| Up Front | News | Brand | Watch | Feature | Trends | TECHNOLogistics | Black & White |
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The 8.8% reason and more
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 Retail has the potential of revolutionising India. This potential relates not only to economic growth but also to social and cultural equality and physical well being of the Indian populace. The Government has just announced that the Indian economy grew at an astounding 8.8% in the April-June quarter just gone by. There have been fears that we may not be able to sustain such a clip for long. This growth is riding on strong industrial and farm output chasing demand resulting from income growth. The whole cycle is greased by infrastructure of which retail forms a critical part. Fetter retail for whatever reason and you restrain growth.
Growth has exposed some of the divides in India and the cleavages are many. The fault lines lie between India and Bharat, the caste divide which refuses to be overlooked, the ‘boom’ gainers and those that remain untouched, male domination and women’s aspirations, metro growth and small city indifference, urban well being versus tribal destitution, etc. Retail does not recognize social stratification and tends to spread a common cultural heritage across vast geographical spreads.
The recent order of the Supreme Court to the Government to distribute food grains to the poor for free rather than leaving them to rot underlines how public control is not necessarily the better way. Properly incentivised, the private sector can move items of public consumption even better. This goes for distribution and retail for sure. The Government should not leave any further time in unfettering the retail industry.  |
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Looking Ahead
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Indian economy on a good wicket
Future Group & Star join the TV home shopping bandwagon
Wholesale cash-and-carry market goes into overdrive
Yum! Brands aim $100mil profit in India by 2015
Lifestyle expected to post first profit after ten years
Apparel exporters turning attention to domestic retail
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 The stock market surge which following global cues last month underlined the good wicket that the Indian economy finds itself in. On the 19th Aug, the Sensex rose by 1.1% to a new 30 month high of 18,455 points while the Nifty rose by 1.1% as well to a 31 month high of 5,540. The food inflation, still high dipped to 10.35% in the year to Aug 7. It eased from the previous week's annual rise of 11.40%. Perhaps the only one doing better was our Northern neighbor. China surpassed Japan in second-quarter (ending June) GDP figures ($1.399 trillion) to become the second largest economy after the US. This is likely to translate into China remaining at number two even at the end of the year when the full 2010 figures are compiled. The gap between the Chinese economy and that of the US is still too large ($5 trill Read More
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Strategy Refinement
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Raymond plans major expansion in non-metros
Genesis Colors betting on new tie-up with Burberry
Brandhouse Oviesse launches Italian brand ‘OVS Industry'
Blue Clothing Company targets airport retailing
Big Bazaar's five-day Independence Day sale bonanza
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 Short of a COO with the recent exit of Deepak Khetrapal, Raymond is still game for major retail expansion. Having saturated metros (but not malls), the company feels it is ready to make a major presence in class IV and V towns. Premium luxury brand marketer Genesis Colours is gleefully pushing its luxury brand Burberry although others (such as Murjani, SSIPL) have come a cropper in this segment. S.Kumar’s Brandhouse Retail is serenading foreign brands, this time the Italian brand Oviesse. Blues Clothing sees a bright future in airport retailing, a segment where experience is sorely required for Indian retailers. Closer to the ground, Big Bazaar has declared its Independence sale a resounding success.
Textiles maker and retailer Raymond Ltd has res Read More
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Expansion & Growth
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Vimal to add 38 stores this fiscal
HyperCity Retail to set up 10 more malls
Pantaloon rides robust sales at Central malls
Parag Milk Foods to launch 150 own stores
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 The retail industry is seeing not only expansion of the specialty store such as Vimal and Parag but also of high investment, large format stores such as HyperCity and Central. In fact, retailers are feeling more confidant about larger formats since it offers a ‘difference’ in the buying experience for customers as compared to local outlets with lower operational costs.
