of these stores will be in Bangalore and Hyderabad, with sizes varying from 60,000 to 100,000 sq ft in space. 16. Birla Group’s hiring spree The Birla Group’s expected foray in the retail sector is already making waves due to their hiring 6 key executives from Shoppers’ Stop. Two key players, Shoppers’ Stop HR head Vijay Kashyap and Property head Sanjay Badhe had joined the Birla Group earlier and now 6-7 middle-level executives have also switched over. The Birla Group is reportedly also looking to Food Bazaar for talent from where two senior executives have already moved to the Birla Group. Another high profile executive that has joined the company is Pankaj Katiyal who has moved from Reliance, where he looked after the filling stations division. 17. Trinethra launches its operations in Kerala South India’s fastest growing food and grocery retail chain, Trinethra Super Retail Ltd. (TSRL) opened its first store, a Fabmall in Kerala at Fort Cochin. The company will also be opening 5 additional stores in the city and suburbs in the next few days. Trinethra currently has 130 outlets and plans to reach 200 by expanding in Andhra Pradesh, Chennai and Karnataka. Trinethra’s annual sales were over Rs. 2.4 billion and a turnover of Rs. 1.7 billion. The company plans to invest Rs. 1 billion over the next two years towards its expansion plans. The company has carved a niche for itself in the market by creating a right mix of quality, affordability and convenience in an enjoyable and comfortable setting. 18. Delhi plans its first city-wide shopping festival Delhi will have its very first city wide shopping festival this Diwali. Being organized by Thyme, the Delhi Diwali Shopping Festival (DDSF) will cover 20 shopping centers and 10 malls in the NCR area from September 21 to October 21 this year. Besides shopping highlights, there will also be events such as performances by Jigjig Singh and Indian Ocean, fashion shows, a jewelry festival, food exhibition etc.
Indian retail companies’ expansion plans and joint ventures have been increasing their stock prices each month. Stock prices of Pantaloon Retail, Prologue India, Trent, Pyramid Retail, and Shoppers’ Stop have all increased in the past few months. According to Prate Deal, Analyst (Retail) with Embay Share and Stock Brokers, "Investment in the retail sector will hold well in the long run. The sector is all set to attract fresh investments in the next few years. Investors should wait for the appropriate moment to invest in these stocks. Let the stocks undergo some correction." 20. Koreas to set up exclusive retail outlets Koreas (India) announced that it will be setting up its own retail outlets to sell its office products. The first store will be in Mumbai and then to other metros and non-metros by March 2007. A K Gag, vice president for marketing and sales said that the company plans to reach a turnover of Rs. 6.7 billion by March 2007 and Rs. 10 billion by 2008-2009. Source: Indian Express 21. Diageo to launch its wine in India The world’s largest liquor company, Diageo will soon be bringing its wine brands to the Indian market. The company has tied up with Flemingo Dutyfree, India Tourism Development Corporation (ITDC), Brind Co and some others to sell wine at duty free shops and to foreign embassies, and will extend these tie ups to retail its wine to the general market. 22. Carrefour all set to enter Indian market According to industry sources, the world’s second largest retailer, Carrefour is all set to enter the Indian market after a franchising tie up with the Dubai based Landmark Group. The new venture will set up hypermarkets to sell food and groceries, apparel and electronics. Although there is no confirmation on the finalization of the deal from either company, Landmark’s Director H Ramnathan said that the companies were still conducting talks. 23. Retailers rush to set up stores at new Bangalore airport Several multinational companies such as the Nuance Group, DFS Group, Alpha Airports Group, Dufry Group and Gebr Heinemann are lining up to operated stores and other retail services at Bangalore’s new international airport. Domestic retailers such as Shoppers’ Stop and Pantaloon and other companies like the Oberoi Group are also showing keen interest in the venture. India Tourism Development Corporation (ITDC), the government run organization that runs duty-free shops at most airports is not on the list as it has not qualified. Arianta is another major company that has not made the grade. The Bangalore International Airport (BIAL) met bidders at a meeting on Thursday and has short-listed potential bidders into five sets, including food retail and retail facilities. 24. McDonalds’s plans expansion in south At the opening of its 94th restaurant (the third one for Bangalore), Amit Jatia MD and Joint Venture Partner of McDonald’s India (West and South) announced that it will be investing Rs. 3-4 billion over the next three years to open 100-125 restaurants, focusing on south India. The company will be focusing initially on Bangalore and Hyderabad and then branching out to other cities in the region. 25. Van Heusen introduces two new lines Van Heusen introduced two new lines of clothing, Van Heusen Woman, which includes clothes for both formal and social occasions and V. (pronounced V dot) which will cater to the younger man with trendy outfits. At the launch, Hemchandra Javeri, President Madura Garments said, "These two launches are significant milestones for Van Heusen, signifying the evolution from being a formal men's wear brand to a mega brand with many facets to it. We have always been looking to expand Van Heusen's persona with new categories and these two innovations are logical extensions of the brand."
