From Starbucks to Wal-Mart, US buyers pull back

FROM lattes at Starbucks to clothing at Wal-Mart, US consumers are showing signs of lethargy and have retreated from their free-spending ways. “I don’t know if they’re dead, but they certainly are on life support,” Carl Steidtmann, chief economist with Deloitte Services, said of the more liberal-spending consumer, which in the past had led the boom in the US economy. But as the housing market decline moves into its second year, energy prices continue to be high and food prices jump, the consumer could actually be a drag on the US economy. “Now the consumer makes up about 70% of all GDP growth,” Steidtmann said. “If that goes from a factor that is boosting growth to one that is (hurting) growth, that could very clearly be a factor that could lead to a recession.”

Wal-Mart Stores on Tuesday reported lower-than-expected second-quarter profit and said sales at US stores open at least a year rose only 1.9%. “It’s no secret that many customers are running out of money toward the end of the month, said Lee Scott, chief executive of the world’s largest retailer. The company, which has more than 127 million customers in the United States alone every week, also said shoppers were spending more on lower-margin items like food and eschewing higher-margin goods such as apparel. While economists tend to discount the impact of rising food prices in monthly inflation reports — because food tends to be a volatile component — consumers still feel the impact of widespread food price increases in their wallets. Sixty-five percent of US shoppers said they experienced significant price increases in their local supermarket, causing them to spend at least $8 to $20 more a week on groceries, Britt Beemer, chairman of America’s Research Group, said, citing a survey the group conducted in July. That compared with 53% in February and March and increased spending of $6 to $12. “They’re devastating back to school right now,” Beemer said of higher food prices, which appear to be cutting into back-to-school shopping for new clothing and other necessities.

But it isn’t just the Wal-Mart consumer who is being hurt. Sears Holdings said on Monday that sales at US Sears stores open at least a year fell 4.3% in its second quarter, with Kmart sales down 3.8%. Meanwhile, Home Depot has been hammered by the slumping US housing market and posted a 15% fall in second-quarter profit on Tuesday.

STILL A KING?

Consumer spending, the driving force behind the US economy, has slowed down in the past few months, although was resilient through a series of gasoline price spikes In the second quarter, consumer spending advanced at a slim 1.3% annual rate, down from 3.7% in the first quarter As the housing market continues to decline, energy prices remain high and food prices jump, the consumer could actually be a drag on the US economy

Retailers’discounts wean customers away from local chemists

BEING loyal to your neighbourhood retail stores could help you get medicines cheaper. With competition hotting up in the $5-billion domestic pharma retail market, customers are offered discounts ranging between 10-20% for most medicines. Retailers contend that such huge discounts would help retain customers and wean them from local chemists. Subhiksha, India’s retail chain offers a flat 10% discount on all medicines to customer irrespective of their profile. “We have the lowest price and cost structure that helps us give discounts and in turn retain customers”, Subhiksha MD R Subramanian said. In India, many drugs are sold over the counter unlike the developed countries where only a few are sold through retail outlets. Some retailers directly sell medicines while a few have tied up with local chemists for distribution. Delhi-based Pharma retail store 98.4 Degrees also works on the philosophy of discounts besides providing value added services like home delivery. “We give huge discounts to our loyal customers to retain them”, 98.4 Degrees marketing executive Neeraj Arrya said.

Med Plus, another pharma retail chain has also taken to the same model. “Our idea is to target the 40 plus population. We are targeting them through our customer loyalty cards”, Med Plus CEO Madhukar Gangadi said. Big retail chains are essentially banking on volumes to break even. But there are some players in the industry who oppose the discount model. North India-based pharma retail chain Guardian Lifecare is averse to offering discounts. “Quality management is our major focus. When we are dealing with life saving drugs quality rides over cost,” Guardian Lifecare CMD Ashutosh Garg said.

Many local chemists offer discounts only on day-to-day drugs in contrast to big retailers who give them for all medicines. For customers, it seems to be a win-win situation as they have the advantage of getting their regular medicines at prices lower than the maximum retail price (MRP).

Shoppers non-stop at Big Bazaars

THE saffron, white and green ambience of Big Bazaars across the country went completely unnoticed in the midst of a riot of shoppers. The five-day ‘independence sale’ of Big Bazaar, with some items discounted by nearly 60% to mark the 60th Independence Day, culminated across the country with people lining up for upwards of three-four hours before they could step foot into some of the stores.

As a result, the hypermarket chain saw crowds well in excess of the 15,000 footfalls they get over weekends in some of their bigger stores. At 11.30 PM at Phoenix Mills, Mumbai, it seemed like a normal holiday shopping crowd. However, within an hour, as school Independence Day functions wound up, the crowds came, and both the parking lot and the mall attendants were stretched. The police were on stand-by to avoid any untoward incident after last year’s fiasco at Phoenix Mills. A steady stream of delivery trucks made their way into the mall over a period of three hours to ensure that there were no stockouts. As the entry line at Phoenix Mills wound itself around the extremities of the mall, the store attendants provided biscuits and water to the waiting people. Says Rajan Malhotra, chief executive, Big Bazaar, “We were better prepared this year after the events of last year. Hence we spread it out over a longer period and made better arrangements for all our customers.”

The total number of Big Bazaars, at 66, have more than doubled from last year. According to Mr Malhotra, the targeted revenues from the five-day sale was Rs 150 crore. Some categories like home furnishings had discounts upwards of 30% on a listed price of Rs 50,000 and were a fast moving category

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Store Loyalty

Reliance Retail kicks off dairy foray with sip of liquid milk

RELIANCE Industries’ (RIL’s) ambitious dairy plans are finally taking wing. The company, which has been working on plans to enter the country’s Rs 40,000-crore branded dairy sector over the past two years, has kicked off the venture by foraying into the lucrative, but low-margin, liquid milk category. Reliance Retail has begun testing liquid milk, branded Dairy Pure, in Hyderabad, sources told ET. It has tied up with a south-based private dairy operator. The liquid milk has been rolled out in four variants at a pricing structure that pits RIL’s brand against other competing liquid milk brands in the state such as Mother Dairy, Vijaya and a host of other private players. However, Gujarat Milk Marketing Cooperative Federation (GCMMF)’s Amul, which leads the country’s Rs 15,000-crore branded packaged milk market, does not have a presence in Andhra Pradesh. In fact, Amul liquid milk is not yet present in the southern states. When contacted by ET, an RIL spokesperson declined to comment. Hyderabad is a reasonably big liquid milk market with a total estimated size of approximately 11-12 lakh litres per day (lpd), of which packaged milk accounts for 8-9 lakh lpd.

