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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 06th August - 12th August 2006 For other weekly updates click: Weekly Retail Update
Aug 6th - 12th India Retail News: Crosswords, Starbucks, Reliance and More1. Monday, August 7, 2006 Pantaloon Retail announced that it will be entering into an equal partnership joint venture with Manipal Health Systems Pvt. Ltd. to form a new healthcare company. The new company will provide healthcare services as well as sell healthcare products. Source: Rediff Money 2. Monday, August 07, 2006 The largest warehouse and distribution systems provider, ProLogis will be entering the Indian market to cash in on the retail boom. The company plans to provide land and lease development, materials and equipment handling and facilitate network designing. Jeffrey H Schwartz, CEO of ProLogis said "Companies around the world are focused on maximizing the efficiency of their supply chains, and they need modern, well-located distribution facilities to achieve that objective. And we hope to provide this." Source: NDTV.com 3. Monday, August 07, 2006 US coffee company Starbucks will be in India in 2007. The company is currently finalizing locations for its outlets in India. T May Kulthol, spokesperson for Starbucks said that, "We are looking forward to offering the finest coffee in the world to customers in this country within the next 18 months." The company was excited about the opportunities available in India. Starbucks plans to open outlets first in Delhi and Mumbai and will be targeting the youth to grow its brand in the country. Source: Indiadaily.com 4. Tuesday, August 08, 2006 Italian couture brand Valentino opened its flagship store in Delhi’s Shangri La hotel. Marzotto Group, controls Valentino and other luxury brands such as Hugo Boss, Missoni and Malboro Classics, has tied up with Mafatlal Luxury for its foray into India. Sheetal Mafatlal, president of Mafatlal Luxury, said, "The luxury and fashion market in India is growing at an unprecedented rate with a large captive consumer audience in the age group of 20-45 years. This segment is not only aware of international brands but also has the disposable income and interest to keep up with international fashion." Source: The Hindustan Times 5. Tuesday, August 08, 2006 Indians fascination with shopping for clothes is leading to a boom in the mid-range apparel market for both retailers and smaller textile manufacturers. Chaya Garments, brand Stori is also working to build on this segment with its ‘clothes with a twist’ tagline. The company will be investing Rs. 200 million to attract the youth segment and will be increasing its exclusive brand outlets from 8 to 15 by the end of the year. Stori will also be available at 200 multi brand outlets. Several brands are tying up with manufacturers to ensure a high quality product. The Royal Classic Group (RCG) has tied up with Birla Cellulose to launch Swiss Club, a premier range of polo’s and tees. Swiss Club garments are manufactured from Birla Modal, a new generation fibre. Several companies such as Ambattur Clothing (Color Plus), Acme Clothing (Provogue), SM Apparels (Natalia) and Moustache International (Moustache) originally started as exporters and created their own brands based on the potential of the domestic market. Others like Span apparels (Spykar Jeans), London Fashion Couture (LFC) and Essence Collections (Essence) started as retailers and then developed their own brands. Source: Daily News & Analysis 6. Tuesday, August 08, 2006 Reliance Retail is reportedly in the final stages of signing an agreement for approximately 150,000 sq ft of space in a downtown mall in Pune for a hypermarket format store. The mall and office property is being developed by Suma Shilp Ltd. The location of the mall in the Erandwana locality is where the bulk of the city’s middle and upper class residents live. At present there is no other larger format store in the areas. The area is also close to Kothrud, once the fastest growing suburb in the country. Source: The Hindu Business Line 7. Tuesday, August 08, 2006 One of the leading corporate houses of Gujarat, the Adani’s will be setting up cold chains in Himachal Pradesh to transport apples directly from orchards. Adani Agrifresh Ltd (AAFL) will announce a fixed price for the apples on a weekly basis. The company will be investing Rs. 1.6 billion to set up controlled atmospheric stores (CAS) in Mehandli, Rewali and Sainj in Himachal Pradesh, with a total capacity of 18,000 metric tones. Source: Business Standard 8. Tuesday, August 08, 2006 Koutons Retail India Ltd. plans to