News Update from the Retail Scene in India

chillibreeze writer — 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.

Retail News 9th April - 15th April 2006

For other weekly updates click: Weekly Retail Update

 

 

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April 9th – 15th India Retail News: Tata Group, Reliance Retail, Retail chains, Apollo and More

1. Monday, April 10, 2006
Pantaloon aiming for 100% growth this quarter

Pantaloon Retail is looking for a 100% growth this quarter based on an aggressive increase in retail space and new promotions to attract customers. According to Sanjeev Agrawal, president, marketing, Pantaloon Retail, this increase will be led by the Big Bazaar format as well as new store openings.

The company plans to open several standalone stores for the first time including a lifestyle electronics store, E-Zone and a furniture store, Collection-I, which will both open in Indore. Other new formats will be Depot, a bookstore in Mangalore and 3 Shoe Factory outlets in a JV with Liberty footwear.

Pantaloon Retail currently has 25 Big Bazaars in the country and plans to open 6-7 more this quarter. Other formats such as Pantaloons and Fashion Station will also see an expansion of stores. The March quarter ended last year with net sales of Rs 2.75 billion and a net profit of Rs 106.9 million.

Source: Business Standard

2. Monday, April 10, 2006
Pantaloon Retail expanding talent pool

Pantaloon Retail has tied up with four management schools in India where it will make offers to all students enrolling in MBA programs, who can decide to join or not at the end of the study program. The four institutes are: Wellingkar Institute of Management Development, KJ Somaiya Institute, IILM, Delhi and Chennai Business School. The company recruited 62 graduates from this pool in 2005.

The company currently has 14,000 employees on its rolls and is filling 600 frontline and 60 managerial positions each month. According the Sanjay Jog, Head-HR, Pantaloon Retail, the company does not believe in temporary staffing as employees are not assured of growth in their careers. Pantaloons attrition rate is 8.3% well below the industry standard of 40-50%.

Source: Hindu Business Line

3. Monday, April 10, 2006
Tata Group focuses on retail

At the Annual Group Manager’s Meeting (AGMM) last week in Mumbai, Tata Group Chairman, Ratan Tata has apparently identified infrastructure, real estate, bio-fuels, wind power, retail, food, groceries and home improvement as the main thrust areas for the company to focus on.

Source: Business Standard

4. Wednesday, April 12, 2006
Archies plans to open 120 new stores

Greeting cards and gift company Archies Ltd is aggressively planning to expand across the country and open 120 company owned stores over the next two years, investing Rs 300 million for the expansion. The new stores will be opened mostly in prime retail locations and will add to the current total of 65 company owned stores. There are more than 410 franchise stores in 139 cites and 6 countries.

Source: Rediff Money

5. Wednesday, April 12, 2006
Reliance Retail in talks with HK retail giant

Reliance Retail is supposedly in talks with $10 billion Hong Kong retail giant Li & Fung to form a deal to source for its private label business. If it works out, the deal would cover soft goods like apparel, furnishings and household products. Soft goods is expected to contribute a large amount of the total sales turnover projected at Rs 900 billion, of which apparel will account for 20% of the amount.

Source: Economic Times

6. Wednesday, April 12, 2006
Pantaloon, Reliance planning on wholesale trade

Pantaloon, currently India’s largest retailer and Reliance, soon to be the challenger, are both following Wal-Mart’s Business-to-Business system by entering the wholesale agri-commodities trade. This model strengthens the supply chain and sourcing abilities, while reducing costs and increasing volumes.

Both Pantaloon and Reliance have formed agreements with farmers to source pulses, food grains, fresh vegetables, fruits and processed foods directly from growers and suppliers. Metro Cash N Carry follows this system and sells to large distributors and kirana stores. Pantaloon’s wholesale venture operates under the name KB’s Wholesale and has been set up in smaller cities like Mathura.

Source: Economic Times

7. Wednesday, April 12, 2006
Priyadarshini Spinning Mills to enter garment manufacturing

Leading manufacturer of cotton and synthetic blended yarns, Priyadarshini Spinning Mills Ltd. Has announced that it will enter the garment manufacturing segment. The company is planning on an Rs 250 million investment to set up a shirt manufacturing unit at Pashamailaram Apparel Park near Hyderabad.