Sources said retailing of liquid milk is expected to commence later this month at Reliance Retail stores across all states. RIL has signed up with the Punjab government for milk procurement. It plans to buy 7 lakh litres every day from 1.5 lakh farmers across 3,000 villages in the state. Other plans include supporting milk cooperatives in Uttar Pradesh and Bihar, but no agreement with cooperatives has been finalised so far. In UP and Bihar, Reliance Retail proposes to set up over 5,000 collection centres, which will be a single-window selling system for the milkmen in the area. RIL is also working on a private label to make deeper inroads in the dairy sector. The country’s biggest market for liquid milk is Delhi, estimated at 50 lakh litres per day, of which pouches account for 35 lakh lpd. National Dairy Development Board (NDDB)’s Mother Dairy leads the Delhi market. Unlike other FMCG products, margins in liquid milk are very low — at just 3-5%. The biggest challenge for players operating in this sector is to work out efficiencies in logistics. However, the dairy sector has a huge potential, with the country’s milk production estimated to have touched 100 million tonne last year. India also happens to be the world’s largest producer of milk. WHITE FLOOD RIL has signed up with Punjab government for milk procurement. It plans to buy 7 lakh litres every day from 1.5 lakh farmers The company also plans to support milk cooperatives in UP and Bihar, but no agreement with cooperatives has been finalised so far Reliance Retail has planned 5,000 collection centres in UP & Bihar. It is working on a private label to make deeper inroads in dairy sector

Tesco and Asda check abuse claims in Bangladesh

Supermarket firms Tesco and Asda have said they were looking into allegations of worker abuse at garment factories used by their suppliers in Bangladesh. The retailers’ comments came after a Guardian investigation claimed that workers making clothes were paid as little as 4 pence an hour. Tesco said it had done all it could to ensure “high standards and good conditions” in the country. Asda said any abuse was “unacceptable” and it may audit its factories. The textile industry is a large employer in Bangladesh In its report, the Guardian claims that garment workers are regularly forced to work 80 hours a week in factories where conditions are often violent, and where staff do not have access to trade unions. Allegations of abuse of workers in South Asia’s textile industry are nothing new. We have done all we can to ensure that high standards and good conditions are maintained Charities such as War on Want have campaigned for years to improve the pay and conditions for garment workers in Bangladesh and last year wrote a report based on interviews with 60 workers from six garment factories. The group claimed that retailers could only sell their clothes at very low prices by pressuring suppliers in developing economies to keep costs down. As a result, suppliers in countries such as Bangladesh have had to drive down wages and extend working hours, as there is stiff competition for the retailers’ business from other developing nations such as China.

Asda told the Guardian: “We find abuse of any kind unacceptable.” The retailer blamed the problem on the fact that one of their approved suppliers was outsourcing its work to another factory without its knowledge and against its wishes. Tesco said it had taken steps to improve working conditions. “We have stuck by Bangladesh, continued to invest in modern factories and done all we can to ensure that high standards and good conditions are maintained,” the UK’s largest supermarket firm said in a statement. The company added that in many ways it would be easier for them to stop sourcing garments “in countries that have economic and social problems, which are beyond the capabilities of any organisation working alone to fix”.

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AVB’s ‘More’ to set foot on Gujarat retail market

THE Aditya Birla group’s retail venture, Aditya Birla Retail, is now set to bring ‘More’ brand of stores to Gujarat. Industry sources say that the company has already grabbed around 80,000-1,00,000 square feet of leased space for the proposed foray. While most of the locations are under construction and ready for possession in two-four months, a few more are ready. Birla retail is believed to have signed around 20 properties in Ahmedabad, almost all of them on ground floor. “The company plans to launch its ‘More’ brand supermarkets in Gujarat with an average area of 2,600-7,800 square feet,” said a source. Some ten locations have already been finalised, with few more yet to be finalised. While it will start rolling out its stores in the next three-four months in Ahmedabad, the company also plans to reach out to Vadodara, Rajkot, Surat and Jamnagar. The company announced its national launch in Mumbai in May and has come up with stores in Pune. The company is increasing its presence in South through retail network of Trinethra Super Retail.

It had acquired the south-based chain to further expand in the southern region. Aditya Birla Retail has already faced strong opposition from the vegetarian community in Maharashtra for selling non-vegetarian products and is fearing further opposition in Gujarat, a strong vegetarian market. However, sources say that at present the company does not intend to sell non-vegetarian products in Gujarat market. The company plans to increase its presence across the country. “The stores will be set up in every 3-5 km radius as they are positioned as convenient stores.” The supermarkets would be neighbourhood stores serving daily needs of the customers, including fruits, vegetables and groceries at competitive rates. The company plans to bank on store brands to improve margins. With the APMC act in Gujarat to be amended, the company is looking at tie-ups with farmers.

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Vishal Retail debuts at a 178% premium

VISHAL Retail debuted on the bourses at a premium of 178% over the IPO price of Rs 270. The scrip opened at Rs 472, touched a high of Rs 809 and a low of Rs 423. The stock ended the day at Rs 752 on the BSE. About 1.14 crore shares were traded on the exchange. Brokers said the reason for the spectacular listing was that the IPO was perceived as having been attractively priced. The company had priced the offering at the top-end of the price band, following strong response to the issue. The issue was subscribed a massive 69 times. The proceeds of the issue would be used to establish new retail stores. Of the total 32 stores to be set up this year, the IPO will fund for the establishment of 22 stores. The company will deploy Rs 104.15 crore of the net issue proceeds for setting up the stores in the current financial year. The setting up of the remaining stores will be funded through internal accruals.
Toeing the value retail line, Vishal Retail sells goods at affordable prices by either manufacturing themselves or procuring them from small and medium-sized vendors. The target group of the company is middle and lower-middle income groups, which constitute a major portion of the demography in India. It also sells readymade apparels (including its own brands) and a wide range of household merchandise and other consumer goods.

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Global handset retailers vie for pie of Indian mobile biz

ABOOMING Indian telecom market is throwing up big buck opportunities on the retailing front. Several international handset retailers are foraying into India to tap the mobile sales and after-service market. According to sources, among the latest entrants scouting for opportunities in the country are Axiom, a Middle-East-based company and Oke, an Indonesian mobile retail company with over 750 outlets. Global players already present in this market are Virgin, with its collaboration with Essar, and Cellucom, the Dubai-based retailer which has tied up with the RPG group. Sources say that Oke is looking for technical collaborators in the Indian market. According to reports, Axiom, with over 200 outlets in the UAE, has committed around $250 million for its entry into the Indian markets, but is still scouting for an Indian partner. As per current FDI regulations, companies can enter the country only through the franchisee route or with technical collaborations.
For instance, the RPG-Cellucom tieup is through the franchisee route while the Essar-Virgin collaboration is a technical tie-up. In this case, Virgin provides brand licensing and consultancy services. According to analysts, the market for mobile retailing including post-sale services is close to Rs 75,000 crore, and is growing at 60% pa. With mobile retail stores now expanding their portfolio, adding laptops and game consoles, an additional Rs 25,000 crore comes in from sale of laptops. The operator side of the business, including selling prepaid and postpaid cards, recharge vouchers along with billing services, brings in another Rs 70,000 crore. The interest in this market by global players brings in international expertise. “Our tie up with Cellucom will help us gain domain knowledge, which is really critical in retailing.

Hermes gets FIPB nod to set up shop

AT A time when entry of international brands into India through the franchise route is facing regulatory hurdles, the Foreign Investment Promotion Board (FIPB) has allowed Hermes International of France to set up a subsidiary here through the single-brand retail window. Apart from retailing the French luxury brand in the Indian market, the multinational has also been allowed to carry out wholesale trading and distribution. The French company plans to retail cosmetics, perfumes, readymade garments, leather goods, footwear, lifestyle products, jewellery, silk items and bags here to tap the booming demand for premium luxury goods. This will be done through a joint venture in which Hermes International will hold 51% stake. The French company’s partner in India is Khanna Speciality Retail and Distributors.

The entire equity of the Indian partner is owned by Aashana Retail, also an Indian company. The clearance granted to Hermes is subject to the joint venture company sticking to the norms laid down for singlebrand retail. This means the joint venture can only retail the Hermes brand of products. These products should be branded during manufacturing and sold under the same brand internationally too. Entry of Hermes into India comes at a time when FIPB is reviewing the policy on permitting foreign brands into India through the franchise route. In view of the clarifications sought by the board in the Starbucks case, the promoters of the venture have revised their application once and are likely to do so again. FIPB seems to be looking at a policy shift to induce multinationals to invest in the country rather than market their brands through franchise arrangements.

