Indian Talent, Global Content
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Indian Talent, Global Content |
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March 2010: What's in the breeze |
News Update from the Retail Scene in India
The retail industry could see a sea change with the Government of India considering Foreign Direct Investment. With this in view, Chillibreeze plans to bring you periodical updates on the retail scene in India.The Chillibreeze Business Research Team has writers with interest and experience in the Retail industry, will be populating this page with the updates. Retail News 13th August - 19th August 2006 For other weekly updates click: Weekly Retail Update
Retail News 13th August – 19th August 20061. Sunday, August 13, 2006 Based on a study conducted by ET and Indicus Analytics on ‘City Skyline of India 2006’, Chandigarh consumers are the richest as well as the biggest spenders as compared to 50 cities of India. The city comes in second in terms of saving, after Thiruvananthapuram. Chandigarh residents, on average earn Rs. 109,000 a month, spend Rs. 72,000 and save the balance, Rs. 37,000. The total market size of Chandigarh is Rs. 69 billion. Other top 10 cities based on per capita income are Thiruvananthapuram, Jamshedpur, Vadodra, Kochi, Goa, Guwahati, Faridabad, Bangalore and Thiruvallur. Six cities, Chandigarh, Thiruvananthapuram, Vadodra, Goa, Guwahati and Faridabad are placed in the top 10 for all three factors, earning, spending and saving. Source: Economic Times 2. Sunday, August 13, 2006 Retail industry magazine Retail Week, announced that HyperCITY was India’s top store in its ‘100 Shops You Must Visit’ report. Other retail stores to be featured in the compilation were Bloomingdales, Selfridges, Louis Vuitton and Carrefour. The report was based on surveys conducted amongst business people, analysts, retail consultants, shoppers, editors. Source: Rediff Money 3. Monday, August 14, 2006 Wal-Mart is looking to India and China as being its future growth drivers, especially since it has withdrawn from the German and South Korean markets. Other key markets identified by the company are the Latin and Central American countries, Mexico, Japan, Canada and the UK. Wal-Mart spokesperson Amy Wyatt highlighted the role of India in the company’s future as it currently is an emerging retail market. Wal-Mart is currently conducting research and monitoring the government’s FDI policy and has not tied up with any Indian retailers, contrary to all the rumors in the media. Source: Economic Times 4. Monday, August 14, 2006 RIL’s plans to buyout Super Bazaar has run into trouble with the New Delhi Municipal Corporation (NDMC) petitioning the Supreme Court reclaiming the building to develop it and lease parts to interested bidders. Located in prime real estate area in Connaught Place, the property is estimated to be worth Rs. 12-15 billion. RIL had bid Rs. 288 for turning the retail chain around, while the Indian Labour Cooperative Society and Indian Poatsh have bid Rs. 700 million. Source: Economic Times 5. Tuesday, August 15, 2006 Pune is attracting organized retailers with its higher spending per transaction. At present, there is 800,000-1.2 million sq ft of organized retail space and another 3 million will be added in the next two years. Most new construction will be in formats such as malls, multiplexes and department stores. According to IS Narula, CEO of Ishanya, a specialty mall in Pune, “…the national average spend in organized retail is 3-3.5%. In Pune, this is much higher, at 5-7%.” Pune is also known for its youthful population with several colleges and young professionals, which retailers find a qualitative test market before launching in larger cities. Source: Economic Times 6. Tuesday, August 15, 2006 The IT Corridor (OMR) will soon have over 1.3 million sq ft of retail space, after several companies have finalized plans for building malls in the area. The Allied Group has tied up with Arihant Foundations & Housing to build a 610,000 sq ft mall, which will include a 160 room hotel. Other companies building in the area are, Marg Constructions will be building a 450,000 sq ft Riverside Mall and Suryavandhan Estates will be building a 250,000 sq ft Coromandel Plaza. The IT Corridor will be adding on 30,000 jobs next year which will further increase the demand for retail and commercial space in the region. Source: Economic Times 7. Wednesday, August 16, 2006 The government owned India Post is considering entering the retail sector by tying up with several established retail chains. The talks have primarily been focusing on