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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 5th March - 11th March 2006 For other weekly updates click: Weekly Retail Update
March 5th – 11th India Retail News: Pantaloon, Piramyd, Spinach, Foreign Telecom and MoreMonday, March 6, 2006 The word is that Reliance Retail is negotiating a deal with Rajeev Bakshi, chairman of Pepsico India. If he joins, he will be the fourth high profile person to join after Rajeev Karwal, Gunender Kapur and Raghu Pillai. Reliance is offering substantial hikes over current salaries and the senior management hired so far is believed to be receiving Rs 40 million plus annual packages. Monday, March 6, 2006 Leading retailers are increasing their presence in Tier II cites and retail sales are growing at 50-60% compared to 35-40% in metros. Retailers are finding that smaller cities are more profitable due to a lower investment in land and manpower and also because customers in these areas make more aspirational purchases in clothes, jewelry, footwear and accessories. According to Harminder P Sahni, chief operating officer of KSA Technopak, retailers are trying to establish a foothold in smaller markets even though the metros have not reached a saturation point. Two important sectors in the smaller cities are clothing, growing at 5-10% and personal care, growing at 10-15 %. Source: Economic Times Tuesday, March 7, 2006 India’s largest retailer, Pantaloon Retail is planning to enter the restaurant business either independently or through alliances. Initially, only two restaurants are planned in Mumbai and Bangalore. The company is also planning to increase its Food Bazaar stores from the present 40 to 150 by 2007 end, by entering tier 1 and 2 cities. Its other brands Café Bollywood serves Indian street food and its kiosk brand Chamosa serves a combination of chai and samosa’s at affordable prices. Tuesday, March 7, 2006 Pantaloon Retail announced that its retail sales for February rose by 70%, led by grocery and hypermarket stores. Actual sales rose to Rs 1.57 billion from Rs 922.6 million last year. The grocery and hypermarket division sales were Rs 915 million almost double of last years Rs 460.6 million. Sales for the department store rose 41%, up Rs 653 million from last years Rs 462 million. Source: Reuters Tuesday, March 7, 2006 The Piramal Group promoted retail venture, Piramyd Retail is likely to be restructured soon to separate lifestyle retailing, food, home and personal care (FHPC) into two independent units. According to Nandan Piramal, vice chairman of Piramyd Retail, the company will be separated into Piramyd Megastore and TruMart with individual management structure and business heads. Piramyd Retail’s current chief operating officer, Bipin Gurnani will head the lifestyle business. A selection process for a head for TruMart is currently underway. The company is planning to open 13 Megastores and 61 TruMarts by 2008, 35 of which will be opened in the next 15 months. While the company is focusing on Mumbai and Pune for TruMarts, tier II cities in the north like Jaipur, Ludhiana and Lucknow are the focus of the Megastore expansion. Source: Business Standard Wednesday, March 8, 2006 A group of Italian equipment manufacturers for the food processing industry are attracted by West Bengal’s potential as a viable market for their products. The group is led by Forli-Cesena Chamber of Commerce and is specifically interested in the new food park, Sudha Ras, on the outskirts of Kolkata. The state government is now planning to build a second food park adjacent to Sudha Ras and is being flooded with requests from entrepreneurs. Wednesday, March 8, 2006 Starwood Hotels and Resorts Worldwide Inc plans to open 50 hotels in the country by 2010, adding 8,000 -10,000 rooms to hotels in India. The chain plans to introduce its brands like Westin, W Hotel and St Regis in metros, secondary and tertiary cities in India. Westin, their first property in India opened in Gurgaon recently. Starwood is also in the process of incorporating its new acquisition Le Meridien and will be expanding them from the current 8 to 15 by 2010. Other major brands owned by the Starwood Group are Sheraton, Four Points and Luxury Collection. The domestic hospitality sector is experiencing a substantial growth and is currently facing a sever shortage of hotel rooms. Major Indian hotel groups like the Taj Group, Oberoi, ITC, Leela, Hyatt and Marriott are all in expansion mode. Source: Business Standard Wednesday, March 8, 2006 While Mumbai is the financial and business capital of India, Bangalore is the technology capital and Kolkata can be called the country’s literary capital. It is Delhi that is described as the consumer capital of the country. The combined NCR region market consists of Rs 743.54 billion as compared to the Greater Mumbai-Suburban Mumbai-Thane region combine of Rs 531.23 billion according to Indicus Analytics, a market research company. The NCR region is without doubt the most happening market in recent times and marketers are flocking to the region. According to last year’s figures from the National Council of Applied Economic Research (NCAER), Delhi is the number one metro city on average household income, expenditure, rich and very rich households. The average household income in Delhi is Rs 2,79,000 per year, almost Rs 84,000 more than Mumbai, the second richest city. Spending power is also significantly higher