The Hermes proposal was cleared since the French company that owns the brand is investing 51% in the joint venture. The single-brand route should be adopted in such cases, officials argue. The Hermes-Khanna joint venture has committed that it would adhere to single-brand FDI stipulations, official sources said. Among the products that Hermes has obtained permission to retail in India are readymade garments for babies, pet items, enamel products, office accessories, saddlery & riding gear and outdoor accessories. The perfume brands of Hermes include Caleche, Amazone, Parfum d’Hermes, Equipage, Bel Ami and Eau d’Hermes. The French major is also well-known for its gloves and hats. Following the FIPB clearance, the joint venture is likely to set up outlets in metros. The company would be appointed as the distributor of Hermes in India and enjoy exclusive rights over the trademark here. The total investment of the joint venture is estimated to about Rs 9 crore.

Retailers look up to ITIs for wholesale solution

FACED with acute manpower crunch, country’s top retailers are turning to Industrial Training Institutes (ITIs) for raising and replenishing their front-end workforce. Retail bigwigs, including Mukesh Ambani of Reliance and Rajan Bharti Mittal of Bharti-Wal-Mart, may soon be face to face with ITI directors persuading them to introduce retail courses in their institutes at the earliest. ITIs are spread across the country and impart skills to trainees in different industrial trades (electrical, electronics, mechanical) for lower-level skilled employment, mainly in manufacturing units. The government in association with Industry body Ficci is organising a conference of ITI directors and retail industry leaders at the end of the month in New Delhi. Reliance Retail, in its bid to ensure a regular supply of front-end talent to its upcoming stores, had approached Directorate General of Employment & Training (DGET), part of ministry of labour, for holding a meeting of the ITIs. DGET in turn roped in Ficci to hold this industry-ITI meet.
DGET, the policy making body for the ITIs in the country, is presently working towards introducing retail courses in these institutes. “We are identifying institutions and instructors for retail courses,” director general of DGET Sharda Prasad told ET. The process may take three months. Two separate six-month retail courses are likely to be introduced for salespersons and supervisors at the ITIs. The course would comprise 3 months of classroom teaching followed by an equal duration of apprenticeship. The curriculum has already been prepared and approved by the National Council for Vocational Training. Mr Prasad says all mandatory approvals for starting these courses at the ITIs has been taken, but a budgetary allocation is pending. An expenditure of Rs 16 crore has been proposed for the purpose. Of late, industry in general has been quite enthusiastic towards engaging ITIs for their manpower needs. Industry bodies Ficci, CII and Assocham have volunteered to adopt several of these institutes in order to ensure that right skills are imparted to trainees and a pool of productive employees created. But there is scepticism in some quarters over ITIs’ ability to produce right talent for retail industry. Says consulting firm Technopak’s chairman Arvind Singhal: “ITIs are meant to provide technical skills and they should focus on that.

ALL this while, Kishore Biyani wanted you to come to his Big Bazaar. But now, he is bringing his new stores — call it the ‘Small Bazaar’ — next to your home. These stores will be small, like Subhiksha, which is a convenience store format, and will look to address the daily shopping needs of customers. For the past 18 months, a team from Pantaloon Retail has been secretly working on a special project, which Pantaloon Retail CEO Kishore Biyani hopes will change the face of Indian food and grocery retail and infuse new life into its foods business. The project is the launch of KB’s Fairprice Value Stores (KBFVS), a no-frills, deep discount format, sometime in August that will focus on local catchment areas and service the daily requirements of consumers. Sources call it a radically different concept and services model which is based on a German no-frills discount format, LIDL (owned by Schwarz).

Pantaloon is planning a ‘bombardment strategy’ that will see the group swarming a particular area with clusters of stores. The group plans to set up 1,500 stores over 18 months across top cities. These non-AC, basic format stores will offer limited stock-keeping units with massive discounts, but will not compete with kiranas. The company has already tied up the real estate for the formats, sources said. Food Bazaar, Pantaloon’s large food format did not get the kind of volumes needed to be successful in the low-margin foods business since consumers visit the store for their monthly purchases and not for daily requirements. However, Kishore Biyani was tightlipped on the details. “I cannot say anything more than confirming that the launch is sometime in August,” he said.

The stores will take on new-age convenience formats such as Subhiksha, Spencers, Spinach, Reliance Fresh and the proposed Bharti retail venture. The first cluster of stores is understood to have been test-marketed in Delhi. The launch is also the result of consumer learning that Indians prefer fresh supplies and proximity of stores in residential areas to make frequent purchases. More often than not, Indian consumers do not have access to good roads, cheap fuel or have large storage space to stock up the big volume purchases. Food retailers are finding that the traditional kirana style is best suited to the Indian consumer’s needs. Currently, the foods portfolio accounts for nearly 24% of the total turnover. But margins are as low as 3-4%. Currently, all the fresh foods section across all Big Bazaar formats are run under the Choupal Fresh umbrella. Some pilots have already been done in markets such as Ambala. In fact, most of the modern food retailers have recently begun following the kirana (local mom-’n’-pop stores) business strategy of setting up smaller convenience food and grocery stores. These stores have positioned themselves as upscale kiranas with the back-end efficiencies of a large retailer, new formats such as Trumart. Spencers Daily, Spinach, Vishal, D Mart and others are offering the kirana convenience of being situated locally and offering similar services such as taking orders over phone and making home deliveries. Earlier, most of them had set up stores in the larger hoping a higher conversion rate (consumers actually making purchases) from the footfalls in these formats, a strategy which did not prove too profitable. Retailers say most consumers tend to visit these areas as entertainment zones and rather than making their daily basic grocery purchases. Convenience formats are also able to get better bargains with suppliers and manufacturers by offering business scales higher than the local kirana. Consequently, manufacturers have begun stepping up discounts to the new formats, industry players said.

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Bharti, Wal-Mart to seal deal by July

BHARTI and Wal-Mart seem to be inching closer to finally sealing their partnership. The formal agreement is likely to be signed “as early as next month”, Sunil Mittal said in London. “There has been a delay, as there are multiple agreements and legal issues we have to deal with, but I don’t see it taking longer than that,” he said. “This also has had no impact on the work in progress. We are hiring people, locations are being identified and work is on through Bharti. We are also working on finalising the formal agreements at the same time,” Mr Mittal said. Sunil Mittal, who as president of CII is currently leading a CEO delegation to the UK for talks with industry and government, is being labelled by the local media here as the ‘other’ Mittal — the man who’s brought Wal-Mart into India.
Wal-Mart and Bharti are expected to enter into a joint venture for the cash and carry segment, which will involve selling to wholesale consumers, mostly to small shop owners. For selling to retail consumers, Wal-Mart is expected to enter into a technology transfer agreement with the Bharti Group. The two are also expected to collaborate in terms of sharing processes and best practices as well. Close on the heels of Tesco’s recent statement about a “frenzy” being whipped up in India against foreign retailers, and reports of the Indian government re-examining franchisee arrangements, Mr Mittal and his team were often in the firing line about the whole FDI in retail question. Talking to UK newspersons, Mr Mittal came out strongly in favour of allowing large organised retail in FDI. “In this case, I would tend to bat on your side. The issue is not about foreign and Indian, the debate is about big versus small. If large Indian retailers like us, and Reliance, and the Birlas are allowed, then we would say that more competition is better, and large foreign retailers should also be allowed.”
The team had to repeatedly clarify that Indian regulations bars FDI only in multi-brand retail, and that too largely in the food and grocery segment. “This debate (of organised retail versus mom-and-pop shops) is going on even in developed countries, and I believe in India we will have to go through this debate, but we will not take as long as many other countries,” he said. In the UK, Tesco’s rising ‘size’ and ‘domination’ of the market squeezing out competitors, suppliers and gaining an ‘unhealthy’ influence is a recurring theme for public discussion; Wal-Mart in the US has also had to deal with the same accusations. Mr Mittal clarified that a lot of the public opinion is against large organised retail, and Indian organised players are having to face the same debate and it’s not necessarily directed against any foreign entrant. Mr Mittal dismissed fears that the Indian government would backtrack on the franchisee regulations. Pheroze Vandrevala of TCS, who is co-chair of the Indo-British Partnership initiative and also on the delegation, pointed out that India does not have a track record of rolling back policy changes.

