Stay abreast of the fast moving economic super-power — India!
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Stay abreast of the fast moving economic super-power — India!
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Retail News December 2007 |
Metro to open stores in Mumbai and Kolkata
Germany’s Metro Cash & Carry announced that it would be investing $40-45 million to set up new wholesale marts in Kolkata and Mumbai, both of which will become operational by the first quarter of next year. Metro currently has a total of three stores, two in Bangalore and one in Hyderabad.
The company sells fruits and vegetables at its Hyderabad store, it cannot sell these items in Bangalore as it is not permitted under the Agriculture Produce Marketing Committee (APMC) Act, which restricts private companies to buy produce directly from the farmers. Construction has already begun for its stores in both cities, which will have a total area of 75,000 sq ft of space. Metro is also keen on expanding to Punjab, which it feels will offer it a good opportunity to source as well as sell products.
While Wal-Mart will be entering this format in the coming year with its tie up with Bharti Retail, Metro is quite a way ahead of them and has been running cash and carry businesses in 29 countries. Metro reiterated that it would not be interested in entering the front-end retail business at all.
December 04, 2007
Source: Business Standard
Dabur aims Rs 1000 crore turnover from lifestyle retail biz by 2010
Home grown FMCG major Dabur India on Tuesday said it is targeting a turnover of Rs 1,000 crore over the next three years from its beauty and lifestyle subsidiary - H&B Stores.
"We are aiming a turnover at about Rs 1,000 crore by 2,010 and around 150 H&B Stores. On an average, we are expecting a turnover of nearly Rs 22,000 per sq ft per annum from the outlets," Dabur India CEO Peter Braker told reporters.
The company is planning six retail outlets in the Delhi NCR region by the end of January and by next financial year the number would go up to 50.
"Currently, we are focusing on the Northern India and will soon open stores in Chandigarh, Amritsar and Ludhiana. We also have plans to open shop in Bangalore by January and foray in the Southern part," Braker added.
When asked how the company would compete with the existing retail outlets, Braker said, "We will offer products at a price which is 20-25 per cent cheaper than the Maximum Retail Price (MRP). This would attract the customers as this promotional price will be made available through out the year." The company's market size is about Rs 25,000 crore and is now targeting customers in the age group of 16-45 years.
The retail initiative of H&B Stores is not only confined to selling only Dabur products, Braker said and added, "products of other FMCG majors, both national and international will be available in the outlet."
The store size would vary in the range of 1,200 - 6,000 sq ft. The company would be investing about Rs 140 crore for streamlining its operations by 2010. The lifestyle retail section of the H&B would be operating under the brand name of 'new u'.
December 04, 2007
Source: Economic Times
Reliance Retail likely to shift to specialty stores
Reliance Retail is likely its closed Reliance Fresh stores in West Bengal into specialty stores for items such as footwear, apparel, jewelry, books etc. The company had to shut down its stores in the state of West Bengal after widespread protests organized by political groups and trader organizations against their low prices.
The company has already given notices for about 150 of its leases that it had taken for its grocery stores. According to Bijou Kurien, president and chief executive officer of the lifestyle division of Reliance Retail, "West Bengal will see only speciality stores, like exclusive jewellery, footwear, wellness and apparel stores, instead of the hyper or fresh formats."
At present, Reliance Retail has seven specialty formats and will be unveiling some new formats in the coming two weeks. The company will be launching its first books, music and film outlet in December, as well as add another footwear outlet in the NCR are before the end of the year.
On the subject of lost jobs in locations where the stores have been shut down, Kurien said that "Employees' security is not solely our responsibility, the government must take the responsibility of locations where stores could be opened and sustained. If there are no stores, there would be no jobs."
December 03, 2007
Source: Business Standard
NTC and Pantaloon in joint venture
The National Textile Corporation (NTC) and Pantaloon Retail, which is owned by the Future Group, have formed a joint venture. NTC has been selling surplus land in many states and is now planning to separate its retail business into a new company. NTC will have a majority stake in the company at 51%, management will be from the private sector partner company.
NTC has 113 retail stores across India, in prime retail locations in Delhi, Mumbai, Kolkata and Chennai and are all worth enormous sums of money for their value of land alone. Other companies that NTC has formed joint ventures with are Alok Industries and Bhaskar Industries.
December 1, 2007
Source: The Economic Times
Reliance Retail is not sure of what to do about opening retail outlets in states where it faced vigorous protests and has also put its Rs. 1,200 crore investment plan in Uttrakhand’s agriculture sector. The company had earlier decided to close outlets in Uttar Pradesh and is undecided about its plans for Uttrakhand.
The company was expecting the Uttrakhand government to sign the Agriculture Produce Marketing Committee (APMC) Act, which would give Reliance access to the vegetable mandis. Traders in Uttrakhand have submitted a memorandum to the Chief Minister asking for a ban on organized retail in the state.
November 30, 2007
Source: Business Standard
ITC will be increasing the number of e-Choupals from nine to 20,000 by the year 2010, in an effort to reach 10 million farmers. At present, the e-Choupal network is operational in six states with its 6,400 kiosks covering 400,000 farmers in 40,000 villages. Once the network is expanded, it will cover 100,000 villages in 15 states across India.
According to Srinavasa Rao, head of new initiatives at ITC, “Currently, 40-50 per cent of our procurement of certain commodities comes from our Choupal network, and we are looking at taking it higher.” In addition, the company will also be expanding its Choupal Sagar network and has also tied up with 140 companies to sell products at their outlets.
