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 28th May - 3rd June 2006 For other weekly updates click: Weekly Retail Update
May 28th - June 3rd India Retail News: Itochu, Metro, Designer Mall1. Monday, May 29, 2006 Andrew Levermore, CEO of HyperCITY Retail (India) Pvt. Ltd. announced that the company will be opening in Kolkata by 2007 end. Currently, there is only one HyperCITY located in Mumbai and a second store will be opening in Gurgaon by year end. The company will also be targeting tier II cities such as Lucknow, Aurangabad, Coimbatore and Ludhiana where it has fixed locations ranging from 120,000 to 165,000 sq ft. Commenting on the Mumbai store, Levermore said the store receives more than double of the estimated 3,500 footfalls even on a quiet day. Conversion rates and bill amounts have been high. Fresh food products and meat account for 18% of sales and take up 30% of display space in the store. Source: Business Standard 2. Tuesday, May 30, 2006 IGD has predicted that Wal-Mart will be India’s first global retailer that enters the food and grocery retail sector. The Indian retail sector is estimated to be worth $203 billion. The Indian government currently does not allow Foreign Direct Investment (FDI), although it is likely to permit international companies to enter in the next few years. According to IGD, other major global retailers such as Tesco and Carrefour will not be entering India in the short run as Tesco is concentrating on other markets like the US and China, while Carrefour is focusing on maximizing the potential of current stores and locations. Fiona McTavish, Senior International Business Analyst with IGD stated that, global retailers must plan on keeping India in their expansion plans if they want to grow. “By 2010 it will have overtaken France, Germany and the UK in the league of global grocery markets, and will double to a value of $482bn by 2020”. She added that although there are several challenges at present, India has a substantial population of the country under the age of 25 and offers tremendous opportunities for international retailers to attract consumers for the long term. Source: kamcity.com 3. Tuesday, May 30, 2006 Nandan Piramal executive vice-chairman of Piramyd Retail announced that with completion of the Dev Arc Mall in Ahemdabad in 18 months, the company was considering setting up malls in Surat, Rajkot and Vadodra. He added that they were looking into plots and malls for development in Rajkot, through its consultant AC Nielsen. The company is also planning to set up a 40,000 sq ft mall in Surat. Source: Business Standard 4. Tuesday, May 30, 2006 Pantaloon Retail will be opening different formats in the east, covering approximately 3 million sq ft, over the next two years. Currently, the company is present in Kolkata in three formats, Pantaloons, Big Bazaar and Food Bazaar. Besides these formats, the company also plans to develop five malls in Kolkata. Source: Business Standard 5. Tuesday, May 30, 2006 The future of retail might be Beijing’s Wu-Mart instead of Wal-Mart. The Chinese retailer has grown to $500 million in sales since it started in 1994, insignificant against Wal-Mart’s sales of $316 billion, but the retailer has been listed as one of the ten up-coming global companies by UK based food and grocery research company IGD. The research was conducted in over 24 countries and over 50 retailers, focusing on chains stores that have “had an impact beyond their scale”, says Jonathan Gunz, an author of the study. Factors such as savvy merchandising, aggressive plans for expansion and a unique corporate culture differentiated these firms from other good performers. While major global names such as Wal-Mart, Target, Tesco and Carrefour were not included in the list, Hong Kong based AS Watson was placed in the top spot. India’s Pantaloon Retail was included in the list at number five as “The most successful multi-format retailer in India.” The IGD report singles out India has have the most potential for growth, having the eighth largest retail sector in the world, which is likely to double by 2010. Don Delzell, an industry consultant, said that "Pantaloon's short-term prospects are outstanding." Other retailers included in the list were US based Whole Foods Market, eBay, Wegmans, Tchibo from Germany, CoucheTard from Canada, Central Retail Corporation from Thailand and Perekriostok from Russia. Source: Fortune 6. Tuesday, May 30, 2006 After the popularity of discount stores, the new trend in shop formats is discount malls. Several smaller retailers have already made their entry in this area, while larger companies such as the Hiranandani Group, Essel Group and the Vatika Group are all developing plans. Discount malls are likely to offer 25-60% lower prices for apparel, cosmetics and electronic items. One such mall under development is the Orchard Road Mall, which is being developed by Royal Palms Estates. The mall will have four distinct areas, two for stores, one for a food court and space for cultural events and one for its anchor, HomeMakers. According to real estate consultants Knight Frank India, there are approximately 10 discount malls that will be coming up in Mumbai, Delhi, Chennai and Bangalore in the next 2 years. Source: Economic Times 7. Wednesday, May 31, 2006 