become worth Rs. 18 billion by 2011-12. In this endeavor, the company is opening 1,000 stores by 2007-08 and will be re-launching its Charlie denim brand later this year. The Charlie brand will be targeting the 16-24 age brackets and plans to make a big splash by opening 100 stores in a single day. The company will also increase its Kouton brand by opening 450 stores by March 2007. At present there are 296 stores in India, mostly in tier I and II cities north India. The bulk of the expansion push will be aimed at west and south India. Source: Business Standard 9. Tuesday, August 08, 2006 Provouge’s mall development and management division, Prozone will own 14 properties by end 2008, in several smaller cities such as Aurangabad and Mysore. The first two of these properties, one in Rajkot will open this week and a second one in Surat will open by December, are jointly owned with JP Infrastructure, a division of the Iscon Group, and will be called Iscon-Prozone. All malls developed by Prozone would have individual SPV’s with owners of the land. Prozone has also tied up with the Omaxe Group to jointly develop 10 malls. Prozone plans to build malls of over 600,000 sq. ft. and has also tied up with Clancey Global and Zachary Designs for the mall design and management. According to Nikhil Chaturvedi, managing director of Provouge, “Only 15 per cent of the 300 million consumers live in the six metros, but you have 70 per cent of the organized retail being concentrated in these cities.” Source: Business Standard 10. Tuesday, August 08, 2006 The Jindal Group will open its first artd’inox store in Bangalore on August 10 this year. Sugata Bose, CEO of Austenitic Creations Pvt. Ltd., the newly formed division of Jindal Stainless Steel Ltd said that the company will now be focusing on the south and will be opening a minimum of 10 standalone stores in the region. The company currently has 7 standalone stores called artd’inox Boutique and plan to have 25 stores by March 2007. After the Bangalore store, the company will be opening a store in Chandigarh on August 20 this year. Each store requires an investment of Rs. 500,000 on average. Source: The Hindu Business Line 11. Tuesday, August 08, 2006 Simon Property Group plans to enter the Indian market via a joint venture with a domestic company. According to sources, David Simon, Simon Property Group CEO said the company was "very close to starting a potential joint venture in India,” during a conference call with analysts. The company is likely to form a joint venture with “a real estate and industrial company in India”. Simon Group is reportedly in talks with 2-3 companies in Mumbai, one of which is already developing malls. There are an estimated 350 malls being developed in India at the moment, with Unitech, DLF, Future Group and Prozone being the most prominent players. Source: Rediff Money 12. Tuesday, August 08, 2006 Thai home furnishings retail chain, Index Living Mall Co, will be opening in India after signing a franchising agreement with a local Indian partner. The first outlet will be opening in Mumbai next year. Kijja Pattamasattayasonthi, the company’s managing director, said, ''India has huge market potential, reflecting the boom of the overall economy during the past four years.'' The company will collaborate with its Indian partner to develop home furnishing products. Its Indian partner company will be investing in retail outlets, while Index would supply the products. There will be 7 outlets opened in the next five years, each ranging from 19,000-23,000 sq ft. Index has 16 stores in Thailand and 6 outlets in Indonesia. India will be its second international market, although plans are being made for an entry to the Dubai market. Source: Bangkok Post 13. Tuesday, August 08, 2006 Sundeep Malhotra, executive vice president of PepsiCo Foods will be joining TV 18 as CEO of its home shopping division. According to Haresh Chawla, CEO of CNBC TV 18, “Home shopping is something that will naturally complement the growth of the retail sector in India. There has been a huge rise in consumer spending.” Source: Daily News & Analysis 14. Tuesday, August 08, 2006 Retail chains such as Westside and Pantaloons earn about 70% of sales through in-house labels. Kishore Biyani, Chairman of the Future Group, said "There is more thrust on private label and some of our private brand will become independent stores this year." Private labels ensure better margins for retailers, usually in the range of 25-30% but sometimes as much as 50% higher than branded products. Consumers are also selecting more private brands than before, leading to retailers to increase their