The company is expanding its Choupal Fresh operations in current locations such as Hyderabad, Pune and Chandigarh, and working to expand its e-Choupal network in Andhra Pradesh, Karnataka, Punjab and Haryana.
November 28, 2007
Source: Business Standard
Cash and Carry format sees entry of local companies
Carrefour is the most recent high profile player to announce its intentions of entering the cash and carry format in India, and it has led to a host of planned cash and carry outlets by domestic retailers as well. While Metro of Germany is well established in the market, newer entrants include Bharti-Wal-Mart, Reliance, Pantaloon, Wadhawan Retail and other international players such as Tesco and Costco.
While the cash and carry format is only a small portion of the retail industry, it is highly unorganized as yet, which is why so many retailers are rushing in to enter the sector. Another huge attraction is the 35-40% growth rate that will propel them to the big league as well as give them a smooth launch pad for branching out into retail once FDI restrictions on international companies is lifted.
According to Mala Morris, a senior business analyst at UK based food and grocery research company IGD, “Smaller retailers in interior markets often struggle to obtain the same service levels and prices from the companies’ distribution structure as retailers in the mainstream markets. Global retailers will use the opportunity to set up wholesale stores in India to understand the market. This will inform their entry strategy when FDI norms are eventually relaxed.”
The Future Group will be expanding its wholesale format KB’s Wholesale Market to Mathura in Uttar Pradesh and Bardwan in West Bengal and based on how well the company does there, it will further expand to Gujarat, Karnataka, Maharashtra, Uttar Pradesh and Chhattisgarh.
Reliance has planned to launch its wholesale format in March 2008 under the name Reliance Cash and Carry, and had hired Metro’s chief executive Harsh Bahadur earlier this year. Reliance will be opening its wholesale stores in Hyderabad and Bangalore. Another player who is keen to enter the market is Wadhawan Food Retail, which runs the Spinach chain of stores.
November 25, 2007
Source: Business Standard
Reliance Retail to use its Fresh outlets in UP for specialty products
Reliance Retail has decided to open up some of its closed Fresh stores in UP as specialty stores for footwear, apparel, jewelry, books and other items. So far, 15 of these outlets have been planned, with most of them located in Ghaziabad and Noida.
Reliance Retail had to shut down its Reliance Fresh outlets in Uttar Pradesh after violent protests by political groups and trade organizations against their low prices, which they felt would drive small traders out of business. The company had given notices for close to 150 properties that it had originally rented for setting up grocery stores.
November 23, 2007
Source: Business Standard
Future Retail to build another Central mall
The Future Retail group will be building the Kolkata Central mall, which will stock over 400 brands of items. The new mall is expected to open in the next two years and will cover 300,000 sq ft of space and will be located off Ballygunge Circular Road. The company will be opening in Gurgaon, Goregoan, Vashi, Amhedabad, Indore and Bangalore by mid-2008.
Central malls are unique as they do not have any internal walls and are built using a seamless concept of stores and different brands are all stocked under one roof. At present, Central malls are located in Bangalore, Pune, Hyderabad and Baroda. Each of these malls cost around Rs. 1,500 to 2,000 per sq ft.
November 22, 2007
Source: Business Standard
Reliance Fresh store attacked in Bhopal
Uma Bharti’s party Bhartiya Janashakti (BJS) activists attacked a Reliance Fresh store in Bhopal after she called on the people to protest the opening of such stores. While she was addressing the rally, party workers attacked the store and ransacked it, breaking windowpanes and throwing vegetables on the road. Protests against these stores have been intensifying in the state of Madhya Pradesh, with demonstrations being held in Jabalpur, Gwalior, Indore and Bhopal.
November 22, 2007
Source: The Economic Times
Reliance Retail plans $5.5 billion investment
Reliance Retail announced that its plans of setting up an Indian version of Wal-Mart and changing the way Indian consumers shop, is still on track, despite fears and protests by small unorganized retailers. According to Bijou Kurien, President and Chief Executive of Reliance Retail, "There is no slowing down in any of our retail investment plans."
Mukesh Ambani, Chairman of Reliance Industries Ltd. had launched the company’s retail initiative a year ago and set a sales target of $25 billion by the year 2011. The company has been opening stores across the country on a regular basis, but has faced several setbacks with protests against its stores leading to the shutting down of stores and pulling out of the state of Uttar Pradesh. The company also faced protests in Orissa, Jharkand and West Bengal. Reliance Retail currently has 390 outlets in 16 states.
November 15, 2007
Source: The Economic Times
Reliance Retail opens its jewelry outlet
Reliance Retail opened its first jewelry outlet under the name of Reliance Jewels in Bangalore. The company hopes to have a chain of 300 Reliance Jewels stores in the country over the next three years. Reliance has been branching out to open specialty stores in several fields, such as Reliance Footprint for footwear products, Reliance Trendz for apparel products, Reliance Wellness for wellness products and Reliance Digital for consumer durable and electronic products.
According to Bijou Kurien, President and Chief Executive of Reliance Retail, the Jewels brand is focused on the mid-market and sells products that offer “value and competitive prices, catering to every budget and type of consumer in a superior shopping ambience.”
The jewelry industry in India is gaining momentum every year with a growth rate of 12%, and is currently worth Rs. 80,000 crore, but only 3% of this market or Rs. 2,400 crore, is part of the organized market. Other retailers in the organized jewelry market are Tanishq and Gitanjali and Reliance Jewels aims to be part of this segment, although at a slightly lower level.
