Pulse - Opening Accounts

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.

Pulse - Investor Protection Index

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.

Pulse - BRAND INDIA!!

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.

ET