Retail News April 2007

Big players – Plans and Investments

Bharti-Wal-Mart might use different brands
Wednesday, March 07, 2007

Bharti Enterprises’ highly anticipated retail launch with Wal-Mart is likely to use three different brand names for operations in India. The cash-and-carry venture will carry the Bharti and Wal-Mart name while the Bharti operated supermarkets and franchise stores will have two different identities and brand names. The company is likely to open its first stores in early 2008, as opposed to its earlier time frame of September 2007.

Source: The Economic Times

Reliance Retail plans to focus on large format stores
Wednesday, March 07, 2007

Reliance Retail is looking for land in the Chennai area to set up its large format stores. The company is also looking for suitable locations in other locations such as Madurai and Coimbatore where it will be opening Reliance Fresh stores. There are more than a dozen stores in the Chennai area, which receive over 12,000 visitors every day.

Reliance has set up 10 collection centers for grading and processing fruits and vegetables. M. Balachandran, Chief Mentor for Reliance Retail, dismissed claims that the company would put local fruit and vegetable vendors out of the market, stating that their stores have a turnover of Rs. 120,000 per day, while the total retail market for fruits and vegetables for Chennai was for Rs. 180 million a day. He added that the Reliance Fresh stores are only a test project to understand the market and the main focus of the company will be large format stores.

Source: The Hindu Business Line

(We don’t know about the rest of theReliance Fresh Stores, but the one in Koramangala, Bangalore could do with some more space. Read more at http://www.india-reports.com/buz-consumer/Reliance-Koramangala.aspx

- Chillibreeze Business Research Team)

RPG Group makes major retail plans
Thursday, March 08, 2007

The RPG Group announced that it will be making an investment of Rs. 25 billion to expand its Spencers’ retail chain, setting up an additional 1,000 stores by the year 2009. The company will be expanding the Spencers’ brand in two phases, the first completing by 2009 will see an investment of Rs. 10 billion to increase the number of stores to 1,000 from the current 125. During this period the Spencers’ brand would also be made the company’s premier brand. From 2009 to 2011, RPG will be investing another Rs. 15 billion to expand its operations.

Source: The Economic Times

Reliance Industries has decided to opt out of reviving cooperative store Super Bazaar, mainly due to the government’s reluctance to hand over full management control. Reliance had earlier made the winning bid of Rs. 2.28 billion to revive Super Bazar.

Source: The Economic Times

Godrej Group set to enter retail sector
Friday, March 16, 2007

The Godrej Group is the latest of companies to announce plans to enter the retail sector and is looking for international retailers to tie up with for its venture. One of the retailers that the company is holding talks with is Makro, which is owned by the Metro Group of Germany. Godrej is a Rs. 60 billion consumer goods company that has interests in a variety of sectors such as agri-business, appliances, furniture and properties.

Source: The Economic Times

Pantaloon plans to double stores
Monday, March 19, 2007

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.

Source: The Economic Times

Reliance Retail plans to turn Adani outlets into specialty stores
Tuesday, March 20, 2007

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.

Source: The Economic Times

Reliance Retail set to push expansion southwards
Thursday, March 22, 2007

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.

Source: The Economic Times, Business Standard

Disney opens stores in India
Sunday, March 18, 2007

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.

Source: Rediff Money

Future Group plans cash-and-carry business
Wednesday, March 28, 2007

Kishore Biyani’s Future Group is likely to enter the cash-and-carry business to compete directly with Reliance and Wal-Mart/Bharti. Its new business will be called KB’s Wholesale and is likely to open next month itself. The company is looking to open around 15 stores in the next 18 months with the first store coming up in Burdwan in West Bengal and the second one in Mathura in April.

It was essential for Future Group to get into the wholesale business to stay competitive with Reliance and Wal-Mart since both companies are developing their back-end supply chains very strongly. According to consultant, “Wal-Mart cash & carry will obviously sell at a preferential rate to Bharti’s retail business than to say a Pantaloon,” which creates the need for it to become a wholesaler itself.

Having a network of wholesale stores is also profitable for the future when FDI restrictions are eased. According to London based marketing research and intelligence firm, Euromonitor, “When the restrictions on retail in India are lifted, international retailers will be in prime position to easily convert their cash-and-carry stores into highly profitable supermarkets and hypermarkets.” Currently there are two cash-and-carry companies, Metro of Germany and Shoprite of South Africa.

Source: The Economic Times

General Trends & Information

India and China on top of global retailers agenda
Monday, March 12, 2007

International retail majors are keen on investing in India and China, more so than in other locations, according to a new retail study, the 2007 Global Powers of Retailing brought out by Deloitte Touche Tohmatsu. According to the report, “Slow growth in many mature markets and not-to-be-missed opportunities in emerging markets - particularly China, India and Russia - are powerful driving forces.”

