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News Update from the Retail Scene in India
chillibreeze writer — The Chillibreeze Business Research Team
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.
May 14th - 20th India Retail News: LVMH, Nautica,
FDI, Godrej
1. Monday, May 15, 2006 HyperCITY to open 6 new outlets
The K Raheja Group promoted HyperCITY announced that it will be developing 6 new outlets by year end in cities such as Delhi, Bangalore and Kolkata with an investment of approximately Rs. 900 million. An estimated Rs. 150 million per store is being planned excluding the cost of real estate.
The company’s first outlet opened in Malad in Mumbai, covering 120,000 sq ft. The new store has already seen an average footfall of 45,000 on the weekends with a 60% conversion rate.
Source: Economic Times
2. Monday, May 15, 2006 Akbarallys plans to open 4-5 new stores
Mumbai chain store Akbarallys is planning to open new stores to compete with competition form department stores. The company plans to open 4-5 supermarkets in Mumbai by the end of the year, according to chairman F T Khorakiwala. Currently, the company has 4 supermarkets in the city and besides Mumbai also plans to open stores in Hyderabad and Surat.
Source: Economic Times
3. Monday, May 15, 2006 More International chain back offices heading to India
Tesco is only one of several international companies whose back offices are located in India. The company is increasing its staff in India and moving several applications and operations from the UK to India. US based Target is also increasing its operations in Bangalore where it has an office. The company has hired vendors like TCS, Infosys and Wipro for its maintenance tasks.
Several other retailers such as Home Depot, Kroger, Costco and Wal-Mart are also expected to increase back office operations to their India offices. Hindustan Service Centre in Bangalore has developed an application called ‘Tesco in a Box’, a program that can be shipped to wherever Tesco opens a new store. Besides doing back end work at a lower cost and in lesser time, these companies see setting up an office in India as paving the groundwork for when FDI in retail is permitted.
Source: Economic Times
4. Monday, May 15, 2006 Pantaloon Retail looking for more tie ups
The retail division of the Pantaloon Group is looking to finalize tie ups with several companies such as Galaxy, Liberty, Gini & Jony and Lee Cooper. The company launched its fourth Fashion Station store in the city, a value retail based store that targets youths.
Fashion Stations will be opening 20 stores including 4 additional ones in Ahmedabad and 2 stores each in Baroda, Rajkot and Surat. The company plans to set up over 50 stores in the next four to five years in cities such as Delhi, Mumbai, Kolkata, Chennai, Bangalore, Hyderabad, Pune and Ahmedabad.
Besides apparel, Pantaloon Retail is planning to boost its food retailing business. Currently, food business contributes 10-15 percent of sales in malls, while in international markets it contributes 40%. At present Pantaloon has Light Kitchen, an Indian snack food outlet that sells food to customers.
Source: Business Standard
5. Monday, May 15, 2006 Alok Banerjee to join S Kumars as CEO of Textile division
Bombay Dyeing’s CEO of the home textiles division Alok Banerjee will be leaving to join S Kumars as the CEO for the textile division. This is the second high profile departure from Bombay Dyeing after the managing director Ninu Khanna resigned two months ago.
S Kumars have been aggressively searching for talent in an effort to expand the company. One of the recent inductees was expat Martin Haemerle, who will lead the company’s high-value cotton fabric division focusing on the export market.
Source: Economic Times
6. Monday, May 15, 2006 Koutons plans to open 1000 outlets
Apparel retailer Koutons plans to increase its network of stores to 1000 outlets and will be investing Rs. 1.5 billion towards the expansion. Currently, the company has 225 outlets in major cities and plans to open new outlets in Bangalore, Chennai and other cities in the south. The company achieved a turnover of Rs. 5 billion, a substantial rise from Rs. 1.68 billion last year. The company also has plans to sell women’s wear from next year.
Source: Business Standard
7. Tuesday, May 16, 2006 Sriram Srinavasan will head Reliance Retail apparel division
Sriram Srinavasan who set up Madura Garments and launched Indus League Clothing will be Reliance Retail’s new apparel head. He will be joining the company by end of June. Srinavasan had sold his stake in Indus League Clothing to the Pantaloon Group. There still is some uncertainty on Srinavasan’s move as he had signed a no-compete clause with Pantaloon.
Source: Economic Times
8. Wednesday, May 17, 2006 Pantaloon subsidiary to invest Rs. 1.5 billion for 6 Home Town stores
Pantaloon Retail’s home furnishings division Home Solutions Retail will be opening 6 outlets of its flagship format Home Town in the next year. The first of these outlets will open in NOIDA in September this year. Home Town stores are targeted at customers who need to build, furnish and decorate a home.
Items such paints, tiles, electrical and plumbing products as well as services, furniture and electronic items will all be available at Home Town outlets. The home segment in India is estimated to be worth Rs. 1000 billion, although it consists mainly of the unorganized sector.
Source: The Hindu Business Line
9. Wednesday, May 17, 2006 Exclusive home décor shopping destination on the anvil
International Home Décor Park (IHDP), a home décor theme concept will be opening in September 2006 in NOIDA. The park will function as a business-to-business (B2B) format, serving as a permanent trade fair location. Covering a total area of 350,000 sq ft, the park will have additional amenities such as a service centre, a travel desk, laboratory testing facilities as well as a multi-cousin restaurant. The park will also showcase Indian handicrafts to foreign buyers.