Domino’s Pizza India Ltd. announced that it had opened its first store in Jaipur. The store covers 1,150 sq ft in space including seating space for 40 customers at the store. The company currently has over 120 stores in 31 cities in India. 27. Lifestyle products business poised for growth The $1 billion leader in healthy lifestyle products, OSIM is upbeat about the growth of health related lifestyle products in India. At the launch of its first store in Gujarat, Shaily Grover, MD of OSIM India highlighted the need for massage related products as the fast paced lifestyle becoming part of the culture. The company currently has 45 stores in India, of which 10 are exclusive showrooms, is planning to increase the number to 70 in the next two-three years. 28. S Kumars bidding for US home furnishings company S Kumars is bidding $100-120 million (Rs. 97.5-119.2 million) for San Francisco based America Pacific, one of the largest US home furnishings manufacturing and distribution firm. America Pacific specializes in supplying bed, bath and window products to companies such as Nautica, Dockers and Liz Clairborne. The company also manufactures home linen under its own name, which accounts for 4-5% of its total business. S Kumars CEO Nitin Kasliwal did not comment on the impending deal although other sources have confirmed that the company has already completed the first round of due diligence. American Pacific already has offices in China, India, Pakistan and Turkey dealing with sourcing. 29. The success of hypermarkets in India Hypermarkets are emerging as the preferred format for most retailers due to their high growth rates and market buzz. India has only 25 hypermarkets at present, although all major domestic retailers are either already in the segment or will soon be getting into it. According to Andrew Levermore, CEO of HyperCITY, price is still one of the most important issues that bring people to the store. He adds, "Unless your prices are the best, especially in the food and groceries (F&G) segment, there's little point." A relatively new entrant to the supermarket and convenience store chain, Piramyd has started Trumart which offers prices that match hypermarkets and kirana stores along with additional services like free home delivery. Beyond having the right price, it is the product that makes all the difference, and in hypermarkets while the margins in food and grocery are usually quite unattractive, the stores offer a mix of general merchandise and food to balance it out. Most hypermarkets abroad too still make the bulk of their earnings on non-food items. 30. Tommy Hilfiger upbeat on Indian retail market Tommy Hilfiger which entered the Indian market through a joint venture between Arvind Mills and the Murjani Group called the Arvind Murjani Group plans to have a presence in seven cities with a total of nine stores and increase this to twenty stores within two years. Shailesh Chaturvedi, CEO of Arvind Murjani Brands said that the company was keen to expand stores in cities they are already located in as well as opening in new cities. 31. Planet M judged best leisure retailer Bennett & Coleman’s music and entertainment division, Planet M has been awarded Retailer of the Year as the best leisure retailer at the India Retail Awards. Planet M has won this award for the second time. 32. Anil Ambani’s ADAG likely to invest in retail According to sources, the Reliance-Anil Dhirubhai Ambani Group (R-ADAG) will be investing in one of the country’s leading retail chains. The talk is that the company is none other than Pantaloon, which had earlier announced it would be raising Rs. 5 billion by selling 24% of its stake in Home Solutions, Central Mall, Future Media and Future Logistics. Saturday, September 16, 2006 33. Reliance Retail places bulk orders for garments Reliance Retail has placed bulk orders with several garment manufactures in Ahmedabad to meet the anticipated supply for the Diwali rush. According to Sunil Gandhi, president of the Gujarat Garment Manufacturer’s Association, “They want us to supply 40,000 pieces every day from Ahmedabad. But currently all manufacturers are busy with other jobs till Diwali. We can start garment production exclusively for RIL only after Diwali.” Reliance plans to open 35 outlets in Ahmedabad city as part of its mega launch of over 1,500 retail stores across the country. Most manufacturers are already working overtime to meet earlier orders, and are waiting to see it Reliance improves its price offer. Saturday, September 16, 2006 |
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