Reliance Jewels stores will be opening next in Hyderabad and Ludhiana. Most stores will be in the range of 2,000 to 15,000 sq ft. The Bangalore store is spread over an area of 6,000 sq ft and offers a selection of gold, diamond and bridal jewelry.
November 15, 2007
Source: The Hindu Business Line
Big Bazaar launches initiative to serve poor children
Pantaloon Retail’s discount store chain Big Bazaar has launched a program to serve poor children in a tie up with the NGO, Save The Children India. The Power Of One campaign will appeal to customers at Big Bazaar to donate Re 1 towards the organization, and will have several celebrities endorsing and taking part in the campaign. The initiative has been launched at it Mumbai store and will be rolled out at all of its 75 stores in 48 cities.
November 14, 2007
Source: The Economic Times
ITC keen on store-in-store concept
ITC’s robust growth of its Agri Business Division has led to the expansion of its Choupal Sagar and Fresh outlets but has also given a much-needed boost to branded horticultural produce. This has also given an opportunity to open up store-in-stores. According to S. Sivakumar, Chief Executive of ITC’s International Business Division, “We manage food and vegetable section at some of Food Bazaars and True Mart stores. In a way, this is forward integration of wholesale business.”
ITC has 15 Choupal Fresh outlets located in several major cities across the country, such as Hyderabad, Pune and Chandigarh. An estimated 50 of the new Choupal Fresh stores planned for the next few months would be store-in-stores. The company would also be increasing its Choupal Sagars from 20 to 100 in the next two years, some of which will be smaller versions of their stores. In all, the company plans to open 700 outlets in the next 7-10 years spread across the country.
November 10, 2007
Source: The Hindu Business Line
Reliance kicks off ‘Footprint’
Reliance Retail Ltd (RRL) launched its latest specialty store under the name Footprint, to sell footwear, handbags and accessories. The company opened two stores simultaneously in Hyderabad and Bangalore. Footprint stores will carry more than 25,000 products, with prices ranging from Rs. 300 to Rs. 4,000.
Besides all the major footwear and accessory brands from Europe and America, the company will also sell its own private label Footprint in its stores. The company is aiming to open 15 such stores in metros as well as mini-metros in the coming year, reaching 100 stores in tier I and tier II cities by the year 2010. It is estimated that these stores will contribute 4-5% to the total revenue of Reliance Retail.
November 08, 2007
Source: Business Standard
Future Group and Planet Retail Holdings to part ways
The Future Group and Planet Retail Holdings will be ending their agreement once the Pantaloon Board approves it at the end of the year. Planet Retail Holdings is owned by Indonesian NRI businessman VP Sharma and was started by him in 1999, merging with Pantaloon Retail Holdings in 2005.
Once the de-merger takes place, Planet Sports, the footwear retailing company will be transferred to the Future Group, while Planet Retail will hold the lifestyle business. When the merger took place in 2005, it was said to be one of the most strategic joint ventures in the retail business, as VP Sharma had access to international firms such as Marks & Spencer, Next, Guess, Speedo and Puma, while Pantaloon had access to lots of prime lots of real estate as well as an in-depth knowledge of the local retail market.
Planet Sports is the licensing holder of brands such as Wilson, Converse, Speedo, Callaway and Prince. There are 45 Planet Sports stores in the country, earning revenue of Rs. 100 crore for the financial year that ended March 2007. The company has plans to expand their stores to 150 and increase revenue to Rs. 500 crore by the end of 2010.
November 07, 2007
Source: The Economic Times
Food retail set to double by 2020
Food retail is one of the fastest growing segments of the Indian retail sector and is expected to reach $482 billion by the year 2020, a significant increase from $236 billion in 2006. Some of the factors that are leading to its fast growth are the rising disposable incomes, a growing exposure to global lifestyles, increasing aspirations of consumers, convenience factors and health consciousness.
According to food industry experts at a CII seminar “Foodpro 2007” in Chennai, more than 80 million Indian consumers have an income of more than $5,000 and these consumers are the growth drivers of the sector. The consumer class of India is growing rapidly and with each year, more people enter the segment.
Rajesh Srivastav, managing director of Rabo India Finance, stated that "Following the US, China and Japan, India is the fourth largest economy in terms of purchasing power parity. The consumer base is growing with the households of annual income of over $5,000 expected to increase from the current 81 million to 147 million by 2015."
With 9 million consumers in India with an annual income of more than $25,000, a number that will increase to 20 million by the year 2015-15, India’s consumer class is one of the most dynamic and will ensure that the food sector growth continues at a fast pace.
November 29, 2007
Source: The Financial Express
Malls become inventive at attracting customers
Malls across the country are becoming inventive at attracting customers to the malls. Special endeavors such as getting taxis and buses to get customers, adding utility stores such as banks, drug stores, dry cleaners, cobblers, gyms etc, creating morning walk and breakfast destinations in the mall and starting mall loyalty programs are some of the ways that malls are pulling in new customers.
According to Munish K Baldev, retail head for Unitech, “Every mall is trying to find a differentiator. Our aim is to offer things that bring more convenience and a wider range of products and services to customers.” Unitech plans to start a bus service in January to ferry customers to the mall.
Parsavnath developers will be ensuring its malls have all the basic utility stores that its customers are looking for when they go out shopping, including telecom service stores, bill payment centers, health clinics and insurance outlets. Ambience Mall in Gurgaon, plans to offer to reimburse customers the toll charges they have paid to come to the mall.
