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 January 2009Big players – Plans and InvestmentsDabur to open new stores, scales down size General Trends & InformationMom-and-Pop stores stay alive Regional TrendsIn times of recession, malls have gifts on offer Apparel & AccessoriesLevi’s rolls out plans to beat the slowdown Lifestyle & Luxury RetailingIn the lap of luxury, by invitation only e-CommercePune’s shopping portal starts operations Big players – Plans and InvestmentsDabur to open new stores, scales down size FMCG major Dabur India is back on its retail expansion track with scaled-down store sizes after curtailing its growth due to high estate prices. The company has scaled down the size of the stores to 700-1,200 sq ft from its originally planned size of 1,500-6,000 sq ft, besides removing its pharmacy section. “The store sizes have now been reduced to between 700 sq feet and 1,200 sq feet, nearly half of the originally planned sizes of between 1,500 sq feet and 6,000 sq feet,”' a company spokesperson said. Dabur India had decided to hold the expansion plan of its retail arm as it aimed to capitalised more from further slide in retail rentals that the company is expecting. Launching its first outlet in the capital this week, the new store would sell its beauty and baby-care products, fashion accessories and other merchandise products. However, it would no longer retail its prescription medicines. “In the health market, the stores will now stock only OTC products and not prescription medicines as was available in the previous avatar,” the company said. January 5, 2009 Croma to invest Rs 28 crore in seven new stores Infiniti Retail, a Tata company announced the launch of its 25th Croma store in India at Phoenix Mills, South Mumbai spread over 15, 000 sq ft area. The total investment on the store is around Rs 4 crore of which 1.9 crore went into fittings and fixture and Rs 2 crore into product inventory, the store is tenth in Mumbai. The total equity investment from Tata Sons towards Infiniti retail stands to Rs 350 crore. Croma plans to launch additional seven stores in the country by March 31, 2009 of which one store will be launched in Mumbai, three in Hyderabad and three in Delhi and the total approximate cost would be Rs 28 crore. By March 2010, Croma aims of having a total of 50 mega stores across India for which it is currently reviewing cities like Chandigarh, Chennai, Kolkatta, Jalandhar and Bangalore. “We are not shutting any of the existing stores. When the tough times are over, we will be far ahead of the competition,” Ajit Joshi, CEO and Managing Director, Infiniti Retail said. Joshi even ruled out the option of laying of any employees and said that the stores have witnessed increasing size of cash memos. “November this year was the only tough period for the mall and retail industry where we must have experienced around 11-12 per cent slump in sales but it has returned to normalcy from December 10. We foresee better times ahead by April 2009,” Joshi added. Besides the Croma Zip store at the Mumbai Airport, the company is also planning to launch a few more in the country that would be not bigger than 2500-6000 sq. ft. and will have limited but variety in product offerings. Croma is also expecting it’s newly launched private label to contribute 20 per cent to its total sales revenue that consists of products like- mobile air conditioners, foot massagers, two categories of irons, and three categories of microwaves- which Joshi claims are 10-15 per cent cheaper than existing brands. It is even looking at adding newer products to the range very soon. “The idea of having a private label was to increase volume at our stores which would further help us to negotiate in the Chinese market. With the commodities price of steel and aluminum going down, production costs of electronics have also decreased,” Joshi informed. January 2, 2009 Vishal talks down rentals for 50 stores Vishal Retail, a New Delhi-based supermarket chain, has successfully negotiated rentals of about a third of its stores across the country even as other retailers are bargaining for lower prices. Vishal has been able to negotiate lower rentals for at least 50 stores across the country helping the retailer to bring down rentals by as much as 35 per cent. “We told the store owners that we will relocate our stores to other places if they don’t bring the rentals down. We managed to get rentals down between 20 and 35 per cent,” said Ambeek Khemka, president, Vishal Retail. A decelerating economy, coupled with job cuts, has forced several retailers and companies to stall their expansion plans, leaving mall developers and other real estate companies with surplus stock. “Today the market situation is exactly the opposite of what it was a year ago. Supply of retail space far exceeds the demand and we have an upper hand,” Khemka added. Vishal Retail has 178 stores across India and most of them are standalone. December 29, 2008 Reliance Retail to play the value card Reliance Retail is positioning itself as a value retailer as part of its strategy to drive up footfalls and beat the slowdown. The company is focusing on product pricing even as it consolidates the back-end of all its hyper, super and convenience stores — referred to in the company as ”value formats.” Roles and responsibilities of top executives have been shuffled, and the company has set a six-month target to improve its bottomline. Reliance Retail, which operates around 860 stores across the country under different formats, plans to project its hyper, super and convenience store formats as discount destinations. K Radhakrishnan, who heads Reliance Super, the large format supermarket, will now head the backend of all three formats and be responsible for sourcing of products, logistics, marketing and distribution. Bhavdeep Singh will oversee store operations or the front-end. Thus, the management of all three formats have been merged. Reliance Fresh head Gunender Kapur will now oversee private labels in the company. Combined sourcing for each format will help Reliance get better bargains from suppliers, while better utilisation of manpower, logistics and other resources will minimise costs. In response to ET’s query, a Reliance Retail spokesperson said, “Each of our formats has a distinct identity and continues to operate with its management teams. There has been no strategic shift in operational strategy or format design. The supply chain management team continues to strive to offer products at the most attractive prices and expand product offerings in line with market demand.” On the changes in senior executive roles, the spokesperson said, “As a part of good corporate practice, we periodically undertake studies to identify gaps and take necessary management decisions to address these. However, as a policy, we do not comment on any specific roles.” December 29, 2008 Shoppers Stop postpones further acquisition of HyperCITY Tough liquidity issues have led Shopper's Stop - promoters of HyperCITY Retail (India) - to postpone its plans to acquire an additional 32% stake in HyperCITY by two years. The plans are learnt to have been pushed back to June 2010. Shopper's Stop had the option to acquire up to 51% of the equity share capital of HyperCITY from the promoters at any time prior to December 31, 2008. It has already acquired an 19% stake in the big box format, HyperCITY in March 2007. Shoppers' Stop managing director BS Nagesh said: "Considering the present scenario, we have requested the promoters of Hypercity and they have agreed and provided an extension up to June 2010." December 22, 2008 Vishal Retail may soon head the new consumer revolution. It is planning to source fast moving consumer goods from the same or similar OEMs around the world from where the existing power brands such as Samsung, Haier, TCL, Electrolux and Whirlpool source their goods. If this move succeeds then existing brands may have to totally rethink their strategy. This would be the Nano of FMCG which forces the whole industry to restrategise. Vishal Retail Ltd has always let go of equity in crumb sized instalments to raise capital for expansion. And expand it has - at a frenetic pace. Vishal is the only retail venture which has outstripped its rivals in the number of people it employs and also the number of outlets it manages. Its core team constantly maintains two things: One, they make sure that no two outlets are too close to each other so that they don't cannibalize each other. Recent media reports have indicated that the company may again go in for a stake sale in the next six months to fund its growth beyond a currently planned one million square-feet expansion.. Going direct to the OEMs could be construed as a rebel brand which takes on the existing equations of the global FMCG industry. This has not been a very good year for FMCG anyway. Vishal Megamart has always kept its portfolio of products quite varied and complex so that they do not put too many eggs in one basket. This has resulted in considerable strength in systems and processes and always pushed or rather catapulted Vishal Megamart into what it is today: a powerhouse in Indian retail. December 21, 2008 Reliance Retail to set up 100 Reliance Trends stores by 2011 Mukesh Ambani-led Reliance Retail plans to set up 100 Reliance Trends outlets by 2010-11, besides making a foray into furniture segment and adding more stores for home furnishings. Reliance Trends, the apparel, luggage and accessories format, will see a mega expansion in two and half years time. "We are now present in five cities with seven stores and plan to have 100 by 2010-11. Our aim is to be among the top two players in the organised retail market for apparels by that period," Reliance Trends Chief Executive Arun Sirdeshmukh said, adding the company is focusing on its private labels. It has 10 private labels for various categories such as sportswear, formal wear, kidswear, lingerie and others. "In most of our stores, the ratio of products available is 50:50 between private and external labels," he said. Reliance Retail, which opened its first furniture store -- Reliance Living Furniture -- here, is also looking to expand the format while synergising it with home furnishing format. It plans to add one more furniture store in Hyderabad by early 2009. "We are testing the market with the first two stores and are ready for venturing into any city where opportunities beckon," Reliance Retail Business Head and Vice President (Home) Nalin Khanna said. The Delhi store has been set up under the label of 'Reliance Living', where two stores from furnishings and furniture segments would be co-located. The company is also expanding its newly launched Living Furnishings format. "Our plan is to have five more stores by end of the fiscal in March 2009, including two more in NCR and two in Hyderabad," Reliance Retail Category Head (Home Fashion & Decor) Eqbal Perwaiz said, adding the company has two such stores now. He said around 95 per cent of the furnishings would be private labels. December 19, 2008 DLF Brands plans 600 stores in five years DLF Brands, the retail management subsidiary of real estate firm DLF, is planning a major expansion with an aim to have 600 stores and bring around 15 international labels in the country by 2012-13, which could entail an investment of Rs 750 crore. "We presently have 11 stores of seven foreign brands in Delhi, of which four are JVs. We will be opening another 40-50 stores across the country by end of 2009 and plan to take the total number of stores to 600 by 2012-13," DLF Brands Managing Director Kelvin Coyle told reporters here. "Among the five new brands, we have formed JVs with men's wear brand Boggi and luggage brand Piquadro, while we have partnership with sunglass speciality retailer Sunglass Hut, French home decor firm Sia Home and Italian apparel brand Alcott. We hope to have a total of 15-16 brands over the next five years, including three to five luxury brands and the rest premium ones," he said. When asked about the investments, he declined to comment. "The company will need around Rs 2,000-2,500 for each square feet of retail