Source: Business Standard
10. Wednesday, May 17, 2006 Godrej sets up division to fund its retail chain
Godrej Industries has set up a new retail division Aadhaar Retailing as a special purpose vehicle (SPV) for investment for infrastructure for its new supermarket chain, Aadhaar. Godrej Agrovet’s managing director, C K Vaidya, said that the investment required for Aadhaar will be done through Aadhaar Retailing.
The company currently has 22 Aadhaar outlets and has made plans to open 50 more this year. There are 2 models of the Aadhaar stores, larger outlets covering 10,000 sq ft and smaller outlets covering 3,000 sq ft. Godrej’s other food venture, Nature’s Basket currently has 4 outlets in Mumbai and the company is planning to increase this number to 12-15 stores by year end.
Source: Business Standard
11. Thursday, May 18, 2006 LVMH, Lladro, Chanel file papers to enter India
France’s LVMH, the world’s largest retailer of luxury goods, Lladro Commercial of Spain, the world’s leading retailer of porcelain figures and Chanel SA, the French perfume and accessories company have asked the government’s permission to establish joint ventures in the country. Once approved by the Foreign Investment Promotion Board (FIPB), these ventures will be the start of the foreign equity partnership in the retail sector.
Source: Financial Express
12. Thursday, May 18, 2006 Recruitment agencies using retail model to hire staff
The severe shortage of staff has led to recruitment agencies using retail stores as places to hunt for potential candidates. Ma Foi has appointed 40 franchisees across the country to open recruitment centers, focusing on tier II and tier III cities such as Nagpur, Guwahati, Siliguri and Jammu. According to Balaji E, COO of Ma Foi, the company is looking for entry level candidates for retail, BPOs and front line sales people for financial services industries.
Source: Economic Times
13. Thursday, May 18, 2006 Private labels on the upswing
Trent’s retailing arm Westside is upbeat on sales of its private labels. The company is planning to have a100 stores by 2010 and has recently acquired books and music retailer, Landmark. Compared to Pantaloon, the company is still very small but is planning to expand.
Currently, the company has 27 stores, covering 700,000 sq ft in retail space, compared to Pantaloon, which has over 2.5 million sq ft of retail space. As the company grows, it will retain its original business model, with private labels making up the bulk of its merchandise. At present close to 90% of Westside’s sales come from in-house labels. At Shopper’s Stop the figure is as low as 20%.
Source: Business Standard
14. Thursday, May 18, 2006 Nautica opens its destination store in Bangalore
Leading international lifestyle and apparel brand, Nautica opened its flagship store in Bangalore. The company is also looking for two additional outlets for the city, in either a shop-in-shop or a stand alone format. The new store in Bangalore covers 6,000 sq ft and is the company’s largest standalone store outside of the US, according to Denise E Seegal, President and CEO of VF Sportswear Inc (Nautica).
Nautica will be opening in Delhi later this week and in Chennai in the third quarter of the year. Nautica has been brought in by Arvind Mills, who have also introduced several other international brands such as Wrangler and Lee.
Source: The Hindu Business Line
15. Friday, May 19, 2006 Food retailers moving towards larger stores
K Raheja Group’s new retail venture, HyperCITY is leading the trend towards larger stores. The brand new store covers an area of 120,000 sq ft. India’s other major retailers such as Pantaloon Retail and Trent are also in the process of setting up more hypermarkets to reach economies of scale and increase the profit margin on non-food items.
The turnover of major retailers in India accounts for $7 billion, only 3% of the total retail market. The percentages are significantly different from China where major retailers account for 20% of the market and Thailand where they account for 40% of the market. Therefore, the scope for growth in India is tremendous.
The major hindrances to large outlets are factors such as rising real estate costs, scarcity of large tracts of land and the poor conditions of roads and transportation. According to Anil Rajpal, a consultant at KSA Technopak, "Convenience and proximity are very important to the Indian shopper. Even those who have a car don't want to spend hours to get to a store. The Indian consumer is also quite pampered ... we can call and have groceries delivered at our door and get even very small packs, which hypermarkets would find difficult to do."
The food and grocery sector consists of an estimated 77% of the retail market and is dominated by mom and pop stores. R Subramaniam, managing director of Subshiksha, a leading Chennai based food retailer, "Our competition is not other formal retailers ... we are going head-on with the traditional mom-and-pop stores."
Major retailers are estimated to grow at 25-30% per year for the next four years, which is attracting several new names such as Bharti Enterprises and Reliance Industries to foray into this sector.
Source: Reuters
16. Friday, May 19, 2006 India is the world’s leading FDI destination
At a meeting organized by the India-American Chamber of Commerce in New York, India’s Minister of State for Industry Ashwani Kumar told investors that “India provides higher returns on foreign direct investment (FDI) than any other country in the world.” The meeting was attended by over 100 investors, including some from large US multinationals.
The minister further highlighted the government’s focus on expansion in manufacturing, infrastructure, automobiles and auto components, telecommunications and food processing sectors.
Source: Economic Times
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