November 28, 2007
Source: The Economic Times
High cost of manpower and retail space dragging down retail industry
Net profits for the second quarter of major retail companies nose-dived due to high operational costs. Shoppers’ Stop, one of the most successful retail firms, saw its net profit dip by 94% from Rs. 7.3 crore last year to Rs. 0.42 crore this year. Margins were under severe pressure due to high costs of retail space, manpower as well as opening a large number of newer stores.
According to Govind Srikhande, Chief Executive Officer at Shoppers’ Stop, the new depreciation policy that the company is using is affecting its margins now, but is likely to be useful in the long term. Manpower costs at Shoppers’ Stop increased by 57%, a figure that is much higher than it should be. Like several other retailers, the company is also using its private labels to increase its margins.
November 17, 2007
Source: The Hindu Business Line
India is the 16th most expensive retail destination
A new report by real estate consultancy Cushman & Wakefield, puts India as the 16th most expensive “high street destination” in the world. Their latest report titled Main Streets Across the World (MSATW) 2007 puts Delhi’s Khan Market as the most expensive retail spot in the country with rentals going at Rs. 950 per sq ft. Khan Market has also seen a growth of 35.7% over the past year.
The report states that, "Khan Market is the biggest riser in the ranking of the world's most expensive shopping locations in terms of retail rents, moving up eight places from last years 24th position." The top locations on the list were New York City’s Fifth Avenue, Hong Kong’s Causeway Bay and Paris’ Avenue des Champs Elysees.
According o Raineesh Mahajan, national head for retail at Cushman & Wakefield India, "Retail is going through a revolution in India, although a part of the increase in rents is due to lack of high-quality space in the right location."
Other hot locations in India, included Delhi’s Connaught Place, which was the highest gainer in Asia, with an annual growth rate of 87.5%; Kemp’s Corner in Mumbai with an annual growth rate of 78.2%; Greater Kailash of Delhi with an annual growth rate of 57.1% and Fountain and Colaba in Mumbai with annual growth rates of 55.2% and 51.1% respectively.
November 16, 2007
Source: Rediff Money
Shrinkage costs Indian retailers Rs. 9,691 crore
The retail industry in India faces loses of Rs. 9,691 crore due to shoplifting and wastage in the year 2007. According to a new report, Global Theft Barometer conducted by the Center for Retail Research in Nottingham, UK and Checkpoint Systems, shrinkage in India has decreased from 3.2% of sales in 2006 to 2.9% of sales in 2007, but still accounts for a large loss.
The study was conducted across 32 countries and showed that the global retail shrinkage accounted for Rs. 401,647 crore. Worldwide, retailers catch 6 million shoplifters each year of which 87.5% were customers. In India, retailers caught 74,540 shoplifters and 93.3% of them were customers.
November 14, 2007
Source: The Economic Times
Diwali brings in big business for retailers
Retailers recorded huge sales this Diwali season, with stores such as Big Bazaar in Lower Parel, Mumbai reaching sales of more than Rs. 200 crore on Diwali, an increase of 50% from sales during this period last year. According to a Pantaloon Retail spokesperson, “Sales have been very good and our target for this season, Rs. 800 crore, seems to be well within reach now.”
Smaller stores saw the gain this Diwali as well, with stores such as Milap Sarees, a well-known saree shop in Dadar, seeing a large number of customers on Diwali. Some of the best selling items this Diwali were, HD TVs, home theatre systems and designer sarees. According to Shahid Bhatti, a sales executive at Vijay Sales Opera House location, there have been sales of over 30 home theatre systems and 10 HD TVs per day.
November 10, 2007
Source: The Economic Times
Malls gain at the cost of Kirana stores
This Diwali shopping season, the lines at kirana stores have been shorter than normal, while they have been growing at stores in the mall. According to a dipstick survey of small stores in Mumbai, growth in sales has been much less this year, at less than 15% instead of the usual 30% growth in earlier years.
Kirana stores usually work on a 12% margin, while larger retailers sacrifice larger margins, even selling at –2% for certain promotions and schemes. Manufacturers are usually keen on working with large retail stores due to their higher volumes.
A large part of sales at kirana stores take place over the telephone, so any item that requires to be felt or seen, are relegated to the background. This year, many kirana stores have drastically reduced the number and type of dry fruit packs they keep, since most consumers are heading to larger retail stores to do their Diwali shopping.
November 08, 2007
Source: The Economic Times
High rental prices put specialty retail in a bind
The sky rocketing prices of retail rentals is putting specialty stores in a bind, especially in the malls. According to B. S. Nagesh, MD and CEO of Shopper’s Stop, “Malls are being planned and developed without keeping in mind the retailer. And with the kind of rentals, I don’t think any retailer will ever make money. It just didn’t make business sense. In my observation, going forward, specialty retail will prove to be a tough business.”
Most experts agree that since there is no set outer limit of rental costs, as leasing retail space is always looked at as a percentage of overall revenue, so as revenues increase, successful retailers are willing to pay a higher amount, and therefore spoil the market for all others. For small specialty stores, lease rentals should work out to 12-15% of the revenue, but most now have to pay close to 20%, which makes their businesses unviable.
According to Raman Manglorkar, MD or Greenbox Realty, a company that specializes in real estate for retail purposes, states that even though specialty retail will be around for a long time, general departmental stores are more susceptible to high real estate rates as well as other factors such as increases in operating costs and margin pressures.
November 07, 2007
Source: DNA India
India on it’s way to become a luxury retail destination
Several international luxury product companies are planning their entry into the Indian market, which is being perceived as the next major retail destination for premium products. According to Tikka Shatrujit Singh, Advisor to the Chairman of Louis Vuitton, “India is becoming the beacon of the future.” One of the foremost steps to achieving this is by creating world class shopping environments, the first of which is being created by UB and Prestige Group and will be called UB City-The Collection.