space and the total retail space would be of 2.5 lakh square feet," Coyle said. A company official, who did not wished to be named, said the investments could be to the tune of Rs 750 crore. Coyle said the 15 foreign brands could be brought through joint ventures or strategic partnerships as DLF Brands aims to achieve a sales volume of $1 billion in the Indian market within the next five years. December 18, 2008 Future group brands see better conversion rates across stores Despite weak market sentiment, dip in footfalls and prudent consumer spending in the retail market, the Central chain of malls and Indus League Clothing, two of Future Group’s retail brands, are seeing better conversion rates across their stores. Mr Vishnu Prasad, CEO, Central and Brand Factory, told Business Line that the mall has experienced a 20 per cent rise in conversion rates in the last two-three months, despite a 10-15 per cent dip in the footfalls. Impulse buying, which is important in malls, has also fallen by 10-15 per cent, according to him. “We need to get these consumers back into the stores through incentives and offers,” Mr Prasad said referring to ‘The Great Indian Shopping Festival,’ launched across Future Groups’ 40 formats today. Ms Rachna Aggarwal, CEO of Indus League Clothing, voiced similar sentiments, calling the retail scenario a mixed bag. “Conversions are up by 6-8 per cent to about 48 per cent now because only serious buyers are walking into stores now.” She says that the average bill value at Indus League stores has also gone up by 10 per cent. But with walk-ins having come down by 10-15 per cent and general impulse purchases coming down, retailers have to generate new reasons for people to walk into stores now, she added. December 11, 2008 Future Group eyes Rs 700 cr sales from shopping festival At a when time the economy is reeling under economic pressure, the Future Group on Wednesday said it is aiming to rake in a total sales of around Rs 700 crore and two crore shoppers at its 23-day nationwide shopping festival from December 13- January 4. "We have planned 'The Great Indian Shopping Festival' on the lines of such overseas fairs. This is a combination of offers on 1,000 brands and formats controlled by the group," company Head Operations (east) Pantaloons Sandeep Marwaha said here. Marwaha who was not ready to accept that the marketing push was organised to stem the slowdown said, "We have not yet felt any impact of the economic crisis on sales. We want this to be an annual event if we get success." The company said it would offer Rs 15 crore in prizes and gifts. The group has decided to bring a common identification of a golden bird, 'sone ka chiriya', in all brands controlled by the group. Future Group has various brands across fashion, entertainment and electronics segments. December 10, 2008 Reliance Retail unveils furnishings store format Reliance Retail announced the launch of its home furnishings format under the brand ‘Reliance Living Furnishings’ at Shopprix Mall, Sector 61. ‘Reliance Living Furnishings’ promises ‘value for money’, with a variety of over 120 products in the home furnishings category in addition to an excellent shopping experience. First of its kind in India, ‘Reliance Living Furnishings’ spread across a lavish 4500 sq ft, offers a highly coordinated three tiered private label range, namely - 'Home One' (basic) 'My Home' (mid-tier) and 'My Home Premium' (lifestyle oriented), exclusively designed keeping with seasonal color forecasts and fashion trends. ‘Reliance Living Furnishings’ offers shoppers unique choices such as oriental handmade carpets made with New Zealand blended wool; Italian printed reproductions of classics made by some of the masters of modern painting; (Henri Matisse, Paul Cezanne, Vincent Van Gogh, Claude Monet, Wassily Kandinsky); hand-woven cushions made by women in Rajasthan under the aegis of the NGO - Urmul. Among other products are Portico's 'Therapia' health collection (soyabean quilts / anti-mite, anti-bacterial pillows, memory foam pillows); Disney, Mattel and Cartoon Network furnishings from Portico; premium Hygro and Pima towels and premium cotton fitted sheets by 'Spaces'; Raghavendra Rathore's signature bedding line by 'Carmichael House' and more. Mr. Raghu Pillai, President and CEO - Operations and Strategy, Reliance Retail, said, "There is an opportunity in the Furnishing retail space in the country when it comes to the range being design led without the normal penalty of being too expensive. High quality fashion and design in home furnishings need no longer be expensive.” December 5, 2008 Wadhawan Food plans more Smart stores Wadhawan Food Retail Pvt Ltd, which operates a chain of stores under the brand names Smart, Spinach and Sabka Bazaar, launched its 50th Smart store in Bangalore today. With the opening of this store, WFRL operates over 200 food and grocery retail outlets in the convenience store format across 15 cities. WFRL operates the home décor and utility lifestyle store The Home Store in Delhi NCR, Jaipur and Bangalore. The company also has a management contract with the Maratha chain of co-operative stores to operate its stores in Maharashtra. Smart stores are based on the concept of neighbourhood food and grocery stores located in residential areas. In Karnataka, Smart Retail, a subsidiary of WFRL, operates 50 stores across six cities/towns: Bangalore, Mysore, Mandya, Hubli, Belgaum and Gokak. WFRL plans to double the number in the next 12-18 months across existing and new formats. December 5, 2008 Metro Cash & Carry to invest Rs 900 cr in Punjab Metro Cash & Carry, the German wholesale retailer, today said that it plans to invest Rs 900 crore in Punjab to set up six distribution centers. “We have plans to enter Punjab now,” said Martin Dlouhy, managing director of Metro Cash & Carry, India, without mentioning a time frame. Metro opened its fifth outlet in the country today in Kolkata, after Bangalore, Hyderabad and Mumbai. Metro’s special focus would be hotels, restaurants, traders and kirana stores. Metro, which has more than 600 centres in 29 countries, has centres in Kolkata, Bangalore, Hyderabad and Mumbai. "We are planning to invest in more stores in these areas. We will follow the same business to business model, but stores may vary in sizes," Dlouhy said. December 4, 2008 Reliance Retail opens first optical store The 50:50 joint venture between Reliance Retail and Pearle Europe of the Netherlands, Vision Express, on Wednesday opened its first branded optical speciality store here. The Vision Express store format included eye testing machines close to the entrance and once the prescription was ready, the customer could choose the frame and lenses on the spot and walk away wearing the new spectacles in little over an hour. The locations will be mostly outside main metros but close enough such as Gurgaon, Mr. Widomski said. Pune, Chennai, Hyderabad are among cities where stores would come up in the coming months. December 3, 2008 Subhiksha to open consumer durable retail stores As part of its expansion plans, supermarket chain Subhiksha Trading Services today said it will set up consumer durable retail stores across the country. The stores will sell products like laptops, printers, computers apart from mobile phones, Subhiksha Managing Director R Subramanian said. However, Subramanian declined to give details on how much the company is investing and the time frame for setting up the retail stores. On the decrease in mobile phone stocks (across the company showrooms in Chennai), he said, "In the last few months, the sales of mobile phones have been witnessing slow growth." He said the retail industrial growth has been affected due to the global meltdown. "Everyone in retail industry are postponing their expansion plans and are adopting a wait and watch strategy," he added. He also said that the global meltdown would help in making the industry lead a "healthy life" despite its negative impact. December 2, 2008 General Trends & InformationThe year 2008 saw some dramatic twists in the discourse on big retail. From a spate of controversies surrounding the entry of corporate houses and fears that big players will swallow small kirana stores, the debate has clearly shifted to whether big retail can survive in its current form. “Kiranas have clearly won the first round. The story of ‘modern retail vs Kirana’ is over. The past year was about the survival of modern retail,” said Kishore Biyani, CEO of India’s biggest retailer Future Group that operates hundreds of stores in multiple formats. Modern retail players such as Future group, Reliance, Aditya Birla group, Subhiksha and Vishal Retail went on an expansion spree creating footprints across the country in different formats. Many other smaller players such as 6Ten, Wadhwan Retail, LM365 too joined them. And in the expansion frenzy, many of them lost their way. By the end of the year, retailers were struggling with sales, shutting down stores and laying off staff in hundreds. “We have grown too fast. With this kind of pace, we make mistakes,” says Thomas Verghese, CEO of Aditya Birla Retail. He admits that retailers chose wrong locations or paid too high rentals in the race to open more stores. Meanwhile, Kiranas rarely shut shop. Not that big retailers failed to attract shoppers. But they failed to manage cost. “Before modern retail could attain scale, the economy went into a tailspin,” said Mr Biyani, adding that Kirana has been more efficient at managing cost. Both Kirana and big retail had their sales going up, possibly because a booming economy, rising income levels and a higher propensity among middle class to consume more. Both Kirana stores and local vegetable vendors survived because they offered a value proposition, which modern retailer couldn’t match— local vegetable vendors almost always offered fresher vegetables than the modern retailer, while Kirana offered the luxury of home delivery and interest-free credit. Naturally, customers chose different shopping destination for different needs. “One could see a slight bias towards processed food and personal care products in terms of sales through modern retail stores,” said Mr Verghese. A downturn in the economy and terror strikes also played spoilsport for the big retail, still in its infancy in India. “Consumers don’t want to spend as they fear for their jobs. Terror strikes have further eroded consumer sentiment and reduced footfalls at shopping destinations,” said R C Agarwal, chairman and managing director of Vishal Retail. Retailers see 2009 as the year of consolidation and are cautious about expansion. Most retailers are already in cost-cutting mode and some are even looking at exiting the business lock, stock and barrel. Some of the smaller retailers have been seeking buyers and lobbying for FDI in retail. “I will sell my entire stake as soon as FDI is allowed in the sector,” said a Delhi-based retailer who had earlier held talks with at least two potential buyers, but failed to seal a deal. He says no retailer with less than 150-200 stores will survive. While Mr Biyani is in favour of calibrated approach towards FDI in retail, Mr Agarwal favours 51% FDI in multi-brand retail. As sales slipped and cost mounted, several retailers were also engaged in a tug of war with suppliers. Major suppliers refused to supply goods to many retailers after they failed to pay or delayed payments. Pilferage was another challenge retailers struggled to find solution to, which made a significant dent in their margins. The silver lining, however, was a fall in real estate rentals, which is likely to bring down the cost for retailers. January 5, 2009 Retail chains gear up to combat slowdown The Year-end sales may have been good, but the country’s leading retail chains are now gearing up to fight for an overall slowdown in sales in the second half of the fiscal. The big retailers are looking at inventory optimisation, efficiencies in supply chain, better product assortment and reducing the number of stock keeping units (SKUs). The retailers feel these strategies will ultimately help them tide over the fall in consumer demand, improve gross