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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 16th April - 22nd April 2006 For other weekly updates click: Weekly Retail Update
Retail News 16th April – 22nd April 20061. Monday, April 17, 2006 German cosmetics brand Art Deco is conducting talks with Shopper’s Stop, Westside and Lifestyle to market its products and widen its base in the country. The company currently has 10 sales counters in Mumbai, Delhi, Bangalore and Hyderabad and plans on adding another 20 counters by end 2006. Art Deco is targeting primarily the middle and upper segments of the market with its products. Source: Economic Times 2. Monday, April 17, 2006 Several prominent retailers like Pantaloon, Shopper’s Stop and Globus are in the process of setting up e-retailing portals, while Zodiac has already set up its online store. While online sales are very miniscule at present, retailers are using this opportunity to reach out to customers in a new format. According to the Internet and Online Association of India (IOAI) India’s total internet business is worth Rs 22 billion and is expected to rise to Rs 23 billion by end of 2007 financial year. The Internet and Mobile Association of India (IAMAI), there are 38.5 million online Indians currently which will grow to 100 million by 2007-08. Kishore Biyani, managing director, Pantaloon Retail, announced that the company’s e-retail portal, futurebazaar.com will be ready in three weeks time. The company aims to earn Rs 3 billion from this new format in the next year. Source: Economic Times 3. Monday, April 17, 2006 Leading perfume chain store, Kunchals will be opening four more stores in the National Capital Region (NCR). After its Delhi expansion, the company is planning to open outlets in Ludhiana, Chandigarh, Ahmedabad, Bangalore and Mumbai. Source: Economic Times 4. Tuesday, April 18, 2006 Sunil Mittal, chairman and managing director of Bharti Enterprises, said that the company’s retail foray will be finalized in the next three to four months as the company is looking for a foreign partner for a JV. The initial push will be in the food and grocery segment. Source: Rediff Money 5. Tuesday, April 18, 2006 The Retailers Association of India (RAI) will be submitting a proposal to the central government to make regulatory changes that will enforce implementation of barcodes on all products. According to Gibson Vedamani, chief executive officer, RAI, barcode will increase safety for consumers, reduce billing time and simplify stock replenishment. Source: Business Standard 6. Tuesday, April 18, 2006 Owners of the Classic Polo brand, Royal Classic Group announced that it will be opening 25 exclusive stores in the northern region and 75 stores in the rest of India by the end 2007. The company currently has 17 exclusive outlets in south and west India and is available in 1,200 multi-brand stores. Besides retailing in the domestic market, Royal Classic also exports garments worth Rs 1 billion to the US, Canada and Europe for brands such as Gap, Fila and Daniel Hechter of Paris. Source: Business Standard 7. Tuesday, April 18, 2006 Reliance Retail’s relentless search for talent is sending headhunters to look for new areas to source talent from. According to sources, the company’s HR team is conducting ‘gate interviews’ for sales, marketing, purchase and merchandising staff of large international retailers such as Carrefour, Lulu and Lifestyle. The company is hoping that these people will be able to set the initial systems in place. According to a senior level Reliance Retail executive, the company is also conducting talks with a former Wal-Mart top executive to head its retail venture. The latest senior executive to join Reliance Retail is K Radhakrishnan who will join as CEO for the hypermarket vertical. He was VP Merchandising, Spencer’s Retail, which is part of the RPG Group. He was also one of the key players who organized FoodWorld’s operations. Source: The Hindu Business Line 8. Tuesday, April 18, 2006 Piramyd Retail will be restructuring is operations by creating two separate CEO positions for its Megastore and TruMart divisions. While Bipin Gurnani has been appointed as CEO of Piramyd Megastore, a search is still on for a CEO for TruMart. Piramyd will be focusing on in-store labels such as Venpiuno, Boston Club, Rudra and Peppermint as well as introducing new labels for footwear, children’s wear and home décor. Currently, in-store labels contribute between 8-19% of the company’s Rs 2 billion turnover; the aim is to increase this to 15-20% of the total turnover. The company is also exploring new formats in retailing and has tied up with L’Oreal for salons in its stores and is looking for a partner for travel services. Source: The Hindu Business Line 9. Wednesday, April 19, 2006 Sansonite’s vice president, E P Suresh Menon announced in Chandigarh that the company will be focusing on expanding its stores across India. The company currently controls 70% of the premium segment market share, in the seven years that it has been in India. Source: Economic Times 10. Wednesday, April 19, 2006 Pantaloon Retail has formed a 50:50 JV