According to Shashikanth, CEO of UB Global, the group has signed international luxury brands such as Dunhill, Gucci, Mont Blanc, Van Cleef & Arpels, Zegna and several others. While the luxury retail market is currently estimated to be worth Rs. 1,500 crore it is expected to grow by 20% in the next five years.
Vivek Kaul, Retail and Leisure advisory of Jones Lang LaSalle, a retail advisory service, feels that Indian consumers have become global and have gained a greater exposure to well known international brands. The Indian consumer is an ‘aspirational shopper’ and is ready to be a part of this luxury market now, even though they might only start off with a small purchase, they are quick to graduate to larger purchases and higher amounts.
November 07, 2007
Source: DNA India
DLF to purchase Ferragamo franchise
India’s largest real estate firm, DLF is keen to buy the franchise rights in India for luxury Italian brand Salvatore Ferragamo, whose original franchise partner Sports Station India will be leaving the business. According to sources, the franchise rights for Ferragamo were valued at approximately $3 million.
There is only one Ferragamo store in India at present, which opened its doors in March 2006 and is located in Mumbai. DLF had made its plans clear earlier on when its chairman KP Singh stated that the company was looking for a partner for global luxury brands.
November 30, 2007
Source: Business Standard
Tommy Hilfiger makes expansion plans
US fashion brand Tommy Hilfiger is increasing its expansion plans and expects sales from its apparel and accessories to cross Rs. 1 billion ($25 million) in the current financial year. Tommy Hilfiger stores are located in 7 cities at present and are likely to be expanded to 14-15 cities in the next three years with 50 locations. According to Shailesh Chuturvedi, CEO of Tommy Hilfiger Apparel India, "Currently, we are in the second phase of expansion. We have been in the Indian market for the last three years with eight points of sale. By this year, we will be having 22 such points."
Of the 22 new locations, 12-14 will be exclusive stores of Tommy Hilfiger that would be operated as franchises, while the balance would be in malls and department stores. The company stocks almost all of its products from its international portfolio, and will be increasing its product lines to fill the gaps.
November 29, 2007
Source: Asia Pulse
Carrefour identifies 3 names for JV in India
French retailer Carrefour has identified three companies that it can potentially partner with for its joint venture in India and will be announcing its decision in the first quarter of 2008. The company has registered two companies in India; Carrefour Wholesale Cash & Carry India Pvt Ltd, and Carrefour India Master Franchise Company Pvt. Ltd.
According to Herve Clec’h, Carrefour Group India Managing Director, the partners could be from the retail, real estate or the financial sector. At present, Carrefour India has 50 employees and will be shifting to their new premises in Gurgaon, which can accommodate over 150 people.
The company is looking for a partner that will be able to run its India business, will have an in-depth knowledge of the real estate market and will be able to take care of the long-term operations of the company.
Speaking on the subject of the recent backlash against organized retail, Gerard Freiszmuth, general manager for Carrefour in India, stated that, “We want to cater to middle-class housewives who’ll find everything under one roof, but with our cash-&-carry activity, we want to supply to the kirana store.”
November 21, 2007
Source: The Economic Times
Carrefour to open cash-and-carry business in 2009
The second largest grocery store in the world, French Carrefour will be opening in India in 2009 in metros, setting up in the suburbs of New Delhi, Mumbai, Bangalore and Chennai. While it’s cash-and-carry business will be wholly owned by Carrefour, it is in talks with three potential partners that will tie up for running its retail stores as franchisees.
It is estimating that the size of its franchise and cash-and-carry stores will range from 32,000 to 86,000 sq ft and will cost $5-10 million per outlet, which would be absorbed by the company itself and not the partner company, according to Gerard Freiszmuth, general manager for the India project for Carrefour.
Carrefour is not thinking of creating a logistics supply chain as Wal-Mart usually does when it enters a new market. The company will sub-contract this part of the business and will itself stick with the retailing aspect of it. The company will also be focusing on price and will be offering its private label products as a way to control its margins better.
According to Freiszmuth, close to 90% of the products sold in Carrefour in India will be sourced in India itself, in addition to its $450 million worth of products that it sources already for its international stores. With real estate costs sky rocketing in the past few years, the company plans to stay conservative and not exceed a certain price, beyond with its business will not be viable.
November 22, 2007
Source: Business Standard
Rothschild considering retail foray in India
The Rothschild Group is considering making its own individual foray into the retail sector in India, after it has reduced its stake in the joint venture with Bharti and is now planning to “make a long-term investment in small, mid-sized technology companies”. According to Lady Lynn de Rothschild, “We are keen on being active owners and operators with local partners and not simply be financial investors.... We are interested in being in India with the best international brands that are most committed to broad-based success in an India-specific way, as well as with the best Indian brands that aspire to achieve international stature.”
The Rothschilds were earlier part of a joint venture with Bharti under the name of FieldFresh, where both companies had an equal partnership, but Rothschild had recently reduced to just 9.9% once DelMonte Pacific bought part of the company. At the present, the company has not specified if it is to be tying up with any specific investment partner either Indian or international.
November 11, 2007
Source: Business Standard
Mattel asks India to open up retail sector
The largest toy firm of the US, Mattel Inc, has asked for the Indian retail sector to be opened up to foreign players as well, which would boost the $250 million domestic toy industry. According to Chris Willson-White, Vice President of Mattel Inc, "If the Indian government does not open up 100 per cent foreign direct investment in retail, then it will limit our ability to grow here." The company is interested in thinking of India as a long-term investment and sees India as an extremely viable and large market.
