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July 27, 2009
Reuters
MUMBAI
27, July 2009
Apparel retailers are poised to chase consumers in small towns, besides lower operating expenses, while aiming for a balanced presence across markets in a challenging economy.
Exploring the relatively unexplored markets are S Kumars Nationwide, Arvind Ltd, Alok Industries and Welspun India’s Welspun Retail.
As the economic slowdown hurts retailers in large cities, smaller towns are less impacted due to their dependence on agricultural income and independent enterprises.
“The rationale is in fact the tier 2, 3 and 4 cities, the amount of money that is available there and the amount of consumer growth happening there, there is a big shift happening for the consumer, especially in garments,”
Nitin Kasliwal, managing director of S Kumars, said.
S Kumars, known for premium brands such as Reid & Taylor and Belmonte, is launching a ‘mass brand’ for the tier 3 and tier 4 cities at “very reasonable rates,” said Kasliwal.
Rival Arvind, which already has about 30% of its revenue coming from tier 2 and tier 3 cities, plans to locate a significant share of 30 outlets to be added this year in tier 3 cities, said J. Suresh, chief executive, brand and retail.
The company plans to spend about Rs400 million for expansion this year, he said.
Branded apparels and home furnishing maker Alok, owner of the H&A brand, is planning to triple its store count by next March, with a strong focus on the tier 2 and tier 3 cities.
“Once we reach the 300 target, then my share coming from tier 2 and tier 3 cities will be about 75%,” said Umang Garg, vice president, domestic business. It already has outlets in Moga and Firozpur in Punjab, and Latur in Maharashtra.
Welspun Retail, with 200 stores under its ‘Welhome´ brand that targets budget customers in home furnishing category, plans to add 70-80 stores in FY11, with 30% focused on villages.
BALANCING ACT
Besides the potential of the markets in the interior, it is also a balancing act for companies wanting to mark their presence in different markets to leave no consumer untapped.
“For long term perspective…it makes immense sense for us to be in all strata of the markets, of course with different brands,” said Kasliwal.
As big brands target budget consumers with value-pricing range, firms believe brand awareness is growing in small towns.
“The market is evolving, today if I make inroads, that would pay dividends tomorrow,” said Welspun Retail director Dipali Goenka.
“There are lots of towns and cities where companies don’t have the distribution reach or retail presence. That is a new market for them,” Devangshu Dutta, Chief Executive, Third Eyesight, said.
Skyrocketing rentals in big cities also makes moving to tier 2 and tier 3 cities attractive.
High rentals in big cities make even covering the cost of merchandise difficult, while small towns give 8-12 times of the rent in returns, said Alok’s Garg.
“You can have a profitable business by opening more shops in smaller towns with lower rentals.”
admin
July 24, 2009
By Gouri Shah
LIVEMINT.com (A Wall Street Journal Partner)
Fri, Jul 24 2009
After making their debut on television ads during the Indian Premier League earlier this year, the lovable egg-headed Zoozoos quickly made their way onto comic strips, newspaper mastheads, birthday cakes, wedding cards, shoes, T-shirts, key chains and even rakhis, as clever local and Chinese marketeers cashed in on their popularity with fans. Now, creator Vodafone Essar Ltd is planning to launch official Zoozoo merchandise with retail chain Shopper’s Stop Ltd.
“We are in discussions and are very close to signing the deal,” said a senior official from Shopper’s Stop Ltd, who did not want to be named, citing company policy. This was also confirmed by a senior advertising executive familiar with the development, who added that Shopper’s Stop was still scouting for good suppliers to produce the Zoozoo merchandise. It’s a delay that could cause the official Zoozoo creators to lose revenues to pirated merchandise producers.
Shoppers Stop is likely to manufacture and market Zoozoo T-shirts, bags, clocks, dolls, mugs and key chains, among other things. “The merchandise should be out soon, possibly within a month or two,” says Rajiv Rao, executive creative director, South Asia, Ogilvy and Mather Pvt. Ltd, who created the Zoozoo campaign.
Shoppers Stop has so far produced branded apparel and accessories for films such as Farah Khan’s Om Shanti Om and, more recently, for the forthcoming Saif Ali Khan starrer Love Aaj Kal. Barring a slightly unsuccessful licensing deal with Disney almost a decade ago, this will be the firm’s only attempt to produce branded character merchandise. It’s an area few retailers want to venture into, considering the vast amount of knock-offs available at every price point in the market.
“Character merchandising is easy to copy and there really isn’t any control on violation of intellectual property,” says Govind Shrikhande, customer care associate and chief executive for Shoppers Stop Ltd.
He explains that unlike film merchandise, which has a shelf life of 10-12 weeks—allowing merchandisers to move in and move out before the knock-offs had even arrived—character merchandising is a greater challenge, especially if the official merchandise is expensive, thereby encouraging the demand for cheaper knock-offs.