partnership with CapitaLand Ltd, a Singapore based company, to manage retail properties in India. Pantaloon will also co-sponsor Real Estate Income Funds (REITs) with CapitaLand. Source: Economic Times 11. Wednesday, April 19, 2006 US retailer My Dollar Store is planning to add another 70 stores to its existing 26 by August 2006. The master franchisee for the company in India is Sankalp Retail Value Stores. Pankaj Oza, marketing manager for My Dollar Store announced that the company will be looking to expand to smaller cities like Surat and Baroda, while also opening 700 sq ft Express stores in IT Parks. Source: Business Standard 12. Wednesday, April 19, 2006 Pantaloon Lifestyle and Big Bazaar were recently opened in Indore with great success leading the company to introduce several new brands to the city in the next month or so. Pantaloon’s lifestyle electronics store E-Zone as well as its furniture chain store Collection I will be opening in the city by month end. All of its stores will be located at the city’s only mall, Treasure Island. Mayur Toshniwal, Head operations for Pantaloon Retail said the consumers in Indore are modern and open to new trends, who do not mind spending on quality products. Pantaloon has already generated employment for 300 locals. The company will also be opening F123, a chain of family entertainment outlets to cater to corporate as well as family parties. Another company keen on Indore is Max Lifestyle, who has also started its operations in India by opening a store here recently. Source: Business Standard 13. Wednesday, April 19, 2006 UK based Costa Coffee announced that it will be opening 290 new outlets over the next four years with an investment of Rs 1.5 billion. Costa’s first outlet opened in September 2005 and has since opened 11 more outlets. Virag Joshi, CEO of Devyyani International Ltd (DIL) the master franchisee of Costa Coffee said the company would be opening 50 outlets this year. After years of stagnation, coffee consumption has seen a growth in India in the past three years. It is set to grow at 30% for the next three years, along with the overall fast food segment which is currently at 40% each year. Source: Rediff Money 14. Thursday, April 20, 2006 Global giant Wal-Mart is considering shifting from its single-storey format of supercenters to multi-storey stores. The rising cost of real estate in urban India is said to be the likely cause of this radical change for Wal-Mart. The company is waiting for the Indian government to allow FDI for general merchandise retailing for it to open stores in the country. According to sources, the company would open 16-18 stores initially to show its commitment to the local market. Source: Economic Times 15. Thursday, April 20, 2006 German company Hucke AG who owns the Whoopi brand of kids wear has tied up with Novotex Exim (India) Pvt. Ltd, a Hyderabad based company to launch its products. Novotex will be commissioning a factory in Hyderabad to produce garments for Whoopi. The company plans to set up 20 exclusive stores along with 200 shop-in-shops in large format stores across India. Source: Business Standard 16. Thursday, April 20, 2006 After a positive response at its Mumbai stores, Godrej Agrovet Ltd. is planning to open a store in Chandigarh. Nature’s Basket’s focus is in providing healthy organic fruits and vegetables in a modern retail format. The store size range from 2,000-3,000 sq ft and will offer value added services like home delivery and in-house nutritionists. There are currently three stores in Mumbai and a forth one will be opening in Thane shortly. Next on the list is Delhi and after that Chandigarh, which is an attractive market due to its high literacy rate and the health conscious lifestyle of people. Source: Business Standard 17. Thursday, April 20, 2006 Reliance Retail is very keen on buying real estate in West Bengal to expand its retail venture. The company has bid for two commercial and entertainment sites in the twin cities of Asansol and Durgapur. Other bidders include local mall developers such as Rahul Saraf, Silver Spring, Merlin Group and Tantia. Source: Business Standard 18. Thursday, April 20, 2006 Italian fashion house Giorgio Armani plans to open 4 stores in India in the next 18 months. The company has been aggressively pushing growth in Asian markets where it opened the bulk of its 41 new stores in 2005. Francesco Tombolini, marketing and sales director for Emporio Armani said that the company would find a large client base from “businessmen to Bollywood stars”. The company plans to open 2 stores first in Delhi and then in Mumbai. Source: Reuters 19. Thursday, April 20, 2006 Leading Indian coffee retailer opened its first lounge café format in Kochi. The outlet size is 1, 150 sq ft and aims at offering a global experience of leisurely coffee drinking experience. The café also serves food items in an effort to create more value for customers. Source: The Hindu Business Line 20. Friday, April 21, 2006 With the entry of high profile companies such as Reliance, the Tatas and the Bharti Group into retail, the Indian retail industry is attracting investments, jobs and eventually