Mattel had earlier entered the Indian retail market in the 1980s via a joint venture agreement with Blowplast, where toys were sold under the name Leo-Mattel, but the venture was called off in the 1990s, when Mattel decided to go it alone for India. According to Willson-White, "The quality of Blowplast toys did not meet Mattel standards. That was one of the reasons we broke up the joint venture with Blowplast."
During the joint venture agreement, Mattel was sold in 110 cities, but on its own is only available in 40 cities, but is still managing to make a profit. Starting with only 50 toys when it first entered the country, the company now has a range of over 500 toys that it gets from companies in China, Thailand, Indonesia and Mexico.
November 11, 2007
Source: The Economic Times
Marks & Spencer plans to invest big in India
UK based retailer Marks & Spencer announced that it will be investing 1.1 billion GBP (around Rs. 91 billion) in India as well as China. The company will be announcing its partner for a joint venture in India. According to Stuart Rose, M&S Chief Executive, 'To get to where we are going, we have to make investments. If I said we are cutting back on capital expenditure, you would say the business is going nowhere.'
He added that even though the short-term scenario looks uncertain, the company is sure that the changes that it has made in the past three years in restructuring and revitalizing the company will create a positive result. India is seen as a long-term opportunity for the company. The company aims to double the international revenue in the next five years.
Marks & Spencer will open its first wholly owned store in China in Shanghai by the end of this financial year. In the UK, the company will also be expanding and will add 15-20% more selling space over the next three to four years.
November 07, 2007
Source: Yahoo News
Singapore based CapitaLand to establish fund to invest in Indian malls
Singapore based property company CapitaLand, which is one of Asia’s largest listed property companies announced that it has established a $600 million fund to invest in retail mall developments in India. CapitaLand currently holds a 45% stake in CapitaRetail India Development Fund, with the remaining stake being held by insurance companies, pension funds and corporations.
According to Liew Mun Leong, Chief Executive of CapitaLand, “We are conscious of the vast opportunities presented by India's retail real estate market, driven by the country's strong macro-economic growth and rapid urbanization. Over time, we expect to deepen our retail and fund management presence in India to become a significant long-term retail real estate player there.”
November 23, 2007
Source: The Economic Times
Chandigarh based Strand chain of stores plan to expand in north India
The Strand beauty chain has announced that it will be opening 10 outlets by the end of the 2007 financial year. The company currently has five outlets, of which three are located in Chandigarh and one each in Patiala and Panipat. New stores are set to come up in Ludhiana, Jalandhar, Amritsar, Bhatinda, Ambala, Karnal, Sirsa, Hisar, Dehradun and Simla. Some of the new outlets will be franchisee owned, while others will be owned by the parent company.
The company has also tied up with the Arush beauty chain in Cochin to open a Strand store in the city. The goal is to have 50 salons across the country by the end of the 3008 financial year. According to owner Naunihal Singh, the company has tied up with Clara International, a Malaysian academy to train its staff and will be training 200 people this year in one year and short term courses.
November 22, 2007
Source: Business Standard
Bangalore retail space drying up
As several retail majors are opening up larger stores in the Bangalore area, the city is facing a severe shortage of available retail space and retailers are getting aggressive in their approach to expand. The city of Bangalore currently has 12 malls under construction, which will add 4.6 million square feet of retail space in the city by end 2008. There are also a large number of smaller retail developments taking place besides malls.
Vacancy rates in the city have fallen to just 0.3% for the first 2 quarters of 2007, which is the lowest it has ever been in the city. The main drive for retail space is being spearheaded by categories such as groceries, fashion, sports, food and beverage and jewelry.
According to a report by Jones Lang LaSalle Meghraj, “The city is witnessing high demand and limited supply. This has seen rents climb higher, showing an increase of 7.1 per cent over first quarter levels. Average rental value in prime malls are around Rs. 150 per square feet per month. Coveted high streets in Jayanagar, C M H Road and 100 feet road in Indiranagar have witnessed a 15 per cent quarter-on-quarter increase in rental.”
In the last 2 quarters, there have been 3 new malls opening up in the city, one in CBD and two in the suburbs of the city. According to Mayank Saksena, the rush by both international and domestic retailers towards the city of Bangalore, show the confidence the companies have in the city. This demand for property in the city is expected to continue in the future as well.
November 10, 2007
Source: Business Standard
Big Bazaar faces food adulteration, double swiping charges
The Future Group’s Pantaloon Retail India Ltd (PRIL), which runs Big Bazaar, is facing several charges of food adulteration. There are an estimated eight cases under the Prevention of Food Adulteration Act of 1954 (PFAA) and Standards of Weights and Measures according to the draft prospectus. In another area, the company is also facing charges of double swiping debit cards as well as misuse of trademarks etc.
November 29, 2007
Source: The Economic Times
Subhiksha to treble stores by 2010
Chennai based retail chain Subhiksha announced that the company would be trebling stores by the first half of 2010, taking the total number of stores to 3,000 across the country. Subhiksha is the largest supermarket, pharmacy and telecom chain in the country at present, having grown from its base is south India to having a pan-India presence.