Source: Hindu Business Line

8. Thursday, April 13, 2006
Every footfall counts in a mall

Retailers have estimated that every footfall in a mall or supermarket is likely to make a purchase worth Rs 250 in Pantaloon Lifestyle store to Rs 400 in Shopper’s Stop or Piramyd Megastore. In supermarkets, each customer is likely to make a purchase of Rs 250 in Piramyd Trumart to Rs 320 in Food Bazaar. The likely purchase amount is estimated to be between Rs 350 and Rs 400 for mass merchandise stores like Central or Crossroads.

The three factors determining the success or failure of any retail format are customer traffic, conversion rate and customer spending. The average consumer spending or ticket price for supermarkets varies from Rs 250 to Rs 400 in a supermarket format and Rs 1,000 to Rs 1,500 in a department store or mass merchandiser. The conversion rate in supermarkets, however, is significantly higher at 75-80% compared to 25-35% in department stores.

Store	Group	Conversion Rate	Average ticket size
Food retailing
Food Bazaar	Pantaloon	80%	Rs 400
Trumart	Piramyd	80%	Rs 280
Lifestyle retailing
Pantaloon	Pantaloon	25%	Rs 1,000
Shopper’s Stop	RPG	27%	Rs 1,400
Discount stores
Big Bazaar	Pantaloon	35%	Rs 850

Source: Economic Times

9. Thursday, April 13, 2006
Retail chains negotiating with strategic investors

Chain stores such as Vijay Sales and Vivek’s are understood to be negotiating with investment banker and retail companies like Pantaloon and Reliance, which might result in their buying an equity stake as strategic investors in the firms. These chain stores feel the need of expanding across the country to compete on a level footing.

On the domestic front, Reliance, Godrej, Shopper’s Stop and Big Bazaar plan to operate on high volumes. Durable companies such as LG, Samsung, Onida, Videocon and Phillips are also considering introducing new formats to increase volume. Global companies such as Best Buy, Circuit City and Radio Shack are also keen on entering the Indian market.

Source: Economic Times

10. Thursday, April 13, 2006
Fashion not restricted to 4 seasons anymore

Global fashion retailers like Zara, H&M and Esprit are breaking the four seasons per year model by bringing out 12-24 collections each year. This has led to local garment manufacturers and exporters supplying them to increase efficiency and become more competitive. The time taken to execute orders has reduced to 60 days from 90 days earlier.

According to Raghav Gupta, VP, Technopak Advisors, this new way of functioning has led to “domestic companies are now investing heavily in IT infrastructure, improving their product development strategies to reduce working time on designing and finishing, and integrating vertically to simplify raw material sourcing”. Interestingly enough these trends are being replicated in Indian large format stores such as Lifestyle, Shopper’s Stop and Pantaloon, who currently follow the four seasons a year cycle.

Source: Economic Times

11. Thursday, April 13, 2006
Pantaloon Retail sales increase by 69% in March

Pantaloon Retail announced that sales for the month of March increased by 68.7% to Rs 1.43 billion. Big Bazaar and Food Bazaar sales increased by 90.9% to Rs 1.04 billion and Pantaloon store sales increased by 28.7% to Rs 39.1%.

Source: Economic Times

12. Thursday, April 13, 2006
Apollo Pharmacies to open in Aadhar stores

CK Vaidya, managing director, Godrej Agrovet, announced that its rural retail division, Godrej Aadhar had signed an agreement with Apollo Pharmacy, which is part of the Apollo Hospitals group, to open centres in Aadhar outlets. These pharmacies at Aadhar outlets will provide medical supplies around the clock in addition to consultation, mobile clinic facilities and conduct health programmes and medical camps from time to time. Godrej Aadhar currently has 23 outlets and is planning on setting up another 1000 in the next five years.