margins and safeguard their net profit. All such initiatives come at a time when the country’s apex retail trade body Retailers Association of India (RAI) feels the growth of the organised retail industry will fall down from 35% to 10-12% in 2008-09. The organised retail industry in India is valued at Rs 27,000 crore as against the total retail market of Rs 20 lakh crore. “Despite of good year-end sales led by promotional offers, there has been a fall in overall sales in the October-December period. While value retailers are slightly better-off, the worst hit are those targeting the upper-middle class. Hence, almost all retailers have started taking initiatives to reduce cost and drive efficiencies,” RAI CEO Gibson Vedamani told ET. India’s largest retailer Future Group is looking at customising product assortment in each of the stores to suit a particular locality and has taken several steps to improve processes. Future Retail CEO Rakesh Biyani said such initiatives should help better sales and margin realisation over the next 2-3 quarters. Shopper’s Stop has decided to spruce up consumer experience to get the maximum share of the consumer’s wallet and is also tightening its supply chain. “We are scaling down our back-end infrastructure. For instance, if we had earlier planned a distribution centre for our hypermart Hypercity, keeping in mind the need for 20-30 upcoming stores, we are now building just half of the space to meet immediate requirements. This helps us save on our capital,” managing director BS Nagesh said. Tata Group’s book-music-gifts retailer Landmark has started inventory optimisation to ensure better cash utilisation. “We are cutting down on our stock by lowering the number of units of a particular SKU. This will ultimately improve the efficiencies of suppliers,” said COO Himanshu Chakrawarti. Mr Vedamani said several retailers are even lowering operating costs such as re-negotiating rentals, electricity cost and are rationalising employee salaries. “If all such efforts even translate into 2-3% improvement in gross margins, it will ultimately secure their net profit,” he said. January 2, 2009 Retailers urged to cut price to boost demand Retailers should cut prices in the next six months to clear inventories and push sales, an industry representative said here on Thursday. 'Retailers may reduce prices in the next few months in an effort to make people buy more. The slowdown should not continue for more than six months. Value retail is already on track now,' said Gibson Vedamani, chief executive of Retailers Association of India, the group representing the country's organised retail trade. Retailers, he said, were looking at enhancing operating efficiencies and not bringing down inventories. But it is essential for retailers to start reducing stocks to tackle mounting losses, Vedamani added. In a bid to boost demand, retailers across the country have begun offering heavy discounts and sales promotion offers on Christmas and Diwali. January 1, 2009 Slowdown effect hampering retailers’ New Year sales It’s a dull run-up to the New Year for local small-time retailers. The frenzied shopping scenes that one witnesses in the week leading up to the New Year are missing this time around with many opting to usher in 2009 quietly. The year 2008 has been a big letdown due to economic recession and the terror attacks; there is nothing to cheer about or celebrate, say traders. “The salaried middle-class, which accounts for 70 per cent of our buyers, have reduced spending by 25-30 per cent,” says Mr S. Asif of Kutch Bandhej, which is holding an exhibition of handmade fabrics in the city. “Sales are down 25-30 per cent across the country. Walk-ins have also reduced by 50 per cent. The upper-class buyers are still there, but they don’t bring in the moolah,” says Mr Asif. And with the livelihood of 750 karigars depending on him, the times are indeed tough. Mr K. Manikandan, Marketing Consultant, Indira Agarbathi Industries, Mysore, participating in a craft fair in the city, says, “We usually make Rs 4,000 on the first day itself, but this time we barely made Rs 1,000 on day one. Even Delhi Haat was dull this year, with sales down 40 per cent.” Business has been slow even on Commercial Street – Bangalore’s shopping paradise. Shopping has become an occasion-led activity. While wedding and tourist shopping are bringing in some business, people are refraining from “impulse” big-ticket buying. Fluctuating gold prices have also spoiled the party for jewellers like Mr S. S. Radhakrishna of R.S. Jewellers. “Although people still buy gold for weddings, the quantity has seen a dip. Foreign tourists have also reduced this year.” With sales decreasing, some retailers have cut down stock purchases. December 31, 2008 Big retailers not keen to anchor new malls In what could make things worse for mall developers, big retailers, including Future Group, are now not too keen on being the first to open stores in new malls. Department stores or hypermarket chains are usually the first to sign up as anchor tenants in a new mall. This helps the mall developer get other tenants on board easily as the presence of a big retailer ensures minimum footfall in the mall. “We will not be the first to open stores in new malls,” said Future Group CEO Kishore Biyani, adding that new malls took a long time in getting other tenants and attracting enough footfalls. Future Group now plans to open stores along with other retailers so that it doesn’t have to go through a long gestation period to reach optimum sales. Anchor tenants have traditionally been crucial to the success of malls. Large department stores or lifestyle chains, which usually occupy a significant chunk of retail space—sometimes as much as 25%—ease off pressure on mall developers. It’s good for a mall to have one or more anchor tenants as shoppers are initially drawn to the anchor stores. Anchors, in turn, have their rents significantly discounted. It’s easier for mall developers to convince other smaller retailers to come on board once they have signed up an anchor tenant. December 31, 2008 Retailers optimistic about next year Indian retailers are an optimistic lot when it comes to deciding on expansion plans for 2009. Retailers such as Spencer's Retail, Future Group, Shoppers Stop, Westside, Wills Lifestyle, Bata India, and Raymond find the 30-40 per cent drop in retail rentals a reason to cheer. The retailers also anticipate a further drop in rentals in 2009 and flexibility from mall-owners to help tide over the slump in consumer spending. Although most retailers held back expansion plans in 2008 and some even closed down unviable stores, most are optimistic about 2009 which is expected to see some momentum. Spencer's Retail, which closed down and relocated 56 of its unviable stores recently, will set up 300 more stores till 2010 for an investment of Rs 500 crore. Currently, Spencer's has 700 stores, commanding a retail space of 2.5 million, which will see addition of another 1.3 million sq ft by 2010. Samar Sheikhawat, VP marketing, Spencer's, says, "We will also expand our private labels in terms of more variety and options. This will ensure that sale of our private labels make up almost 35 per cent of our revenues, from 25 per cent right now. We are also working on offering more quality products whose price points will be more affordable." Future Group plans to reach 24 million sq feet of retail space by June 2011, up from 8.6 million sq feet right now. According to Kishore Biyani, MD and CEO of Future Group, the company will concentrate on introducing private labels with high profit margins, in segments ranging from toothpaste to shampoo to butter. "Another thrust area will be entering into new segments like rural retail and telecom products distribution. Through 'Aadhar' we can ramp up rural retail, which is outside the 20 per cent of the population we have been targeting so far," said Biyani. Atul Chand, divisional chief executive, Wills Lifestyle, the retailing arm of ITC, said, "New and emerging retail markets and formats in tier II & III cities offer us the opportunity to expand our presence and we will be leveraging this opportunity both for Wills Lifestyle and John Players over the next year. In the coming year, we see our total retail space going up by around 15-20 per cent to better cater to the needs of the youth with an eye for fashion." Currently, the country has over 50 Wills Lifestyle stores. Shopper's Stop plans to invest Rs 1,000 crore for expanding its existing store space of 1.3 million square feet to 2.7 million square feet over the next 3-4 years. Garments retailer Raymond plans to open 50 more stores in tier II & III cities. Currently, the company has 390 stores, of which 60 are owned by the company. According to Aniruddha Deshmukh, president, retail and FMCG, Raymond, the ongoing economic downturn has not impacted the company in a big way and its retail stores have seen revenue growth of 12 per cent in recent months. Tata Group's retail arm Trent, which operates Westside, plans to add 8-10 stores every year. Currently, it has 31 stores in India, informed Smeeta Neogi, head-marketing of Westside. December 29, 2008 Retailers press for shorter ‘lock-in’ on leasing space Hurt by the financial crunch, weak consumer sentiment and a major slump in footfalls, some retailers are starting to insist on softer clauses while leasing space from developers, including a reduced ‘lock-in’ of just 1.5-2 years. ‘Lock-in’ - the commitment on minimum duration of occupancy of retail space — was earlier an average three years, say market watchers. Vacating the space before the stipulated lock-in period meant forfeiture of deposit, and in some cases a penalty, depending on the contract drawn up by the two sides. “The dynamics of the market, particularly in luxury and lifestyle retail, are changing. With depressed market sentiment and fear of job losses, consumers are holding back discretionary purchases. This is making retailers cautious. We are now starting to see a small section of retailers both in malls and high streets, asking for maximum of two years of lock-in to protect their interests,” says the DTZ India Associate Director (Investment Advisory), Mr Rajeev Bairathi. According to Mr Sanjeev Srivastava, Managing Director of realty firm Assotech, stringent lock-in norms worked well during market boom when retailers were rolling out aggressive expansion blueprints, and flocking to malls to lease space. “The retailers were convinced about the mall location, and apprehensive that the rentals may rise, in future. In the current scenario, however, even the developers are not averse to inking flexible clauses, as they are anticipating that the rentals will go up. Hence they would not like to be tied down to the existing rates,” opines Mr Srivastava. Mr Rajneesh Mahajan, Director (Retail Services), Cushman & Wakefield (C&W), points out that while the lock-in is shrinking, there has been virtually no change in the overall lease tenure. “But shorter lock-in is certainly gaining momentum. It is an added comfort to the retailer that he has the option to exit in 18-24 months, if the mall does not click,” he says. According to C&W, India’s retail sector showed signs of sluggish activities in Q3 of 2008 with most retailers recalibrating their expansion strategies in response to slow demand. The rental values for malls in many major micro-markets saw a slowdown and even traditionally strong retail high streets reported significant slide in rental values. Linking Road and Kemps Corner (Mumbai) rentals witnessed 20 per cent fall, Karol Bagh (National Capital Region) 18 per cent; Ganesh Khind Road (Pune) and Cathedral Road-Radhakrishna Salai (Chennai) witnessed 13 per cent dip, it said. Source: Hindu Business Line Some of India’s biggest retailers have reasons to smile. Sales this Christmas season have topped their expectations, raising hopes of a revival in consumer sentiment after disappointing shopping numbers during Diwali some two months ago. Falling inflation and interest rates, along with aggressive promotions and discounts, are expected to result in sales growth of 