The company opened its 1,000th store in October is expanding rapidly ahead of its initial public offering (IPO), which will take place before the end of this financial year. Subhiksha will be investing Rs. 300 crore to open 500 additional stores by June 2008. According to R. Subramaniam, managing director of Subhiksha Trading Services, “We are growing and will continue to do so. We are planning to double the store-number in two years after we reach the 1,500 mark. For undertaking all current expansion activities, we are adequately funded and can raise money for future purposes also.”
The company will be expanding in existing markets as well as entering new markets according to its managing director. At present, company has more than 1 million sq ft of retail space and is located in five states. Most Subhiksha stores are in the 1,500 sq ft range, and offer a range of fresh fruits and vegetables, pharmaceuticals, FCMG and telecom.
November 28, 2007
Source: Business Standard
Hakoba plans Rs. 250 crore expansion
Hakoba Lifestyle announced that it would be making an investment of Rs. 250 crore to solidify its position as a lifestyle brand. The company will also be introducing a lingerie label as well as enter the home furnishings segment in the coming year. Hakoba Lifestyle is the retail division of Pioneer Embroideries, which is one of the only embroidery companies that is making headway in the retail sector.
Hakoba’s products which are well known for their sarees and dress materials, has launched the Rocky S Club with clothing designed by noted designer Rocky S and will be introducing a range of bridal wear by designer Archana Kochar. According to Madhup Dokania, CEO of Hakoba Lifestyle, “The tie-up with fashion designers will enable us to offer value-added products and reach to the high-end customers. The company intends to associate with another 2-3 designers who will act as consultants to introduce focused product lines.”
The company already has a menswear label under the Born Rich name, which it acquired earlier. Hakoba will be opening an estimated 400 small format stores by 2011, with an average store size of 1000 sq ft. Around 30 large format stores will be opened in a later phase, with the average store size around 40,000 sq ft in size.
November 29, 2007
Source: Business Standard
Arvind Mills considers bringing its businesses under Megamart label
Arvind Mills is considering bringing its retail businesses under the Megamart label and spinning them off into a new entity, which could attract outside investor participation. The company is also considering separating its retail operations and retail brands into two separate entities instead of a single one. Most likely, the company will create a retail company under its Megamart brand. A final decision will be taking place in the coming months.
Megamart has been growing at a fast pace in the past four years and the company is looking to achieve a target of Rs. 2,000 crore by 2011 end. Megamart is a value retail chain and the company is likely to extend its reach to the luxury retail format. The company’s turnover at present is around Rs. 130/150 crore, and a spin off would likely happen once it doubles its turnover in the next 12-18 months.
November 28, 2007
Source: The Economic Times
FootMart to invest Rs 80 cr to quadruple outlets
FootMart Retail, a joint venture between footwear maker Liberty Shoes and retail giant Pantaloon Retail, is planning to invest Rs 80 crore over the next two years to quadruple its chain of multi-brand stores in India. The joint venture also has plans to achieve a top-line of Rs 200 crore by 2009-10.
FootMart, which retails shoes and accessories under the brand name of Shoe Factory, would open as many as 60 new stores by 2009 to take its total outlets to 80 from the present 20.
The proposed new stores would come up in tier I and tier II including Mumbai, Jaipur, Ahmedabad, Hyderabad, Agra, Ghaziabad, Lucknow, Panipat which have a population base of 10 lakh and above.
The company is also mulling to float new format stores 'Pairs' to retail exclusive branded shoe labels. The format is under trial with two stores operational in Kolkata.
November 27, 2007
Source: Economic Times
Lee heads towards ‘concept stores’
The Lee brand is keen on setting up ‘concept stores’ to build its brand and opened a boutique store in Delhi’s Greater Kailash area, known to be one of the most upmarket areas for a store in the city. Concept stores are those that are created around a theme and carry the brands ethos, so as to heighten the shopping experience.
Its Delhi store is full of bling, with diamond-studded signs to modern and minimalist furniture, plasma screens and foot massagers. In Bangalore, the brand went with a vintage/contemporary feel and in Pune, the store is focused on the younger crowd. In Ahmedabad, Lee will be opening a Buddy Lee café, named after its advertising icon and is being aimed as a way of connecting to the youth.
According to Chakor Jain, business head of Lee, “Concept stores give consumers a complete brand experience and convey the values and ‘lifestyle’ imagery of the brand.” These stores work to build the image of a brand and differentiate it from all others, which is only possible in stores that are completely dedicated to a single brand. In multi-brand outlets, the space is shared by several brands and therefore it is not possible to get a unique look for any one brand.
November 15, 2007
Source: The Hindu Business Line
Esprit to open large stores in malls
German apparel and lifestyle company Esprit announced that it has made plans to open its first store in the city of Kolkata, with a store opening in Forum Mall. At present the company has leased about 20,000 sq ft of space in the mall, which will be expanded to 40,000 sq ft of space. The new store is set to open in 2008.
Esprit has stores in ten cities at present, with a total of 28 outlets, of which 16 are exclusive outlets and 12 are shop-in-shop formats. The company entered the Indian market in 2005 after a tie up with Mudra Garments, which is a part of the Aditya Birla Group.
Worldwide the company has stores in 44 countries and runs around 640 stores directly and 12,000 wholesale outlets. The turnover for the company came to around $5 billion in the last financial year.
November 14, 2007
Source: Business Standard
Infiniti Retail’s Croma brand of consumer durable store opened its first store in Bangalore, as a starting point for the company’s expansion to south India. The new store has been opened at the Eva Mall on Brigade Road and occupies a total space of 20,000 sq ft and stocks 6,000 products from 180 national and international brands.