stock of current private labels and also add newer product categories. Sales of private labels are increasing as they are usually marketed prominently, have prominent displays, attractively priced and also offered as a special deal. In western markets, almost 90% of sales in larger stores come from private labels. Source: CNN-IBN 15. Wednesday, August 09, 2006 The joint venture between Manipal Health Systems and the Pantaloon Group, Manipal Cure & Care, will be opening over 100 outlets in the next 2 years using an initial investment of Rs. 100 million. Its first store will be on Old Madras Road in Bangalore, covering 7,000 sq ft. Manipal Health Systems will look after the healthcare side, while Pantaloon Retail will provide real estate locations, consumer understanding and front end staff. Source: Pharmabiz.com 16. Thursday, August 10, 2006 The Mehsana union which is the Gujarat Co-operative Milk Marketing Federation’s (GCMMF) largest member will be taking its brands out of the federation. The union is in talks with Adani Retail and Big Bazaar to discuss possible tie ups and has also made an ambitions expansion plan requiring Rs. 500 million investments. Vahid Ravji, CEO of Adani Retail said that the company was considering sourcing certain products from the Mehsana union under new brand names. Source: Economic Times 17. Thursday, August 10, 2006 Digital lifestyle stores might be the next big thing in retail. Several companies such as Pantaloon’s P Mart and HCL Infosystems are making plans to provide a variety of digital products to consumers under one roof. The company plans to open 60-100 stores in the next 12-18 months focusing only on digital lifestyle products such as iPods, digital cameras, mobile phones, LCD TVs etc. Industry sources estimate the size of the digital lifestyle market to be around Rs. 25 billion, which is likely to increase to Rs. 100-120 billion by 2010. The leading international players in this segment at Fnac in France, Best Buy in the US and Dixons in the UK. Source: Economic Times 18. Thursday, August 10, 2006 Reliance Industries Ltd. bid for Delhi based cooperative store Super Bazaar was above the Rs. 700 million bid by the Indian Labour Cooperative Society and Indian Potash Ltd. The final decision will be taken by the Supreme Court at its next hearing. Source: Economic Times 19. Thursday, August 10, 2006 Shoppers’ Stop will own all Crossword bookstores in the future and no franchises will be given out. According to Aniyan Nair, Head - Operations and Marketing for Crossword, “Shoppers’ Stop will help leverage the scale and services of Crossword in terms of distribution, logistics management and marketing” to increase operational efficiencies and bring down costs.” At present there are 35 Crossword stores in India, with 17 stores being franchised out. The company plans to reach 42 stores by end 2006 and have 100 stores by 2011. Source: Business Standard 20. Thursday, August 10, 2006 Valdel Retail Pvt. Ltd., the retail division of the Valdel Corporation will be expanding to open more stores this year. The company will be increasing its department store chain, Centra by 3 stores and its supermarket chain, Dailys by 12 stores. One of the first retailers to become organized, Valdel currently has 8 Dailys and 2 Centra outlets in Karnataka. The new stores will be opening in Bangalore and Mysore. Valdel also plans to expand to other towns in Karnataka. According to M.J. Shantharaam, Managing Director of Valdel Corporation Pvt. Ltd, "Dailys aggressive expansion would provide a platform for us to tap into the fastest growing retail segment — food & groceries — where convenience, accessibility and value are important and branded daily essentials are in great demand." Source: The Hindu Business Line 21. Friday, August 11, 2006 The Internet & Mobile Association of India (IAMAI) and Cross-Tab Marketing Services have brought out a report on the behavior of online shoppers. The study was based using 1,240 respondents of which 93% recommended online shopping. Almost 52% of consumers surveyed said that consumer reviews were important. It was found that 31% of consumers find shopping sites based on word of mouth and 18% purchased products based on these referrals. Breaking up the ages; 25% were in the 18-25 age bracket; 46% in the 26-35 age bracket; and 18% in the 36-45 age bracket. The bulk of the shoppers are male at present, although IAMAI estimates online female shoppers will be 15 million by 2007-2008. The top reason for shopping online was due to home delivery offers. Other important reasons were the 24/7 shopping hours and product comparison options. Source: The