Retail News August 2008

Big players - Plans and Investments: Spencer’s to roll out, Spencer's to shut, Reliance Retail to bring in, Timex to launch, Reliance sets up, Pantaloon’s Brand Factory Globus into retail, Gloria Jean's, Dabur's retail, Planet M, Next stores, Spencer's ties up, Spencers to form, Vishal Retail, AB Group, Arvind shops, M&S to end franchisee, Trent to invest

General Trends & Information: Delays plague supply, High mall rentals, Inflation a blessing, Retailers on terror edge, Mall hoppers, Retailers bet, Gaining Share, Discount retailers, Retailers bet big, Traders opt for modernising, Mall scare, Competition dents retail

Regional Trends: NCR mall rentals, Reliance Fresh, Kerala slaps, Malls re-entering, Where mall glamour palls, Hawkers’ movement, Hawkers prevent

International: Marks & Spencer

Apparel & Accessories: Koutons to invest, Titan Ind to invest, Catmoss to invest

Telecom Retail: Corner stores, Subhiksha Mobile, Reliance Retail, 150 Reliance digital

Lifestyle & Luxury Retailing: Gitanjali to open, Luxury bed-maker, Timex to invest

e-Commerce: Online portal, Online retailing gains momentum

Support Industries: Wipro Info bags 5-year Spencer’s deal

HR News: Retail downturn, M&S Reliance starts filling top key mgt positions

Big players – Plans and Investments

Spencer’s to roll out Ladybird in India soon

Spencer’s, the Rs 800-crore retail arm of the RPG Group, is set to roll out the international Ladybird range of children’s wear, owned by the British high-street retail chain Woolworths in India in the next two weeks.

Spencer’s has entered into a tie-up with the $6-billion UK retailer Woolworths to exclusively sell its select products through its nation-wide chain in the country. The Indian retailer has a slew of private labels in the garment segment that include Island Monks and Mark Nicolas in the men’s and women casual/formal wear, Puddles for infants and Little Devils for kids below 14 years.

“We expect to have the Ladybird range of kids’ wear in our outlets in the next ten to 15 days,” Mr Harsh Goenka, Chairman of the RPG Group, told Business Line. This is part of Spencer’s move to increase focus on the apparel segment, which is domestically growing at a brisk pace.

Mr Goenka said the company has recently tied up with the US bakery café, Au Bon Pain, to unroll a chain of standalone outlets in the country. “This will be introduced by the end of this year,” he said.

Spencer’s has formed a joint venture called Novel Confectioners, which will be the master franchiser of Au Bon Pain (which means the place of good bread) in India. The Boston-based casual dining and bakery chain has more than 225 outlets fanned out across the US, South Korea, Taiwan and Thailand. The joint venture will set up 100 stores in the next 18-24 months with an outlay of Rs 50 crore, the first being planned in Bangalore over a 2,000- sq ft area by December this year. The stores will serve an assortment of breakfast and lunches such as soups, stews, sandwiches, sales, bread & bakery items, confectionaries and beverages.

Spencer’s currently has 400 stores across India with a total retail space of 14.27 lakh sq ft. It plans to increase the number of stores to 1,000 with a total retail space of 30- lakh sq ft by the end of the current fiscal, involving an investment of Rs 1,500 crore.

A company official said the focus would be more on large format stores. “Currently, we have 15 hyper stores and 12 supers, which are to go up to 45 and 30 respectively by the end of this fiscal. In terms of turnover, we are currently at Rs 800 crore and planning to touch the Rs 2,000-crore mark by this fiscal,” he said

Spencer’s will be sharpening its focus on private labels this year. In the private label programme, the retailer sources directly from the manufacturers and sells through its stores, which enables him to offer the products at lower price points. “We plan to increase the share of private label contribution from 25 per cent to 40 per cent in the next two years,” the official said.

August 5, 2008
Source: Hindu Business Line

Spencer's to shut 40 & open 300 outlets

RPG Group company Spencer’s Retail has decided to close down at least 40 unviable outlets and open another 300 in the next 12 months. The company is also looking at developing the Old Mint building on Strand Road where it intends to put up a mall to begin with.

Talking to reporters on the sidelines of the 30th AGM of CESC, Sanjiv Goenka said: “At least 10% of our existing Spencer’s outlets are loss-making and we have decided to close them down. Currently, there are about 410 outlets nationally and the exact number of loss-making stores will be mapped and a decision on closing them down will be taken soon. Stores that have turned unprofitable are mainly due to very high rents, bad hinterland and poor sales. Parallely, we intend to open 300 new stores in the next 12 months.” Mr Goenka, however, declined to disclose details of locales which will see shutdown of outlets.

July 31, 2008
Source: Economic Times

Reliance Retail to bring in 250-year-old Hamleys

Reliance Retail has clinched a deal with the world’s largest toy shop, Hamleys. India’s largest private conglomerate will be the partner in one of the biggest international expansions by the 250-year-old Hamleys till date.

Sources said Hamleys and Reliance have struck a franchise deal to open large format stores. ET first reported on the discussions between the two players on March 21. Reliance Retail is believed to have pipped the Wadias and Kishore Biyani’s Future Group in snapping up the deal.

The Mukesh Ambani-led Reliance and the Icelandic investor Baugur Group-controlled Hamleys are expected to make a joint announcement shortly. Reliance had also explored an arrangement with the US chain Toys ‘R Us before deciding to strike a deal with Hamleys.

Hamleys’ foray into a potentially big market like India could be interesting. The seven-storey Hamleys store on London’s Regent Street is one of the top tourist draws. Despite its cult appeal globally, Hamleys has largely restricted itself to the UK market.

It is believed that Reliance plans to open four standalone Hamleys stores in the first 24 months, which is a significant expansion move for the marque UK brand. Baugur is also working on expanding Hamleys to Middle-East, Russia, Turkey and China. Hamleys operates a standalone store in Jordan’s capital Amman.

While the local stores may not be as big as the London flagship, it will surely be unlike anything seen before in India’s toy retailing space. The Indian stores will be around 25,000 sqft and will be opening doors in metros like Delhi, Mumbai and Bangalore initially.

The Hamleys deal marks Reliance’s third engagement with a major international brand in recent times. It has unveiled JVs with iconic apparel retailer Marks & Spencer and optical chain Vision Express.

July 28, 2008
Source: Economic Times

Timex to launch three luxury brands

Timex on Monday said it plans to introduce three high-end brands in India in the next few months, besides launching its iControl watches, which connect Apple's music device I-Pod, very soon.

The company is planning to launch Ferragamo brand by next month while another luxury brand Marc Ecko would be introduced by September. It has recently started marketing the Nautica brand.

"We are launching two-three luxury brands in India starting with Ferragamo next and Marc Ecko by September. We will also bring iControl very soon," Timex Group India Managing Director, Mr Kapil Kapoor told reporters here.

"We will first introduce iControl in the metros and later take it to smaller cities. It will be priced at around Rs 5,000," he added. Timex is also looking to expand its retail foot-print in the country, with adding 40 stores in the current fiscal to ta ke the total number of outlets to about 100. It currently has 62 stores.

"We will open new stores in smaller cities like Lucknow and Coimbatore," Mr Kapoor said. The company opens all its stores through the franchisee model.

July 28, 2008
Source: Hindu Business Line

Reliance sets up Autozone in Gurgaon

Reliance Autozone launched its automotive specialty store at Ambience Mall, Gurgaon in continuation of its move to bring world class auto retailing facilities to India.

Reliance Autozone, Gurgaon spread over an area of 6,500 sq ft, matches the global auto retailing standards. The product offerings at Reliance Autozone include a comprehensive range of car and bike accessories, electric scooters, tyres, batteries and many more useful accessories.

Reliance Autozone would be retailing electric scooters by offering multi-brand choice under one roof. Tyres and batteries are the other two focus areas at Reliance Autozone.

Mr Arun Dey, Chief Executive of Reliance Autozone, said, “This new format provides a one-stop solution to automobile owners who face inconvenience by having to crisscross between various touch points for accessories, batteries, tyres and lubes etc. at different locations at different times.”

Reliance Autozone has ambitious plans to capitalise upon this business opportunity. This accessory store format shall offer consumers a comprehensive range of products in a pleasant and conducive retail ambience at best value along with quick fitment facility. The range shall include accessories of utility, audio, videos, safety, car care, upholstery, navigation systems etc. The range also includes an exciting array of products sourced from overseas.

July 27, 2008
Source: Hindu Business Line

Pantaloon’s Brand Factory ropes in Planet M, Globus into retail format

Pantaloon Retail’s fashion value retail format, which opened its seventh outlet in the country and the second in Bangalore on Thursday, expects to touch revenues of Rs 500 crore by June 2009.

Plans for the year include six more outlets by June 2009, according to Mr Rajesh Seth, Vice-President, Marketing, Central and Brand Factory, Pantaloon Retail (India) Ltd. The company has budgeted investments of around Rs 6-10 crore a store, he said.

Brand Factory will now offer products from Planet M, Globus, Staples and Dollar stores.

“We want to make this a lifestyle store and all out future Brand Factory outlets will be similarly designed,” Mr Seth said.

Spread across 55,000 sq ft of space, the new outlet offers over 200 brands at 20-50 per cent discount 365 days a year. Products offered are across various categories including apparel, footwear, eyewear, watches, home and kitchen accessories, travel and cell phones.

“This will be bigger and better than other Brand Factory stores, not only in terms of size, but also in our brand offerings,” said Mr Seth. Bangalore’s first Brand Factory outlet located at Marathahalli, the heartland of discount and value retail stores in the city, experiences footfalls of around 150,000 a month. Value retailing in India, estimated at Rs 45,000 crore, is growing at 20 per cent every year.

Brand Factory reported revenues of Rs 200 crore in June 2008, out of which Rs 60 crore came from the Bangalore store alone, Mr Seth told Business Line. The average billing ticket size of a customer in Brand Factory is around Rs 1,500 and is expected to go up to Rs 1,700 in the new format, with the introduction of segments other than apparel and footwear. About 80 per cent of the billing comes from the apparel sections, Mr Seth said.

July 26, 2008
Source: Hindu Business Line

Gloria Jean's to set up cash-&-carry subsidiary in India

US-based coffee chain major Gloria Jean’s is setting up a wholly-owned cash-and-carry subsidiary in India to supply coffee beans, merchandise and equipment to its cafes in the country operated through the franchisee route.

The retailer currently has a master franchisee agreement with Citymax Hospitality (India). Gloria Jean’s has applied to the Foreign Investment Promotion Board (FIPB) for permission.

The proposed Gloria Jean’s subsidiary would be involved in local procurement of roasted coffee, apart from paper cups, syrups and equipment. It would also import incidental products from China, Australia and other countries. The cash-and-carry subsidiary would sell coffee and other incidental products to Gloria Jean’s master franchisee in India.