The study indicates that even though the global retail market has a lot of risks, the robust economic growth in countries such as India, China and Russia make for an attractive atmosphere for retailers. Another factor that is making these countries more attractive is their market-oriented governments, which have led to significant increases in spending power of consumers.

Source: The Economic Times

Low cost sourcing not likely to last for long
Monday, March 19, 2007

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.”

Source: The Economic Times

Not all upbeat in the retail sector
Thursday, March 29, 2007

While the Indian retail industry is growing by leaps and bounds, there are lots of pitfalls and pressures along the way. Some of the main pinches will be high cost of rentals, lack of people as well as higher costs associated with them and rising interest rates. According to one retail sector analyst, “Over 90% retailers usually take the rented or long-lease route to set up stores with a few exceptions of owned properties. We estimate the rent costs to surge from anything between 15% -20% on account of expensive real estate. Adding to the retailers’ woes in the coming financial year will be the new 12% service tax on rents and the additional 3% surcharge.”

Source: DNA India

International

Carrefour talks with HDFC for retail tie-up
Tuesday, March 06, 2007

French retailer Carrefour is reportedly in talks with the HDFC Group to tie up for its retail venture, which is likely to happen with one of the private equity arms of the company. While both companies refused to divulge any details, industry analysts say that the tie-up would have to include a third party as RBI regulations do not permit HDFC or HDFC Bank to enter into retailing as the FDI restrictions do not permit Carrefour to operate stores on its own in the country.

It is possible that HDFC might float a holding company such as a PE fund that would tie up with a third party to allow it to work with Carrefour in India. The French retailer will be handling all the back-end wholesale operations and has been interested in HDFC due to real estate considerations.

Source: The Economic Times

Starbucks makes plans for India launch
Wednesday, March 14, 2007

While the Seattle based coffee chain is getting ready to open outlets in India by the end of the year, it has become embroiled in a trademark row with an Indian company by the name of Starstrucks for violation of its name. The Starstrucks chain is being launched by Shahnaz Hussain, a well-known beauty expert who wants to sell coffee and chocolates with an herbal theme in a Hollywood like atmosphere.

According to a spokesperson at Starbucks, "The company is optimistic that we will be able to open our first store and offer the unique Starbucks Experience in India with a yet-to-be announced joint venture partner by the end of 2007 in either New Delhi or Mumbai."

Source: DNA Money

Reliance Retail holding talks with international luxury brands
Wednesday, March 14, 2007

Reliance Retail is looking to tie up with several luxury brands and has held talks with companies such as Armani, Tommy Hilfiger, Prada, Gucci, Calvin Klein, Moet Hennessy Louis Vuitton and Ralph Lauren. Industry sources report that, "Reliance Retail is talking to a large number of global luxury brands to tie up for its luxury retail venture as part of its retail initiative."

Reliance is planning to retail these high-end brands in two formats, hypermarkets and specialty luxury stores. The company’s first hypermarket will be opening in July this year, with a total of 700 such stores being planned that will be opened in the next three years.

Source: The Hindu Business Line

Kmart seeks to enter Indian retail market
Friday, March 16, 2007

One of the leading retailers of the US, Kmart Corporation is reportedly gearing up to enter India’s organized retail market in the form of cash-and-carry stores. The company is also planning to tie up with an Indian retail partner for franchise-based stores. Executives from Kmart reportedly met officials from the Department of Industrial Policy and Promotion to discuss plans for entry to the Indian market.

Source: The Economic Times

French luxury brands keen on potential of India
Friday, March 30, 2007

French luxury brands are keen on India and the representatives of brands such as Chanel, Louis Vuitton, Lanvin and Cartier who are currently visiting the country are excited about the prospects of growth. According to Damien Vernet, General Manager for West Asia and India for Louis Vuitton, said, "India is a very strategic market, and the market is close to fulfilling its potential."

Igor Baschet, area manager for Cartier, who is in India to identify projects and partners, said, "The elite in India are growing at 20 to 30 per cent. India already has about 36 billionaires, with 14 of them who are new to the list."

Source: The Hindu Business Line

Unique Formats

Social retailing is here to stay
Thursday, March 22, 2007

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.

Source: The Economic Times

Subhiksha and vJive tie up
Tuesday, March 20, 2007

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.

Source: The Economic Times

Damas and Flemingo to set up duty-free shops
Wednesday, March 21, 2007

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.