10-15% during the Christmas shopping season, which begins in earnest in the first week of December and runs till New Year, according to the Retailers Association of India. Gibson Vedamani, CEO of the group representing India’s organised retail trade, said the middle class, which accounts for 60-70% of retail spending, has not shown any big change in its expenditure pattern. A recent Assocham study estimated the size of India’s retail market at $343 billion (Rs 17 lakh crore) and forecast that it would grow up to $416 billion by 2010. “The strong spending class is still spending. Indian retailers are in a far better position than their global counterparts, who have been badly hit this Christmas,” Mr Vedamani said. The National Retail Federation of the US has predicted a near 50% decline in holiday sales growth this year while in the UK retailers such as Marks & Spencer and Debenhams are seen posting their worst Christmas sales in years. Landmark, the Tata Group’s books and music retail chain, has seen sales grow by 15% despite an indifferent start to the season. “Unlike previous years, when sales start picking up from November-end, this year it has been from mid-December. Our average bill sizes have remained intact, at around Rs 900-1,000 per consumer,” said chief operating officer Himanshu Chakrawarti. Although retailers were expecting a better consumer sentiment after a depressing November, when sales fell by 20-30%, the extent of improvement has come as a surprise. Mr Vedamani even thinks that “things are back on track” in India’s small cities. “Thanks to Christmas, sales have been better in December compared to last month. We are also running some consumer promotions this month,” said ITC’s Lifestyle retailing business vice-president (marketing), S Ray. The Future Group’s Pantaloon Retail, which launched a 23-day ‘shopping festival’ on December 13 at its over 1,000 stores, expects to generate sales of Rs 700 crore during the period by luring shoppers with discounts and special offers. “Christmas sales have been fantastic. On same store-to-store basis, we are seeing double-digit sales growth,” said Pantaloon’s CEO Sanjeev Agrawal. December 26, 2008 Retailers use franchisee route to revive brand While bigger retailers like Reliance Retail and Trent (Westside) decided to adopt the franchisee model early in the year due to real estate pressures, others like Vishal Retail, Raymond and Brand House Retail are now looking at it to expand in tier-II and tier-III cities. Stand-alone brands like Bata India, ITC’s Wills Lifestyle and GHCL’s Rosebys are also on the lookout for franchisees to add to their top lines. “The market meltdown and recession-like conditions have provided an impetus to the franchisee business from both the retailers’ and the entrepreneurs’ end,” says Franchise India Group president Gaurav Marya. According to Mr Marya, the franchisee-led retail is about 30% of the organised retail market in India, but will increase to 50% in the next few years. “The loss of revenue to a franchisee is more than compensated with top-line growth for the company, especially if it is backward integrated into manufacturing,” says a retailer. Following the footsteps of Trent (for its Westside brand) and Reliance Retail, Vishal Retail too plans to open about 60 new stores through the franchisee route “as it will bring down the new-store investment cost by 50%”, said a company official. These stores, which will be on franchisee-built and franchisee-operated model, will have a smaller floor area (almost half) as compared to the usual company-owned outlet, which is about 10,000 sqft. Currently, of the total 178 stores, about a dozen are franchisee-operated. Others in the apparel and accessories business too are taking the franchisee route, especially for expansion in tier-II and tier-III cities. For example, both Raymond and Brand House Retail Limited (which manages S Kumar’s brands) are using franchisee model to expand to smaller towns. “We are using the franchisee route to penetrate the tier-II and III markets, where it is difficult to service the brand directly,” says BHRL MD Tarun Joshi. Single brand outlets that have been thriving on a mix of company-owned and franchisee stores are changing strategies. Shoe-major Bata India is planning to open more than 150 stores exclusively through the franchisee route in the next three years. Similarly, ITC’s Wills Lifestyle too is looking at entrepreneurial participation for brand expansion into smaller cities, said a retail industry expert. Other specialty retailers that are entering the market are planning to expand exclusively through the franchisee route. GHCL’s Rosebys—a home furnishing brand—is planning to open most of its stores through business partners. December 22, 2008 Unorganised retail sector to grow to $496 bn in four years The unorganised retail sector is expected to grow at about 10 percent per annum to reach $496 billion in 2011-12 despite the steady expansion of organised retailers, a study released Wednesday said. The report on the impact of organised retail on small shop owners, released in parliament by the Delhi-based think tank Indian Council for Research on International Economic Relations (Icrier), said the retail business in the country would grow at 13 percent annually from $322 billion in 2006-07 to $590 billion in 2011-12. The unorganised retail industry was valued at $309 billion in 2006-07. However, given the relatively weak financial state of the unorganised retailers and the space constraints on their expansion prospects, this sector alone will not be able to meet the growing demand, the report said. Hence, the organised retail that now constitutes a small four percent of the total industry is likely to grow at a much faster pace of 45-50 percent per annum and quadruple its share in total retail trade to 16 percent by 2011-12, the Icrier said. However, the Icrier added that small shop owners in the vicinity of organised retailers have experienced a decline in their volume of business and profit after the entry of bigger players. According to the report, consumers have gained with the entry of organised retailers and their overall spending has also gone up. While all income groups saved through organised retail purchases, the report revealed that lower income consumers saved more. Moreover, the report said farmers benefit significantly from the option of direct sales to organised retailers. Profit realisation for farmers selling directly to organised retailers is about 60 percent higher than that received from selling in local markets. The study made certain recommendations like facilitation of cash-and-carry outlets, like Metro, for selling farmers' produce to unorganised retailers. It also urged for encouraging cooperatives and associations of unorganised retailers for direct procurement from suppliers and farmers. Also, simplification of the licensing and permit regime for organised retail and a move towards a nationwide uniform licensing regime in the states to facilitate modern retail have been recommended. December 17, 2008 Value retailers cut prices of pvt labels; FMCG cos yet to budge Several value retailers have cut prices by over 15% across specific product categories to trigger spending in a challenging consumer environment. Big Bazaar, D'Mart, Spencer's, Food Bazaar, among other retailers, have begun cutting prices in product categories like apparel, home products, foods (private labels) to lure consumers. In the wake of softening commodity prices and recent excise duty cuts, input costs have dropped by roughly 25-30% in several categories. "We believe that India's growth story will be fuelled by consumption and we have taken the lead to do that as a leading retailer. Also, commodity prices have dropped, excise duties and countervailing duties are lower. This gives us enough opportunities to pass on the benefits to consumers," said Rajan Malhotra, CEO of Future Group-led Big Bazaar. In contrast, leading FMCG companies are yet to announce any downward price revisions after hiking prices by 20-25% and more during the last several months. In recent times, inflation-hit consumers have begun frequenting value formats and discount stores in larger numbers to stretch their buying power. Value retail is growing by 15-20% while the lifestyle retail market has dropped to less than 8% so far this year. Plausibly, discount formats benefit more during a recession and a weak economy. "We have cut prices in categories where the benefits to consumer were immediate. Prices of private labels (in-house brands), too, have been brought down. But branded FMCG companies need to be more proactive. There is a large room for price revisions in detergents for example," said a senior official of another value retailing format in Mumbai. A significant decline has been seen in the prices of edible oils like soybean oil and crude palm oil, the two majorly consumed oils. Prices of both oils have fallen between 35% and 50% to current levels at Rs 48,000 a tonne and 26,500 a tonne due to good production estimates and increasing stocks. Value formats like Big Bazaar, Food Bazaar, D'Mart are intensifying their bargains and discount offers to encourage consumption. Modern retailers are now pushing private labels with consumers shifting to cheaper brands. December 17, 2008 Discounts, promotions to draw customers Till last year, apparel retailers complained about too many visitors and very few sales. This year, the problem has turned on its head, with apparel retailers going all out to draw the footfall levels back. Though retailers see conversion rates at an all-time high, the impulse shopper has disappeared. On an average, conversion rates have climbed up by 20-30% as it is the serious shoppers, who are making their way into stores. As a result, some segments, like T-shirts and accessories, have become casualties. Last week, the country's largest retailer Future Group launched 'The Great Shopping Festival', which required customers shopping at one format to visit the company's other stores to avail of offers and discounts. Indus League Clothing, a part of the Future Group, has seen conversion rates go up to 40% from 30% earlier and this "cross-pollination effort" will increase their customer base and footfall in the long term. "The attempt to acquire new customers always continues, particularly because we work in a market, where only 10-12% of the customer base buys branded products. Quality advertising and ground-breaking use of more than 300 of our shop windows has been the core of our strategy to increase footfall," Levi Strauss managing director Shumone Chatterjee said. Levi Strauss has seen the footfall-to-sales conversion rate go up to 30% from about 22% a few months back. Retailers generally work on bringing dramatic innovations to their garments, or rely on heavy discounts, to drive more people in. Discounts, however, are often used as an inventory-clearing tactic, which actually ends up eating into margins. In the current scenario, increasing footfall has become a costly affair. Benetton has worked around a 20% fall in footfall over the year by focusing on value-added products and increasing the basket size of customer buys. The basket size is a calculation of items billed divided by the total number of bills. "Being a complete lifestyle and wardrobe brand, we have employed appropriate visual merchandising to prompt the buyer to purchase an entire ensemble. On an average, the number of garments purchased in a single buy have grown to 2.2 to 3 garments per billing," MD Sanjeev Mohanty said. Arvind, however, has not seen a drop in footfall riding mainly on the back of Megamart, which operates in the value retail segment. "Besides customer loyalty programmes and on-ground promotions, we have improved the range of offerings from just formals to sports," Arvind Brands CEO Suresh J said. December 17, 2008 Small is beautiful for retailers in gloom Faced with the unexpectedly sharp slowdown in economic activity, retailers have begun to opt for smaller and niche formats rather than the large and hyper formats. This means shop sizes now will be between 800 and 5,000 sq