This is similar to the model being followed by Wal-Mart, the world’s largest retailer, in India. The retail giant has invested directly in a cash-and-carry subsidiary which will supply to the front-end stores under a franchisee agreement with the Bharti Group.

Gloria Jean’s entered into the master franchisee agreement with Citymax in December 2007 to set up 500 coffee outlets across the country over the next 10 years. The cafe chain is known for its hot and cold coffee drinks including traditional espresso, blends and whole bean coffees, specialty teas, pastries and coffee accessories.

In India, it is targeting executives in the age group 25-45 years, positioning itself higher than Cafe Coffee Day and Barista and closer to Costa Coffee. Gloria Jean’s also plans to retail roasted coffee under the brand name GJC in India.

July 26, 2008
Source: Economic Times

Dabur's retail arm to open six new stores across country

FMCG major Dabur India's retail subsidiary H&B Stores on Wednesday announced plans for setting up six new outlets across the country as part of its expansion plan. The company will open new stores in Delhi, Gurgaon, Amritsar and Panchkula during the next three months, H&B said in a statement. H&B's seventh outlet in the country was opened at Hyderabad today, it said.

"This marks the opening of our third outlet in Hyderabad within a span of just 3 months. As the business strives forward, so does our ability to deliver even better value and choice," H&B Chief Executive Officer Peter Baker said.

H&B Stores is a wholly-owned subsidiary of Dabur India and operates a pan-India chain of beauty, health and wellness retail outlets under the brand name 'newu'. The stores offers a range of health, beauty and wellness products. "Our private label development programme and exclusive brand offering continues to grow, delivering international quality products, at very competitive prices," Baker said.

H&B is also planning to launch of its customer loyalty programme 'Advantage U' intended to demonstrate its commitment of customer experience and service, as well as great value and choice, the release added.

July 23, 2008
Source: Economic Times

Planet M, Next stores in Rs 800-cr expansion

Videocon Retail has readied a huge expansion plan for Planet M and Next retail formats in the next few years with an investment of Rs 800 crore. “We are going to add 40-50 Planet M stores every month in the next few years to reach 1,500 outlets,” said Mr Saurabh Dhoot, Director, Videocon Retail.Currently, the company runs 200 such stores in 42 cities, he said.

Mr Dhoot was here in the city in connection with the launch of the first Café eARTh outlet, attached to the Planet M store at Banjara Hills, here. “A good number of Planet M stores would have such cafes,” he said.

Videocon, which acquired Planet M last year, was in the process of revamping. “We have so far revamped 80 stores offering mobile phones, accessories, apart from the entertainment products,” he said. The company was also planning to increase the sales from its private label products such as mobile accessories and T-shirts. “At present, the private label products contribute 15 per cent to the topline,” Mr Dhoot said.

Planet M registered a turnover of Rs 400 crore last year. “We are expecting this to reach Rs 4,000 crore in the next few years when we breached the 1,500-outlet mark,” he said.

Justifying the numbers, Mr Dhoot said the mobile phone segment contributed 40 per cent to the topline last year.

“Considering the speed at which the company’s expanding the network, we are confident that we will achieve the $1-billion mark after three years,” he said.

As part of its plan to offer value-added services, the company initiated talks with general insurance companies to offer insurance for handsets. “We have already begun offering extended warranties on certain products,” he said. The company had also decided to increase the number of Next (appliances retailing format) stores to 700 from the present 400, covering 200 cities.

July 22, 2008
Source: Hindu Business Line

Spencer's ties up with US-based restaurant for bakery chain

Spencer's retail chain controlled by RPG group has entered into a tie up with the US-based bakery, Au Bon Pain to set up a chain of fast casual dining and bakery cafes across India.

Sanjiv Goenka, vice-chairman RPG Enterprises, said that an agreement had been signed by a joint venture of Spencer's and Varin Narula, director and promoter of Au Bon Pain, Thailand, for the brand's first outlet outside the US.

A joint venture, called Novel Confectioners Ltd, has been formed in which Varin will have a small equity. Au Bon Pain is a Boston-based fast casual dining and bakery chain, which operates over 225 outlets in the US, South Korea, Taiwan and Thailand.

An amount of Rs50 crore is envisaged to be invested in setting up 100 standalone stores. In the next two years 100 stand alone stores, with an average size of 1200 to 1500 square feet, are expected to come up in South India. Initially the stores will come up in South India with focus on Bangalore, Chennai and Hyderabad.

Following this, the stores will come up in the tier one and tier two cities of northern, eastern and western states of the country. At least 400 stores of the company will be coming up on a pan India basis within the next four years. The first store is expected to come up in Bangalore in the next six months. The company is also setting up a factory in Bangalore.

Goenka said, ''While we felt that Bangalore, with its international population, was a great place to launch a brand like this, the other stores would be in Hyderabad and Chennai and Tier-1 and Tier-2 cities in the next 18 months.

The menu would include soups, sandwiches, salads, stews and bakery items.'' Later, shop-in-shop stores would also be launched with a pan-India roll-out covering the north and the east.

Spencer's has a big presence South India with its first store in Chennai dating back to 1863. The group launched its first hypermarket in Hyderabad in 2000 and has 400 stores and is planning to open 200 more this year, targeting a Rs. 2,000 crore turnover.

This is Spencer's second international tie-up this year, the first being one for kids' toys with Woolworths of the UK.

Executives from Au Bon Pain said the company are conducting conducting consumer research to determine the cuisine that would be a better fit with Indian culture. This may mean customers will find more vegetarian items on the menu.

July 16, 2008
Source: Domain-b

Spencers to form two international JVs over 2 months

Spencer's Retail Ltd, a unit of power utility firm CESC Ltd, will announce two joint ventures with international fashion brands over the next two months, an official said on Thursday. The joint ventures, one to be announced in August and the next in September, will help expand Spencer's higher-margin non-food offerings in its hypermarkets, Samar Sheikhawat, vice president, marketing, told reporters.

"It will augment our fashion business model and going ahead the thrust on fashion is a big piece for us because of topline and margin possibilities," he said. "One is from the UK and one from the U.S," he said about the joint venture partners.

About 65 percent of Spencer's hypermarket sales is from food and groceries and the rest from non-food items like consumer durables, but this will be equalised into food and non-food over the next 18-24 months to boost profits, Sheikhawat said. "Food gets in the traffic, it gets the topline, the revenues, it doesn't get the bottomline. Fashion and home get you the bottomline so you need to sell a whole lot of food but you also need to sell a whole lot of fashion and home," he said.

In the year to March 2008, Spencer's Retail, which also runs speciality retail formats for music, books and mobile phones, posted a net loss of 1.5 bn rupees and revenue of 8.2 bn rupees, he said. It has outlayed 25 bn rupees from internal accruals to help grow floor space over the next two years to 4 mn square feet from 1.5 mn square feet now, he said.

July 17, 2008
Source: Economic Times

Vishal Retail to add upto 700,000 sqft retail space by Diwali

Vishal Retail Ltd is likely to add 600,000-700,000 square feet to its retail space before the festival season of Diwali, its chairman and managing director said on Friday.

"The demand for the products we sell is inelastic. We don't see any fall in consumer demand. So our plans continue to be on track," Ram Chandra Agarwal told Reuters over telephone. The discount retailer has 120 stores spread across India, covering an area of 2.36 million square feet.

Agarwal said the firm was however looking at market conditions to improve before it raises money through share sales to fund its expansion plans.

July 11, 2008
Source: Reuters

AB Group arm picks up 25% in V Mart Retail

The private equity arm of the diversified Aditya Birla group has acquired a 25% stake in V Mart Retail, a value-retailer owned by the New Delhi-based Lalit Agarwal.

The investment is estimated to be in the range of Rs 60-70 crore. V Mart Retail chairman Lalit Agarwal confirmed the development to ET but did not disclose the size of the investment. He said: “We needed the business expertise of the Aditya Birla group. We wish to extend our value for money retailing business in a truly Indian way across the country. We are planning to open 100 stores over next two years. We would implement the Birla group’s strategies on merchandising, logistics and store planning.”

The company had reported a turnover of Rs 100 crore last year and targets to achieve a 50% growth in topline this year. The four-year old company has been growing at 40% annually and is expected to continue this trend in next four-five years, said sources close to the company. The format of V Mart can be compared with Big Bazaar, Vishal Mega Mart and Truemart.

Bharat Banka, CEO of Aditya Birla Capital, the private equity arm of the Aditya Birla Group, will join the V Mart board. When contacted, Mr Banka said: “ V Mart is an established player in value retailing with experienced management in execution and focus on profitable growth. We believe it is at an inflection point to extend its current leadership position in value retailing and evolve as a top player.”

This is the third investment of the private equity arm of the Birla group. It had invested in the Bombay Stock Exchange and Core Projects & Technologies, a leading IT solutions provider with special focus in education, health and BFSI.

V Mart, which caters to the middle and lower-middle segment of the retail market, earns two-thirds of its revenue from apparel business. V mart is in operations since 2004 and operates 26 stores in various cities across the country with larger part in the North and West India.

V Mart operates a chain of mid-size hypermarket value retail stores ranging from 6000-12000 sq ft. Its specific focus is on Tier II/ III cities. It covers 250,000 sq. ft. retail space. It plans to open stores ranging from 8,000-12,000 sq. ft.

It recently launched V Galz stores, a fashion studio for ladies garments and accessories. V Galz aims to cater to fashion conscious new generation by offering them western wear at affordable prices. The concept has met with huge initial success.

July 11, 2008
Source: Economic Times

Arvind shops for more overseas brands

Arvind Brands, the apparel and retail division of textile major Arvind, has begun talks with other international brands to scale up its portfolio. The division, which currently manages around 12 retail brands through tie-ups, is looking for partners overseas to manage more brands.

Refusing to divulge names of the prospective partners, Arvind Brands Chief Executive Officer J Suresh said, "We have built a focused pathway for our retail brands over a period of three to four years. Now, we are in the process of entering fresh tie-ups to bring some of the best international brands to India, which have been elusive so far."

Arvind Brands is also in the process of launching six international brands, including Cherokee, Pierre Cardin and US Polo, with whom it has tied up recently. "We plan to launch some of these brands by the end of the calendar year," said Suresh.

Apart from retail brands, the company is also bullish about Megamart, its value chain of stores. Arvind Brands has set an investment target of Rs 400 crore over a period of three years to take the number of Megamart stores to around 250.

For Megamart, Arvind Brands is focusing on tier-II and tier-III cities, catering to a price range of Rs 400 to Rs 5,000. Megamart contributed around 40 per cent of Arvind Brands' Rs 350-crore turnover in 2007-08. According to Suresh, the company has plans to take up the share from the stores to over 50 per cent this year.

Maitaining its focus on men's premium segment, Arvind Brands will also add non-apparels like luggage, accessories and home furnishing to its Megamart stores.