Vimal, the flagship textile brand of Mukesh Ambani led Reliance Industries, is in plans to add 38 stores to its retail network in this fiscal. Anand Prakash, RIL President (Textile Division) reportedly said, “We have 380 stores in the country and plan to increase this by at least 10 per cent in FY 2010-11.” He added that the Company would continue to support franchisees to enhance the Vi Read More
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International tie-ups & JV’s
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THE GAP sends team for India retail talks
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 The Gap has sent a business development team to renew talks on finding a local partner to enter specialty lifestyle retailing in India. The team had meetings with a number of retailers including Reliance Retail and Madura Garments. However, the talks are reportedly still at an exploratory level and any closure will take up quite some time. |
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Tirupur exporter acquires Swiss leisurewear brand Switcher
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 Prem Durai Exports Private Limited, the export arm of PGC Industries and Group, Tirupur, has acquired a controlling stake in Swiss leisurewear Switcher Holdings, to which it has been a supplier for over twenty years. Switcher Holdings owns brands such as Switcher, Respect and Whale. D. Prem, Chairman, PGC Industries and Group, said in a press statement that the new development would benefit both parties. It would enable PGC to gain a strong foothold in European markets such as Germany, Switzerland and Austria and Switcher Group would gain from lower costs in various activities such as warehousing, IT, logistics, product design and development. Aadith D. Vikram, Vice-Chairman and Managing Director of the company, said that as Switcher was a well-known player with operations in Germany, France, Aust Read More
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Jubilant Food keen on partnering global brands
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 Jubilant FoodWorks Ltd, earlier known as Domino's Pizza India Ltd, is in talks with many global brands to bring them into the country. It is being speculated that it will be a partner for the US coffee chain Starbucks' entry in India. The company runs fast food chain Domino's Pizza in India with over 320 stores. It plans to add 70 Dominos stores this fiscal. |
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Next, Gap, M&S in major sweatshop scandal with Indian suppliers
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An investigation conducted by the Observer, UK has exposed vendors of of British high street brands Next, Gap and Marks & Spencers (M&S). The report contends that workers at the vendors’ premises were working up to 16 hours a day. M&S, Gap and Next have all launched their own inquiries into the abuses and pledged to end the practice of excessive overtime, which is in flagrant breach of the industry's ethical trading initiative (ETI) and Indian labour law. Workers did come forward to claim that they were paid at half the legal overtime rate. Gap, which uses the same factory as Next, confirmed it had found wage violations and gave its supplier a deadline of Saturday midnight to repay workers who lost out. Workers have reported that those who refuse to work the extra hours have been told to find new jobs or were fired. The offending factory has offered an apology and agreed to reinstate workers who lost their jobs. All of the three brands Next Read More
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Government & Legal
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UK Gov’t body to adjudicate in supermarket/supplier disputes
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The UK Government has taken a step forward in establishing an adjudicating body for disputes between supermarkets, suppliers and farmers. The Groceries Code Adjudicator (GCA) would investigate disputes falling under the Groceries Supply Code of Practice (GSCOP). The Department for Business will bring forward new legislation in order to set up the GCA, which will reside within the Office of Fair Trading (OFT). The GCA will have the power to receive complaints about the way supermarkets interact with their primary suppliers from anyone in the supply chain at home or overseas, and deal with them anonymously. This includes farmers who may not directly supply the large supermarkets.
Although non-governmental organisations, trade associations and other organisations cannot lodge complaints directly, they still have a useful role to play in offering advice and assistance to their stakeholders.
Read More
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New Gov’t rule might affect Bharti Wal-Mart partnership
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 The partnership between the world’s largest retailer Wal-Mart Stores Inc and billionaire Sunil Bharti Mittal’s Bharti group may be subject to restructuring if the controversial new rule governing wholesale trade is implemented by the government. The new rule on wholesale trading, introduced by the government in April, restrains transactions between group companies, wherein a wholesale trading company cannot sell more than 25% of its sales to a group company and that amount should also be only for internal use. Raj Jain, Bharti Wal-Mart CEO, said that the clarification from the government has been sought, failing which the changes may be necessary in the corporate structure. Bharti Walmart Private Ltd is an equal equity JV between Wal-Mart and Bharti group, which runs a cash and carry or wholesale Read More
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Indian retailers abroad
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Dabur acquires Turkish personal care firm Hobi Kozemtik
Pantaloon considers launching own labels outside India
Amira Foods in distribution deal with Dubai chain
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 Shifting Indian retail abroad may be a big step. However, there are many other ways in which the Indian footprint can go overseas. Many Indian brand marketers are actively acquiring brands abroad or are planning to expand the geographic spread of its exiting brands overseas. Three such recent examples are given below. Dabur International Ltd, the overseas subsidiary of Dabur India Ltd has acquired a 100% stake in three firms of Hobi Kozemtik Group, a Turkish personal care products company, for $69mil. Hobi Kozmetik is a market leader in the hair gel category with 35 per cent market share and its products are sold across 35 countries, including West Asia and North Africa. The transaction for the acquisition is likely to be completed by the third quarter of the 2010-11 financial year.