Tesco, the UK’s largest retailer and the world’s third largest retailer is reportedly close to signing an agreement with Bharti Enterprises to enter the food and grocery sector. The joint venture between the two companies is being worked out and will be finalized in the next few months. According to sources, the joint venture is likely to give Tesco no stake in the front end retail segment of the company, so as to not violate any existing rules. There will be profit sharing between the two companies and Tesco will have the right to own stake in the company once FDI rules are changed. Tesco has also another venture in the Indian retail scene. It has tied up with Home Care Retail Mart which has launched the Magnet hypermarket in Mumbai. Home Care Retail Mart was founded by Ashok Maheshwari, former promoter and managing director of the D Mart retail chain. Magnet is planning to open 50 stores by 2010, stocking everything from fresh fruits to furniture, covering approximately 50,000 sq ft in space. Bharti and Tesco have dealings as the company supplies fresh food products through its company FieldFresh Foods, a JV with the Rothschild Group, to Tesco. Tesco has a back end operations facility in Bangalore where it has developed ‘Tesco in a Box’, an application that can be shipped to any location where a new store is going to open. Source: Economic Times 8. Wednesday, May 31, 2006 AC Nielsen’s survey on FMCG consumption shows that class I towns (populations of 100,000 -1 million) rose by only 2.9% compared to 9.9% in metros. The total FMCG contribution of metros was Rs. 157.61 billion or 28.7%, as compared to class I towns contribution of Rs. 102.8 billion or 18.7% in 2005. Several cities are being tapped as new growth areas due to improved infrastructure and media reach. Source: Economic Times 9. Wednesday, May 31, 2006 Dubai based Landmark Group owned Max Retail will be opening its second outlet at the R3 mall on S G highway in Ahemadabad. The company has over 500 stores in the Gulf and plans to set up 6 stores over the next three years in Ahmedabad, Surat, Rajkot and Vadodara, with an investment of Rs. 40-50 million for each store. The company will target 25-30 year old customers with garments ranging from Rs. 200-600. Source: Business Standard 10. Wednesday, May 31, 2006 RPG Group owned Shoppers’ Stop plans to introduce several new international brands. Currently, these brands consist of only 5% of the store’s total sales. Recently, the company brought in MotherCare and Mac cosmetics to its stores and discussions are being held over a Dubai based jewelry brand that will be introduced. Shoppers’ Stop will also be launching licensee brands for footwear and watches. Besides licensee brands Shoppers’ Stop intends to have standalone stores like Tommy Hilfiger as part of its large-format stores. Also on the anvil are creating standalone stores for its licensee brands such as Mac and MotherCare. Source: The Hindu Business Line 11. Wednesday, May 31, 2006 RPG Group owned Shopper’s Stop announced that it will be opening approximately 100 food outlets over the next 30 months. There will a several different formats in the offing. New restaurant concepts including those offering Chinese, Mexican and Indian fine dining are being planned. At present, the company has three food outlets; Café Brio, a gourmet continental outlet, Desi Café, an Indian fast food outlet and Fresh Basket, a bakery division of HyperCITY. The company plans to open Café Brio outlets at all its stores, while Desi Café will be added to 20 stores. Shopper’s Stop has also tied up with the Blue Foods, a retail chains that operates Copper Chimney, Noodle Bar, Bombay Blues and Cream Centre to operate these food outlets. Source: Economic Times 12. Wednesday, May 31, 2006 Japanese company Itochu will be the second international firm to enter the cash & carry business in India, after Germany’s Metro AG. Itochu will invest $10 million to set up a wholly-owned company in the country. The company plans to import products as well as purchase locally to sell to wholesalers and institutions in bulk. The Indian government permits 100% FDI in cash & carry wholesale trading and permits foreign owned companies trading of items sourced from the small-scale sector through the FIPB (Foreign Investment Promotion Board) route. The company is specifically aiming at providing support in supplying materials and equipment for infrastructure and industrial projects. Source: The Hindu Business Line 13. Wednesday, May 31, 2006 Mukesh Ambani’s RIL is reportedly talking with Kolkata based industrialist Harshvardhan Neotia to begin retailing in the agro-products sector in West Bengal. RIL has been looking to purchase land in a number of states to support its mega foray into retailing. Source: Economic Times 14. Thursday, June 01, 2006 The Welspun Group’s flagship division, Welspun India will be purchasing a home textiles firm in Europe for $50 million. The company is conducting talks with two premium home furnishings companies in the Italy and the UK. Through this acquisition the company will be able to enter the European market and will bring it additional business for Welspun India. Currently, the company is sourcing products from Turkey, Egypt and Pakistan. Welspun India is Asia’s largest terry