The company is also investing around Rs 75 crore in other retail brands, added Suresh. Arvind Brands expects to generate a revenue of Rs 600 crore for 2008-09 after the retail expansion.

July 7, 2008
Source: Business Standard

M&S to end franchisee agreement with Planet Retail

UK retail major Marks and Spencer plans to exit from its six-year old franchisee deal with Planet Retail as part of the company's effort to focus exclusively on the joint venture with Reliance Retail.

As part of the strategy, Marks and Spencer Reliance India Private Ltd, the joint company floated by M&S and Reliance, will take over the 14 existing franchisee stores of Gurgaon-based Planet Retail in the country.

The JV is looking at taking over the existing franchisee stores that we have with Planet Retail. While this will be a staggered approach, and in due course of time the franchisee agreement with Planet Retail will come to an end," Marks and Spencer Reliance India Private Ltd Chief Executive Officer Mark Ashman said.

M&S is holding discussion with Planet Retail on the modalities of eventually managing the 14 stores. The original franchisee agreement between M&S and Planet Retail had been signed back in 2001-02.

The company is also aiming for increasing sourcing from India. "In next five years, we are looking at sourcing around 70 per cent of the product by volume to be sold in India sourced from the country itself. This is a critical part of our strategy which would give us a price competitive advantage," Ashman said. M&S had also set up a sourcing office in India 18 months back and he said this office would remain an independent entity of the company.

July 6, 2008
Source: Economic Times

Trent to invest Rs 2,000 crore in 50 hypermarkets over 5 years

Tata Group retail arm Trent Ltd plans to invest up to Rs2,000 crore for setting up 50 hypermarkets (Star Bazaar) over the next five years.

''We are launching 50 new hypermarket stores 'Star Bazaar' in the next five years at an investment of around Rs2,000 crore,'' Noel Tata, managing director of  Trent Ltd, said.

Addressing reporters after the launch of Trent's second 'Star Bazaar' at Andheri in Mumbai, he said Trent aims to expand to 100 stores across formats by financial year 2009-10. The money will be raised through internal accruals only.

"Higher property price has hit retail expansion. In hypermarkets, property is a major and significant cost in our business," Tata said. ''We have huge pressures on cost - both in terms of raw material and staff. We have been able to absorb quite a substantial portion of those increased costs," he said.

The best way to drive cost down was growing the business as fast as possible, he added.

Trent has sop far set up 31 `Westside' departmental stores measuring 15,000-30,000 square feet each in Mumbai, Bangalore, Hyderabad, Chennai, Pune, Delhi, Noida, Gurgaon, Kolkata, Nagpur, Indore, Baroda, Surat and Ludhiana.

The company hopes to expand rapidly with similar format stores that offer a fine balance between style and price retailing. "We have taken up aggressive expansion programmes by opening 12 new `Westside' stores, five landmark and a few hypermarkets," Tata said.

Trent, meanwhile, has tied up with Italian apparel retailer Benetton Group Spa to run and manage its premium fashion brand, Sisley, in India. Trent currently manages six Sisley stores in India. Trent posted revenues of Rs716 crore and net profit of Rs33.64 crore on a consolidated basis in FY 08.

July 5, 2008
Source: Domain-b

General Trends & Information

Delays plague supply of mall space

A report by international property consultants Cushman & Wakefield points to a paradoxical situation. There is demand for retail space in malls across major cities but nearly a fifth of the space lies vacant. The rentals, though, are stable and holding in specific markets. Despite major mall projects, the supply of space is likely to be low over the next two years as projects are being delayed due to various reasons.

The second quarter of 2008 saw the launch of just about a third of the planned launches in major cities. There was a supply of over 2 million sq.ft of mall space in major urban centres against a planned launch of 6 million sq.ft.

Most of the space during the second quarter has been created in the NCR, Mumbai and Kolkata, with nothing happening in Chennai, Hyderabad and Pune. The second and third quarters could see the supply of over 12 million sq.ft, according to a report by Cushman & Wakefield. The report, quoting Mr Rajneesh Mahajan, Director, Retail Services, Cushman & Wakefield, says that despite the low supply, nearly a fifth of the 40 million sq.ft of mall space is vacant. This is primarily because the businesses are targeting the same catchments resulting in oversupply within local markets. The focus is essentially on premium high streets.

Increasing input costs and global cash crunch have resulted in developers rescheduling project completion. New projects are also being held back in most cities in this quarter.

While quite a few planned mall projects are not likely to hit the market during the next year or two, the pressure for space on existing and emerging high streets will support rentals in prime high streets and prominent mall developments, according to the report.

In the next quarter Bangalore could see the supply of over 5.45 lakh sq.ft of mall space.

There is a pressure for space on the existing and emerging high streets in the city, which will continue to support the rents. Mall rentals have largely been stable across the markets, though some the traditional areas such as Commercial Street and Brigade have witnessed a 10 per cent appreciation in rents.

Mall rentals in Chennai are likely to strengthen because of poor supply. Major malls like Ampa and Coramandal which were to enter the market this year are more likely to start operations next year. Some of the planned mall space is likely to start in 2010. There is a clear dearth of quality real-estate solution to cater to the retailers' needs. "The prime cause for most of these delays is the hold on approvals coupled with construction delays. Indi mall, with approximately 170,000 sq.ft on Nelson Manickam Road, is the only mall expected to be operational during Q3 this year," says the report.

Hyderabad has not seen fresh supply of mall space during the second quarter. Rentals in select established main streets stabilised at the first quarter levels due to near-saturation in retail real-estate activity and absence of significant transactions. Most of the addition to the mall space has happened in the West and the North with Ahmedabad witnessing the launch of 3.50 lakh sq.ft mall on SG Highway. Retail development is happening actively on the western part of the city.

In Kolkata there has been a 50 per cent escalation in mall rentals over the last quarter at Rajarhat because of the lower price points vis-a-vis other areas and the potential development in the residential and commercial space in the vicinity. More than three-fourths of the addition to mall space is anticipated in Rajarhat. Over 3.70 lakh sq.ft of mall space has been added during the second quarter, the report said.

Mumbai will see the addition of 1.7 million sq.ft of mall space over the next six months across central suburban markets and Navi Mumbai.

Over 5.6 lakh sq.ft of mall space was added during the second quarter, when rentals remained stable with no change over the first quarter. In the NCR, mall space was primarily added in Faridabad and Gurgaon during the quarter when over 6.25 lakh sq.ft space was added. Mall and main street rentals have increased by over 24 per cent compared to the first quarter.

August 3, 2008
Source: Hindu Business Line

High mall rentals haunt retailers

The heat is on. If the downturn in the residential sector was not enough, real estate developers are now fighting a losing battle to retain their retail clients in malls. High rentals, coupled with low conversion ratio, have forced retailers to issue a red card warning to mall developers — “either reduce the rentals or we are on our way out.”

According to reports with SundayET, at least 20-25 retailers have asked their mall developers to look at other options for their survival.

”The dynamics of the mall segment have changed in the last few years, as there is an oversupply of retail space in the country. With a fall in footfalls, the retailers are finding it tough to drive in customers to their malls,” explains Anuj Puri, chairman of Jones Lang LaSalle Meghraj (JLLM).

The year saw the opening of a few mega projects that had been awaited eagerly by retailers and industry alike. Some of these projects had been able to justify the expectations of the retailers and customers, but by and large, most of them have not been able to deliver on the promises of high conversion ratios and revenues. High rental rates have put tremendous pressure on the topline and bottomline of most retailers, who had aggressively expanded into multiple stores in the same catchments, banking on the high growth rate of the economy.

According to Mr Kishore Biyani, CEO of the Future Group, due to the above factors, the group has changed its retail strategy for malls. “We are now operating on a revenue-sharing model in the malls. Earlier, we had issues with real estate developers, but now things have been sorted out. Productivity is a key factor for any retailer to operate efficiently in a mall, in case of a leased deal,” he said.

With most malls offering lease terms of six to nine years and retailers being locked in for two to three years, with high initial investments and rental costs, the operational break-even has been stretched to the lock-in period for most of them. This combined with high inflation rates and strong undercurrents of imminent correction in the rentals have made the expansion plans of most of the retailers quite conservative and limited in the next four to six months.

Says Rajneesh Mahajan, director (retail) of Cushman & Wakefield India: “Most retailers want to wait and watch rather than commit to seemingly inflated rental rates even if it is at the risk of further increase in the rentals due to high land and project costs. Overall, the demand for retail real estate continues to remain strong with the influx of many international retailers and growing urbanisation in the country. However, this is focused on premium high streets and promising developments.”

Interestingly, even as there is an oversupply in most of the micro markets, the supply of desired quality is limited to a handful of projects only and this has led to differentiated rentals being commanded by projects in the same micro market. The malls are getting the footfalls in, but conversion is seen mainly for entertainment, F&B and value brands. There are a few exceptions that have been able to offer a more sustainable rental model to retailers along with buoyant footfalls and sales.

August 3, 2008
Source: Economic Times

Inflation a blessing in disguise for retailers

Everyone loves a good discount. And it comes in as an incentive especially during times of inflation. For apparel discount retailers, inflation has proved to be a blessing. Arvind's branded discount retail chain Megamart has seen an improvement in walk-ins of 15% in the past few weeks.

"During inflation, customers always prefer to shop in a value retail outlet," says KE Venkatachalapathy, business head of Megamart. The increased footfall is reflecting in the sales figure of Megamart as well. While he refuses to divulge exact numbers, Venkatachalapathy says there has been a 20% increase in sales compared to the corresponding period last year. Discounts here vary from 10% to 30%.

"Inflation and discount retailing are directly proportional. Customers normally tend to flock to value retail stores where they are assured of good quality at reasonable prices," says Raghunath Narayanan, MD of Chennai discount retailer Europa.

Discount retailing, a post World War II phenomenon, is an established market practice in countries like the US. This concept is now picking in India, which is a price sensitive market. Discounts have always worked well with apparel and factory outlets in the suburbs of many Indian cities and shopping hubs like Fashion Street in Mumbai and Marathalli in Bangalore which acquired sobriquets as an export market bear testimony to this. Now inflation has come to the aid of retail majors.

The Loot, a discount chain, has seen footfalls increase by at least 10% in the last few weeks across its 35 stores in 15 cities. "In Mumbai alone, our footfalls are up by 17% in the last three weeks. In the first quarter, we had sales of Rs 15 crore. In the next quarter , we expect this to climb upto Rs 25 crore," says Jay Gupta, MD of The Loot.

In apparel, children's wear seem to be the biggest beneficiary. "As children, especially toddlers, normally outgrow their clothes pretty fast, parents are flocking to discount stores such as ours more than ever before," says Narayanan. While the discount offered by the apparel and luggage chain is between 25 and 30%, in kids wear it's 30%- 40%.

The consumer base is also widening. "From a largely middle class audience, I now see people getting out of cars like Honda Accord and Mercedes Benz outside our stores," says Gupta.