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Rural Retailing
Milestones
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Bharti WalMart opens third store in Jallandhar
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 Bharti WalMart Pvt Ltd has opened its third wholesale store in the country. The latest Best Price Modern Whole sale store was rolled out in Jalandhar, the third city in Punjab where Bharti WalMart has its cash-and-carry stores. Bharti WalMart made its debut in May 2009 by opening its first store in Amritsar. The firm plans 10 to 15 wholesale stores in the next three years. |
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Reports
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Study highlights importance of music in retail sales
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 An interesting study on the influence of music on shoppers has been conducted by scientists at a Stuttgart Medical college lead by Prof Eberhard Wuest. The report’s conclusion is that music can be an important influence in the shopping experience. In fact, shoppers remember what they hear better than what they see. The study found that 70% of people remembered the music as opposed to only 3% for visual advertising elements.
The other positive effects of music on shoppers include the following:
- Turn stressful shopping experience to a relaxed one
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EUROPE
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July records high growth in UK but economists pessimistic of future
 In the UK, record high retail sales growth in September doesn’t seem to have convinced economists who remain a pessimistic lot. Figures from BDO’s High Street Sales Tracker reveal that July recorded the highest summertime high street sales growth in the last five years. Analysts see this a result of eager shoppers encouraged by promotions. The robust buying activity sparked overall sales growth of 5.2% for medium sized retailers. Fashion sales were up 5.1% and non-fashion 6.1%. A subdued housing market dampened growth of homewares to just 1.4%. Economists, however, point out that the macro-trends point to a slow down and that the good July is flash in the pan! Read More
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Future Group launches new commodity brand Ekta
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 Kishore Biyani’s Future Group has launched the new commodity brand Ektaa, under which, the company will roll out rice, spices, cereals, flour, pickles, regional snacks, and other products in a phased manner.
Ashni Biyani, director, Future Ideas, Future Group said, “The idea of creating ‘Ektaa' as a brand is to bring all communities together and celebrate the diverse culinary tastes of India. While there are food products and brands that cater to the tastes of each Indian community, we found that most of these are limited to the local or native market. So, even if you are Maharashtrian or a Bengali living in Delhi, you will still find your preferred food items at the local Food Bazaar.”
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Godrej decides against licensing dormant brands to retailers
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 Godrej Consumer Products Ltd has decided against licensing out the dormant soap brands Evita and Ganga to retailers. The initial plan was to activate the dormant brands with a new business model. This included selling-out some of the brands. However, the Company now plans to focus on its existing portfolio and the international markets with its spate of acquisitions.
A. Mahendran, MD, GCPL said that some of the household insecticide brands in its subsidiary company Godrej Household Products Ltd, such as Banish in Tamil Nadu and Jet in Andhra Pradesh, will continue to have a regional presence unlike the pan-India brands such as Hit and Good Knight. In Q1 ended in June, GCPL has reported a 67% increase in net profit at `Rs116cr. Net sales were h Read More
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Barista to get screens post tie-up with LiveMedia
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 Barista Coffee Company Ltd announced a strategic alliance with a digital destination firm LiveMedia. As part of the tie-up, 200 Barista Lavazza outlets across India will have LiveMedia screens on their premises.
Rajan Mehta, Chief Executive Officer of LiveMedia said, “We will be developing specific content to the tastes of the youth, upwardly mobile people and young professionals who spend time at coffee shops.”
Sanjay Coutinho, Director and Chief Executive Officer, Barista Coffee Company Ltd said, “We believe that the LiveMedia screens will add significantly to the overall experience of our guests.”
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Kishor Biyani picking up India’s top managerial talent
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 The Future Group head, Kishore Biyani, has been making special efforts in attracting in the pick-of-the-lot of top. The latest addition is V Vaidyanathan who has left ICICI after 10 years to build the financial services business of the Future Group. In the industry circles this is being viewed as a managerial coup as Vidyanathan is a highly rated catch. In 2010, seven managers of high standing have joined the group.
Future Group CEO, Kishore Biyani makes no bones about his efforts: “Expect more big signings…we have identified another five to seven top people in the country, and we are working on getting them…You take care of Lakshmi (wealth), Saraswati (intellectual growth) and Durga (emotional well-being) for them, the rest, like productivity and commitment, is sure to follow.”