towel manufacturer and is steadily increasing its exports to US markets. Source: Economic Times 15. Thursday, June 01, 2006 Arvind Mills is reportedly looking to acquire firms either domestically or abroad. According to industry sources, the company is in talks with firms in Egypt for possible tie-ups or acquisitions so that it can increase its position as a manufacturer of high-end garments as well as suiting and shirting. Source: Economic Times 16. Thursday, June 01, 2006 Jewelry chain Tanishq is keen on focusing on the wedding jewelry segment of Kolkata and has launched a new range of diamonds and gemstones jewelry line aimed specifically at this segment. According to Govindraj, vice-president (sales and marketing), Tanishq, said, "The logic is to give the customer what he wants. We might be a national player but we also believe in acting local at the level of the local store". Since April, this is the company’s third launch, after The Wedding Collection and The Colours of Royalty series. Tanishq is a Rs. 5.35 billion company and projects growth at 40% for the financial year 2006-07. Source: Business Standard 17. Thursday, June 01, 2006 RIL presented its plan to Sharad Pawar, the minister for agriculture and food, committing investments of Rs. 500 billion in the next seven years. Reliance plans to set up rural hubs to assist teaching modern farming practices that increase productivity, better crop variety, analysis of soil conditions and purchase points for agricultural produce from farmers. Clinics to help farmers alternate crops, implement drip irrigation techniques will also be set up. Source: Financial Express 18. Thursday, June 1, 2006 Gallops, the new mall scheduled to open on June 10th in Ahmedabad is being called ‘India’s first designer mall’ due to its high profile tenants. According to NG Patel, promoter of the N G Corporation, the main difference between a regular mall and a designer mall is the focus on a theme by all its occupants in a designer mall. Several high profile names such as Globus, Lifestyle, Max and Foot Mart will be opening stores in the mall. There will be more than 170 international and 800 domestic brands available in the mall. Source: The Hindu Business Line 19. Friday, June 2, 2006 Mukesh Ambani’s Reliance Retail is looking to create high tech mandis in rural areas of West Bengal. The company has two major focuses for the state, agriculture procurement to supply its retail network of stores and developing malls. As being planned by Reliance, these mandis will procure food grains from farmers and will also assist them in increasing productivity and offer related technical help. Source: Business Standard 20. Friday, June 2, 2006 Due to the boom in the domestic retail market, exporters are receiving orders from domestic retailers who are using additional capacity to meet the demand. Several garment exporters like Premlal Udani, managing director of Kaytee Corporation and President of the Clothing Manufacturers Association of India (CMAI) and Ashok Rajani, chairman of Midas Touch Apparel and chairman of the Export Promotion Committee of the Apparel Export Promotion Council (APEC) have been supplying garments to Pantaloons, Shoppers Stop and Lifestyle besides meeting overseas demand. Another export company, Technocraft Industries, recently launched Haute Chilli, its own brand for the domestic retail market. The company has reportedly been asked to manufacture garments for Pantaloons, Shopper’s Stop and Reliance. Source: Economic Times 21. Friday, June 2, 2006 International lifestyle and apparel company, Vanity Fair Corporation is likely to enter into a joint venture with Arvind Mills to enter the Indian retail sector. Arvind Mills license will cover VF brands such as Lee, Wrangler and Nautica, which are already in the market and Jansport which will soon be launched. The joint venture will use both exclusive brand outlets (EBOs) and multi-brand outlets (MBOs). The EBOs will be controlled by the company directly and MBOs will be operated via a franchise model. Source: Economic Times 22. Friday, June 2, 2006 One of the largest childrenswear garment manufacturers of Europe has tied up with Novotex Exim to launch its brand Whoopi. Hucke’s Indian partner, Novotex Exim will have the master franchise for the Whoopi brand. Besides domestic retailing, Novotex will also manufacture garments for export for Hucke’s requirements internationally. Novotex will export 80% of its production to Hucke and retail the remaining 20% at its stores in India. The new store will open in Hyderabad this week and the company is planning to open 12 exclusive stores by the end of the year with an investment of Rs. 60 million. Of the new stores, there will 2 stores each in Hyderabad, Chennai and Ahmedabad and 6 stores in Delhi. In 2007, the company plans to expand to Bangalore, Kochi and Kolkata. Whoopi garments will also be available at several multi-brand outlets (MBOs). The Indian kidswear market is estimated to be Rs. 85 billion and is growing at a fast 30% per year. According to RV Venkat, managing director Novotex, the company has set a target of Rs. 250 million for its first year, including Rs. 150 million from its export business. Source: The Hindu Business Line
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