Future stores in Bangalore will be located in Koramangala and the Marathalli Ring Road, with both stores opening in 2008. Stores in tier II cities such as Mysore and Mangalore will be open in 2009.
According to Ajit Joshi, the CEO and managing director of Infiniti Retail, “Presently, we are experiencing 2,000 to 3,000 footfalls in Mumbai and 6,000 to 8,000 in Gujarat during weekdays and 20 per cent higher footfalls during the weekends.” There are 11 Croma outlets at present, with stores in Ahmedabad, Pune, Surat and Mumbai.
November 22, 2007
Source: Business Standard
Tata’s Infiniti Retail has planed its first Croma stores in south India, after spending time establishing its markets in Maharashtra and Gujarat. Croma will be opening 10-12 stores in major cities in south India, including Chennai, Bangalore, Hyderabad and Kochi. All stores will be large format stores and will range from 10,000-17,000 sq ft in size.
For the investment, Croma will be investing an estimated Rs. 75 crore, with Rs. 1.5-2.5 crore on setting up its infrastructure along with Rs. 2-2.5 crore on each stores inventory. According to Ajit Joshi, CEO Infiniti Retail, “To begin with, we will not open in smaller cities. First, we will establish ourselves in big cities and then move into smaller ones to have better logistics and management.”
The company’s aggressive plans for expansion are not new, it had earlier announced that it would be investing close to Rs. 400 crore to establish 100 stores by the year 2010. In the short term, there will be 30 stores by the end of the current financial year.
According to Joshi, the south has special appeal due to its high literacy rates and the cities connection with the global IT industry, and the company hopes to sell some of its high-end products to these markets.
November 19, 2007
Source: Business Standard
Next Retail looks to buy regional brands
Next Retail India Pvt. Ltd. will be acquiring regional brands in an effort to grow its retail reach. The company recently purchased the Plugin brand from Raymond and Planet M from Bennet, Coleman & Co. and is now looking for some smaller players to take into its retail company.
According to KS Raman, Director of Next Retail India, the company is looking for regional players who are interested in joining with the company, whether they are mobile store chains or IT related stores. The company already has 300 Next stores, which are primarily for consumer electronics and home appliances, and would like to strengthen its mobile and IT related products.
The company will be maintaining the brands that it has purchased, such as Plugin and Planet M and will dedicate specific space to them in their larger stores. Planet M has 145 stores in the country has a brand image built up around it already, which Next would like to build further.
November 16, 2007
Source: The Hindu Business Line
DLF’s luxury mall to have 130 brands
DLF Emporio, the first luxury mall in the country will have over 130 leading brands, of which there will be 70 international brands, some of which will be jointly operated by DLF. Scheduled to open on March 1, 2008, the mall will house brands such as Armani, Versace, Louis Vuitton, Hugo Boss, Christian Dior, Dolce & Gabbana, Escada, Cartier and others.
According to Kajal Aijaz, Head of luxury mall development for DLF, “The mall would reflect retro Indian opulence. From architecture and interior to ambience and tenancy mix, we have tried to retain the stamp of Indian luxury. We also have 34 Indian designers for the first time under one roof.” The Emporio mall covers 350,000 sq ft of space and is targeted at Indian consumers who have traveled the world and are well versed with these brands.
India’s luxury market is worth $377 million according to AT Kearney, but is growing at 28% for the next three years, with Mumbai, Delhi and Bangalore being the three top destinations.
November 16, 2007
Source: The Economic Times
Mobiles, MP3 players top online Diwali sales
Move over sweets and apparel: mobiles and MP3 players are the top festive buys. Shoppers looking for variety, convenience and good deals log onto online shopping markets for their Diwali buying sprees.
Last year, Diwali sales stood at about Rs 115 crore, according to Internet & Mobile Association of India (IAMAI), and is expected to cross Rs 250 crore this year.
IAMAI believes online buying behaviour has changed this year with the booming economy. The category of gifts has changed to consumer electronics, with the increase in wallet sizes and dropping MRPs. An iPod or the latest handset would make a memorable festival gift rather than a hamper.
“Electronic items are selling more this Diwali. There has been phenomenal growth in this category,” agreed Mr V. Vaitheeswaran, Chief Operating Officer of Indiaplaza.com, another online shopping site.
In 2006, over half the sales at this site were of hampers and sweets, while electronics accounted for a mere 5 per cent. This year, over 45 per cent of online sales have been of electronic items – digital cameras, and MP3 players are popular gifts for the season. Sony and Canon are top brands in the former while it is Apple all the way in the MP3 category with the iPod music player.
The top categories in which eBay India would see increased sales are: technology products such as MP3 players, digital cameras, mobile handsets, computers and laptops; diamond and gold jewellery and lifestyle products such as apparel and watches.
November 10, 2007
Source: Hindu Businessline
Cleartrip launches ‘flights + hotel search’ feature
Online travel booking portal Cleartrip has introduced the ‘flights + hotel search’ feature on its Web site that will permit users to book airline tickets along with hotel reservations on the same screen. The company has information on 3,500 domestic hotels and has deployed a team to obtain information on more hotels to add to its database.
The company plans to offer international airline booking services in the next two months and currently has information on 75,000 international hotels, said Mr Sandeep Murthy, Chief Executive Officer, Cleartrip. It also plans to introduce railway ticket booking on its portal and is in talks with the ISRTC for a licence.
In July it entered into a partnership with the Future Group to pilot launch outlets of Cleartrip in four Future Bazaar stores on the lines of the ‘store-in-store’ concept.
November 8, 2007
Source: Hindu Businessline
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