 Clearly, his package is so attractive and the work so challenging that it is difficult for the most to refuse. The magic words that do the trick is ‘intra-preneursip’ or making employees co-owners. Vaidyanathan is likely to pick up a stake in the financial services business he will be spearheading. Another who was pulled in by Biyani’s ‘intra-preneur’ pitch was R Radhakrishnan, the ex-CEO of Reliance Retail’s hypermarket business, who was involved in setting up the Reliance Fresh format and had earlier worked with Foodworld Supermarkets and Hindustan Unilever. He heads Future Fresh Foods, where he has a stake, the exact amount of which is being worked out. Mark Ladham, president of the home business, Future Group, was roped-in in a similar manner. Vibha Paul Rishi, former PepsiCo high-flyer joined the Future Group this March, as group strategy & consumer director, and leads marketing, communication and customer strategy across group companies.
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People
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Noel top contender for Ratan’s chair
 The hunt for the new Chairman of the Tata Group is hotting up. The one name in the forefront is that of Noel Tata. Last month, Noel was appointed as non-executive chairman at Tata Investment Corp, a finance company with a portfolio of investments, including Tata Mutual Fund. More recently he joined in the same position, Tata International, a leather and engineering trading company with presence in 10 African nations, which handles the group's overseas trade. This is being seen as a move to expose Noel to diverse business. Noel Tata grew the retail business Trent more than 10-fold in less than a decade, from a single store company in 1998, to over 90 stores across retail formats that include Westside, Star Bazaar, Landmark, Fashion Yatra, Sisley and Zara. The retailer’s consolidated revenue grew to Rs1,137cr in 2009-10, from Rs8cr in 1998-99. What could work in favour of Noel Tata may be that he has the support of Shapoorji Pallonji Mistry family which he is married into. The Mistrys are the biggest shareholders in Tata Sons, the group’s holding company. But there has been no official word on it either.
Reheja Corp appoints new CEO for Hypercity
 Mark Ashman has been appointed by K Raheja Corp as CEO of Hypercity Retail (India) Ltd. Ashman was previously CEO of Marks & Spencer Reliance India and was instrumental in the rollout of Marks & Spencer’s retail strategy in India. He will replace Andrew Levermore.
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Market Watch
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Future Group to restructure financial services biz
 The Future Group is restructuring its financial services business. This may see the group’s flagship company Pantaloon Retail relinquish its 55% stake in Future Capital Holdings (FCH), a listed non-banking financial company (NBFC), to a new holding company. The new company will probably be called Future Financials. It will be headed (as MD) by V Vaidyanathan, the former CEO of the life insurance arm of ICICI Bank. Vaidyanathan will be a co-promoter, holding a stake alongside Biyani. Enam, the domestic brokerage and investment bank will advise the group on consolidation of the financial business. The board of FCH is set to induct three heavywei Read More
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REALTY WATCH Parsvnath reports 129% jump in net profit
DLF’s debt burden increase by 25%
DLF divests in Brands subsidiary
DLF to buy out property unit of Dubai World JV for 200cr
Market for luxury homes revives
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 While Parsvnath reported a steep increase in net revenues and profits, DLF’s blues continued with increased debts.
Parsvnath Developers reported a healthy 118% increase in its net revenues for Q1, April-June 2010 period, which stood at Rs259cr. The net profit rose by 129% during the quarter as compared to same period a year ago and stood at Rs32cr. There has been a strong demand for residential property across the country and the realty industry is benefiting from it.
Pradeep Jain, chairman Parsvnath Developers said, “The management focused on faster and accelerated completion of the ongoing projects than to aggressively launch new ones. During the past couple of months we have seen improv Read More
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Book Review + Q&A with Vineet Nayar
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 The book from Harvard Business Press, ‘Employees First, Customers Second : Turning Conventional Management Upside Down’ by Vineet Nayar was launched in June this year.
With a unique new perspective advocated in the book, we asked retail industry expert Sanjay Badhe to review the book exclusively for NewsVision. He has also proceeded to question the author first hand. We bring for our readers both, the review and Vineet Nayar's thought provoking answers.