food, health and personal care segments dealing with value based retailing. While India Post is likely to gain more than Rs. 1 billion over the next few years, its retail partners will have access to a network of 160,000 post offices across the country. Source: Economic Times 8. Wednesday, August 16, 2006 Reliance Retail is using global real estate consultants such as Knight Frank, Cushman and Wakefield, Tramell Crow Meghraj and other leading agents to evaluate more than 100,000 property sales and lease offers it has received. While most retailers lease space, Reliance is looking to purchase space outright to avoid high rentals that can affect margins. Source: Economic Times 9. Wednesday, August 16, 2006 The skyrocketing rentals in prime retail areas across the country are becoming a serious worry for retailers. On average, rentals have increased 35-40% this year due to the entry of several high profile companies in the retail sector. The rise has also affected Tier II towns, where real estate prices now match Tier I towns. According to Andrew Levermore, CEO of HyperCITY, “The greed effect is starting to creep in even Tier III markets where developers are asking for absurd rentals. In the long run, this will lead to failure of several malls as they will be unable to sustain profitability once competition hots up. I see a correction 18 months away and so caution is our best approach now.” Gibson Vedamani, President of the Retailers Association of India (RAI), states “The current levels are unsustainable. There are several players venturing into the business without really understanding the dynamics of the retail business.” In developed markets such as the US, rentals only constitute 3-5% of sales, while at present in India, rentals constitute for 15-25% of sales. Source: Economic Times 10. Thursday, August 17, 2006 British luxury brand for men, Dunhill will be launched in India by Brand House Retail, a fully owned subsidiary of S Kumar Nationwide Ltd. (SKNL). There will be two Dunhill stores, one each in Delhi and Mumbai, which will open later this year. The Dunhill brand includes luxury menswear items such as formal and casual clothing, ties, belts, cuff links, leather good, writing instruments and watches. India is on the hot list of most of the world’s luxury retailers due to increasing incomes and exposure to international trends and lifestyles. There are an estimated 1.6 million people in India earning more than Rs. 450,000 ($100,000) per year, according to a recent research. Source: Economic Times 11. Thursday, August 17, 2006 Bangalore is emerging as a key city for retailers after several international brands have opened flagship stores in the city. The city has some of the largest flagship stores in the Asia Pacific region, including those of Levi Strauss India and Adidas Sports Performance Centre (SPC). Soon to be opened is Arvind Brands Arrow flagship store on Brigade road. According to Darshan Mehta, President of Arvind Brands, “Bangalore is fast emerging as India’s answer to Los Angeles or Seattle. Unlike traditional markets such as New York and Chicago in the US which are huge, LA and Seattle emerged as smaller but attractive alternatives in the 60s and 70s.” Brigade Road in the heart of town is already an established center for retailers, and now newer areas such as Lavelle Road and 100 ft Road in Indiranagar are booming too. Source: Economic Times 12. Thursday, August 17, 2006 The Board of Control for Cricket in India (BCCI) has selected Pantaloon to outfit the Indian cricket team with formal wear. Lalit Modi, Chairman of the Marketing Committee of BCCI announced that Pantaloon’s offer of Rs. 200 million for four years had been approved by the BCCI. Formal wear is all clothes that the players wear for official activities off the field. Source: Economic Times 13. Thursday, August 17, 2006 In the three months that the K Raheja Group’s hypermarket HyperCITY has opened, the company has reportedly had one million customers visit its store in Mumbai. HyperCITY will be opening in the metros and other smaller cities such as Lucknow, Jaipur and Aurangabad by 2008. Andrew Levermore, CEO of HyperCITY Retail, attributes the success to the company’s combination of quality products, pleasing environment and competitive pricing. The store has also seen a significantly higher percentage of impulse purchases, with 40% of the purchases being impulse, a much higher figure than in the west. Source: The Hindu Business Line 14. Thursday, August 17, 2006 The Indian Labour Cooperative Society and Indian Potash Ltd. announced that it will match Reliance Retail’s bid of Rs. 2.88 billion