The rush to such outlets is also due to the fact that regular apparel retailers and multi-brand outlets mostly offer off season sale only twice in a year. "But in times of inflation and continued price rise, the consumer is looking to cut spends across categories on a daily basis," says Venkatachalapathy.

Brand Factory too has seen a 5%-7 % increase in our sales over the past few months. "While we cannot say that entirely due to inflation, we cannot rule out that it has played a role," says Vishnu Prasad, CEO of Brand Factory.

July 31, 2008
Source: Economic Times

Retailers on terror edge

Every time there is a terror attack, or a threat of one, it’s bad news for shopping malls and large retail outlets that not only see a drop in visitors and sales, but also come under greater scrutiny of security agencies.

The serial bombings in Bangalore and Ahmedabad through Friday and Saturday hit weekend sales at retail hubs of these two cities as several shopping malls were ordered to shut early and people were kept away fearing more explosions. Retail trade was also hit in other parts of the country, but to a lesser extent.

“There has been a definite fall in business especially in areas such as Bangalore, Ahmedabad, Gujarat and Surat,” said Rajan Malhotra, CEO of Big Bazaar. “We were asked to shut our stores early in Indore and Surat. Overall, there was a 10 per cent fall in business as apart from fear psychosis, business also got affected due to heavy rains in many major cities."

Grocery and food retailer Subhikha saw a 20 to 30 per cent drop in footfall at its stores in Bangalore and major cities of Gujarat, but elsewhere business was as usual, said R Subramanian, managing director of the company.

Vishal Retail, which is mostly into apparels and home furnishing, said its sales were down 20 to 30 per cent compared to a normal weekend.

The drop in visitors is the most immediate impact, but in the longer run retailers have to step up security-related spending, including insurance cover against terror attacks.

“We spend close to Rs 14-15 crore on security every year,” said Subramanian. “We also have an insurance policy in place worth about Rs 1,500 crore.”

Shoppers Stop, which has not yet taken any specific insurance policy against terrorism, said it is reviewing its security needs. “We have made all the necessary investments we needed to for purpose of security,” said BS Nagesh, managing director of the company. “We will be in discussions today to take appropriate decisions to beef up security.”

July 28, 2008
Source: Hindustan Times

Mall hoppers don’t spell sales

Mall developers and retailers in India may be on an expansion spree but signs that everything is not right with the retail industry in Gujarat are beginning to show. Picture this — Around 50 per cent of the branded store outlets have shut down at India’s first designer mall Gallops, located off the Sarkhej-Gandhinagar Highway, while a furlong away, Reliance Mart, the first in India inaugurated by Mr Mukesh Ambani on August 15 last year, attracts mostly tourist crowds.

These shoppers do not spend money at the mall. They are a new breed of tourists who hop from mall to mall ‘just to see’ what it is like or simply to beat the heat in the fully-air-conditioned atrium.

They are different from the youngsters who hang out at malls with friends or frequent the food courts. Most people seen at the Iscon Mall, which houses Reliance Mart as well, are either tourists from other cities or local people visiting the mall for the first time, shop-keepers admit.

“We have just come to see what it is like here. When we came to Ahmedabad, people told us that this was a must-see place, as it is the biggest in Asia,” said Ms Geeta Parikh of Jamnagar, visiting the mall with her son.

The retail scene of Ahmedabad, which used to be concentrated on the business artery of CG Road, has begun to shift to other areas of the city, of which SG Highway is one. Malls such as Big Bazaar, Dev Arc and Vishal Mega Mart are jostling for space on the Highway, leaving the customer spoilt for choice. That is the reason why some of the malls, such as the 3.5 lakh sq.ft Gallops, set up at an investment of Rs 80 crore, wear a deserted look. “As many as 50 per cent of the shops have shut down here. Of the 12 outlets opened two years ago at the food court, only four are operational today,” says painter Mohsin Shaikh, whose art gallery Spandan is located on the second floor of Gallops.

He has an interesting theory about retail in Gujarat. “People in Ahmedabad are new to mall culture and mostly prefer shopping from places they are comfortable with,” he says. For instance, if a customer living in Maninagar wanted to visit Gallops he would have to cross Manek Chowk, Lal Darwaja, C G Road, etc, all of which are major shopping destinations where he would get whatever he wants at a lower price than in a mall on the highway; moreover, he could even bargain at the shops. If this theory holds good, then, it would mean good footfalls, with lower conversion to sales.

He goes on to add, “Mostly, the retail outlets that are shutting down are small brands. The national retail chains situated at the outskirts of the city are thinking of 10 years down the line, when real-estate prices will soar. The city will also expand, bringing the customers closer to them.”

July 27, 2008
Source: Hindu Business Line

Retailers bet on entertainment activities to lure customers

As spiralling inflation dents buyer sentiment, leisure and entertainment forays seem to be big retailers’ weapons to fight flagging sales.

Leading the way is Kishore Biyani-led Future Group that is opening unisex salons, gaming centres and family entertainment centres at its nine Big Bazaar Supercentres. Similarly, Vishal Retail is planning to start salons within the premises of its 120-odd outlets.

Shoppers Stop has introduced its brand of cafes, bookstores and spas within its stores to make consumers spend more time and entice them to buy more.

Shoppers Stop vice-president (marketing) Vinay Bhatia feels such options are important to retain customers. “A customer now looks for more than just shopping. We realise that convergence of retail and entertainment is the way to enhance a shopper’s experience. We are constantly trying to get things that are ‘shopping plus’. So we have Crossword, our bookstore, Cafe Brio & DesiCafe and other such specialty stores within Shoppers Stop stores to enrich consumer experience.”

The Raheja Group-promoted Shoppers Stop is putting its best foot forward to attract shoppers. The company has added small spa centres, allowing consumers a quick foot massage. Then there are bookstores and cafes along with several other initiatives to attract customers and make them spend more time inside the store. It has also introduced a ‘Monsoon Makeover’ offering that promises free makeover for people who walk in.

Following suit is Vishal Retail that will begin by opening salons within the premises of its stores. Says Vishal Retail chairman RC Agarwal, “The initiative is in the planning stage. There is a definite market for these services.”

Spencer’s Retail is also going the extra mile to ensure visitors stay longer and are entertained well. Across the stores, there are live kitchens on weekends that have Japanese, Thai and Italian chefs.

Then there is Books & Beyond, Spencer’s brand of bookstores that has periodic book reading sessions and launches. Stores are also lined with interactive LCD screens that have both original and borrowed content entertaining people.

“We do a business of Rs 100 crore every month. This is 5% of our revenues. Today, consumers expect to feel relaxed and entertained. This is important for a chain like ours that wants to be differentiated. This concept, however, may not have much potential with discount chains,” says Spencer’s Retail marketing V-P Samar Singh Sheikhawat.

There are still others like Subhiksha Retail MD R Subramaniam who think it wise to continue retailing what they currently do. “We are staying focused on what we sell, groceries, mobile phones and medicines. There will be a foray into consumer durables and IT products soon.”

Gaining Share

• Future Group is opening unisex salons, gaming centres and family entertainment centres at its nine Big Bazaar Supercentres.
• Vishal Retail is planning to start salons within premises of its 120-odd outlets.
• Shoppers Stop has introduced its own brand of cafes, bookstores and spas within its stores to make consumers spend more time at the store and entice them to buy more.
• Spencer’s Retail has set up live kitchens and book stores to ensure customers spend more time.
• Smaller players like Subhiksha Retail think it wise to continue retailing what they presently do.

July 26, 2008
Source: Economic Times

Discount retailers make hay while inflation shines

Everyone loves a good discount. And it comes in as an incentive especially during times of inflation. For apparel discount retailers, inflation has proved to be a blessing. Arvind’s branded discount retail chain Megamart has seen an improvement in walk-ins of 15% in the past few weeks.

“During inflation, customers always prefer to shop in a value retail outlet,” says K E Venkatachalapathy , business head of Megamart. The increased footfall is reflecting in the sales figure of Megamart as well. While he refuses to divulge exact numbers, Venkatachalapathy says there has been a 20% increase in sales compared to the corresponding period last year. Discounts here vary from 10% to 30%.

“Inflation and discount retailing are directly proportional. Customers normally tend to flock to value retail stores where they are assured of good quality at reasonable prices,’’ says Raghunath Narayanan, MD of Chennai based discount retailer Europa.

Discount retailing, a post World War II phenomenon, is an established market practice in countries like the US. This concept is now picking in India, where customers are extremely price sensitive. Discounts have always worked well with apparel and factory outlets in the suburbs of many Indian cities and shopping hubs like Fashion Street in Mumbai and Maratahalli in Bangalore bear testimony to this. Now inflation has come to the aid of these retail majors.

The Loot, a discount chain, has seen footfalls increase by at least 10% in the last few weeks across its 35 stores in 15 cities. “In Mumbai alone, our footfalls are up by 17% in the last three weeks. In the first quarter, we had sales of Rs 15 crore. In the next quarter, we expect this to climb upto Rs 25 crore,” says Jay Gupta, MD of The Loot.

In apparel, children’s wear seem to be the biggest beneficiary. “As children, especially toddlers, normally outgrow their clothes pretty fast, parents are flocking to discount stores such as ours more than ever before,” says Narayanan. While the discount offered by Europa is between 25 and 30%, in kids wear it’s 30%- 40%.

The consumer base is also widening. “From largely middle class audiences, I now see people getting out of cars like Honda Accord and Mercedes Benz outside our stores,” says Gupta. The rush to such outlets is also due to the fact that regular apparel retailers and multi-brand outlets mostly offer off season sale only twice in a year. “But in times of inflation and continued price rise, the consumer is looking to cut spends across categories on a daily basis,” says Venkatachalapathy.

Brand Factory too has seen a 5%-7 % increase in our sales over the past few months. “While we cannot say that entirely due to inflation, we cannot rule out that it has played a role,” says Vishnu Prasad, CEO of Brand Factory.

July 26, 2008
Source: Economic Times

Retailers bet big on private labels

Established as well as wannabe retailers have hit upon a new idea in these days of cut-throat competition, high showroom rentals and rising overheads: Private labels. Apparel, fast-moving consumer goods and healthcare retailers are all moving to their own brands to ease the squeeze on their profit margins.

Till not so long ago, only a handful of retailers like Shopper's Stop had their own labels. Now, private labels have become core to every retailer's strategy. The list of retailers who have either introduced private labels recently or plan to do so in the near future includes all the top names of the business like Future Brands, Reliance Retail, Spencer's, Subhiksha and Dabur India.

The reason for the rush is not far to seek. According to industry experts, private label margins range from 30-40 per cent in the FMCG space to 40-60 per cent in apparels and 15-20 per cent in electronic goods. In most cases, these margins are 5-10 per cent better than the mass market brands these retailers sell.

"To support the current real estate prices, you need overall profit margins in the range of 30 per cent," Dabur India CEO Sunil Duggal said, adding: "The answer to this is private labels which give you margins in the range of 40-50 per cent which when blended with regular products give you margins that are around 30 per cent."