According to Shrikhande’s estimates, the size of the branded merchandise market is around Rs1,050 crore. Of this, film merchandise accounts for Rs50 crore, character merchandise from the largest player in the market, Disney, for Rs500 crore and another Rs500 crore is for other popular characters such as Ben 10, SpongeBob SquarePants, Hanuman and so on.
For Indiangiftsportal.com, an e-commerce site hosted by Intermesh Shopping Network Pvt. Ltd, it made good business sense to stock products featuring the Zoozoos. “In the last 15 days, the site has sold close to 100 Zoozoo rakhis,” says managing director Manan Sharma. The rakhis cost Rs300 each and include a card, a handmade box, courier and credit card charges. “The little Zoozoo characters are manufactured and sourced from China, the colourful rakhi ribbons and threads are added here,” he says, adding that his attempts to win an official licence for Zoozoo merchandise had come to nought. Was he worried that he would be sued for infringement of intellectual property rights? He says, “Why should it be a problem? We are making the Zoozoos popular!”
Online merchandise site Myntra Designs Pvt. Ltd has been a little more cautious.
“We have 4,000 creative designers on our site who contribute their own designs and in the recent past, we’ve had to reject at least 15 T-shirt designs that were based on the Zoozoos due to copyright issues,” says Mukesh Bansal, chief executive, Myntra Designs, an e-commerce site that also enables users to create and design their own merchandise. “However, we allow consumers to place orders with their own images and we’ve had two-three customized T-shirt orders like that, with images of Zoozoos.”
No surprise there, considering the character’s broad appeal and popularity. The official Zoozoo fan club page on social networking site Facebook has at least 313,129 fans. Experts maintain that such branded merchandise serves well for the brand as well as the retail partner. “For the brand, such merchandise reinforces the image. For the retailer, each time there is an ad, you get to ride on the popularity of the character. So in that sense, it works beautifully for both parties,” says Devangshu Dutta, CEO, Third Eyesight, a retail consultancy firm.
Vodafone Essar on their part is choosing to remain tightlipped about the deal. “Discussions are on, but I’m not sure if we will be able to do anything. To begin with, we have no experience in this (merchandising) business and secondly, there is still so much we have to do in the telecom business…we’re not ruling it out. As and when we have the bandwidth, we will consider it. As of now, we haven’t zeroed in on anything,” said Harit Nagpal, director marketing and new businesses, Vodafone Essar. “We don’t need to overdo a good thing.”
The mobile services provider has three ongoing campaigns: the pug to convey customer service, Bollywood actor Irrfan Khan to communicate the brand’s value for money products and the Zoozoos to communicate their products service and offering. Industry watchers believe that the last could eventually go on to promote more than just value-added services for the mobile services provider.
admin
July 23, 2009
By
Sruthijith K K, ET Bureau
THE
ECONOMIC TIMES
New
Delhi 23 July, 2009
Wadhawan Retail has decided to shut its Spinach food and grocery stores, multiple people familiar with the development, including one senior executive of the group, said.
Most of the 45 Spinach outlets will down shutters by the end of this month and many suppliers have snapped their relationship with the company because of huge outstanding bills, several current and former company executives said.
About 600 employees are likely to be affected by the development, they said.
Spinach has some 35 stores in Mumbai and about 10 stores in Kolkata, down from a 2008 peak of 55 stores in Mumbai and 15 in Kolkata.
Wadhawan Retail is part of the `12,000-crore Wadhawan group that has interests in real estate, retail, financial services, education and hospitality, and runs operations in India, the UAE and UK.
It runs retail stores under the Smart Retail brand in South India, Sabka Bazaar in the National Capital Region, and Spinach in Mumbai and Kolkata.
Wadhawan Retail CEO Ashok Bhasin was unavailable for comment. When contacted, a company spokesman said, "We don’t comment on market speculation."
Recently there has also been a steady stream of exits from Spinach, which has been in trouble for more than a year now.
Two executives from rival retail firms, who spoke on the condition of anonymity, said their companies were inundated with resumes of job seekers from Spinach Retail.
Wadhawan Retail will also review the operations of its Sabka Bazaar stores starting next month, an executive said.
"The company suffers from a lack of focus from the promoters, who are busy in real estate, which is their core business," a retail consultant said on the condition of anonymity.
He said the company has been downsizing for a while, but he didn’t know if there has been a decision to close the stores.
The group ventured into retail business in late 2005, with the target of launching 750-1,500 stores across the country.
In June 2007, it acquired NCR-based Sabka Bazaar and The Home Store from Home Stores. And in September the same year, it bought a chain of stores called S*Mart and rebranded it Smart Retail. In 2008, Ashok Bhasin, a global director at Whirlpool Corporation, USA, joined the company as CEO.
"Food retailing is a tough business," said Devangshu Dutta, CEO at retail consultant Third Eyesight. "Fresh produce is what drives footfalls, but that is also a very difficult category to manage. Ensuring the freshness of the produce is tough," he said.