Source: Business Standard

13. Thursday, April 13, 2006
Landmark and Crossword competition heating up

The books and music retailing sectors comprises of only 5% of the total Rs 350 billion retail sector. The books industry is growing at an impressive 12-14% and music at 2-5% annually. Landmark, a Rs 1 billion chain is expanding across the country and will be opening its first store in western India in Infinity Mall in Andheri (W) in Mumbai.

The book sector is seeing new entrants and expansion of existing players due to the huge margins, ranging from 30-40%, high number of footfalls and most importantly a conversion rate of between 25-50%.

Source: DNA Money

14. Friday, April 14, 2006
US based Gant enters Indian retail market

Lifestyle apparel brand Gant announced that it entered the Indian retail sector through Arvind Brands Ltd and opened its first 2,000 sq ft exclusive store in Mumbai. The company will open a second store in Delhi in September and a third store in two years. Gant will retail shirts ranging, knits, jeans, blazers and accessories like handbags, belts, caps, socks, eyewear and fragrances.

Source: Economic Times

15. Friday, April 14, 2006
Landmark opening in Mumbai

Landmark will open its first store in the western region in Mumbai’s Infiniti Mall in Andheri (W). The store will be spread over 18,500 sq ft. offering books and music. The company also plans to enter the Gurgaon retail scene and open a second store in Bangalore in the central part of town.

Source: Economic Times

16. Friday, April 14, 2006
N Shridhar is the new CFO of Pantaloon Retail financial division

The current VFO of Britannia Industries, N Shridhar is expected to join as CFO of Future Capital Holdings (FCH), the financial division of Pantaloon Retail in May 2006. The Future Capital Holdings is headed by Sameer Sain and includes Pantaloons real estate funds Kshitij and Horizon and private equity fund Indivision.

Source: Economic Times

17. Friday, April 14, 2006
Designer labels for low prices: a new retail market segment

Sunil Chawla, of Brands for Less, has started a new retail outlet called The Price is Sweet, where shoppers can get designer labels such as Prada and Dolce & Gabbana at heavily discounted prices. The company is currently holding an exhibition and sale in Delhi offering only Prada items and hopes to hold a similar sale with Dolce & Gabbana items for its Mumbai sale.

Source: Business Standard

18. Friday, April 14, 2006
Tesco to increase sourcing from India by 66%

UK retail giant, Tesco is planning to increase its sourcing from India by 66% this year by sourcing £100 million worth of products as compared to £66 million last year. Currently the company only sources garments is considering sourcing household utensils and garden instruments from India as well. While the majority of suppliers are based in Bangalore, Tirupur and Delhi, the company is looking to Ahmedabad as a potential base for suppliers.

Source: Business Standard

19. Saturday, April 15, 2006
Pantaloon forming mega deals with vendors

Pantaloon is understood to have signed a memorandum of understanding (MoU) with vendors such as Amul, Rasna, Ankur Salts and Bharat Vijay Mills. Over 3,000 vendor partners from Gujarat and Rajasthan were screened and 500 will be participating in ‘Saathi’, a vendor fair to be held in Ahmedabad. The aim of the fair is to assist small and mid-sized vendors to sell their products directly to consumers by dealing with Pantaloons. The company expects to do Rs 1 billion during its 2 days of business on Friday and Saturday.

Source: Economic Times

20. Saturday, April 15, 2006
Retailers focusing on window displays to stand out

Retailers worldwide realize the importance of window display to stand out in a crowd. Displays are getting more inventive and theatrical and have even become annual features that attract customers at special occasions like Christmas tableaus in London and New York City. While Indian retailers have not reached that level as yet, several are experimenting and trying out new displays.

In Mumbai, children’s wear retailer Scram changes their window every 30 days and focuses on art and craft props to connect with customers. Pantaloon has more than 30 visual merchandisers who start planning store and window designs as soon as the designers start to create garments. Sonia Manchanda, director of Idiom Design, the Bangalore based company that executes Pantaloon’s retail designs, says “Today, the shop window has to be like a magazine ad or a billboard that you drive past, it has to clearly and quickly communicate brand essence”.

Source: Business Standard

 

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