feet, rather than huge flagship and experiential stores. Companies say that the return on investments (RoI) is high in smaller formats as against a bigger retail area. Retailers such as Reliance Retail, Future Group’s Big Bazaar and Bharti’s Easy Day are moving ahead with smaller formats, especially in the fashion and furnishing segments apart from the food and grocery segments. Industry analysts note that the return on investment in a large format is around Rs 11,000 to Rs 14,000 a year/sq.ft as against a smaller format where the RoI is about Rs 14,000-18,000 a year/sq.ft. “Large formats are highly mall-dependant. With smaller outlets, companies can gain scale faster besides getting premises in residential areas at a much lower cost,” they note. But much depends on whether mixed land use is allowed or not. According to Mr Rajneesh Mahajan, Director (Retail Services), Cushman and Wakefield, “Risk is much lower in a smaller format as compared to a big one. Wherever mixed land use is permitted, companies are going to areas where consumer concentration is high. In certain categories such as furnishing, food and grocery, fashion and apparel, retailers are abandoning flagship stores for neighbourhood stores.” “The smaller formats can be anywhere from 800 sq feet to 5,000 sq feet. We will tap the niche customer segment,” Mr Manu Kapur, Chief Executive, Reliance Living Furnishing, said. The company recently opened another specialty store in the furnishing category. This is the fifteenth specialty store that Reliance has ventured into. Similarly, Big Bazaar’s Best Deal store is the smaller format and a prototype that the company has been testing for a while now. “We are targeting about 100-odd stores, each covering an area of 2,000 sq feet, in the next two years. These stores will follow the convenio format and be present in neighbourhoods where mixed land use is permitted. It will primarily stock food and grocery,” a Future Group official said. December 16, 2008 Terror fear likely to dampen Christmas sales in Mumbai Christmas and New Year sales volume may drop by at least 20 per cent for retailers in Mumbai as fear-stricken customers continue to avoid malls, stores and other crowded areas in the country's commercial capital. The grim outlook comes close on the heels of weak sales during the festival season of Dussera and Diwali as the global economic slowdown forced consumers to curb purchases. During the November 26-29 assault on Mumbai, terrorists claimed the lives of over 160 people and injured at least 300. In the days of the terror attacks, footfalls at malls and other retail stores in Mumbai dropped by about 20 per cent, hurting retailers. Analysts said the impact of the attack was felt even at malls or stores situated about 30 km from the terror sites, which included the Taj and Oberoi-Trident hotels. “Footfalls in our mall have dropped to 30,000 a day from 36,000 earlier after the attack. We have beefed up the security but people will take time to come out of this shock and the festive season this year will not be like that of last year,” said Vikas Oberoi, managing director, Oberoi Construction that owns Oberoi Mall in Goregaon, a suburb of Mumbai. Weekend sales at Shopper's Stop fell 12 per cent in Mumbai after the terror attack in contrast to a 5 per cent increase in the remaining part of country, according to a report released by Morgan Stanley. Shopper’s Stop, which is into high-end fashion and lifestyle retailing, has its chain of stores at least 20 km from the site of terror attacks, the report said. “People are not coming out of their homes and it is natural that our sales would be impacted,” said Govind Shirkhande, chief executive officer, Shopper’s Stop. During the November 26-28 period, sales at malls and stores in the rest of India grew by 15.1 per cent with lifestyle retailing growing by 10.8 per cent and value retailing growing by 16.5 per cent, the report said. According to Arvind Singhal, chairman of retail consultancy firm Technopak, consumer sentiment plays an important role during festival season shopping. “We have doubled security at our stores but people are not coming to stores and we expect our sales growth to be low for the rest of the month,” said Andrew Levermore, CEO, HyperCity. Samar Shekhawat, vice-president of Spencer’s Retail, too says that the terror attacks have impacted the footfalls at their stores by at least 10 per cent. “The customer sentiment will take some time to improve as people were shocked from what happened in Mumbai.” According to the Morgan Stanley report, Future Group’s Pantaloon stores’ sales in Mumbai declined 4.2 per cent on the weekend of the attack as compared with the previous week's sales. However, sales for its value retailing (Big Bazar) went up by 3 per cent. “My visit to our different stores recently reflected the decline in footfalls. But our sales have been better than before as only the serious shoppers are turning up. The window shoppers are staying at home now,” said, Rajan Malhotra, head, Big Bazaar. December 13, 2008 Grocery chains may feel slowdown heat Food and grocery chains may be the first casualty of the slowdown among retailers in India and some of them may have to either shut operations or seek mergers with rivals, experts said. These stores will find it difficult to survive the pressures of the slowdown because the margins in their category of business are the lowest among all retail formats, said Anand Raghuraman, partner & director, The Boston Consulting Group. Generally, food and grocery retail stores such as Subhiksha and others operate on a margin of as low as 2-3 per cent compared to 10-15 per cent margin of apparel stores. Retailers, who sell their private labels through their stores, earn as high as 30 per cent margin on some of the products. Yet another factor working against the food and grocery retailers is the inefficiencies in the system. "In India, the power still lies with suppliers," said Raghuraman. Retailers, who have started operations in the past few years, are still struggling to get higher discounts from established companies as their purchases contribute less than 5 per cent of a fast moving consumer goods (FMCG) company. Retailers led by Biyani are already seeking to collaborate with rivals to enhance bargaining power with suppliers to improve margin. But the brighter said of the shakeout, if any, is that the industry will be more efficient. Meanwhile, Raghuraman said a large number of the 500-800 hyper malls announced by companies may not be started as the domestic market was not yet ready for that many stores. "The sales per square feet is not sustainable," he said. December 13, 2008 The relationship between mall developers and retailers is evolving from that of a buyer-seller to that of greater co-operation and understanding to overcome the difficult times together. Faced by a decline in sales and footfall in the malls, some developers are looking to share risks of a business downturn by introducing revenue sharing model, while others are considering a reduction in rentals — at least temporarily. The retailers on their part feel they will have a greater say in future in deciding the fundamentals of business. The customers also may have something to cheer about, as price of certain categories of products are expected to decline during the Christmas season if rental pressure on retailers are eased, according to industry experts. While authorities at Mani Square, a mall flanking the Eastern Metropolitan Bypass in Kolkata, are not contemplating a drop in rentals, they are planning to purchase vouchers from the retailers equivalent to 14 days’ rentals, according to Mr Subesh Ray, Senior Vice-President and Head Marketing. “In a pilot project for December we will purchase vouchers from all the retail shops in the mall and give out the redeemable coupons as assured gifts with every purchase to the customers,” he said. This will reduce monetary pressure on the shop owners at the same time serving as a promotional campaign during the Christmas sales, he said. The mall has also introduced other incentives such as free car parking to draw customers. Footfall at the mall has dropped significantly due to inflation and the plunging the stock market. Only 4,000-6,000 people visit the mall on weekdays, as against 10,000 earlier. During weekends the footfalls have decreased to 10,000-15,000 from nearly 25,000, he said. While Puja sales had been good this year, the sales during Diwali were not satisfactory. Rentals at the mall signed before Pujas, ranged between Rs 200 and 250 per square feet. The mall has initiated revenue sharing model with 5-30 per cent of revenue to be shared with the developer (varying across product categories) above the minimum guarantee amount. This was particularly planned to deal with delayed rental payments from some retailers on account of lower sales. Over 12-13 per cent of the shops in the mall are already operating under the model. The scheme had been more profitable to the mall owners, fetching 20 per cent more earnings compared to fixed rentals, he added. Mr Harshvardhan Neotia, Chairman, Ambuja Group, said that apart from helping retailers in tiding over the downturn, the revenue sharing model brings in an opportunity to ride the upside of business as well. The developer however needs to examine the retailers’ scale of operation and credibility before applying the model. Space in Ambuja’s flagship mall City Centre in Salt Lake was rented out three years back on an average of Rs 60 per sq.ft without a single deal in the revenue sharing model. However, in the upcoming City Centre II, expected to be completed by June next year, there will be some revenue sharing deals with international brands, he added. The fall in property prices in most areas in the country should ideally lead to fall in rentals, hoped the retailers. Mr Atul Takle of the Future Group’s flagship retail chain Pantaloon said the rentals in malls are expected to come down by 25-40 per cent in the next 2-4 months. Majority of retailers will not look to sign contracts for opening new stores now, Mr Abhijit Das, Regional Director, Jones Lang LaSalle Meghraj said, adding that a number of upcoming malls in Rajarhat, VIP Road and Topsia will be delayed. To prevent exit of retailers, the developers may come up with concessions in rentals for a limited period, he added. While there have been some exits from a few Kolkata malls recently, retailer-exit from malls in Delhi has been to the extent of 30 per cent, said Mr Ray. Mr Sanjeev Mehra, Vice-President, Mall Operations, South City, said the mall plans to “handhold” the retailers by providing them financial assistances in the form of some relief in rentals for a few months. December 7, 2008 Retail rent dips 40%, realtors work overtime to beat slump Rentals for retailers have dropped by as much as 40 per cent in key cities across the country even as mall owners are devising alternative survival strategies to beat the slowdown. Worse, rentals are expected to drop further in the next six months in key metropolises, experts say. Spencer’s Retail, the retail arm of RPG Group, says it has seen a 30-40 per cent decline in the rentals in Tier-II and -III cities. In Tier-I and metropolitan cities, the correction is in the range of 15-20 per cent, and a further correction and its impact is likely to come in the next few months. “Rentals are getting revised downwards by 20-30 per cent, mostly in metropolitan cities,” said Atul Chand, divisional chief executive officer of Wills Lifestyle, the retailing arm of ITC. Wills Lifestyle has 50 outlets, of which 24 are located within malls. MedPlus, which has 600 pharmacy stores in Hyderabad, Bangalore, Chennai and few other cities is negotiating for a reduction in rent, according to Madhukar Gangadi, founder and chief executive officer of MedPlus. “Over the next six months, retail rentals may drop close to 30 per cent in metropolises and about 50 per cent in Tier-II cities,” said Bappaditya Basu, vice-president and associate director - retail, Jones Lang Laselle Meghraj. “We have entered into a revenue-sharing arrangement with our retailers with a