for the Super Bazaar cooperative store chain. ILC and IPL offer to Super Bazaar was primarily to protect the interests of the employees. Source: Business Standard 15. Thursday, August 17, 2006 House Full International Ltd. said that the company will be investing Rs. 3.2 billion to launch a home improvement retail chain, and plans to open 51 stores in India over the next five years. The first 9 stores will open by March 2007 and will offer a wide range of home improvement items and services such as building materials, furniture, home furnishings and other products. The first stores will be opening in Pune and Surat, which will be followed by Hyderabad, Nasik and Mumbai. The company plans to reach a turnover of Rs. 3.5-4 billion by March 2008. House Full products will be sourced from manufacturers in India and abroad. Source: Newkerala.com 16. Friday, August 18, 2006 India’s first mail order company for lifestyle products, Elvy Lifestyle has announced that it will soon be opening stores in Punjab. Elvy Lifestyle, which has the backing of Stalwart Creations, was started by Lovy Khosla about 4 months ago. The company has products for sale through catalogues, internet malls and ‘touch-and-feel shops’. The company has 225 products ranging from cutlery and linen to sporting gods and office equipment. Most products are either created by the company’s own design team or have been sourced from overseas. Products are priced from Rs. 495 – Rs. 20,000. Source: Business Standard 17. Friday, August 18, 2006 RIL’s much anticipated foray into retailing will happen in September, when the company opens its first store in Hyderabad. The store will be a food and grocery store. The announcement was made by Raghu Pillai, Reliance Retail President and Chief Executive (Operations and Strategy) in New Delhi. The company has recently had several high profile tie ups with state governments of Punjab and West Bengal for sourcing fresh fruits and vegetables. Source: Economic Times 18. Friday, August 18, 2006 Almost half of Reliance Retail’s 10,000 hypermarkets, supermarkets and specialty stores will be grocery outlets, making the company the largest vegetable sourcer and vendor in India. Reliance has made plans to airlift fresh fruits and vegetables from Punjab and other states across the country. Reliance also signed a MoU with the Punjab government to set up 50 rural business hubs and 250 franchisees in the state, using an investment of Rs. 5 billion. The company has also made a Rs. 15-20 billion commitment to invest in West Bengal to set up agri-retail chains. Source: Financial Express 19. Friday, August 18, 2006 The Ashok Piramal Group owned Piramyd Retail plans to form joint ventures with international retailers to compete with domestic retailers, focusing especially on specialty stores and hypermarkets. The company’s own brands, Piramyd and Trumart will function as separate business units (SBUs). The Trumart brand is positioned as upscale versions of kirana stores, focusing primarily on local areas for its customer base. At present there are 14 Trumart outlets and 7 Piramyd outlets in the country. Source: Economic Times 20. Friday, August 18, 2006 The Anil Dhirubhai Ambani Group (ADAG) is reportedly conducting talks with Starbucks Coffee to form an alliance with the company to enter into the Indian market. According to industry sources, both companies are in an advanced stage of discussion on the types of formats. Howard Schultz had earlier stated that the company was keen on starting operations in India and was holding discussions with possible partners and had decided to enter the country by 2007. Regarding opportunities in India, he added, “As the world’s second most populous country, with more than 1bn people and growing at 6% per year, we see unique and great opportunity for bringing the Starbucks experience to this market.” Source: Economic Times 21. Friday, August 18, 2006 US based coffee chain Barnie’s Gourmet Coffee & Tea Company announced that it will be investing Rs. 750-800 million over the next 5 years towards its operations in India. At the opening of the company’s first outlet in Noida, Gaurav Marya, MD of Barnie’s India, said that the company plans to open 300 stores and 150 kiosks over the next 5 years. Barnie’s coffee outlets will be both at malls and other locations. Initially all stores will be company owned and run, while later stores will likely be franchised out. Barnie’s is already well established in US, Europe and West Asia markets and hopes to establish itself in Asia Pacific through India. Source: The Hindu Business Line 22. Friday, August 18, 2006 The Indian