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Pulse - Red Fort beats 45 world sites for UN heritage structure tag

THE 17th century Mughal marvel, Red Fort, has joined the ranks of 26 other Indian sites, including the Taj Mahal, to be included in Unesco’s list of world heritage sites. Unesco’s world heritage committee at its meeting in New Zealand on Thursday decided to bestow the honour on the red sandstone monument built by Mughal emperor Shah Jehan in Delhi. It beat competition from 45 other sites from across the globe in finding a place on the list. Japan’s Iwami Ginzan Silver Mine, Turkmenistan’s Parthian Fortresses of Nisa and Australia’s Sydney Opera are the other sites that will now be inscribed in the world heritage list. The Red Fort is considered to represent the zenith of Mughal creativity, which under emperor Shah Jahan was brought to a new level of refinement. The planning of the palace is based on Islamic prototypes, but each pavilion reveals architectural elements typical of Mughal building, reflecting a fusion of Persian, Timurid and Hindu traditions, Unesco said in a statement.

The other Indian monuments which have been given world heritage status in the past include the Ajanta and Ellora caves in Maharashtra, Taj Mahal and Agra Fort in Uttar Pradesh, Sun Temple in Orissa, monuments at Hampi in Karnataka and Khajuraho Temples in Madhya Pradesh. The other monuments in the capital besides the Red Fort in the list are Humayun’s Tomb and Qutub Minar. India had proposed the Majuli Islands in Assam for the status last year, but it was not included in the list. The Red Fort almost got nominated by India for the honour in 1993. The government deferred nominating it at that time as a major part of the fort was occupied by the army. Later on Archaeological Survey of India took charge of it and carried out conservation and beautification work as it chose the monument as the country’s nominee for this year’s world heritage list.

The Red Fort’s innovative planning and architectural style, including its garden design, strongly influenced later buildings and gardens in Rajasthan, Delhi, Agra and further afield. Through, its fabric, the complex reflects all phases of Indian history from the Mughal period to independence, it said.

Pulse - Millionaire club expands to 1,00,000

INDIA has added over 17,000-dollar-millionaires in 2006, recording the highest growth in high net worth individuals (HNIs) after Singapore. At the end of the year, the number of millionaires in India rose to 1,00,000 from 83,000 in the previous year. This comes in the back of a record 8.8% real growth in gross domestic product, second only to China. Also, there has been a sharp increase in the asset values with the Sensex being among the best performing in emerging markets. According to the 11th annual world wealth report brought out by Capgemini and Merrill Lynch, Singapore, India, Indonesia and Russia witnessed the highest growth in HNI populations. The report is not fully indicative of the wealth among Indians. The net worth taken into account here is the investment in financial assets, which excludes self-occupied housing, but includes real estate investments. It also excludes jewellery and art. “India has been one of the fastest wealth creators. The report reflects the increase in wealth among Indians,” said Pradeep Dokania, MD, global private client, DSP Merrill Lynch.

In 2006, investors increased their allocations to real estate, capitalising on the success of commercial real estate and real estate investment trusts (REITs). As the global real estate market has increased transparency and improved liquidity, it has become a less risky investment. Global direct real-estate transaction volumes reached $682 billion in 2006, up 38% from 2005. Global real estate investment (including direct real estate and REITs) totalled $900 billion in 2006 — the strongestever performance by global real estate markets. In 2006, millionaires across the world shifted more money into real estate, at times liquidating some of their alternative investments to fund these real estate opportunities. The trend was most dramatic in Asia-Pacific where a full 29% of their assets were in real estate compared to 16% a year earlier.

The annual report studies arrive at the number of the rich ($1m plus) which are referred to as HNIs and the super rich or ultra-HNI ($30m plus) and it tracks how they invest their money. A study of past reports show the rich are investing more overseas, driven by an expanded awareness of international development, better portfolio performance and risk mitigation. Historically, North Americans have held the largest portion of their assets in domestic markets.

For example, in 2005, 78% of HNI assets were held domestically. In 2006, the number dropped to 73%, as wealthy North Americans increased their allocations to overseas investments in Europe, Asia-Pacific and Latin America. In 2006, as in previous years, North Americans held the most unbalanced portfolios, with 41% allocated to equities, a slight decrease from 43% in 2005. In 2006, North Americans reduced their allocations to alternative investments and shifted to real estate. Following their shortage in office space, North Americans increased their real estate allocations from 12% to 20% of their portfolios. HNIs in Asia-Pacific nearly doubled their allocations to real estate, from 16% in 2005 to 29% in 2006. Consistent investor behaviour, often seen in emerging economies, HNIs in Asia-Pacific tended to invest in tangible assets. The number of dollar millionaires may have gone up significantly in the current year considering the sharp appreciation in the value of the rupee. In 2006, the rupee had appreciated marginally from 45.19 to 41.12 against the dollar. Since then the rupee has firmed up even more and is currently trading at 40.83.

Keep grains off retail, Buddha tells Reliance

“DON’T touch foodgrains.” This is rule no: 1 for the Mukesh Ambaniowned Reliance Group which has ambitious plans to spread its retail footprint across West Bengal. The state government has also spelt out categorically that Reliance’s retail initiative should in no way unsettle the lives of small shopkeepers and vendors. Even as West Bengal chief minister Buddhadeb Bhattacharjee tries to persuade his more difficult cabinet colleagues and other constituents of the ruling Left Front, the rules of the game are being laid down for Reliance’s entry into West Bengal. “We have told Reliance not to touch foodgrains. However, we don’t want to stop them. How can we? Spencers, Pantaloons, all have set up shops. Why should we stop Reliance?” Mr Bhattacharjee told ETon Thursday. The Reliance Group had originally sought around 1,700 acres from the state government to run their businesses. Later, they scaled down their demand to 1,000 acres. Their plan is to roll out a state-wide agri-retail chain that will comprise 5 distribution-cum-procurement hubs and 80-odd rural business hubs. Such outlets are supposed to come up in different districts like East Midnapore, Malda, Howrah, Burdwan and Darjeeling. Reliance Retail has since submitted a scaled-down plan.

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Piramyd to focus on food business

Piramyd Retail Ltd, which is fast expanding both its retail format stores Piramyd and Tru Mart, intends to increase its focus on food business in coming years. The company plans to flood the food segment with its inhouse brand of butter and sauces, among others. “The food and grocery segment is a major revenue earner. In all other segments except personal, brand loyalty is much low. We have already launched our grocery and spices brand in select markets and later plan to introduce dairy products as well,” said Upamanyu Bhattacharya, chief executive officer of Tru Mart. “We will be coming up with 75-90 stores across the country. Each store will cater to 2,500-3,000 people,” he said. Piramyd is also fast changing the model of Tru Mart stores from neighbourhood stores to supermarkets.