minimum guaranteed amount for each month. The revenue-sharing arrangement is for 10-12 per cent of the retailer’s sales per month,” said Kishore Bhatija, chief executive officer of Inorbit Mall, which belongs to the K Raheja Corp that also owns retail brands such as Shoppers Stop. “The minimum amount guaranteed per month by the retailer is also negotiable and decided on a lower amount so that the retailer can live up to the commitment.” Moreover, lower rentals mean faster break-even for retailers. For instance, paying 25 per cent towards retail rental would take a retailer close to three years to break-even, while 15 per cent payment towards rental would mean retailers would now be in a position to break-even within two years. Wherever mall owners or landlords have failed to negotiate, retailers have shut shop or moved to other locations. Future Group has shut its 70,000 square feet Big Bazaar near Shyamal Cross Roads in Ahmedabad. Subhiksha has also downed shutters of a couple of its stores in Ahmedabad. Elsewhere, mall owners are giving into the demand for lowering rent. “We have started negotiations with developers on lower rentals. The rent was over-valued by three to four times in some parts of Bangalore. For upcoming malls, indications are that the rent to revenue ratio would see a dip from 40-50 per cent to 25 per cent in the next few months,” said J Suresh CEO of Arvind Brands, which is the retail division of Arvind Mills and has licensing relationships with international brands such as Arrow, Gant, Cherokee and a joint venture with VF. “In the next six months, we expect the share of rentals to fall to 15 per cent of our sales, thanks to the flexibility shown by mall-owners,” said Vishnu Bhagat, chief financial officer of Reebok. Revenue sharing has been in vogue in India since 2003, but not many developers and retailers were willing to accept it. But with the slowdown becoming more pronounced, more retailers and developers are now amenable to shifting to the revenue-sharing model. Future Group’s 40 per cent stores are inside shopping malls and almost all of which are anchor stores. In most cases, the arrangements with mall owners are for rentals, which in some instance are as low as Rs 45 per cent square feet, because the contracts were signed almost a decade earlier. December 4, 2008 Regional TrendsIn times of recession, malls have gifts on offer (BANGALORE) Come and make a purchase, for you may be the lucky one to win a designer car! This is the "way-out" technique mall operators in the IT city have adopted to beat the impact of global meltdown and dip in business. Their basket of gifts also include gold coins, diamond necklaces and workshop on Salsa among others. Shopping malls, which witnessed a dip in profits after the global recession are now back to wooing "elusive" customers by dangling some lucrative carrots in front of the horse cart. "We have seen a dip in footfalls by 20 to 30 per cent in the last six months", says Anjani Kumar, Marketing Manager, Sigmall Mall, a premier shopping complex located on the busy Cunningham Road. The mall, which sees a visitor count of 8,000 to 11,000 every day and 15,000 to 20,000 on weekends and 20,000 to 25,000 on festival days, has been affected by recession, admits Mr Kumar. Terror attack only compounded their woes. According to Prateek Gupta, Marketing Manager, Bangalore Central, the sector had in general seen a fall of 30 to 50 per cent while Bangalore central saw a drop of 15 per cent following some measures it took to control the downturn. The IT sector which formed a sizeable chunk of consumers, accounting for nearly 25 per cent, has seen a dip, says Mr Kumar. In Sigma, the IT shoppers comprised 60 per cent of the crowd. However, following the meltdown there has been a decline of 20 per cent in this customer segment. January 5, 2009 Future Group plans expansion in East Unperturbed by the slowdown, Kishore Biyani's Future Group has decided to go full steam with its expansion plan in the East India. The group is planning to add some 6 lakh square feet over the next one year across three of its main formats — Pantaloons, Big Bazaar and Home Town. It plans to invest around Rs 1,500-2,000 per sq ft for these ventures. Future Group is also looking at the option of restructuring its unviable stores into newer formats and maximise revenue out of existing stores by setting up speciality format shop-in-shops in Pantaloons and Big Bazaar. Pantaloon Retail India region head (east) Sandeep Marwaha said unless property developers delay construction of their malls, the expansion will be as per schedule. "In fact, our stores have seen normal business in the East. We also don’t expect any significant drop in sales with a lot of consumer activity currently going around. Over the next one year, we plan to launch eight new stores of Big Bazaar and Pantaloons combined and one of our home style format Home Town," Mr Marwaha told reporters here on Wednesday. The proposed Big Bazaar stores will cover some 4 lakh sq ft, the Pantaloons outlets over 50,000 sq ft and the Home Town outlet at Rajarhat over 1.5 lakh sq ft. “We are planning to enter new markets like Tinsukia, Jamshedpur, Patna and Deogargh. Typically, we enter a new market with the Big Bazaar format and then evaluate other options,” said Mr Marwaha. Future Group is going to convert some of its less profitable stores into newer ones. It has already done so with two outlets — a Fashion Station outlet in Kolkata and one Food Bazaar store in Salkia has been converted to Big Bazaar outlets. The group has also started re-negotiation with property developers for change in rent terms for existing stores and the newer ones. "We are trying to move from a fixed rental to revenue sharing arrangement with the realtors," said Mr Marwah. Future Group operates around 1.5 million sq ft in the East, of which Big Bazaar constitutes 10 lakh sq ft and Pantaloons some 3.5 lakh sq ft. December 11, 2008 Rosebys opens shops in Gujarat Home Decor and lifestyle products company, Rosebys Interiors India Limited has entered Gujarat by opening three stores in Ahmedabad. The company plans to open around 20 stores in the state in next 12 months. Acquired by Gujarat Heavy Chemicals Limited (GHCL), Rosebys targets at becoming one of the leading home furnishings and décor companies in the country. The company is setting up a pan India network of franchisee stores in the coming months and is expected to open around 150 stores by March 2009. Rosebys had kick started its Indian retail operations last month by launching its stores in the state of Punjab, where it simultaneously opened six stores, the company press release stated. The launch has met up with a huge success in the state. Talking about the launch in the release, Nikhil Sen, director of Rosebys Interiors India Limited said, "We are on the growth trajectory after the successful experience of the north Indian markets and would like replicate the same to the markets here in Western India. With organized retailing growing at more than 30 per cent annually, there is a huge untapped market for the home décor and lifestyle stores in India which is pegged around Rs 10,000 crore. " Rosebys will launch four basic thematic product ranges including Indulgence, Eco Chic, Geo Retro, and Peony Garden, each of which would have product range from bed covers, bed sheets, towels, cushions, and adornments like photo frames, vases candles contemporary and unique range of home stainless steel ware and personal care products. December 12, 2008 Southern retailers put growth plans on hold A slew of players in the organised retail space in south India have decided to defer their expansion-cum-investment plans till the current financial crisis blows over. Whereas Subhiksha Trading Services, one of the leading retailers in south India, has decided to put off its entry into retail stores for consumer durables, Viveks, a leading Chennai-based consumer durables retailer, has shelved its expansion plans for the time being. Responding to queries on the sidelines of a one-day seminar on ‘Retailing for India’ here on Tuesday, R Subramanian, managing director, Subhiksha Trading Services, said, “We have deferred our plans to enter the consumer durables segment, owing to lack of demand. Property prices have not fallen as per our expectations as well. We will have to wait and watch the situation before we enter this segment.” The company had earlier announced plans to acquire 2 million sq ft across the country on lease for its consumer durables business, with an expected investment of around Rs 800 crore over the next two years. Viveks, which has 54 stores across Tamil Nadu and Karnataka, has also deferred its expansion plans. The company, which runs retail format stores under two brands - Vivek’s and Jainsons - had proposed to add 100 more stores with an estimated investment of Rs 100 crore across four southern states in next two years. “We have to adopt a wait and watch approach as the situation is not conducive to expansion,” said BA Srinivasa, director, Viveks Ltd. Southern markets account for close to 30% of the Rs 35,000 crore consumer durable industry. Tamil Nadu alone accounts for 10% of the market, said Srinivasa. December 2, 2008 Apparel & AccessoriesLevi’s rolls out plans to beat the slowdown Levi Strauss India has lined up plenty of action to beat the economic downturn. From rolling out brand-new retail formats like ‘jeanerys’ to product innovations and tie-ups with leading designers, the jeanswear major gears up to reach out to the consumer in a much bigger way than before. For starters, within the next three months, the company is rolling out Levi’s ‘jeanery’, a concept introduced for the first time ever. These standalone stores, in malls and high street locations, will offer a very high concentration of jeanswear, with a certain segment devoted to relevant tops. “We developed this concept after recognising the fact that most people buy Levi’s primarily because of the jeans. So, besides our flagship stores, we will be locating these stores in strategic spots to offer a wide selection targeted at a slightly younger audience,” Levi’s India marketing director Shyam Sukhramani told ET. According to Mr Sukhramani, the company is looking at setting up 20 to 30 such stores across 6-7 cities over the next year. “We will be launching initially in Mumbai, Delhi and Bangalore, following which the concept will be rolled out across cities like Pune and Kolkata under the franchisee model,” he said. The company, which has brought in Levi’s showpiece-store Rivet to India, is also looking at developing denim as a luxury concept. The first Rivet store has been launched in Delhi, followed by one in Bangalore scheduled for January. More stores will be launched next year. “We have a dual strategy for the Rivet stores. Besides tying up with designers to bring in special collections, we will also be importing lines designed to cater to the super-premium space,” said Mr Sukhramani. Levi’s has already had a special line designed by Tarun Tahiliani that will hit stores in February. “It’s the top-end and the bottom-end of the market where the downturn has the least impact. We feel we should be alive and kicking in the top-end,” said Mr Sukhramani. December 24, 2008 Apparel, accessory sales decline 35 per cent as slowdown sets in The apparel and accessories sector, which falls in the discretionary category, is witnessing 30-35 per cent lower sales this season on the back of the slowdown which has triggered salary cuts and retrenchment across sectors. Mehul Choksi, chairman and managing director, Gitanjali Gems, says: “Yes, the slowdown has had some impact on the sales. Sales have been impacted by 30-35 per cent.” Balvinder Singh Ahluwalia, president, Koutons Retail India, agrees: “I must admit that the slowdown has affected the retail sector as much as any other sector of the economy. However, given the unique sales and distribution model adopted by Koutons, the impact on the company is lower.” Unlike last year holiday season, this season is not exciting. Ambeek Khemka, group president, Vishal Retail, says: “Sales have been affected but we