Show room rentals typically account for 35-50 per cent of the non-material cost for retailers. Space in new malls is more expensive because of the rise in steel and cement prices.

Profit margins in private labels, experts said, are higher because these are in-house products and retailers are able to cut out the intermediaries and overheads. This makes them a cost-effective proposition. As of now share of private labels occupy 10-12 per cent of the product mix on average but the retailers see this number growing significantly.

"Private labels may reduce the pressure of the large overhead the retailer might have to pay to the real estate developer and may in that sense help deal with the high real estate costs," said Future Brands CEO Santosh Desai. Future Brands too is keen on introducing a wider range of private labels ignored to provide a value option to the consumer.

Still others said private label is a good way to address the value-conscious customers. " Private labels is more about providing relevant and quality products to the value conscious consumer and given the economic conditions it becomes a way deal with inflation," said RPG Group Vice-chairman Sanjiv Goenka.

The current high inflation scenario seems to be the high point for private labels as more and more consumers are willing to try these new brands. Retailers also taking to private labels to fill in the gaps in across price points and categories and in turn providing a wider choice to the consumer.

"Since most of our sourcing is mostly the same as that of branded goods, the consumer gets the same quality at a better value," explains Goenka.

For Future Brands it is also about building their private labels at par with any other national brand and hence increase the rate of conversion for consumers from other brands to its own private labels. "We are as of now trying to build brands and make the consumer aware of them. We hope that in future our stores will only have our own brands," adds Desai.

July 16, 2008
Source: Business Standard

Traders opt for modernising retail business format

Traditional small shopkeers in the country were in favour of converting the traditional retail into a modern format and expected the government to pave the way for modernisation by providing financial assistance and rationalising tax structure, according to a recent survey.

The internal survey commissioned by the Confederation of All India Traders (CAIT) in 18 cities, revealed that 82 per cent of the traders were inclined to transform their traditional business format by upgrading their existing business structure.

Ninety four per cent opined that government should initiate steps to form a national trade policy for small retailers and bring reforms in the taxation structure and other law governing trade, a release quoting the study said.

Nearly 87 per cent of the traders viewed that retail trade should be placed for priority sector advances under the present banking system to make it feasible for the banks to facilitate financial assistance to traders without much paper work. About 80 per cent wanted primary focus of government for providing infrastructural faclities in commercial markets.

India has the highest density of retail outlets in the world, for every 1000 persons there are 15 retail outlets in India. The overall retail market size in India is estimated to be Rs 15 lakh crore. About three per cent of the retail trade is the organised sector and the balance 97 per cent is unorganised. The size of the market is expected to exceed Rs 20 lakh crore by 2010, it said.

The survey was conducted by the CAIT Research Trade Development Board, (CRTB) betwen April to June 2008 with a sample size of 7643.

July 13, 2008
Source: Economic Times

Mall scare: Correction in realty sector hits retail too

Just sometime back, the ‘shop till you drop’ mantra of Indian consumers spelt nirvana in terms of business for real estate developers. But now, with boom time having become a thing of the past, the correction in the realty sector has hit the retail space too.

According to latest figures, the top eight cities in the country are witnessing a 20% vacancy across 40 million sq ft of operational mall space. The twin reasons for this huge vacancy is rising rental values and lack of quality space.

Sunday ET, along with global real estate services firm Cushman & Wakefield, conducted a survey in 112 malls across the top eight cities which have more than 8.5 lakh sq ft of vacant space. The study found that all the retail space that has been developed in the last decade has not been able to get the desired retailer patronage.

Most of the supply has come in the same micro-markets targeting the same catchment and created an over-supply within respective neighbourhoods. Of the 112 malls across these cities, only a handful are recognised as successful mall developments, the survey stated. Leading the pack of vacant malls is Ahmedabad — where there is 34% space vacant.

Mumbai and Delhi follow with 23% and 22% vacant space, respectively. It seems Chennai is still a hot destination as far retail space is concerned, as it has no vacant retail space.

Says Rajneesh Mahajan, director (retail), Cushman & Wakefield India: “There are a couple of reasons for such kind of vacant retail space in major cities. The prime reason being the rising rental values and lack of quality space. With the influx of international retailers and growing urbanisation in the country, the demand for retail real estate continues to remain strong. However, now it is focused on premium high streets and promising developments.”

Industry sources say initially most malls in the same micro-market had similar rental rates. But as they became operational, the rentals started to get aligned with revenues and footfalls.

July 13, 2008
Source: Economic Times

Competition dents retail sector growth

The performance of the retail sector in the last quarter of financial year 2007-08 has been a gloomy one. Not only has the quarter-on-quarter growth declined by 700 basis point, on year-on-year (YoY) basis, sales growth fell drastically from 67.8% to 49.1%. Including the recently-listed Koutons and Vishal Retail, all big retailers continue to be on an aggressive expansion mode. This kind of competition is having a negative impact on margins of retailers as the target audience for all of them, more or less, remains the same.

The slowdown has triggered a volume game in the industry. Strategies like promotional campaigns, freebies, promoting private labels and online discounts are just some of the avenues that retailers are looking at to lure customers. According to analysts, this is a knee-jerk reaction by the industry to fight the inflation-induced dent in the purchasing power of customers. As they say, retail is a number game, so, big retailers are trying to push volumes. For some, it comes at the cost of profit. Meanwhile, in contrast to YoY sales growth of 49% for the sector, the interest cost has registered a whopping 96% growth. Though growing at a lesser 39%, depreciation cost has also been impacting margins.

The cost factor too is adding to the woes. For instance, during the quarter, Shoppers Stop opened its new stores in various formats. Provogue and Pantaloon followed soon. The companies are increasing their geographical presence in the wake of increasing competition. Launch of new formats continues to catch the attention of these retailers. In fact, a couple of these new formats are already generating profit at the operating level, thus showing a positive sign towards growth.

Like for Shoppers Stop, the average transaction size increased by about 7% for the current quarter over the same quarter in the previous year. Players like Provogue and Pantaloons too have witnessed a similar upward movement. Also, though growth in total expenses as a whole has almost been equivalent to the growth in sales at about 47%, some individual cost items like staff costs, selling and administration costs are under control. On a YoY basis, staff cost has grown at 26% against 44% in the corresponding quarter of the previous year.

Nonetheless, raw material cost continues to remain high - it grew by 66% in the last quarter and now is equivalent to 74% of the industry's aggregate net sales. This is the reason why operating margins have reduced to 4.8% of the revenue sale compared with 5.7% during the corresponding quarter of the previous year.

Among individual retailers, Pantaloon Retail continues to outgrow the industry - it recorded 57% a YoY growth in net sales during March 2008 quarter. Although it is lower compared with the 63% growth recorded during the December quarter, momentum continues to favour the company. New stores drove the growth in value-for-money format - strategies such as KB's Fair Price and online shopping are picking up. Their home store division has also been doing well. Next on growth charts is Provogue, which grew 40% in the last quarter, similar to the previous quarter.

In short, setting up of new stores has resulted in higher working capital funding, which has raised the industry's interest outgo. For Pantaloon, interest cost has almost doubled during the current quarter - as a proportion of sales, it has increased from 2.7% to 3.2% on a YoY basis. Provogue seems to be an exception in this as it recorded the highest increase of 100 basis points in interest cost for March 2008. Overall, the profitability margin has seen a sharp decline.

Only Shoppers Stop has registered some profit compared with its performance in the corresponding quarter of the previous year. The company's net profit margin now stands at 0.7% of net sales as compared to -1% in March 2007 quarter. It can be concluded that margins of retail companies seem to have been hit by costs related to their ambitious expansion programme. Expansion plans for some of them are running behind schedule. It has led to higher interest cost, yet retail companies are trying hard to cut costs by keeping inventory and carrying costs under control.

July 8, 2008
Source: Economic Times

Regional Trends

NCR mall rentals surged up to 50% in one year

The mall space rentals in the national capital region have jumped by up to 50 per cent over the past one year, but are likely to witness correction due to increased supply in the long run, says a study.

According to a latest report on rentals of mall spaces by global real estate consultant C B Richard Ellis (CBRE), in the last one year, mall space rentals across the NCR have witnessed an increase between 30 per cent and 50 per cent.

"However, in the current quarter some locations witnessed a slight decline as compared to previous quarter values. The primary reason for this is the relaxation in demand for retail space at prevailing rentals and the financial viability of the retailers in the recently operational malls," it added.

The malls and stores in locations, like MG Road, Gurgaon, South Delhi and other prime high streets, would continue to report high conversions and sales and as such rentals in these locations are expected to remain stable in the short-to-medium term, CBRE said. It added that, however, "the supply may take over demand in these locations in the long run and this will lead to a slight correction in values".

"A situation of over-supply and saturation resulting in subsequent correction of rentals may occur in certain pockets and micro-markets in the short to medium term," CBRE Chairman and Managing Director Anshuman Magazine said.

He, however, added that there was significant demand to cater to well planned malls in established locations which were not likely to see change in demand or values in the near future.

August 5, 2008
Source: Economic Times

Reliance Fresh returns to Kolkata amidst police security

The Mukesh Ambani-owned food mart Reliance Fresh, which left West Bengal last year following stringent political resistance, has re-started business here under police security.

Reliance Fresh opened three stores in the city - at New Town, Budge Budge and heritage park Swabhumi - quietly and without any fanfare Aug 1. But employees at the Swabhumi store told IANS that they still feared resistance from Left parties.

"On Sunday afternoon, around 50 men armed with sticks came to protest outside the store. We had to pull the shutters down with customers inside for 20 minutes. This sudden protest triggered panic among the customers," one employee said.

The situation came under control after the police reached the spot.

Incidentally, the store experienced the maximum footfall Sunday before the protesters assembled. Forward Bloc, a Left Front partner is resisting the opening of food marts, forcing Reliance Fresh to fold up business in the state last year. The party says retail stores owned by big corporate houses would hamper the livelihood of vegetable sellers.

"Not only Reliance, all these retail food outlets are illegal and we are conveying the message to the state government," the Forward Bloc-controlled state agricultural marketing board chairman Naren Chatterjee told IANS. Reliance Fresh staff said the stores are presently stocking fruits but no raw vegetables. "But very shortly we will begin stocking vegetables also," they said.

The 4,500 square feet Swabhumi store is also awaiting the launch of a non-vegetarian section adjacent to the main outlet very soon, the staff said. The non-vegetarian section is named Delight, designed in a shop-in-shop format. Reliance plans to open a few more stores in the coming months, including a hyper mart in Kolkata's Bagha Jatin neighbourhood.

Reliance Fresh has tied up with Jayshree Tea and the Goodricke Group for a select range of packet teas. The store stocks cereals, pulses, fruits, packed foods, frozen foods, cosmetics, toiletry, utensils and crockery among a host of daily use goods.