in Delhi, with households spending Rs 2,10,000 per year as compared to Rs 1,61,000 in Mumbai. According to Jayesh Desai, executive director, Ernst & Young India, “Mumbai is a triangle and Delhi a rhombus as far as income demographics go. Prosperity is more evenly spread in Delhi, and that makes it a huge market for just about every consumer good and service.” Source: Economic Times Brand Equity Thursday, March 9, 2006 Wadhawan Food Retail Pvt Ltd has opened its first retail store Spinach in Mumbai. Located at Bandra-Kurla Complex, the store will stock fresh fruit and vegetables, grocery items, processed meat and poultry, dairy products, home and personal care items and house wares. The company is planning to open 1500 stores across the country in the next few years. Source: The Hindu Business Line Thursday, March 9, 2006 Rajesh Batra, Chairman of Proline India, announced that the company is planning to enter women’s and kid’s segments in the domestic market. The Rs 500 million textile company is already a well-established player in the export sector. Source: The Hindu Business Line Thursday, March 9, 2006 Wal-Mart is considering entering India with a local partner, according to Beth Keck, Director, International Corporate Affairs, Wal-Mart International. She said that the company had worked with local partners in Japan, Central America, Mexico and China, which gave a better understanding of the local market and customers. The other hitch in Wal-Mart entering India is the government’s rule of permitting only single brand retail, which would exclude Wal-Mart. The company has significantly increased its sourcing from India and will source $640 million worth of goods this year. Source: The Hindu Business Line Thursday, March 9, 2006 Genesis Colors has opened its first retail store, Samsaara in New Delhi offering the creations of 52 designers, including Satya Paul, Rohit Bal, JJ Valaya and relative newcomer Deepika Gehani. The company is the first company in India to follow the system of Louis Vuitton Moet Hennessy (LVMH) to become a multi-label fashion company. The company has invested Rs 25 million in the project for Delhi and is planning an investment of Rs 120-150 million to set up stores in Mumbai, Bangalore, Kolkata, Chennai, Hyderabad and maybe even cities like Ludhiana or Chandigarh. Source: Business Standard Friday, March 10, 2006 The manufacturers of apparel brands Genesis and Basics, Hasbro Clothing will be opening 5 new stores in the next 2 months. The company which currently has 23 stores will be opening 2 stores in Chennai and one each in Madurai, Salem and Kozhikode. Source: Hindu Business Line Friday, March 10, 2006 Mobile telecom companies in India are being pursued by Asian and Western companies for access to the country’s enormous market. While most carriers in established markets are near their saturation points, here in India the potential for growth is huge, with 4.2-4.7 million new mobile users joining each month. Other factors for the continued growth of the telecom sector are low call rates and the size and demographics of the population, with more than a billion people below the age of 25. The deals so far:
Source: Reuters Friday, March 10, 2006 A severe shortage in qualified talent is causing Indian companies to tie up with universities in India and abroad to offer specialized courses in fields such as bio pharma and retail chain management. The Organization of Pharmaceutical Producers of India (Oppi) is planning to tie up with universities in the US to train students in intellectual property rights and patents in the pharma sector. Pantaloon Retail has already formed an agreement with seven management colleges in India. Besides this, it has tie ups with KJ Somaiya Institute of Management Studies and LN Welingkars Institute of Management and Development Research. The company is also planning to launch a program called Gurukul in March, where new students will be trained on frontline jobs. Source: Business Standard Saturday, March 11, 2006 FMCG major Unilever has announced that it will be setting up an independent consumer and market insight (CMI) division, which will be based in London and will focus on three areas: home and personal care, food and brand building, with each division headed by a vice president. BV Pradeep currently director CMI, home and oral care (Asia) will be the vice president of the home and personal care CMI. He is also the President of the Market Research Society of India (MRSI). Source: Business Standard Saturday, March 11, 2006 With the continued focus on Big Bazaar and gearing up to compete with Reliance and the eventual entry of Wal-Mart, Pantaloon Retail’s Kishore Biyani flagship store is not being ignored. Pantaloon underwent an image makeover late last year and went from being a family-oriented store to focusing on its youth customers. The store also increased its depth of in-house brands, which now comprise of nearly 70-75% of all apparel. By offering a completely new look and changing stock every 4-6 weeks, Pantaloons hopes to differentiate itself from other retailers. The company has picked up stake in several companies such as Indus League Clothing, Planet Sports, Galaxy Entertainment and Gini & Jony to give it greater control, while it is also investing in its own format stores such as Fashion Station, Chamosa, aLL, Central Mall and Home Solutions. Source: Hindu Business Line
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