have still to evaluate the degree. Normally, sales are very high in November-December, but I see some drop this time. Being a non-essential category, apparel and accessories are feeling the recession pinch, reasons Pinakiranjan Mishra, partner and industry leader, retail and consumer product practice, Ernst & Young. While sales in the metropolis are weakening, C and D category towns are doing well, he adds. As the consumers in C and D category towns are not exposed to stocks and other investments, they are not affected to the extent metropolis consumers are affected. A Pantaloon Retail India spokesperson concurs: “Yes, C and D category towns continue to do well.” Ahluwalia adds that the record crop output in the last two-three seasons followed by high aspiration levels of individuals has ensured that the growth of retail sector in B and C category continues. Value offering brands like Pantaloon are doing well. Analysts believe old and strong brands like Raymonds will also be able to stand it, but newer brands will find it difficult to manage. Vasanth Kumar, executive director, Max Retail Stores (an international brand which offers apparel and accessories for women, men and children), says: “Since we are a value product, we are ‘relatively’ recession-proof. But a marginal impact is there. There has been a 20 per cent drop in mall walking, which is a concern.” The recent terror attacks have also resulted in drop in mall walkings. Brands along with mall owners are doing joint events to increase footfalls. “We collaborate with mall ow ners to have joint events to attract consumers. Besides, we are looking at increasing bill value. There are special offers like beyond a certain amount purchase, we give some free gifts to fatten bill value,” adds Kumar. Some have thought of more innovative ways. They are changing merchandise every month to attract buyers. Brands have increased promotions. Choksi says: “We are relying on dealer incentives and promotional offers.” Khemka says: “There are heavy discounts and buy one get one free schemes. We are selling some products even at negligible margins.” Meanwhile, innovative thinkers are not relying on the age-old formula of discounts alone. “Since a Rs 30-50 discount doesn’t push sales, we are relying more on value add-ons. Besides, we have introduced lower slab products,” Kumar says. Nevertheless, the segment will have to learn to maximise lower footfalls for some time to come. December 15, 2008 Lifestyle & Luxury RetailingIn the lap of luxury, by invitation only Time to roll out the red carpet for the Porsche and the Prada, and you can even throw in a twinkling tiara for good measure. Consumption of luxury retail goods in 2009 is not going to take a knock, not by a long shot. The new year is set to see top-end Italian, French and Australian retailers scurrying to set foot in the market, and marquee malls will vie for marquee brands. For a section of the cognoscenti, who would sniff at mingling with bargain-hunters at some luxe mall, special, private screenings are being organised to herald in the new year. On show, among some of the ultra-huge gemstones, will be a single, stone-studded ring. Price tag: upwards of $200,000. A bracelet, which recorded brisk sales during Diwali, will have 20 such stones. And these items are literally flying off-the-shelf. Did somebody say recession? For high net worth individuals (HNWIs), who own private jets and indulge in luxury vacations, there is no cutback on their spend. With net financial assets of at least $1 million, excluding their primary residence and consumables, HNWIs are shopping away like nothing has changed. “This one segment that has never felt the need to cut back,” says Nirmal Zaveri of Trendsmith, a luxury retail jeweller. “Compared to their net worth, these expenses are nothing, a trifle actually. And thanks to such sales, our Diwali has been extremely good. The new year promises to be even better.” Figures back this trend. India led the world in HNWI population growth in 2007, rocketing by 22.7% and exceeding gains of 20.5% in 2006, according to the Asia-Pacific Wealth Report by Merrill Lynch and Capgemini, which reported that India had 123,000 millionaires in 2007 and showed the fastest pace of expansion. Though the new round of statistics is yet to come in for 2008, indications are that the figures would add up to a new total. Luxury brands are growing at a healthy clip of 30% annually, and it is not jewellery alone that is showing the way. Apparel, watches and even perfumes are hitting a high note. As Anjani Kasliwal, GM (luxury brands) at Brandhouse Retail says: “The year 2008 has been pretty good for us. The effects of the slowdown are yet to show.” Asked to comment on the luxury brand sale phenomenon going on in Bangalore and in some areas of Delhi, she maintains: “Internationally, brands are going on an early sale, but there isn’t as much distress as is being made out. We expect 2009 to go largely smooth as we see the sentiment going up again.” Adds Charu Sachdev, CEO of TSG, which brings in brands like Stella McCartney, Lanvin, Jean Paul Gaultier and Moschino: “This year we opened four stores in Bangalore’s UB City and opened our first Kitsch store in Delhi. Although our Moschino store at the Taj in Mumbai was shut due to the terror attacks, we’re back on our feet. Customers have been very supportive.” Trendsmith’s Zaveri says: “There are no discounts on offer here. There is no correction on these expensive pieces. It takes time to collect most of our pieces and we do not offer discounts. Most of our buyers are not looking for value, they are looking for something exclusive.” Interestingly, luxury brands in India have also found new customers in an increasingly wealthy middle-class, the growing ranks of working women and a youthful population that is not afraid to splurge or quaff their daily dram of single malt. Notes Mahesh Madhavan, CEO at Bacardi Martini: “The spirits industry has been growing at a steady 7.2%. Within this segment, single malt whiskey has been growing at double digit growth, though on a small base.” The imported spirits market is estimated to be about 1.1 million cases, of which 79% is whiskey. Within this, single malt comprises 30,000-35,000 cases, which has grown from 25,000 cases recorded in 2007. Post September, sales have not been impacted for single malt whiskey. “These products are bought by consumers at the upper end of the income level, who appreciate fine whisky,” says Madhavan, adding: “They are well-travelled and are part of several malt clubs. They largely pick up their favourites from international airports. What we are noticing now is that people prefer to consume and enjoy their drink at home rather than at a five-star hotel or a fine dining restaurant.” If home is where the action is, it is natural for consumers then to increasingly design their personal space for entertainment. As Himanshu Kumar, MD at HKMT Acoustic Designs says: “We continue to get enquires from our private clients for designing their personal space for entertainment.” Kumar designs home theatres for both corporate and individuals. “The demand is such that we don’t accept more than four orders a month,” Kumar elaborates. “Last year, the demand was around two mini theatres a month. This has obviously been pumped up. I am optimistic that the trend would be better in 2009.” January 1, 2009 Luxury segment consumers look for value retailing Brand value, even in the luxury segment, has never been under so much scrutiny; consumers are looking for the return they will get from the experience of owning, wearing or giving fewer, better things, says a report on luxury consumption by Ledbury Research and De Beers Group. The year saw a series of highs and lows for the luxury market in India, currently estimated to be worth around $2 billion (Rs 9,600 crore). With the launch of new shopping environments, there was an enhanced presence of leading luxury brands — Tag Heuer, Louis Vuitton, Hugo Boss, Lancome, Burberry, Gucci and Hermes — in major metros during the year. The luxury retail environment, which was till now restricted to space offered by five-star hotels, came into its own with the launch of two new malls — UB City in Bangalore and The Emporia Mall in Delhi. “This helped overcome the first and the most important hurdle in the Indian luxury market — of the right luxury retail environment,” says Ms Saloni Nangia, Vice-President at consulting firm Technopak Advisors. Unfortunately, even as the sedans started turning into these places, recession and terrorism struck, and in quick succession. “It would be important to keep in mind that the resilience of the luxury market will be tested post the terror attacks,” agrees a spokesperson from Ledbury Research that specialises in helping brands that market and sell to affluent consumers. Globally, the cost of real estate is typically 8-10 per cent of the total cost of running the store, but in India, it could go to as high as 40 per cent, according to the Indian luxury retail report by Jones Lang LaSalle Meghraj. But the good news is that falling rentals, which is the trend across all real estate deals now, would help luxury retailers too, though only for the new properties that they would be signing up. “They might not be benefited immediately in the rental agreements already contracted,” says Ms Nangia. Earlier in the year, footfalls at both UB City and The Emporia were encouraging, but post-October, stores reportedly faced falling and weak walk-ins. As a result, retailers have advanced their promotions and sales and not waited for February, which is the traditional end of season sales, says Ms Nangia. Luxury retailers refused to comment on the discreet discounts that they were offering, with some of them reportedly going as high as 25 per cent. But it’s also true that for luxury retailers, the shopping experience is also a very important part of the total luxury and brand experience that cannot be compromised. Does this mean value retailing, which is the preferred shopping trend this season, has hit the luxury segment too? Value brands in the luxury segment would always be more successful in the Indian market, says Ms Nangia. Calling this a shift from indulgent to considered luxury, the Ledbury report says that there is a growing fatigue with ‘fast’ luxury products, which means consumers are looking for products that provide them with lasting value December 31, 2008 Rosebys plans 240 stores in India in first year of operations Seeking to expand its footprint aggressively, home decor and lifestyle products firm Rosebys Interiors India Ltd plans to open 240 single brand retail stores in India by October next, a company official said. Rosebys kicked off its Indian retail operations in October end and it now has 12 stores in Punjab, Gujarat, West Bengal and Uttaranchal. It entered the Karnataka market launching four stores here on Wednesday. It plans to open 25 stores in Karnataka in a year, CEO of Rosebys Aloke Banerjee told a press conference. Rosebys offers a range of products including bed covers, bed sheets, towels, cushions, and adornments such as photo frames, vases, candles besides home stainless steel ware and personal care products. Rosebys Director Nikhil Sen said five to ten per cent of the 240 stores planned in one year would be company-owned, with the remaining being franchisee ones. Sen said the company proposed a Rs 150 crore spend, particularly for brand building.Rosebys is positioning itself as an affordable luxury brand in the premium market. The company aims for sales of Rs 10,000 per sq ft of retail space per annum. December 24, 2008 Piquadro aims to roll out 16 stores by 2013 Italian travel items and lifestyle brand Piquadro, which had recently opened a store in the Capital, mulls setting up 15 such showrooms by 2012-13, eyeing the Rs 800 crore Indian branded luggage market. The $40 million company is seeking at tapping the corporate and fashion gifts market and has set up a 51:49 joint venture with DLF Group's retail management arm DLF Brands for expansion in India. “We have just started with our first Indian store at Delhi and our plan is to