August 4, 2008
Source: Economic Times

Kerala slaps 10 pc surcharge on retail chains

Under pressure from the domestic traders, Kerala government has slapped a 10 per cent surcharge on the big retail chains, thus becoming the first state in the country to impose such a levy on super and hyper markets run by monopolies.

The proposal in this regard, made by state Finance Minister T M Thomas Isaac in the budget presented in March, came into effect with assembly adopting Finance Bill 2008-09 on Tuesday.

The surcharge would be applicable on retail chains, including direct marketing chains, which import at least 50 per cent of their stock from outside the state or the country.

Commercial ventures, whose 75 per cent of the total business is in retail space and total turn over exceeds Rs 5 crore a year would come under the purview of the surcharge.

The retail chains run by the state and those in the co-operative sector such as Civil Supplies Corporation and Consumerfed, would, however, be exempted from the levy.

Curbing the entry of both national and multinational monopolies in retail sector has been an openly acknowledged policy of the ruling party.

The coalition, however, is aware of the constraints it has in imposing total ban on monopolies and that it could only restrict them through regulatory measures like additional levies.

The well-organised trading community in Kerala has been spearheading a campaign demanding tough measures to curb big retail chains and earlier this month organised a statewide shutdown to press its demand.

July 23, 2008
Source: Economic Times

Malls re-entering high streets

Developers of shopping malls who were shying away from Bangalore's high-streets are now returning to establish their presence. The city, presently having six operational malls, is likely to see 30 more by 2009.

The key reason attributed for this development is that the presence of a mall within an established high-street has increased the retail appeal and attractiveness of the entire stretch and allows malls and high-street to equally benefit from a growing footfall base of consumers flocking to such a street, and also shoppers find a combination of both high-street retailing and climate-controlled shopping in new malls.

The development is coming on the success of high streets (M G Road, Brigade Road and Commercial Street) and malls (Garuda, Sigma and Central) all complementing each other within 1.5-2 kms radius in the city centre.

"Though it is early days, the initial evidence shows Bangalore is likely to see more malls which does suggest that departmental stores as well as malls and high streets can indeed play to each others strengths," said Shubranshu Pani, managing director-retail services, Jones Lang LaSalle-Meghraj (JLLM).

"The city has six operational shopping malls, which are expected to rise to over 30 by 2009. Interestingly, most of the new malls have been able to establish themselves well and have been successful in attracting consistent footfalls," he added.

The young, upwardly mobile consumer base of Bangalore has been patronising the city's prime shopping areas such us Brigade Road, M G Road, Commercial Street, Vittal Mallya Road and 100 Feet Road Indira Nagar.

Sharing study of three high streets of Bangalore - Brigade Road, Commercial Street and 100 Feet Road in Indira Nagar in JLLM's report on ‘Leading high street of India — Embracing change', Pani said, "In turn, these streets have ramped up their retail offerings, both in terms of density and the variety of national and international brands. Exclusive, high-end showrooms, designer studios and fine-dining restaurants are now establishing their presence on the high streets slowly."

Footfalls in this almost-integrated contemporary retail streets are quite record breaking, with estimates that Brigade Road probably attracts the highest number of consumers in the city. A store in this stretch is the first priority for any new brand entering the city.

Given the fact that vacancies are quite low and new supply is limited, brands have to contend with expensive rentals.

Although, Commercial Street has retained its character over the decades, it has also evolved over time, providing a mix of traditional as well as more contemporary national and international brands.

"Almost half of this bustling shopping lane is filled with traditional and quaint shops that find enough business from its loyal customers; but at the same time, the new brands have also been successful in attracting a steady flow of footfalls, which makes it an important retail destination within the city," Pani said.

In terms of retail expression, 100 Feet Road is probably a response to the consumer needs of the new generation in Bangalore. Consumer trends here are largely driven by the software and knowledge sector professionals, whether they are Indian or even expatriates.

Pani said, "Even though the street originally had a bungalow layout, after being declared as a transformational zone (allowed to house retail shops), the High-Street has seen a phenomenal growth over the last three years."

July 21, 2008
Source: Business Standard

Where mall glamour palls

Two years ago, India’s first designer mall, Gallops, came up in Ahmedabad, announcing that Gujaratis looking for global lifestyle brands would no longer have to travel to Singapore, Hong Kong or Dubai with their shopping lists.

But the globe-trotting Gujarati customer, who may dig into his deep pockets outside the State, is known to bargain hard within it. Today, many shops at Gallops are gasping for breath. A ‘designer mall’ is one where the outlets are specifically designed to give the customer a ‘global experience.’ For instance, an outlet of, say, ‘Lifestyle’ at Gallops has exactly the same look and dimension as its outlet in Mumbai, Frankfurt or New York so the customer would not feel out of place in any of these.

Today, few outlets in the swanky mall can boast of ‘business’; many have, in fact, closed shop due to lack of customers; others, who had booked space, have not even opened shop.

Of course, the parking lot is seen almost packed, but the car-owners are either shop-keepers themselves, window-shoppers, or those heading straightaway to the food court on the top floor of Gallops.

Simply put, many of these outlets are yet to break even. But this trend is not restricted to Gallops alone. Many other malls, whether marketing lifestyle products or grocery, are crying for customers’ attention.

The so-called ‘footfalls’ have hardly translated into actual business in most cases. And, of course, the traditional grocery stores (kiranas) have not disappeared, as feared by many only a few months ago. If anything, they are now giving stiff competition to the big boys of retail after the public’s initial enthusiasm wore off.

A number of reasons may have contributed to customer disinterest in retail, locals say. The Gujaratis are known to generally store their supplies of basic articles — foodgrains, sugar, edible oil — for the whole year and shop for the remaining needs in their neighbourhood store.

They even shop for clothes for the entire family in the ‘sales season’ of July and August. So, grocery and clothes, which constitute major portions of a retail outlet’s billing, do not really attract the customer in Gujarat to the swanky malls unless some freebies are thrown in.

Vegetable and fruits retail stores such as Subhiksha and Reliance Fresh face another problem: Gujarat being a ‘hot’ state, vegetables and fruits have low shelf-life. Most people buy these in small quantities, daily or even twice a day, from the larri-wala.

According to realty developer Mr R. K. Patel, the ‘old world’ shopkeepers have several advantages — rents at old rates, non-air-conditioned shops, minimum manpower, no-frills environment, flexibility of business hours and meagre overhead costs, they have more staying power and can afford competition. Few retailers, including the pioneering Big Bazaar, have, therefore, managed to break even.

In a mall, on the other hand, the shopkeepers are required to shell out for electricity bills, skilled manpower and rents. Lease rents in Ahmedabad, for instance, have increased four to five times during the last three years compared to the high street, stand-alone old shops.

Unlike Mumbai, New Delhi or Bangalore, malls in Ahmedabad, Surat and Rajkot do not attract the high net worth individuals (HNIs), such as IT professionals, simply because Gujarat is yet to emerge as an IT-major State.

Moreover, sale of branded articles is often split amongst the many shops selling the same articles in a limited area. For instance, about a dozen outlets in a radius of just 3 km sell the same brands of shoes, wristwatches or computers; this has split business and adversely affected these outlets as they all have set up shop in each of the half-a-dozen malls or hyper-markets within a 2-3 km radius.

There is too much supply but little demand, according to Mr R. K. Jain, a realtor. However, this has not deterred construction activity, although some of the mall developers are rethinking or recasting their plans: some have simply postponed construction, mainly due to increased costs involved now, or have changed plans to construct commercial, corporate and business complexes instead of swanky malls.

Interestingly, some of the major malls are now actually downsizing their outlets due to various reasons. Some shop-keepers at malls, according to another realty developer, have even formed ‘unions’ threatening to pull out unless their lease rent was reduced by mall managements! Some have, even after signing up, cancelled occupation.

‘Unrealistic’ least rents on the new business artery of Ahmedabad, the Sarkhej-Gandhinagar Highway, have only compounded the problem: rents on this Highway have increased three-fold during the last six months, from Rs 1,400 to Rs 1,500 per sq.ft to Rs 3,400 per sq.ft. As a result, more than 10 lakh sq.ft of retail space is ready but has no occupiers in Ahmedabad.

Again, this has not deterred some of the developers: they are still busy constructing some 20 lakh sq.ft in the city this fiscal. Any takers?

July 20, 2008
Source: Hindu Business Line

Hawkers’ movement gathers strength

A week after it was forced to defer its formal launch of a large format store here, Spencer’s, the retail arm of the RPG group, looks set to become a test case for the agitating hawkers committee which is now getting ready to give a major push to a national movement under its umbrella body, the ‘Vyapar Rozgar Bachao Andolan’ a forum which is described as a movement for retail democracy by its Delhi-based leaders.

The Spencer’s store covering 36,000 sq. ft. of retail space in Gariahat, an upmarket shopping-cum-residential hub in South Kolkata, has now been able to commence operations; but only as per some conditions set by the hawkers.

They had blocked the July 4 launch saying that the store will jeopardise the livelihood of 6,000 small pavement sellers and shopkeepers in the area. RPG group Vice-Chairman Sanjiv Goenka maintained that Spencer’s was an upmarket store whose range of merchandise did not compete with that of the small hawker. But the conditions remained.

Here are a few samples: garments below Rs. 300 cannot be sold. Vegetables will have to be mostly in packs of three kg. Fresh coriander leaves can be sold only in bunches of 500 gm, while ginger can be retailed from this store only in lots of 500 gm.

The city mayor, at whose behest the store was opened on July 7, is mediating between the All India National Hawkers Federation, whose local unit is spearheading the protest, and company officials.

A Spencer’s spokesperson said that these conditions were forcing customers to spend more during times of high inflation. “It is also leading to restrictive trade practices as we cannot impose conditions of minimum purchase of essential and perishable commodities on the consumer. We have now stopped stocking fruits and vegetables as these are not selling.”

The hawkers have also walked into the store and conducted what the company described as a hostile audit. Says Shaktiman Ghosh, the all India general secretary of the federation which has as its President Medha Patkar. “We had to conduct these audits at the billing points to check whether the conditions were being adhered to. “He hinted that now other stores in this area would also be targeted and then gradually the movement would be taken to other parts of the country where street hawkers and round-the-corner mom-and-pop stores were suffering due to the entry of big retail. “We have done it against Reliance in some States and now the movement will gather in strength”, he said.

July 13, 2008
Source: The Hindu

Hawkers prevent Spencer's hyper mall inauguration

Hundreds of hawkers today foiled the inauguration of the second hyper mall of the Spencer's, promoted by the RPG Enterprises, in upmarket south Kolkata, dealing a major blow to the organised retail trade in West Bengal.

All trade unions, except the CITU, supported the hawkers who even prevented RPG Enterprises vice-chairman Sanjiv Goenka from entering the swank three-storied mall located near Gariahat, a major retail hub.