Godrej’s Aadhar to have 100 more retail outlets

Godrej Agrovet, the retailing unit of Godrej Group, plans to open 100 agri retail outlets under its Aadhar brand in four states in the next one year. “We will be launching another 100 retail stores in Punjab, Gujarat, Haryana and Maharashtra,” Godrej Agrovet general manager (human resource) Videep Singh said. Godrej already has 47 stores in these states and would like to have more retail outlets there since logistically it was easier and economical, he said. Around 15,000-18,000 people would be hired in the new stores, he said. These outlets will sell seeds, pesticides, fertilisers, grocery, apparel, footwear, home appliances, furniture and kitchen appliances among others.

Tommy Hilfiger to open 11 exclusive outlets

Arvind Murjani Brands, which sells Tommy Hilfiger products in the country, plans to open 11 more exclusive outlets in the next six months to meet the rising demand for branded garments. “We have nine exclusive outlets in seven cities now. We plan to open 11 more this year, making our presence in nine cities by the end of December,” Shailesh Chaturvedi, CEO, Tommy Hilfiger Apparel India, said. Although he declined to give the total investment the company plans to make in India, Mr Chaturvedi said it usually takes Rs 1-2 crore to put up an exclusive store.

Furniture Bazaar to double outlets to 100

The Future group plans to double the number of its Furniture Bazaar outlets to 100 by the end of year this year. In the last 18 months, the group has rolled out 54 stores, largely in the western and southern parts of the country. “We are aggressively rolling out new stores in Big Bazaar and Home Town. We are also putting up stand-alone Furniture Bazaar outlets as and where we see an opportunity. We are aiming to become a leading organised player in furniture market,” said Venugopal B, senior category manager, Furniture Bazaar. He was in Vadodara to launch group’s seventh stand-alone outlet of Furniture Bazaar on Saturday. Venugopal B, however, avoided divulging figures on revenues of Furniture Bazaar.

Big grocery retailers may come under licence raj

Mayur Shekhar Jha & Rajat Guha NEW DELHI (ET)

THE government is mulling the introduction of a licensing regime to regulate grocery, fruits and vegetable retail in the country. As per the model being considered by policy makers, any shop dealing in retail of food and grocery items such as atta, edible oil, fruits and vegetables, and spread over 10,000 sq ft will mandatorily have to seek licence from the local urban body managing that area. The objective is to check unfettered growth of grocery retail and to protect small kirana stores by restricting the mushrooming of organised retail outlets in a particular catchment area. When implemented, the licensing policy will have a direct impact on all hypermarkets where selling of food and grocery items is proposed. Both Reliance and Bharti plan to operate huge hypermarkets, ranging from 50,000 sq ft to even 1.5 lakh sq ft in certain cases.
The retailers will be allowed to operate only in a specified catchment area, thus minimising the scope of competition between them and local kirana shops. For one, in the case of Delhi, the MCD, which is the administering authority in most areas, will be empowered to give these licences. Large mega outlets and hypermarkets will be asked to operate from outside the city. The policy is being worked out by the commerce, urban development and labour ministry. According to sources, the move has come at the back of Left parties’ demand of regularisation of retail. “The Ministry of Urban Development is already finalising zonal plans. The zonal plans for Delhi will be ready by January next year. Subsequently, the same model will be followed in other states.
The move is aimed at protecting the interest of local kirana stores from unfair competition thrown up by large corporate retailers,” a senior government official said. Zonal plans divide a city or town into different zones, specifying areas for mixed land use. These plans are then incorporated in the city’s master plan. However, when implemented, the mandatory licensing will not impact the basic food and grocery format of retailers like Reliance and Future Group and the proposed Bharti Retail.

FIGURING IT OUT

Pothik Ghosh (ET)

FOR petty shopkeepers and hawkers corporate retail could well prove to be a difficult customer. A paper, based on a sample survey conducted in Mumbai and published in the Economic and Political Weekly (June 2-8, 2007), has revealed that malls, centres of organised corporate retail, threatened 50% of small shops with either a substantial decline in sales or permanent shutdown. Those are ominous portents. More so, since retail giants like Wal-Mart-Bharti, Reliance planning to expand their share of the trade from the current 3% to 15-20% over the next four years. In fact, the value of organised retail industry is projected to increase to Rs 1,000 billion (2.8 times of its current valuation) during that period.
The survey — which was based on a randomly chosen sample of 82 small retail shops and 30 hawkers within about one-kilometre radius of four malls (one in Lower Parel, another in Mumbai Central and two in the Bhandup-Mulund area) — does show that the impact of shopping malls on unorganised retail is not uniform, but varies in accordance with the type of business activity being pursued by shopkeepers and mobile vendors. And so while it did turn up the unexpected (11% of the sample reported an increase in sales with 18% remaining unaffected), that was hardly enough to mitigate the disturbing discovery that 71% of the sample reported decline in sales. The maximum number of shops/hawkers (27.5%) in the sample reported a decline in sales that was more than 10% but not more than 20%. Unorganised retailers who reported sales decline of less than 10%; more than 20% but not more than 30%; and more than 30% but not more than 40% comprised 22.5% each of the sample. Only 5% of the sample reported a fall of more than 40% in their sales.
Vegetable and fruit sellers, and electronics and electrical shops have, within the general sample of unorganised retailers, been the worst hit with all of them (100%) reporting a decrease in sales. (See Table 2.) The dip in sales was found to be in the 70-81% range for shops with inventory valued at up to Rs 25 lakh. This decline was considerably lower (67%) for shops with inventory value of more than Rs 25 lakh but less than Rs 50 lakh, and none at all for shop(s) in the more-than-Rs-50-lakh category. (See Table 1.) As for drop in business by shop size, outlets that figure in the 400-500 sq feet bracket have been the worst hit with 90% of them reporting a slowdown. This decline, however, becomes relatively less alarming as we move to the 500-600 sq feet (67%) and more than 600 sq feet (50%) brackets.
Surprisingly, while 75% of itinerant vendors and below-100-sq-feet shops taken together report reduction in commerce, the figure on the same parameter in the 100-200 sq feet and 200-300 sq feet shops are 35% and 52% respectively. But instances of loss of jobs, despite such alarmingly widespread decline in the business for unorganised retailers due to malls, have surprisingly been few and far between. In all, only nine of the 112 retailers who comprised the sample had laid off their staff since the malls had come up in their respective areas — in all, 11 hired hands (3% of the original workforce of 401 in the units that made up the sample) had been sacked. But that, more than anything else, was on account of the sample largely consisting of family-owned small shops, with 60% of them with no employees.
So, decline in sales would, in this case, be reflected not so much by retrenchment but reduction in earnings per head. Such a situation is as perilous, if not more, than rise in unemployment as it would lead to a rise in the population of the informal working class, what with operations of a large number of above-subsistence level, petty accumulatorbusinessmen being rendered unviable and redundant.

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Multiplexes are driving the shopping mall revolution

It’s the classical chicken and the egg situation. Do consumers go to see a movie and end up buying stuff at the cinemamultiplex or is the mall a destination in itself, with the cineplex merely being one of the options?