Ever think about your employees…
 Vineet Nayar is a veteran of HCL - campus placement, handpicked by Shiv Nadar to lead a new initiative and finally MD of the parent company. You would think that when a person spends most of his working career in one organisation, he would be completely ‘ossified’ – steeped in corporate culture, low risk taking ability and unwilling to look at new ideas. On the contrary, Vineet Nayar thrives on criticism, questions his own judgment and looks for solutions in his team, without ever exuding the corporate ‘smugness’ that envelopes most in the grey corridors of head office. Refreshing, indeed!
The author chronicles, in a slim, easy-to- Read More
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NATIONAL TRENDS
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Regional food chains in South India holding their own
Notwithstanding the advent of modern retailing, regional family run food chains in South India are holding their own with store loyal customers. Many of these chains are even contemplating expansion. Some of these regional chains include:
- MK Retail, Bangalotre, 6 outlets
- Ratnadeep Supermarkets, Hyderabad
- Sri Murugan, Chennai, 30 outlets
- Shri Kannan Departmental Stores, Coimbatore, 28 o Read More
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WORLD TREND
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Internet and social networks become integral to retailing
Social networks such as Facebook, Twitter, You Tube, blogs, etc have become an integral part of everyday life for the city dweller around the world. It has also penetrated Indian social groups and many online communities have been formed. The marketing departments of companies have been looking at opportunities to leverage their brands and offerings on this platform. The retailing industry can no longer overlook this arena.
The KPMG/Synovate Retail Think Tank’s latest white paper has concluded that in the UK, the internet now forms an integral part of retailing there. For the retailer, the social networks are an opportunity to go beyond statistics and immediate sales. These networks have become a gigantic shop window for the retailer’s wares. Read More
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NATIONAL
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Café Coffee Day to distribute food centrally
Amalgamated Bean Coffee, promoters of the 972 outlet Café Coffee Day chain, are working out a new model for food distribution to its outlets. Semi-finished food will be shipped centrally and the finished food assembled at the outlets. Semi-finished food can be shipped over long distances. With the implementation of this model, the promoters hope to cut costs. However, they will have to make investments in food handling, storage, equipment and training of personnel. The program will first be unrolled in Bangalore and then taken to eight more cities. By the end of 2010, 200 cafes are expected to be covered.
Read More
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INTERNATIONAL
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M&S to introduce next generation RFID tags
UK retailer Marks & Spencer is planning to trial a second generation of RFID tags in the beginning of 2011. The new tags are much smaller than the current ones in use. This permits smaller labels and tags. M&S is already amongst the largest users of RFID tags (100 million annually) and hopes to expand its usage even further, especially for its international business and men’s shoes. The high unit cost ($0.15) restricts the use to only high value goods (18% of general merchandise).
A spokesperson for the M&S said: "We've found that RFID is most beneficial in our high value departments where there are complex sizing requirements, such as suits and tailoring, as it allows us to manage our stock levels better and ensure we have the right product mix on di Read More
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IN BLACK & WHITE
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R.C. Agarwal, CMD, Vishal Retail
“The move (allowing FDI in multi-brand retail) could instill new life in the expansion plans and bring in international best practices of organised retail in the country,“ said.
Devendra Chawla, Head of Private Brands, Pantaloon Retail
“We are working on it (exports of private label) and will see if we can do something. The probabilities are close to it.”
Jyoti Narula, MD, Genesis Colors
“There was a plateau (in sales) but now things are on an upswing.
Rentals too are showing an upward march...We are going to concentrate on our (core brand) Satya Paul.”
Govind Shrikhande, President and CEO, Shoppers Stop Ltd
“We are witnessing buoyant activity in the retail sector and hope this will continue in the coming quarters. We are looking to increase our coverage areas and also retail space…In perfect alignment with our bridge to luxury positioning, we are looking to add more luxury brands to our portfolio. Talks are on with several international players for a tie up.”
Carrefour spokesperson to Industry Ministry
“Any cap or restriction on FDI in this sector may result in potential loss of opportunities and avenues of inclusive growth of the retail sector.”
K. Dasaratharaman, President, Specialty Retail, Spencer's
“The bill value and number are both growing on a healthy note. This is a clear indication that consumers are back in the purchase-mode.”
Abhay Gupta, ED, Blue Clothing Company
“We are going aggressive on the airport retailing segment since it will allow us a wider brand presence.”
Sudhir Dhingra, MD of Orient Craft
“The single-brand retail market is going through an evolution at both ends of the yardstick. At one end, while the growth in sales and market size is keeping up its pace, at the other end the market is maturing in terms of retailing practices and consumer preferences.”
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