The police said around 10 am hundreds of hawkers converged on the area raising slogans. They also burnt pamphlets and discount coupons.

Local councillor Debasis Kumar said the CITU-affiliated hawkers were not present in the agitation.

The general secretary of the Hawkers' Sangram Committee, Shaktiman Ghosh, told reporters that some 6,000 hawkers conducting their trade between Ballygunge railway station and Rasbehari Crossing would be affected.

"We are more concerned here because the density of hawkers is very high compared to other locations. We will allow Spencer's to open here if they refrain from selling fruits, vegetables, food articles and cheap garments," Ghosh said.

Spencer's vice-president (Marketing) S S Shekhawat said the agitation and the blockade were based on misinformation spread by vested interests. "The fact is that we will sell no product which hits hawkers' interest."

July 4, 2008
Source: Economic Times

International

Marks & Spencer among 28 FDI plans cleared

Global retail major Marks & Spencer’s proposal for 51 per cent foreign direct investment in single brand retail business was among 28 FDI proposals worth Rs 1,328 crore, cleared by the Government on Friday.

“Based on the recommendations of the Foreign Investment Promotion Board (FIPB) in its meeting held on June 24, the Finance Minister, Mr P. Chidambaram, has approved 28 FDI proposals,” an official statement said here.

The approved proposals relate to chemicals & petrochemicals, industrial policy & promotion, information & broadcasting, urban development, tourism and economic affairs, amongst others.

A proposal of Giordano Fashions (India) to establish a chain of single brand retail stores, and another by Pearle Europe BV involving induction of 50 per cent FDI for single brand retail trading also received the Government’s green signal. Parryware Roca’s Rs 741-crore proposal has also got approval for increasing foreign equity from 50 per cent to 100 per cent in the sanitary ware venture, while the Government nod was also granted to Multiscreen Media’s FDI proposal (about Rs 158 crore).

FIPB also approved real estate major Eldeco’s Rs 195.7 crore proposal for induction of foreign equity and change in status from operating company into operating-cum-holding company.

July 5, 2008
Source: Hindu Business Line

Apparel & Accessories

Koutons to invest Rs 300 cr to open 200 more family stores

Apparel and fashion-wear major Koutons Retail will invest Rs 300 crore for expanding its new family stores along with outlets for its casual-wear brand 'Charlie Outlaw'.

The company will open 200 new large format Koutons Family stores apart from adding another 1,400 stores of Charlie Outlaw, over the existing 605 stores of the brand in the next 18 months.

On the back of these expansions, the firm is aiming to more than double its annual turnover by end of 2009-10 fiscal to Rs 1,800 crore by 2009-10.

"We have presently 60 Koutons Family Stores and 605 Charlie Outlaw outlets. By end of 2009-10 fiscal, we would be expanding in both the categories and add 200 more Family Stores and 1,400 Charlie Outlaw stores," Koutons Retail Chairman D P S Kohli said. The expansion would entail an investment of close to Rs 300 crore on the part of the company, he added.

"We have sufficient funds left from the IPO we went for in late 2007 where we raised Rs 140 crore. Besides, our debt equity ratio is also comfortable for securing funds from banks in case of need," Kohli said.

August 3, 2008
Source: Economic Times

Titan Ind to invest 250 mln rupees in eyewear retail

Watch and jewellery retailer Titan Industries Ltd will invest 250 million rupees in its eyewear retail business, a top official said on Wednesday.

The company today launched its eyewear brand, Titan Eye+, and plans to set up 80 stores in 40 towns across India by March 2009, Managing Director Bhaskar Bhat told Reuters.

Most of the stores will be set up on a franchise basis, Bhat added.

July 16, 2008
Source: Reuters

Catmoss to invest for rolling out 500 stores

Kidswear chain Catmoss Retail on Friday said it would invest Rs 400 crore in the next five years to expand its outlets to 500 stores in India by 2010-11, besides it is planning to foray into overseas markets, including Australia and the Middle East.

"We have just crossed the 100 stores mark across the country and are adding another 100 odd in various Tier II and III cities this year. We also plan to set up 20-25 stores in Australia and the Middle East," Catmoss Retail Chairman Ashwani Chawla told PTI.

In Australia and the Middle East, the new Catmoss stores will come up in Sydney, Melbourne, Dubai and Abu Dhabi among other cities, he added. The company is aiming for 500 stores in India alone by 2010-11, with an investment of Rs 400 crore, he added.

Chawla said, as part of its expansion plans, the company would invest Rs 50 crore this fiscal for rolling out 100 stores in India and 20-25 stores in Australia and the Middle East.

"From a turnover of Rs 75 crore last year, we are now targetting a figure of Rs 125 crore in the current fiscal on the basis of the expansion," he said.

It also plans to hit the capital market in 2009, besides moves to attract private equity investments. The percentage of share offloading would depend on company's valuation, he said.

"The Rs 20,000-crore kidswear market in India is growing at 20-25 per cent annually and our focus is on tapping the upper middle segment in the price range of Rs 300 to Rs 1,000. The expansion would keep intact the existing 70-30 ratio between company owned and franchisee outlets," he said.

Catmoss is also venturing beyond the ethnic and party kidswear apparel segment and would soon be introducing kids accessories like shoes, belt, caps, sunglasses and bags for both boys and girls in the age group of two to 14 years, he added.

July 11, 2008
Source: The Hindu

Telecom Retail

Corner stores next hot spot for mobiles

Organised mobile retailers like HotSpot and Mobile NXT have found a new way to deal with competition from mom & pop stores: make neighbourhood retailers their franchisees to sell mobile phones and accessories under their brand.

Currently, more than 70% of the mobile retail sector is unorganised and market analysts believe there is a huge potential for the franchise model. “The return on investment (RoI) for the franchisee is somewhere around 60-65%.

It will allow us to expand our presence and enter deep into the cities,” says HotSpot CEO Sanjeev Mahajan. HotSpot has recently adopted the franchise model with 25 stores operational in Delhi alone and has plans to expand to 100 such stores besides the 400 company-owned, company-operated (co-co) stores across the country.

“Customer experience and pricing is the crux of this business. Therefore, we provide stock management, professional training for the in-store sales team, and an after-sales customer support at all our franchised stores.

The role of the franchisee is restricted to the operational level,” says Mobile NXT CEO Vijay Menon.

Mobile NXT adopted the franchise model in tier-II and tier-III cities across India in 2007. The company operates more than 55 stores all over the country.

Mr Menon, however, concedes that the franchise model in mobile retailing is difficult to adopt since there is no uniqueness in the product and the return on investment is not very attractive.

That is why players like Subhiksha and Mobile Store are refusing to join the bandwagon. They believe the franchise model is not profitable at this stage, given the low profit margins and low market penetration.

“We are concentrating on a co-co model based on pricing. We don’t think franchise model is the way to go, since the business already accounts for low margins; expanding through franchise would dent the margins further,” says Subhiksha president-marketing Mohit Khattar. Subhiksha operates the largest chain of mobile stores with around 1,300 stores all over the country.

Mobile Store CEO Rajiv Agarwal also feels that the franchise model in the current scenario does not hold much ground. “There is the risk of our brand value being diluted. This is a business where you cannot allow your service proposition to get diluted,” says he. Mobile Store has significant presence in the country with more than 800 stores.

However, RPG Cellucom head-marketing Biswajit Pandey feels that with improving margins and marketing strategies, the franchise model may take the front stage in future. The company currently operates over 25 stores.

“It’s a win-win situation since it allows rapid expansion and presence in local areas for the franchiser and an opportunity for the traditional retailer to enter the newfound trend of organised retail. Moreover, the operational costs in case of franchise model is low in comparison to co-co model, giving both the parties a better RoI,” says global management consulting firm Technopak chairman Arvind Singhal.

July 26, 2008
Source: Economic Times

Subhiksha Mobile to invest Rs 500 cr

Telecom retail major Subhiksha Mobile is going for a major expansion and will invest Rs 500 crore this year to add around 800-1,000 stores to its existing 750 outlets in the country.

The company which opened its 100th outlet in Andhra Pradesh today, said in a press release that the state is a important for Subhiksha and we are delighted to be the first mobile retailer to cross the 100 stores benchmark here.

The company said its has mananged to have 15 per cent share in the mobile retailing market in Andhra Pradesh since opening its first store there in second half of 2007, the release added.

July 23, 2008
Source: Economic Times

Reliance Retail to open 50-60 'i stores', 150 Reliance digital

Mukesh Ambani promoted Reliance Retail Ltd today announced to open 50-60 'i store' across the country within the next one and half years and 150 Reliance Digital stores by 2011-12.

"We have plans to open 50-60 i stores by next 15-18 months while first targeting top cities of the country and we also plan to open 150 Reliance Digital stores by 2011-12," Reliance Digital Chief Executive Officer Ajay Baijal told reporters here today.

Reliance Digital is a consumer durable and IT arm of Reliance Retail Ltd, which offers home appliance, consumer electronics, IT and telecom products. While i store is a Apple Premium Reseller store, which exclusively deals with Apple products.

On being asked about the earnings, he said, "On an average, we are expecting Rs 7 crore from i store format and Rs 70 crore per annum from Reliance digital." The company is looking to have 1,000-1,200 square feet of area under i store and 20,000-30,000 square feet under Reliance Digital, he said.

Presently, the company has i store in Bangalore, Hyderabad, Mumbai and Jaipur and Reliance Digital stores in Hyderabad, Bangalore, Mumbai, Gurgaon and Ghaziabad. The company today announced to open fifth i store here and the first in Punjab.

The new i store at Ludhiana spread over 1363 sq ft, will offer entire range of Apple products, including iMac consumer desktop computers, iPods and the entire suite of Mac software along with over 500 accessories and peripherals complementing Apple products.

July 16, 2008
Source: Economic Times

Lifestyle & Luxury Retailing

Gitanjali to open 150 stores in Tier-II cities

Gitanjali Gems Ltd, part of the Gitanjali Group of companies promoted by Mehul Choksi, is contemplating setting up 150 branded retail stores in Tier-II cities in the next two years. Gitanjali feels that these cities contribute 60% to the sales.

During the period, the company is also planning to expand point of sale for various brands from 840 to 1,500. For the retail expansion plans, it is planning to pump in $50 million, Anuj Rakyan, vice-president (jewellery division), Gitanjali Gems Ltd, said. The company has also roped Bollywood actress Katrina Kaif as its new brand ambassador for its popular jewellery brand, Nakshatra, replacing Aishwarya Rai, who was its brand ambassador since 2004.

Currently, Gitanjali Group sells its branded diamond and other jewellery products under brands, Nakshatra, Asmi, Gili, D’Damas, Sangini, Collection G, Gold Expressions and Vivaha Gold through 840 outlets.

Addressing a press conference, Rakyan said, “Katrina lends a refreshing look to the brand and is currently the reigning queen of Bollywood. We strongly feel that Katrina epitomises what Nakshatra stands for.” Company sources added that the endorsement agreement with Katrina Kaif has been signed for about 18 months.