Pramod Arora

They are integral to the success of malls

CINEMA multiplexes are a perfect example of convergence of retail and entertainment across the mall and high-street organised shopping formats. Multiplexes are now proving themselves to be an integral part of a successful shopping mall/center. Symbolic of footfall generator, multiplexes offer an ideal opportunity for shopping-center developers to attract boutique & anchor retailers to their development. Not so long ago, the first cinema multiplex of South East Asia came up in Singapore in 1992 redefining shopping with a confluence of leisure. Today 4 Fs (fun, food, films & fashion) have become a pertinent and a potent mixture to attract discerning consumers who want their needs to be met under one single roof. The young Indian consumer is no longer satisfied by purely spending on basic products and services. They want to spend more on lifestyle products and quality services, which would satisfy their self-esteem, social and self-actualisation needs. Leisure needs are currently manifesting themselves in the desire for a shopping experience, watching movies in multiplexes, lounging, eating out, travel etc. The winning formula ideally should be a true representation of footfall generator & monetiser. Percentages & strike rates may differ (footfalls to transaction) but footfall still is imperative for transaction to happen. As a CII-KPMG study found out in 2005, the presence of a multiplex increases footfalls by a whopping 40-50%%. The key element for the success of a mall/shopping center is its ability to drive footfalls consistently. Every shopping center developers recognises this. No wonder, shopping center/mall developers all over the country prefer multiplexes to occupy their top floors as anchor tenants who would ensure footfalls. The traffic flow & layout of the shopping center/mall is so defined as to ensure that the patrons reach the cinema after experiencing & exploring the retail, food and leisure facilities, thus ensuring success. The potency of the formula can be noticed by the young crowd hanging out in these malls/shopping centers as a everyday habit. The bond is so strong that it represents third space in the life of these youngsters (first being their home, second being their place of work/school/college). Promotional activities like events, contests, star visits, premiers and customer loyalty programmes organised by the mall management and the retail tenants also help such shopping centers/malls to attract higher footfalls. Finally nothing succeeds like success. The author is CEO & president, PVR

Pradeep Jain

Cineplex and retail boom mutually dependent

IT goes without saying that multiplexes have indeed given a new meaning to the age-old concept of shopping in modern India. But to say that the entire retail boom is being driven by multiplexes would be too strong a statement to be made. In my opinion, the multiplex and the retail boom in the Indian context have been mutually dependent. From a mall-developer’s point of view, what is most critical is to ensure the right tenant mix. It’s important that the footfalls and the eyeballs actually get converted to transactions in the shops. Cinema has always been a crowd puller, being one the cheapest avenues of entertainment. However, in case of some malls in the national capital region (NCR), which initially showed an over-dependence on cineplexes, conversions have been as low as 35-40% of footfalls. There aren’t many instances where people go out with the intention of watching a movie and end up making major purchases. On the contrary, the last couple of years have witnessed the evolution of serious and planned shopping in India. Families plan their trip to a mall well in advance. The choice of the mall is based on their budget and requirements. Then, the comforts that a particular mall offers are an important criterion as far as making this choice is concerned. Of late, parking is emerging as an important concern, and malls which do not have ample parking facilities, will eventually lose out. Anchor tenants play an important role in generating an immediate recall for a mall and are one of the most important incentives that a consumer is looking for. The tenant mix should be worked out, keeping the anchor tenant’s positioning in mind. Families, which go out for shopping together, also look out for unwinding options in the mall. There has to be a kids’ zone. Good food joints are also important. It needs to be understood that in the changing socio-economic scenario, the Indian consumer is in a fairly comfortable position to afford all of this at the same time. Disposable incomes are on an all-time high and affordability is not a barrier. The only concern is: value for money. In this context, while cinema does act as an added incentive to shoppers, it cannot be the sole driving force of the retail boom.

The author is chairman, Parsvnath Developers

It’s the classical chicken and the egg situation. Do consumers go to see a movie and end up buying stuff at the cinemamultiplex or is the mall a destination in itself, with the cineplex merely being one of the options?

Pramod Arora

They are integral to the success of malls

CINEMA multiplexes are a perfect example of convergence of retail and entertainment across the mall and high-street organised shopping formats. Multiplexes are now proving themselves to be an integral part of a successful shopping mall/center. Symbolic of footfall generator, multiplexes offer an ideal opportunity for shopping-center developers to attract boutique & anchor retailers to their development. Not so long ago, the first cinema multiplex of South East Asia came up in Singapore in 1992 redefining shopping with a confluence of leisure. Today 4 Fs (fun, food, films & fashion) have become a pertinent and a potent mixture to attract discerning consumers who want their needs to be met under one single roof. The young Indian consumer is no longer satisfied by purely spending on basic products and services. They want to spend more on lifestyle products and quality services, which would satisfy their self-esteem, social and self-actualisation needs. Leisure needs are currently manifesting themselves in the desire for a shopping experience, watching movies in multiplexes, lounging, eating out, travel etc. The winning formula ideally should be a true representation of footfall generator & monetiser. Percentages & strike rates may differ (footfalls to transaction) but footfall still is imperative for transaction to happen. As a CII-KPMG study found out in 2005, the presence of a multiplex increases footfalls by a whopping 40-50%%. The key element for the success of a mall/shopping center is its ability to drive footfalls consistently. Every shopping center developers recognises this. No wonder, shopping center/mall developers all over the country prefer multiplexes to occupy their top floors as anchor tenants who would ensure footfalls. The traffic flow & layout of the shopping center/mall is so defined as to ensure that the patrons reach the cinema after experiencing & exploring the retail, food and leisure facilities, thus ensuring success. The potency of the formula can be noticed by the young crowd hanging out in these malls/shopping centers as a everyday habit. The bond is so strong that it represents third space in the life of these youngsters (first being their home, second being their place of work/school/college). Promotional activities like events, contests, star visits, premiers and customer loyalty programmes organised by the mall management and the retail tenants also help such shopping centers/malls to attract higher footfalls. Finally nothing succeeds like success. The author is CEO & president, PVR

Pradeep Jain

Cineplex and retail boom mutually dependent

IT goes without saying that multiplexes have indeed given a new meaning to the age-old concept of shopping in modern India. But to say that the entire retail boom is being driven by multiplexes would be too strong a statement to be made. In my opinion, the multiplex and the retail boom in the Indian context have been mutually dependent. From a mall-developer’s point of view, what is most critical is to ensure the right tenant mix. It’s important that the footfalls and the eyeballs actually get converted to transactions in the shops. Cinema has always been a crowd puller, being one the cheapest avenues of entertainment. However, in case of some malls in the national capital region (NCR), which initially showed an over-dependence on cineplexes, conversions have been as low as 35-40% of footfalls. There aren’t many instances where people go out with the intention of watching a movie and end up making major purchases. On the contrary, the last couple of years have witnessed the evolution of serious and planned shopping in India. Families plan their trip to a mall well in advance. The choice of the mall is based on their budget and requirements. Then, the comforts that a particular mall offers are an important criterion as far as making this choice is concerned. Of late, parking is emerging as an important concern, and malls which do not have ample parking facilities, will eventually lose out. Anchor tenants play an important role in generating an immediate recall for a mall and are one of the most important incentives that a consumer is looking for. The tenant mix should be worked out, keeping the anchor tenant’s positioning in mind. Families, which go out for shopping together, also look out for unwinding options in the mall. There has to be a kids’ zone. Good food joints are also important. It needs to be understood that in the changing socio-economic scenario, the Indian consumer is in a fairly comfortable position to afford all of this at the same time. Disposable incomes are on an all-time high and affordability is not a barrier. The only concern is: value for money. In this context, while cinema does act as an added incentive to shoppers, it cannot be the sole driving force of the retail boom.

The author is chairman, Parsvnath Developers

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Tesco launches retail test lab in B’lore

Thanuja B M BANGALORE

RETAIL major Tesco has unveiled a retail test lab in its Bangalore facility. The lab will replicate its entire point-of-sale testing infrastructure in the UK and will test and certify new software to be used in 1,500-plus stores in the UK and the Republic of Ireland. Mr Sridhar Rathnam, head, IT services, Tesco Hindustan Service Centre (HSC) said: “We have set up a 7,000 sq-ft lab in our campus which has 30 different tills and 5 different store formats. This will be used to test and validate software releases which are introduced into Tesco stores worldwide every year.”