Source: The Economic Times

Strategy

Retail spies on the loose
Monday, March 12, 2007

With increasing competition, prices have become one of the key decision making factors that pull in customers, leading to retailers visiting rival stores to keep a tab on prices. Key items that prices are checked for on a regular basis include, essential commodities such as rice, lentils, oil and sugar.

According to S Raghunandan, an independent retail consultant and former HyperCITY CEO, “Every retail chain would have people who scout around for prices and offers in other stores. The consumers often know of the best prices and retailers can’t afford to be more expensive than the other stores in the catchments.”

Source: The Economic Times

Retailers trying out newer ways to offer discounted prices
Saturday, March 17, 2007

Retailers are concerned about the reaction to deals and discounts that they offer consumers, with so much information in the media and comparison shopping, consumers often don’t get an actually discount. The recent expose about Tesco doubling its prices one week and then offering a 50% discount a few days later has caused discontent among consumers. The problem could be that consumers expect discounts regardless of what price they are paying. According to ACNielsen, “Consumers are hooked on promotions,” he says. “On average, about 80% of UK shoppers are looking for price promotions — that’s the highest in Europe. Low prices are now expected.”

Source: The Economic Times

Regional Trends

Kerala retail is booming, but where are the large retailers?
Wednesday, February 28, 2007

Consumers in Kerala are flush with money, with high amounts of forex remittances, stores everywhere are full of people spending money, but there is no sign of the large retail groups. Small towns in Kerala are booming, growing faster and faster, thanks to money coming in from the gulf, but there are still very few organized retailers in the State.
The most prominent retailers are Varkeys in Kochi and Spencer’s in Thiruvananthapuram, and the Margin Free Markets. While Varkeys and Spencer’s are supermarkets, medium sized stores at best; and Margin Free Market is a discount store chain. The potential of growth in the consumerist state is simply huge, although consumers here are very focused on price as the deciding factor in making a decision.

Source: The Hindu Business Line

(Read about the growth potential of Tier II and Tier III cities in our report at http://www.india-reports.com/browse-report.aspx
- Chillibreeze Business Research Team)

Saturday, March 17, 2007

The Future Group will be expanding in West Bengal and has signed several properties in Howrah, Siliguri, Bardhaman, Kharagpur, Darjeeling and Asansol to take up 2.9 million sq ft of space. The total investment by the company for West Bengal is more than Rs. 5 billion. According to Sandeep Marwah, Pantaloon Retail India regional head (eastern zone), “West Bengal plays a critical role in our overall scheme of growth. We began our retail journey from here and hence, the state will always occupy an important place in our growth plans.”

Source: The Economic Times

UK’s retail major Liberty keen to invest in Rajasthan
Wednesday, March 21, 2007

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.

Source: Indiaretailing.com

Mall rush in Chennai
Friday, March 23, 2007

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.

Source: CNN-IBN

HR News

Food Bazaar merchandising head resigns to join AV Birla Group
Tuesday, March 06, 2007

Shiv Murthy, the head of merchandising of Food Bazaar, part of the Pantaloon Group, has put in his papers to join the Aditya Birla Group’s retail initiative as COO of its supermarket venture. The AVB Group had hired Russell Berman to head its hypermarket venture from Carrefour and now has heads for both its supermarket and hypermarket divisions in place.

This is the second high profile resignation at Pantaloon in recent weeks, with Ved Prakash Arya, COO of Pantaloon Retail who left recently. Interestingly, Mr. Murthy was likely to become the next Food Bazaar President, while the current Food Bazaar President Damodar Mall was expected to become COO of Pantaloon Retail.

Other high profile resignations and appointments include Vijay Kashyap, HR head of Aditya Birla Retail who has put in his papers and Martin Dlouhy who has been appointed as Metro Cash & Carry’s new MD, after the departure of former MD Harsh Bahadur to Reliance Retail.

Source: The Economic Times

Pantaloon Retail makes major organizational changes
Wednesday, March 14, 2007

Pantaloon Retail made some major changes within its organization, by creating five verticals, retail, incubation and innovation, products, JV and partnerships and zonal strategy.

In the retail vertical: Rakesh Biyani will be the retail CEO and will take care of Big Bazaar, Central malls, Food Bazaar and Pantaloon, the entire retail vertical. Rajan Malhotra, former Big Bazaar category head, will be the new CEO of Big Bazaar, Vishnu Prasad, former South Zone head, will be CEO of Central, Sadashiv Nayak, former Western Zone head, will be CEO of Food Bazaar and Sanjeev Aggarwal, former president of marketing for Pantaloon, will be CEO of Pantaloon retail chain. In the incubations and innovations vertical: Damodar Mall will be the new CEO

Source: Business Standard

Bharti and Reliance enter no-poaching pact
Friday, March 16, 2007

Bharti Enterprises and Reliance Retail have reportedly signed a no-poaching agreement, which will be valid for one year and will ensure that retail professionals will not switch jobs and leave their companies in the lurch. Reliance who has hired several of Bharti’s executives from its FieldFresh agri-business venture is supposed to have started the poaching war. Industry estimates suggest that there is a severe shortage of senior professionals in the retail industry.