have a total of 16 outlets by 2012-13,'' Piquadro India Brand Head Jayshree Chowdhury told PTI. She, however, refused to divulge the company's investment plans for the India. The company is basically targeting the premium segment customer in the metros and Tier I cities. “We would be having a range of leather goods, luggage items and accessories including keychains, cufflinks, laptops bags and gift items. The company is set ting up its second store in February 2009 at Delhi before venturing into other metros, she said, adding that the Piquadro stores would be of average around 600 sq ft in area. “The Rs 800 crore organised leather bag market in India is growing annually at over 25 per cent and we want to have a substantial presence in it,'' Chowdhury said, without disclosing the company's sales target for India. December 24, 2008 DLF brands expands lifestyle portfolio DLF Brands announced the unveiling of five internationally successful lifestyle brands in India. The brands are spread across product categories and include iconic fashion labels like Boggi, a super premium Italian men’s wear brand; Alcott, the young and trendy Italian apparel and accessories brand; Piquadro, a high-end, Italian luggage brand; Sia Home fashion, a French premium home decor brand and Sunglass Hut, the largest sunglass specialty retailer in the world with over 2000 retail locations worldwide. After entering the luxury lifestyle segment with Armani and Ferragamo earlier this year, DLF Brands sought to diversify its portfolio by introducing brands across premium and super premium segments and various product categories. DLF Brands initially followed the joint- venture route to launch Armani and Ferragamo in India . The company is following a similar route for Boggi and Piquadro. The company has opted for sole franchising partnerships for the other brands; Alcott, Sia Home Fashion and Sun Glass Hut. All five brands will be available at stores located at DLF Place , Saket, New Delhi . The company has aggressive plans to market and strategically promote each of the brands across India. December 22, 2008 Italy's Loro Piana plans India foray Famed for its superfine cashmere and vicuna, the Italian textiles and clothing company Loro Piana SpA is now poised to enter India. It has opted for a 51% stake in a joint venture called LP Retail (via its Swiss arm Loro Piana SA) with the Kishor Bajaj-promoted Bada Saab Design, the master franchisee of another legendary Italian brand, Brioni, in India. “Loro Piana is entering India through single brand retail window by which it would hold 51% equity in the JV company. All Loro Piana products would be sold under the single brand name — Loro Piana in India,” a source close to the development said. According to Press Note 3 of 2006 series, FDI up to 51% in retail trade of single brand products is permissible with prior government approval subject to the conditions that the products to be sold in India should be of a single brand which the foreign company uses in the international market. The privately-owned Loro Piana group, with 113 stores world-wide — including US and Europe — is divided into textile and retail divisions. For much of its 194 years, it has made fabrics for top fashion brands, but ventured into the world of retailing suits, overcoats and sweaters around a decade ago and more recently, home furnishings too. Now, the latter accounts for around two-thirds of its total sales, totting up e243 million out of a total of e420 million in sales in 2007. December 9, 2008 TAG Heuer defers mobile phone launch to Mar 2009 Swiss watchmaker TAG Heuer, part of French luxury goods group Louis Vuitton Moet Hennessy( LVMH), has deferred the launch of its high-end mobile phones in India. It had initially planned to roll-out TAG Heuer phones in the first half of the current year, which it later revised to December 2008. The company now says it will launch the phones by March 2009. TAG Heuer has also revised the starting price of the phone, which was to debut in India for around Rs 2,20,000. “It is a high-end luxury mobile phone and in India it will start at Rs 2,70,000 through exclusive Tag Heuer boutiques and select stores,” Jean-Christophe Babin, president and CEO, TAG Heuer, told Business Standard. Touted as the Vertu killer, the first mobile phone from TAG Heuer stable is called The Meridiist and sports a unique secondary top screen that displays time. It is available only in 8-9 stores across the world with Singapore being the only Asian country where the phones are available. Given the complex micro mechanic engineering involved in hand-assembling the 430 components of the phone, the company has been able to manufacture only a few pieces every week. “We have been out of stock as the demand has been phenomenal. Since we do not have the required inventory, we cannot introduce the phones worldwide,” Babin explained. “The ultra precise mechanics take time and we shall wait for the inventory to achieve a sizable amount,” he added. The phones are manufactured at factory in France and sent to Switzerland from where it is finally exported. TAG Heuer Meriidist Phone Watch comes with an all-in-one USB plug to charge the phone as well as transfer data to the PC. It’s constructed from corrosion-resistant, watch making 316L steel. The dual displays have been crafted from scratch-resistance 60.5 carats sapphire crystal. It has a 28-day standby time and 7 hours of talk time. “We want this phone to be the new premium accessory for men,” Babin said. In India, the TAG Heuer mobile handsets will be available at TAG Heuer boutiques and select multi-brand retail outlets across Mumbai, New Delhi, Bangalore, Chennai, Ahemdabad and Kolkata. The company has recently opened 2 boutiques, one each in UB Group’s UB City Mall and DLF’s Emporio Mall. Incidentally, given the high real estate prices in the country, TAG Heuer has adopted a wait-and-watch policy in terms of expanding its stores. While it has decided to open two format stores — one each in Chennai and Mumbai, its target of opening 30 stores by 2010 will depend on the real estate environment in the country. “We are talking to mall developers and evaluating other opportunities,” Babin added. December 5, 2008 e-CommercePune’s shopping portal starts operations Chaotic traffic, maddening crowds and inadequate parking are some of the hindrances that take away the joy of shopping. But sitting in the comfort of the home if customers can order from their favourite shops, then shopping can still be fun. laxmiroad.in, the first online shopping site for Pune customers, has begun its full- fledged operations. Ms Zelam Dixit, co-founder, told Business Line it has about 20 popular shops, ranging from garments, DVDs to books, available on the portal. The Web site started its beta testing during the Ganapati festival in September and now has 550 registered members. Ms Dixit said the mode of delivery is through courier with a minimum charge of Rs 25 within and around the city and on weight basis for those outside the city. To spur interest, the site offered Friday deals — five per cent discount on products, Ms Dixit said. Plans are on to begin similar Web sites in eight more locations in Maharashtra within the next three months. The locations that have been identified include Mumbai, Satara, Aurangabad, Ratnagiri, Nasik and Nagpur, while the other two locations were yet to be finalised. Plans are on for UAE, the UK, Singapore and Malayasia at a later date. She noted that orders had started coming in from the UAE customers and was being delivered through Pune-based courier services having branches in the UAE. Ms Dixit said the site has been set up with an investment of Rs 3 lakh and an additional Rs 2 lakh would be used for advertising purposes. Currently, revenues came from the commissions from the shops registered at the site. January 2, 2009 Infinity Retail plans to launch online sales The Tata Group company, Infinity Retail Ltd, is planning to start e-commerce for its Croma brand of stores. The retail company would seek advice from its technical and sourcing partner – Woolworth to make a foray into this arena. Besides, it would be roping in other Tata group companies such as TCS and Drive India to provide software and logistics support for its e-commerce venture. Speaking to Business Line, Mr Ajit Joshi, CEO & MD, Infiniti Retail Ltd., said, “We would soon be entering the online space and are in the process of building our business model, our partner Woolworth already has a robust model under its DickSmith electronics brand and we would be seeking their advice to enter this business.” To begin with, the e-commerce foray would be limited to certain major metros while the company would continue to build on its logistics support. “We would be launching our e-commerce operations in a phased manner as logistics is going to be issue in this venture. Our group logistics company Drive India would become our partners while Tata Consultancy Services (TCS) would help in putting up the Web site for us,” added Mr. Joshi. Meanwhile trying to improve its wafer thin margins in the consumer durable business, the retailer has also decided to launch its private label under the Croma brand. “We expect our private labels to contribute at least 20 per cent of our top line. The Croma brand would be cheaper by 10-15 per cent compared to the rest of the brands in the same category,” said Mr Joshi. Besides, Croma is also experimenting with an after sales service in Bangalore. “We are currently working with a Bangalore-based company to service the brands brought from our stores. Going forward we will evaluate how to take this partnership forward,” added Mr Joshi. Tata Group’s Infiniti Retail Ltd, which operates a national chain of mega stores of consumer electronics and durables under the brand name ‘Croma’, will invest Rs 350 crore in retail business in the next 12 months. This is part of the expansion plans for Croma as the company looks to double the number of stores to 50 within a year, said Mr R.K. Krishna Kumar, Chairman, Infiniti Retail Ltd. January 1, 2009 Tanishq brings bling-bling online Tanishq is exploring a whole new realm in jewellery marketing – the virtual world of the Internet. Can a touch and feel product like jewellery be retailed online? Can brand awareness lead to a level of trust that gives picky jewellery buyers enough confidence to choose online? The country’s biggest jewellery brand seems to have the answers. Alpana Parida, Head of Marketing and Merchandising, Tanishq, tells Business Line that e-commerce is going to be their next tool to target customers. They have already launched their special solitaire website www.tanishqsolitaire.com with specific focus on their NRI clientele. This web initiative not only answers queries on how to choose a solitaire, but also lets one view Tanishq’s entire solitaire collection and allows interested customers to book an appointment with trained personnel at a store of their choice. After catapulting the age-old ‘polki’ and ‘kundan’ jewellery to popularity and enabling them to re-enter modern day weddings, Tanishq has witnessed heightened interest even amongst the young and the Indian living abroad. These are customers who are typically very net-savvy. In keeping with this customer profile and with social networking and communities created via the Internet garnering many ‘net falls’, this is yet another arena Tanishq is exploring. “We have launched www.tanishqeverydays.in , in correspondence with our ‘Everydays’ diamond collection for women where they have the option to post images on the website and the pretty faces win prizes,” explains Alpana Parida. This interactive website has been targeted at independent and confident web savvy women. “We hope to remove one more level of difficulty away for our customers through this website. Our gift vouchers have always been a hit but this would be a different experience altogether,” adds Alpana. A jewellery business group of Titan Industries Ltd, promoted by the TATA group, Tanishq raked in Rs 1,200 crore in retail sales last year. December 17, 2008
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