The company is currently in the process of transitioning much of the testing work of software. “About 80% of the testing will be done in Bangalore while only the last bit of integration testing, including mainframe integration and credit card pin testing, will remain in the UK lab,” he said, adding that the new lab is also planning to work on automation of the processes of the software. The number of store formats will be increased to 40 formats by the end of the year. While the first phase will also have petrol filling stations (PFS), later phases will add new generation formats like PFS (with Pay@Pump), Self Service Checkouts, Grocery Home Shopping etc. Queried on investments, Ms Meena Ganesh, CEO of HSC, declined specifics but added that Tesco had invested about 30 million pounds in the Bangalore centre so far and the lab was a significant part of that investment. The lab in Bangalore will employ about 50 test analysts and testers doing system and functional testing. The software which Tesco uses in all its stores is custom developed by Israeli company Retalix.

The new lab has already made its presence felt after having worked on a significant part of the testing phase for Tesco’s recentlylaunched software Progress 3.8. This new software release had a few business functionality changes and included the ‘chip-in-pin’ functionality and base software testing (the latter two were done in India). The Bangalore team is now working on 5.01 software.

ET

Wal-Mart in talks for warehousing

Priyanka Talwar NEW DELHI

RETAIL giant Wal-Mart is in talks with Delhi-based logistics company Indo Arya to set up a warehouse in India. “We have been offered business by Wal-Mart and are looking for a suitable location in north India to set up an exclusive warehouse by 2008,” Indo Arya director Yogesh Arya said. “Wal-Mart has provided broad indications of the size of warehouse, which will be between 50,000-2 lakh square feet,” he added. The warehouse would be occupied by Wal-Mart by the beginning of 2008 and is expected to be leased out for a minimum of three years, Mr Arya said. Indo Arya is planning to invest Rs 200 crore over the next two years to expand its transport and warehouse business.
The company has recently set up a 5.14-lakh square feet warehouse in Haryana to serve retail companies such as Pantaloon, ITC and Reliance Retail. “Retail majors today want logistics services comparable with what is offered to them in developed nations. The focus has shifted from multiple vendors offering different services to just a single vendor who can provide them with complete back-end solutions,” Mr Arya said. Services include source to destination delivery, assembling and packaging. The company recently operationalised a 514,000-square feet modern warehouse in Haryana having a capacity of 85,000 million tonnes. ITC and Pantaloon have already booked about 4 lakh square feet. The 23-acre site, of which 12 acres have been occupied by the warehouse, will also get a cold storage warehouse to be set up over an area of about 4 lakh square feet, Mr Arya said. Plans to set up warehouses in six more cities are under way. “Six new warehouses, covering a total of 2 million square feet, are proposed to be set up, with warehouses in Kolkata, Chennai and Bombay due to be operational by 2010,” Mr Arya said. The company is also planning an initial public offering (IPO) by 2010. While Indo Arya has operations within India, it is eyeing acquisitions in the international freight forwarding business. “We are looking at acquiring a freight forwarder with operations in Europe and south-east Asia by the middle of 2008,” Mr Arya said.

ET

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Visual appeal

HE thriving Indian retail industry has led to a stiff competition among the Indian and foreign retailers to attract and retain customers. This competition has given rise to a new breed of retail staff – retail experience managers or visual merchandisers. Their job is to focus on the design and merchandising aspects of the retail business. In this tug-of-war between numerous stores, the display and arrangement within the store becomes the best way of attracting eyeballs of the potential customers. After all it’s all about catching their attention! The window displays of the storefront are the initial point of interaction with a potential customer. “Like in the West, the concept of store design and window displays is catching up fast in India.

The customers now demand international shopping experience and visual merchandising plays a major role in customer satisfaction,” says Deepak Seth ,group chairman, House of Pearl Fashions. Visual merchandising has emerged as the most important arm in retailing, but it is still establishing its identity in Indian market. Many confuse it with the art of window display. However, contrary to the belief, window display is a very small part of visual merchandising.

“These days it’s the packaging that counts. When you present a gift to someone, it’s the packaging that creates the first impression. Customers are not willing to buy the products unless the stores show them in an appealing way. The stores in turn are willing to hire professionals to attract customers,” says Sunil Sethi of Alliance Merchandising Company. A good display means the store cares about entertaining, informing and educating the customers. It has become the best method of increasing sale worldwide. “In the West, stores are spending lots of money on Christmas decoration to come up with the most attractive window. The stores present to sell. In fact when companies make a presentation to the franchises, they do it visually now which gives the store insights,” says Mr Sethi.

With globalisation and intense competition, Indian market is waking up to the need of the industry. “There is a huge demand for professional visual merchandisers, who would be able to fulfil the need of the retail industry. Visual merchandising will further pick up as the number of malls go up,” said Dr Sanjay Gupta, chairperson of fashion textiles at National Institute of Fashion Technology (NIFT). NIFT offers a wholesome course in fashion communication that also includes visual merchandising. “It’s the way you communicate with the customers. The demand for visual merchandiser has picked up over night as the retail sector opened up. However, it’s not only in retail, but also in the fashion industry that one needs visual sense. Colours are an integral part of the fashion merchandising and unless you have a visual sense to arrange them, you cannot lure customers,” he says.

Seeing the demand, Pearl Academy of Fashion has tied up with Pantaloon Retail Industry(PRIL) for recruiting retail experience managers. “A customer has more choices and retailers are trying to grab their attention. Merchandising is an integral component of the business image. This course will help in providing creatively inclined employees with a skill-set, best suited to catering to the need of the industry,” says AKG Nair group director Pearl Academy of Fashion (PAF). PAF will soon start this six-month long course in visual merchandising dealing with the nuances of spatial and structural dynamics, creative design processes and understanding of materials. Pantaloon would provide on-the-job training and opportunities for projects at any PRIL stores or offices.

At the end of the course, the retailer would extend an open offer to students with an aboveaverage performance to join it. “The industry today needs trained retail experience managers who know how to communicate with the customer. We want to produce experience retail designers who are more sensitive and know how to connect brands to customers. It means implementing both push and pull strategy. Any touch point between the store and the customer should be regulated properly and this is what this course aims at,” says Vishal Kapoor experience design chief PRIL. As a result of this tie-up, PRIL gets trained retail experience managers and PAF will get the first hand information about the customers’ response to Pantaloon stores.

The course will look at holistic development, taking into account ambiance, conducting and packaging and the way employees communicate with the clients. “Visual merchandising and design play a major role in connecting customers to the brand or store,” said Mr Nair. For instance, the whole ambiance in a designer apparel shop should convey the feel of design-focused outlet. Retailers know the impact of a store’s atmosphere on its financial performance. Minute details, ranging from music to visual display of products in the store, exercise great influence on the whole shopping experience of the customers. With tough retail competition, a retailer cannot ignore something as important as visual merchandising. Retail outlets are now looking at visual merchandisers to provide the edge as far as visual display is concerned. The customer attitude has changed because of the number of options available and this has created a bright future for visual merchandising.

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Commissariat is country’s hottest highstreet

BANGALORE’S retail landscape is witnessing significant changes with the emergence of new highstreets. Commissariat Road, a one-kilometer stretch located in the city’s CBD, has quietly become the country’s hottest emerging retail catchment with daily grossings of Rs 4.5 crore. Now, retail pundits are also betting on Vittal Mallya Road as a world class highstreet in the making with the 1.5 million sq ft mixed use UB City as the anchor. UB City, nearing completion, will house one of the first super luxury malls in India adding lustre to the street that already has Nautica, Esprit and ethnic chic brands like Satya Paul. Commissariat Road appears to have upstaged other new mall-centric retail hotspots like the NCR’s Mehrauli-Gurgaon Road and Mumbai’s Malad-Link Road.