Source: DNA Money

Retailers head for agri-universities and specialized institutions
Tuesday, March 20, 2007

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.

Source: The Economic Times

Wal-Mart interesting in employer-branding
Thursday, March 22, 2007

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.

Source: The Economic Times

Two executives leave Reliance Retail for Wal-Mart
Thursday, March 22, 2007

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.

Source: The Economic Times

Reliance Retail changes its HR policy once again
Wednesday, March 28, 2007

Reliance Retail changed its HR policy to a more comprehensive manpower management policy in an effort to streamline both recruitment as well as retention of employees. The new policy is to focus on acquisition, transformation, design and concept of the HR in the company. Reliance Retail president and its chief people officer, Bijay Sahoo, is in charge of creating the new policy.

Reliance Retail currently has 89 outlets and plans to increase the number of its stores to 120 in April 2007. The company has huge requirements for retail talent and plans to have 500,000 employees by 2010. At present it only has 6,000 employees. There has been an ongoing tussle for the limited number of retail executives at the top level. According to a company official, “We may have lost some seven to eight top guys in the war for talent, but the proposed HR policy will aim at stopping attrition in the senior and middle management level.”

Source: The Economic Times

Retailers using Esops to retail talent
Thursday, March 29, 2007

While most companies are losing their interest in giving Employee stock options plans as a fringe benefit due to the decision to include them in the tax net, retailers are finding them a useful tool in holding on to employees. Provogue is the latest retailer to come up with an Esop plan that is likely to be revealed soon. According to Salil Chaturvedi, promoter of Provouge, “Besides controlling attrition, Esops help in aligning the interest of the managers with those of the owners. Whatever be the outcome of FBT on Esops, I feel Esops are worthy of investment in our human resources.” Other retailers using Esops as a benefit are Reliance Retail, Shoppers’ Stop, Future Group and Piramyd Retail.

Source: The Economic Times

FMCG, Food & Grocery

Lavazza buys Barista
Saturday, March 10, 2007

Italy’s Lavazza, the sixth largest coffee roaster company in the world, has acquired Barista coffee from Fresh and Honest for an estimated Rs. 4.8 billion. Lavazza is expected to invest $150 million (Rs. 6.75 billion), including the cost of the company, for its operations in India in the next two years. Barista was the first coffee chain to start in India although Café Coffee Day is the undisputed leader at present.

Source: Business Standard

Food franchisees on a roll
Sunday, March 11, 2007

Specialized food and entertainment chains are heading to India, to offer not just dining but also an entire merchandising line of memorabilia. Manchester United is one of the many that has shown interest in opening restaurants here, as has London’s famous Ministry of Sound that recently opened its first restaurant in Delhi. Local companies are not far behind, with Percept Holdings planning to launch Bollywood Café in Mumbai.

Source: The Economic Times

Dabur announced that it will be setting up a chain of 300-400 retail stores focusing on the health and beauty segment in the next few years. Dabur India’s retail outlets will be based on international outlets such as Boots and Walgreens and would sell pharmaceutical and OTC products along with health foods, confectionary items, personal and baby care products. The company will be hiring foreign expats to guide the project and has earmarked Rs. 2 billion for its retail venture.

Source: The Economic Times

Café Coffee Day plans domestic and international expansion
Sunday, March 18, 2007

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.

Source: DNA India

Dabur to tie up with kirana stores
Friday, March 23, 2007

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.

Source: Business Standard

Heritage Foods to open 30 stores in Bangalore
Friday, March 30, 2007

Hyderabad based dairy products company, Heritage Foods announced that it would be setting up a minimum of 30 stores under its Fresh@ brand around the end of the year in Bangalore. The first few stores will be coming up in Indiranagar, Jayanagar and Basaveshwaranagar areas of Bangalore. Stores would be in the 2,500-3,000 sq ft range, with 40% of the area devoted to fresh fruits and vegetables.

At present, Heritage Foods already operates 12 stores in Hyderabad and is launching stores in Chennai. By the end of the year, the company is looking to have 100 stores and will then expand its footprint to tier II cities.

Source: Business Standard