retail industry has the potential to grow from $300 billion to $600 billion by 2015 if it is able to become inclusive, according to industry experts at a marketing seminar organized by the Confederation of Indian Industry (CII) in New Delhi. Raghu Pillai, President and Chief Executive of Reliance Retail said "India can catch the $600 billion mark only if there is a paradigm shift in the mindset that regards those at the bottom of the pyramid as potential consumers." According to Maureen Johnson of Global Media Group, "Organized retailing in India can be achieved if greater emphasis is laid on customer relationship management. With skilled workforce and systematic approach India will transform the traditional marketing landscape seamlessly." Source: Newkerala.com 23. Friday, August 18, 2006 Pantaloon Retail India Ltd. is considering raising funds through various methods to fund its expansion plans. The company announced that the board would consider the various methods at a meeting on 24th August. Source: Economic Times 24. Saturday, August 19, 2006 A new specialty of professionals has emerged with the retailing boom; Mall specialists who can ‘turnaround sick units’ and analyze causes such as poor tenant mix, poor mall management or competition from newer and better managed malls. Although a few malls have been converted into multiplexes, none have closed down as yet. There are an estimated 200 malls coming up in the next few years and not all will fare well. Malls in the NCR have an average occupancy of 40-60%, but the real problem lies in converting the footfalls into sales. Malls with low tenancy rates, erratic footfalls and those where retailers are reluctant to pay maintenance fees for common areas, are most likely to fall into the ‘sick’ category. Source: Economic Times 25. Saturday, August 19, 2006 As organized retailing becomes the norm, the system of having a solid ‘anchor’ is becoming the way to ensure success of a mall. Anchor tenants are the main tenants of al mall and usually are a large department store or hypermarket chain. It is for this reason that anchor tenants usually get a 30-60% discount on rentals. The brands that have emerged as dependable anchor tenants are Westside, Pantaloon, Lifestyle, Shoppers’ Stop, Globus, HyperCITY and Landmark. Food chains such as Pizza Hut, McDonalds, KFC and Delhi based Nirulas also ensure a steady stream of customers. Source: Economic Times 26. Saturday, August 19, 2006 The continued growth of retail stores and malls across India, is giving a boost to the signage industry. According to V.V. Ramana of Villart Expositions, the signage industry is worth approximately Rs. 6 billion. Besides, this boost in sales, the industry is also witnessing a dramatic change in the various technologies, such as high speed digital printers. Villart Expositions is organizing a three day event on ‘Photography and signage industry’ at People’s Plaza on Necklace Road, starting from September 1, 2006. Several major brands such as Canon, HP, Kodak, Olympus, Xerox and Epson will be present to highlight the functions of their products. Source: The Hindu Business Line 27. Saturday, August 19, 2006 Titan Industries hopes to establish its presence in the mass jewelry market segment with its new retail project, ‘GoldPlus’. The new brand targets semi-urban buyers in tier II towns, who primarily purchase jewelry for investment purposes. At present, there are only 2 GoldPlus outlets, in Erode in Tamil Nadu and Ratlam in Madhya Pradesh. Ten more stores are planned, most being in the south. Titan’s other brand Tanishq is already well established in the metros and has an urban image. Source: The Hindu Business Line 28. Saturday, August 19, 2006 Lifestyle International Pvt. Ltd. announced its plans to open 10 new home stores called Home Center’s in the next three years. The announcement was made by Kabir Lumba, Executive Director of Lifestyle International in Chennai, at the opening of the second Home Centre store. The first Home Centre store is in Gurgaon. The company invests an average of Rs. 50-60 million per store and sources its products from over 40 countries. The 27,000 sq ft Chennai store has 41 ‘concept rooms’ which showcase its products in a lifestyle driven merchandise display. Source: The Hindu Business Line 29. Saturday, August 19, 2006 Reliance Retail will be having several global brands in its kitty, although details are still being worked out at this stage, according to Raghu Pillai, President and Chief Executive (Operations and Strategy) of Reliance Retail. Source: Business Standard
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