Commenting on the occasion, Kaif added, “I am delighted to be associated with a brand like Nakshatra that has garnered immense popularity not only in India but also worldwide. I hope this association is amiable and mutually profitable.” The Nakshatra collection has floral designs with multiple diamonds encircling a single large diamond to signify the constellation effect.

August 5, 2008
Source: Financial Express

Luxury bed-maker Hastens forays into India

Sweden-based luxury bed-maker, Hastens, will foray into the Indian market by launching its first store here on July 27.

The launch of the store in India is part of Hastens’ strategy to focus on the Asian markets, Mr Sanjay Verma, Country Manager, Hastens (India) Pvt Ltd, told newspersons here on Friday.

Priced between Rs 2.5 lakh and Rs 35 lakh, the beds are targeted at the upper-end customers. “Our prospective customers in India are those who own a Mercedes ‘S’ class or similar luxuries for whom price is not a deterrent,” he said. The price includes 32.8 per cent import duty as the beds are manufactured in Hastens’ facility in Koping, Sweden.

Unlike beds in India which come without cots (bed frames), Hasten beds come with a bed-frame carrying patented springs.

July 27, 2008
Source: Hindu Business Line

Timex to invest Rs 60 crore to revamp portfolio

Watch brand Timex will revamp its product portfolio and presence this year with a host of high-end luxury and fashion brands with an investment of around Rs 60 crore.

Speaking at the launch of its second 'Time Factory' outlet in Kolkata's Mani Square mall on Friday, Vikram Arora, vice president-sales, Timex Group India Limited, said, "We will focus on retail expansion by setting up more mid-priced to premium international multi-brand outlets in India, in addition to bringing more fashion and luxury brands to the country."

The fashion and luxury watch market in India is growing at a rate of 15-20 percent with influx of various international brands. "That is the reason we want to bring in more of such high end luxury and fashion brands for Indian customers.

Though the base is relatively small there is tremendous potential of growth besides increased revenues," said Arora.

Currently the company has more than 62 stores in India with South and West claiming a major bulk, he added. The company is planning to open around 120 more stores, each entailing an investment of around Rs 50 lakh. The Timex Group recorded a turnover of Rs 125 crore last year selling around 16 lakh watches in India. "We are targeting around 15-20 percent growth this year in tandem with the booming watch market in India," Arora said.

"We already have global license for retailing several US-based fashion brands like Nautica, Guess and luxury brands like Versace, Valentino, and Feragamo," Arora informed.

This apart the Group has recently got into an alliance with 'Fossils India Limited' to retail its products besides retailing DKNY products. While the foreign brands are priced between Rs 1495 and Rs 26,000, while Timex caters to the mass market with prices between Rs 1000 and Rs 10,000.

July 4, 2008
Source: Business Standard

e-Commerce

Online portal on best deals plans network expansion

Open2save, an online platform which currently offers information to consumers on discounts and best deals from its network of over 1,200 retailers across the country, is planning to take this number to 10,000 by March next year.

Open2save, promoted by Bangalore-based AeNwis E-systems Pvt Ltd helps consumers make purchase decisions based on aggregated information on all the offers running in the market across various retail products and services.

“We also complement traditional advertising and marketing efforts by manufacturers and retailers so that they reach their target market effectively,” says Mr Vaibhav Tewari, CEO, AeNwis E-systems Pvt Ltd. Though India is still in a nascent stage in target marketing efforts, retailers are willing to experiment with new ideas, he says.

In the US, though only about 20 per cent of the shopping happens online, almost 60 per cent of the purchase decision is made through online information, according to Mr Tewari.

The Web site currently lists deals and discounts offered by manufacturers, large and regional retail chains, local stores, individual stores and boutique stores in five cities (Bangalore, Mumbai, Pune, Mysore and Lucknow).

Offers listed are across 35 product and service categories including FMCGs, consumer durables, apparel, telecom and financial products, salons and restaurants. “Laptops, mobile phones, apparel and beauty services are the most used categories,” says Mr Tewari. The Web site currently records 150,000 page views a month.

Plans for the year include launching mobile coupons for customers and increasing presence in 15 other cities, Mr Tewari added.

July 19, 2008
Source: Hindu Business Line

Online retailing gains momentum

For the adman turned online marketer Prakash Bang, the only truth is bottom line. If cash register is ringing, the business model is a success, he maintains.

Using that yardstick, several online retailers are reporting success, and not just in the usual businesses of travel, art, books and music. These are e-tailers from the lingerie and fresh fruit businesses, which usually require a high level of buyer involvement by way of touch and feel.

Hina Saiya of Shop Imagine, an online lingerie store which went live in January 2008 and started shipping out products from the following month, says she is “blown away” by the response from the far off small towns of semi-rural India.

“I had not even heard of these places from where we are getting our orders,” she said, adding: “Businesses have not tapped into this phenomenon of India’s women being able to use their financial clout and buying themselves some excitement and romance via these luxury, aspirational items.”

Mr Bang’s fresh fruit e-tail venture is seven-years-old. He admits to selling 1-lakh mangoes during the short, two-three month season, with 90% of his sales being domestic, making it worth around Rs 1 crore from just one fruit.

He has just added sitaphal and pomegranates, giving him fresh produce for at least nine months of the year. “We have three brands in mangoes starting with Bangoes, sitaphal goes under the brand of Capp and the red pomegranate under the brand anara,” said Prakash Bang and Sons CEO Mr Bang.

Silicon Valley-based Ms Saiya and the Pune-based Mr Bang agree that gifting is what gives them volumes. Ms Saiya expected the Valentine’s Day effect to linger for a bit. “We were surprised that sales just kept on, long after Valentine’s Day. These items are mainly gifts,” she said.

Since neither has an offline presence, all the action is on the Net and Ms Saiya maintains that it cost her a quarter of what it would have cost to set up one small shop in Mumbai to retail her line of products. The average size of a purchase varies between Rs 10,000-20,000, usually comprising two or three items.

“Retail is too daunting to enter. This way, with a portal, I can target the entire country, with an office here. We ship out from a central store in Bangalore, where goods ordered from all over the world are stocked,” she said. From concept to start-up took her less than a year and now, within a year of start-up, she plans to extend the product range. This venture is privately funded although she is open to external borrowings for the expansion.

July 17, 2008
Source: Economic Times

Support Industries

Wipro Info bags 5-year Spencer’s deal

As retailers ramp up their store count in the country, they are hiring IT companies for quick and cost-effective rollouts. This is offering huge opportunities for tech companies in the vertical that is currently growing faster than the industry average of 20-22%.

A week after Infosys launched ShoppingTrip360, a platform that enables retailers and consumer product manufacturers to get real-time information on shoppers’ buying behaviour, Wipro Infotech has bagged a five-year IT outsourcing deal from Spencer’s Retail Ltd. Wipro Infotech offers services like integrated outsourcing, point solution, infrastructure management and managed services to its retail clients.

“Most of retailers are increasing number of stores and they are looking for IT partners to transform and handle their growth,” Anil Jain, VP - corporate business, Wipro Infotech, said.

Wipro would be providing infrastructure management services to Spencer’s, he said. The retailer’s application management and data centre operations is being handled by its in-house IT team.

“Spencer’s will be rolling out 600 stores in the next six months. Our services will help them in expediting the process and would also translate into cost savings in the long run,” Jain said.  Spencer’s CIO Amit Mukerjee said that over a period of time, implementation of IT solution would result in cost savings for them.

Currently, Rs 1,000-crore Spencer’s operates 400 stores in 66 cities. It has launched a massive expansion drive under which it is planning to roll out 1,000 stores by March 2009.

Jain said Wipro’s retail vertical was growing at a significant pace. Last year, Infosys earned 11.8% of its total revenues from retail. In 2006-07, it was 10%

August 5, 2008
Source: DNA

HR News

Retail downturn: Senior execs receive pink slips

Senior executives who drove India’s retail juggernaut in the past two years of boom are finding their shelf life reduced in times of a downturn. With the focus shifting from driving topline growth to protecting the quickly depleting margins, retailers have put their managers on notice. Many have already started to prune manpower from the top. Over the past 48 hours, realty major India Bulls, which acquired Pyramid Retail, has sacked 15 of its middle and senior-level executives.

When contacted, IndiaBulls’ CEO Gagan Banga told ET that the sackings had nothing to do with costs. Only those employees who could not perform were asked to go. “Yes, it is true that 15 managers have been asked to leave but that is because they were non-performers. One should appreciate that we had taken over a loss-making business and we are trying to turn it around.”

Mr Banga claims that he has also been hiring an equal number of people at the same time. In the past 6-8 months, prices of consumer goods have increased dramatically. While consumer spend has been dipping, manufacturers have been putting pressure on retailers to increase sales while keeping margins at bare minimum.

Most retailers — yet to recover their investments — have resorted to severe cost cutting at their end to remain afloat. Acquisition of new space — buyout, rental or lease —have been put on hold. Pruning staff is yet another strategy.

While the smaller retailers have stopped hiring and have cut staff at frequent intervals, unconfirmed reports of layoffs are coming from big retailers like Reliance Retail.

However, the company’s spokesperson “strongly denied the information”. According to industry experts, it is for the first time that the middle and senior-level executives are being laid off. This seems like a deviation from the norm wherein junior-level staff is the first to be shown the pink slip, he said.

Future Group chief executive Kishore Biyani says: “Yes, there have been some issues in the retail industry. But we, as an organisation, are trying to shift employees from one department to another rather than laying them off.

August 2, 2008
Source: Economic Times

M&S Reliance starts filling top key mgt positions

Gearing up for roll-out of its chain of stores across the country, retail company Marks and Spencer Reliance India Ltd has started filling in top key management positions, while it is still scouting for a marketing head.

"We have already filled the positions of Chief Financial Officer, heads of human resources, buying and retail. We are looking out for a local person to head marketing," Marks and Spencer Reliance India Chief Executive Officer Mark Ashman told PTI.

The JV, in which the UK's retail company M&S has 51 per cent and the rest is with Reliance Retail, has roped in Jatin Luthra as the CFO. "Also we have two expats from M&S Adam Colton and Spencer Sheen who will be heading buying and retail portfolios respectively," Ashman said. Shalini Naggar will be the HR head of the JV that plans to pump in 29 million pounds (about Rs 230 crore) in the Indian market over the next five years and set up 50 stores.

He said the company is still looking out for a local person to head its marketing team.

"In the long run we are looking at local talent to head the respective teams," he added.

Ashman said in the initial year the company would have a strength of about 40 executives, which is likely to grow to about 55 next year.

Under its current franchise agreement with Planet Retail, M&S has 14 stores with about 250 people overall. "When we reach the number to 50 stores in the next five years it is likely to grow many folds," he added

July 31, 2008
Source: Economic Times