Hindu Business Line 22. Friday, August 11, 2006 Godrej plans to introduce lifestyle products such as digital camera’s and camcorders, personal computers and laptops, Tupperware products, wall furnishings and crystal to its expanding retail chain Godrej Lifespace Store. Godrej’s retailing division was started in 2003 and expects to be part of the rising trend of home furnishing retail in India. Shyam Motwani, Vice President and Business Head for Godrej & Boyce Mfg Co Ltd, said, “We have already initiated talks with several brands for a retailing tie-up, and will soon be placing them in our store.” The company plans to become a Rs. 3 billion company by 2010, and having over 90 Lifespace stores in India. At present there are 42 Lifespace stores and 6 more will be opening by the end of the year. Besides metro’s, the company plans to open stores in tier II and tier III cities such as Nagpur, Jamshedpur, Ranchi, Trichi, Kozhikode, Jalandhar and Ludhiana. Source: Daily News & Analysis 23. Friday, August 11, 2006 India’s ‘original’ malls like Tardeo AC Market in Mumbai, Pallika Bazar in Delhi and AC Market in Kolkata are making plans to compete effectively with organized malls such as Inorbit and Crossroads in Mumbai and DLF Mega Malls and MGF Plaza in Delhi. The bulk of the stores in the original malls are still small mom-n-pop stores, selling a variety of products such as bag, shoes, apparel and imported toiletries. ABL International Ltd. which owns AC Market in Kolkata is planning to revamp its premises of 70,000 sq ft. Source: Daily News & Analysis 24. Friday, August 11, 2006 Madison has launched a shopper marketing consultancy, MASH – Madison Shopper Marketing. Shopper marketing is the discipline of converting customers from shoppers into buyers. MASH offers clients solutions in four main areas: Shopper Behavior & Insight, Shopper Strategy & Tactics, Shopper Concepts and Shopper Programs. Source: The Hindu Business Line 25. Friday, August 11, 2006 Global Consumer Services Pvt. Ltd, a division of Global Hospitals will be investing Rs. 900 million to set up 200 wellness product stores in south India over the next three years. The stores labeled ‘Goodlife’ will be pharmacies as well as supermarkets for all wellness products such as medicines, baby care items breakfast cereals and diabetic footwear. The company will initially be opening 15 outlets in southern cities such as Vijaywada, Vishakapatnam and Bangalore. Source: The Hindu Business Line 26. Saturday, August 12, 2006 The top three retail chains in India, Pantaloon Retail, Shoppers’ Stop and Trent recorded net sales growth of 58%, 36% and 42% for the quarter ended June 2006 over last year. The major increase in the growth rate is due to the companies’ expansion to new markets like Gujarat and south India. Pantaloon Retail’s turnover for the quarter was estimated to be Rs. 5.53 billion. The company’s value retailing segments, Big Bazaar and Food Bazaar grew by 73%, while the Pantaloon Lifestyle store grew by 29%. Shoppers’ Stop had net sales of Rs. 1.6 billion, increasing net profits by 96% with the company’s loyalty program, First Citizen Club accounting for 63% of the sales. The company’s other retail ventures, Home Stop and MotherCare accounted for a combined turnover of Rs. 70 million, while HyperCITY achieved Rs. 1.25 billion in its first month of operations. Trent had net sales of Rs. 1.05 billion, for all of its retail ventures, including Westside, Star India Bazaar and Landmark. Other stores also had a marked increase in net sales. Provogue’s sales grew by 20% and profits grew by 32%, while Piramyd Retail had net sales of Rs. 300 million. Source: Economic Times 27. Saturday, August 12, 2006 Lifestyle International’s value retail division, Max Retail will be expanding to more cities across India, including tier II cities. The company’s Vice President, Operations and Marketing, Vinesh Singh said "We want to concentrate on the mid market, offer value to Indian consumers and provide contemporary fashion for the entire family at affordable prices. Most of our products are priced under Rs. 599 so that fashion comes within the reach of an average family." Max Retail sells a variety of items including apparel, accessories, footwear and gift items. Most items are priced between Rs. 99-599. In the future, the company will also be adding kitchenware and crockery products to its stores. At present the company has 3 stores in the country in Indore, Ahemdabad and Bangalore and plans to open stores in Delhi, Lucknow, Hyderabad, Agra and Navi Mumbai by 2007 end. Source: The Hindu Business Line
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