savings for the consumer due to competition. KSA Technopak estimates that the industry will see close to $20 billion of fresh investments, approximately 6.5 million new jobs and 2,000 hypermarkets that will open over the next five years. Arvind Singhal, chairman of KSA Technopak said that “Big buyers with bulk orders will invest in supply-chain, eliminate middlemen, remove inefficiencies and make it a win-win situation for the producers as well as the consumers”. An estimated 40% of the shopping basket consists of fruits and vegetables and supply chain efficiency will lower grocery bills. Another major issue is wastage which amounts to Rs 500 billion each year, with both farmers and consumers losing. Large retailers who are forming direct relationships with farmers will make a huge impact on reducing this wastage. Source: Economic Times 21. Friday, April 21, 2006 Hypermarkets are being forecasted as the preferred method for international retailers entering India, according to Ernst & Young’s annual retail report. Malls will also expand beyond metros to tier II cities. The report states that footwear and clothing segments will have the highest penetration. According to Rajan Biswas, partner at Ernst & Young, "Of the 12 million retail outlets, more than 80 per cent are run by small family businesses which use only household labor. It took 10-15 years for China and Brazil to raise the share of their organized retail sector to 20 per cent and 38 per cent respectively, from 5 per cent. India too is moving towards growth and maturity in the retail sector at a fast pace." There are currently less than 50 hypermarkets and 5 larger retailers in India. The growth of hypermarkets will take place in 67 cities in India. Using a franchising route to enter the market is also likely to gain momentum, especially in tier II cities. Source: Business Standard 22. Friday, April 21, 2006 Pantaloon Retail is planning to introduce private in-house brands for its consumer durables and appliance division Electronics Bazaar and e zone. Manoj Kumar, chief, consumer durables and electronics for Pantaloon Retail said their prices would be 15-25% lower than known brands comparable products. The company plans to open stores ranging from 10,000 to 20,000 sq ft, in malls and as standalone stores under the e zone brand as well. All e zones will be Wi-fi enabled and will allow consumers to test products before purchasing them. The first e zone will be opening in Indore, and later in Bangalore, Hyderabad, Delhi and Mumbai. Source: Economic Times 23. Friday, April 21, 2006 The private equity arm of Goldman Sachs is conducting talks to invest $100 million in Indivision Capital, a private equity fund managed by Future Capital Holdings, Pantaloon financial retail arm. Indivision is currently holding road shows abroad to raise funds. Pantaloon has hired Atul Kapur, managing director and principal strategist of Goldman Sachs’ private equity fund to become managing director of Indivision Capital and chief investment officer. Other high profile entrants are Sanjiv Gupta, formerly CEO of Coca Cola India, Dimple Sanghi, formerly with AIG Private Equity, Roopa Purushothaman, formerly senior economist with Goldman Sachs and co-author of the BRIC report and Sanjoy Chatterjee, formerly with McKinsey. Source: Economic Times 24. Friday, April 21, 2006 Delivering the 2006 Robert Hatfield Fellow lecture at Cornell University, Ratan Tata chairman of the Tata Group, said that Indian retailers should not be worried about international retailers destroying domestic retailers when they enter the market and instead should look at the competition as a way to be better than them. The Tata Group owns Trent which operates Westside, a leading lifestyle chain and has recently purchased 76% of Landmark, a book, music and movies retailer from Dubai based Lifestyle. Source: Economic Times 25. Saturday, April 22, 2006 Several retailers like Café Coffee Day, Baskin Robbins and Barista who have opened outlets in pilgrimage places have seen 30-50% higher sales at these outlets as compared to outlets in other cities. Café Coffee Day has 8 fully vegetarian outlets en-route to various holy sites such as Vaishno Devi, Amritsar, Puri, Bhubhaneshwar and Madurai. Three new outlets will be opening in Tirupati, Varanasi and Allahabad. Although the average size of these cafes is only 950 sq ft, holy cities are high traffic areas and usually offer very few options to street food. Average walk-in’s in these outlets is 500. Dry take away food items like cookies are big sellers here. Café Coffee Day also introduced promotional items such as devotee headbands and T-shirts. Source: Economic Times 26. Saturday, April 22, 2006 Reliance Retail has been conducting talks with the Armani Group and is likely to be the local franchisee for Armani in India. Armani has been looking for a partner since its announcement this week that it planned to set up shops in India. Bijou Kurien, who is likely to head Reliance Retail’s luxury business is said to be in talks with another world renowned brand, Manolo Blahnik. Source: Economic Times
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