The first four months of 2007 have seen this high street clock an average of Rs 4.5 crore in daily billings. Average sales per day for the Jan-April period from the Mehrauli-Gurgaon Road stood at Rs 3.6 crore, while for the Malad-Link Road it was Rs 2.9 crore, according to a survey by real estate consultant Asipac Group. And retail industry heavyweights like Future Group’s chief executive officer Kishore Biyani concurs with Commissariat Road’s emergence as one of the busiest retail hotspots. But the industry appears divided over the size and significance of its daily business when compared to traditional retail spots like Connaught Place in New Delhi or Linking Road in Mumbai. Incidentally, the retail sector in Bangalore is growing at 45% year-on-year.

The city today figures among the list of preferred launch markets in the country. Commissariat Road is home to retail anchors such as Bangalore Central, Garuda Mall, Shoppers Stop, Home Stop, Globus and Lifestyle. The survey states that Bangalore Central was the highest grosser on this high street, followed by the Lifestyle store and Shoppers’ Stop. “Commissariat Road’s unique advantage over Malad-Link Road or Mehrauli-Gurgaon Road is that it is located in the heart of Bangalore, while the others are in suburban locations. The average number of bills/receipts issued by various retail anchors combine stands at 29,000 per day,” said Amit Bagaria, chief executive officer, Asipac Group.

However, even while recognising Commissariat’s climb to the top of retail spots, a section of the retail industry argue that its growth could plateau in the medium term as it does not qualify as a shopping high street. “The street, no doubt, is one physical entity. But it is punctured by busy traffic stops. It is not possible to stroll down the street and has no cafes to hop into. It does not qualify as a highstreet, unlike Brigade Road, in the true sense,” says Fazle Naqvi, President LMG Brands, a division of Landmark Group.

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Gini & Jony eyes 50% biz from Freedom Fashion stores

GINI and Jony Apparel Ltd, the kidswear specialist, is targetting 50% of its revenue by 2010 through its newly rolled out format for kids, Freedom Fashion. This format, essentially based on controlled retail, houses four premium brands —- Gini and Jony, United Colours of Benetton (UCB), Reebok Junior and Levis Sykes Junior for youngsters up to the age of 16. Speaking to ET, business head Mr Puneet Tripathi said, “Besides garments, shoes and accessories, we will also be retailing cosmetics for kids, which we will be sourcing from UK. The idea is provide the target audience in that price segment with a choice of premium brands in an organised format.” Incidentally, Gini and Jony is the official licensee for Levis Sykes in India while it has the marketing rights for the children’s wear range for UCB, Reebok Apparel and Reebok Footwear. For starters, besides the Freedom Fashion stores in Ranchi and Kolkata, the company plans to roll out 20 stores by the end of June in places like Delhi and Gujarat among others. “About 30% of these will be company-owned and the rest will be under the franchisee model,” said Mr Tripathi. The average investment for a large-format store is Rs 50-70 lakh. Right now, the company has 26 Gini and Jony stores. The company is envisaging a total of 200 stores by 2008, of which nearly 60% will be in the Freedom Fashion format. The rest will be single-brand outlets. “Besides metros and mini-metros, we will also be looking at Tier II and Tier III cities like Kanpur and Jamshedpur, said Mr Tripathi.

FieldFresh to adopt contract farming in Punjab

LUDHIANA: FieldFresh Foods, farm unit of telecom major Bharti Enterprises, has decided to grow and source vegetables and fruits through contract farming in Punjab instead of the earlier collaborative route. “We have decided to adopt the contract farming model in Punjab for growing and sourcing vegetables and fruits, under which we will directly establish contact with farmers. We will soon come out with the detailed plans,” Bharti Enterprises vice-chairman and FieldFresh Foods director Rakesh Bharti Mittal said here.

ET

Indians eager for Wal-Mart entry: Duke

Company Vice-Chairman Michael Duke Sees Increasing Support From Both Govt & Businesses
Bodhisatva Ganguli FAYETTEVILLE (ARKANSAS)

WAL-MART, the world’s largest company, says that it sees a groundswell of support for its plans to enter India. Michael Duke, Wal-Mart’s vice-chairman, said that businesses in India are eager for the Bentonville, Arkansas based retail behemoth to start its operations in the country . “ We see a gigantic groundswell of desire from the government and from businesses for working with us in India. There is opposition but predominantly the groundswell is in support for Wal-Mart coming in,” Mr Duke told mediapersons. He was speaking on the sidelines of Wal-Mart’s annual shareholders meeting at the Bud Walton Arena at Fayetteville, Arkansas on June 1.
Mr Duke looks after Wal-Mart’s international operations, which accounts for 22% of sales, and is by some distance the fastest growing part of of its business. International sales grew a stunning 30% in the fiscal year ended 31 January 2007. Despite what he perceives as support for Wal-Mart’s India foray, Mr Duke and other officials present didn’t make any announcements as to when the retail giant would enter India. “We are researching our consumers, mom and pop stores, farming methods. Lot of work is happening,” said Raj Jain, who head’s Wal-Mart’s operations in India. Officials who weren’t willing to be identified by name said the details of a joint venture with the Bharti Group were still being worked out. These included legal provisions.
While Wal-Mart and Bharti are expected to enter into a joint venture for the cash and carry segment, which will involve selling to wholesale consumers, mostly small shop owners. For selling to retail consumers, Wal-Mart is expected to enter into a technology transfer agreement with the Bharti Group. Indian regulations currently prohibit foreign direct investment in retail. “ There will be collaboration in terms of processes, knowledge sharing and best practices,” said Rajan Bharti Mittal, Managing director, Bharti Enterprises. Wal-Mart sources about $600 million worth of products from India and 1,00,000 people work in factories which sell to Wal-mart. China’s interaction is an order of magnitude greater. It sells $9 worth of merchandise directly to Wal-Mart. Wal-Mart’s Internationalisation was very much a theme of its shareholder meeting, understandably so, because international operations are now experiencing the kind of growth which the company experienced in the US in the 1980s and 1990s as it grew to current position at the top of the Fortune 500.
However, in the recent past, same-store sales, a key measure of retail performance, has slowed in the US. For fiscal ‘07 same store sales for Wal-Mart stores grew just 2%. At the shareholders meeting, Wal-Mart announced that it would build a lesser number of supercentres (Wal-Mart’s main retail format) then previously announced in the US during the next four fiscals. It’s stock price has been essentially stagnant for years. Wal-Mart CEO Lee Scott has been criticised for presiding over a 24% decline in share prices during his seven year tenure. At the shareholders meeting, Rob Walton, chairman of the board, emphasised the Walton’s family’s support for Mr Scott.
The meeting was part theatre, with performances from Jennifer Lopez and new American Idol Jordin Sparks, and part indoctrination session. The famous Wal-Mart cheer, which certainly has a passing resemblance to North Korea style propaganda sessions , seemed to have been enthusiastically adopted by Wal-Mart’s foreign employees, of which there were large contingents from China, Brazil, Japan and the United Kingdom. A small delegation from India, mostly US citizens of Indian origin working in Wal-Mart, enthusiastically waved the tricolour. In his address to shareholders, Mr Scott said Wal-Mart researching the Indian market. In all Wal-Mart is present in 13 countries outside the USA, the bigger ones being Britain, Mexico, Brazil, China and Japan. It has had its share of failures. It sold off its businesses in Germany and South Korea.

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