Mr Dutta said that margins on FMCG products are really slim. "On top of that, there is a certain level of shrinkage all retailers suffer from. It’s important to maintain a really lean operation," he said.
India’s modern retail industry, which holds the enormous potential of nearly a billion future customers with rising disposable incomes, has so far claimed a number of players, small and large, who expanded too soon, or committed one of the several possible cardinal errors in the business.
Last year, Subhiksha Trading Services wound up operations due to financial difficulties.
Vishal Retail, which operates Vishal Mega Marts, is in the process of restructuring more than Rs. 740 crore of debt. Unsecured lenders have filed winding up petitions against the firm.
Even as the government is calibrating its policy approach towards domestic and foreign retailers, many early movers are struggling to stay afloat in the retail business.
Clearly, Wadhawan is no Popeye; Spinach has failed to give it strength.
With inputs from Ratna Bhushan
admin
July 20, 2009
By Priya Kapoor
MoneyToday
July 20, 2009
Convenience and low prices are spurring an increasing number of Indians to purchase goods and services through the Internet. The innovations in securing online transactions are also fuelling the trend .
Sandhya Kaushik, a 32- year- old healthcare professional, bought a kitchen appliance online and saved nearly Rs 800.
It wasn’t a one- off purchase, or the first time she had done so.
Kaushik has been a regular on the online circuit for the past two years. Her purchases range from kitchen items and educational toys for her children to books and flowers. Her motivation — lower prices and sheer convenience.
“Even if the physical store offers a discount, you end up paying more in transport cost. Also, it works best if you have a hectic schedule,” she says.
Kaushik is no aberration. Parul Suri, a 27- year- old consultant, also swears by online shopping. “ In today’s fast- paced life, there is hardly any time to make physical purchases. An online platform not only saves time but gives you a lot of options,” she explains. Kaushik and Suri represent a growing breed of people who see value for money in buying online. The current ‘ online shoppers’ base in India stands at 34.5 million compared to 28 million last year. This includes a sizeable chunk of ‘ window’ shoppers too, who use the Net for research and cost comparison.
A Mastercard survey conducted in December 2008 reveals that the average number of online purchases in India grew to 2.9 transactions in three months, up from 2.6 during the same period in 2007.
It’s a trend replicated in mature markets — in the UK, online shopping outperformed the high street last year. A December 2008 UK- based survey by Lightspeed Research revealed that 35.5 per cent of the respondents preferred to shop online. Another survey by Mintel, a leading consumer research firm, shows that though America’s economic growth has been flattened by the recession, online retail continues to show more signs of life than consumer retail as a whole.
admin
July 20, 2009
By Diwakar Kumar
indiaretailing.com
20, July 2009
The primary challenge in food retail, no doubt, is its supply chain, which is making things difficult for retailers and food processors to procure quality produce at competitive costs directly from farmers in India. Last year at the India Retail Forum held in Mumbai, this prime challenge was centrestage for retailers to sidestep efficiency bottlenecks of the modern marketplace. The Indian supply chain for fresh and processed food is extremely poor and characterised by panoptic wastage and poor handling. A food retailer’s supply chain must be short and tightened by professionally-drawn efficient practices to avoid long chain of products from farm to fork, failure of which costs a retailer not just efficiency and just-in-time inventory control, but also results in a higher cost-of-operations burden.
Last week, we posted an open question for our audience to poll on, on our sister website www.imagesfood.com — Food retailers should adopt the following strategy to stay out of financial trouble in a slump: 1. Cut costs, 2. Increase revenue, 3. Combination of the two. Over 19.05% of the respondents supported cost cutting, 33.33% were in favour of increasing revenues and 47.62% polled for a combination of the two strategies.
Food safety and security are essential concerns for grocery retailers of all sizes. But the main challenge lies in boosting revenue, even as the cost of operations rise and sales appear to be slowing. A good retailer respects the value of always being in-stock, which in turn depends on highly efficient supply chain, inventory management and demand forecasting. In many cases, maximising square foot returns can entail additional spends – on upgraded cold chain systems, technology-enabled SCM, shopper data mining or hosting promotional events in alliance with suppliers, among on others.
Sunil Sanklecha, managing partner of the Chennai-based supermarket chain Nuts ‘n’ Spices, points out that every penny a retailer spends is out of profits, but every penny of the revenue is not profit. Cutting cost while simultaneously increasing the revenue is the mantra of any business model. "To increase the revenue is every businessman’s challenge; retailers must rework their strategies very frequently as today’s strategy may not work after one year. One has to constantly work on strategising the business model in alignment with market shifts," he suggests.
He further adds, "We must also understand that cost cutting does not work everywhere; cutting down on the basic infrastructure and basic customer services is a no-no. We need to cut costs only in the areas where the input is not productive."
Devangshu Dutta, chief executive of Third Eyesight points out that in many cases, business projections are also unrealistically high; there are locations where the expected change-over from the kirana to modern retail has been over-estimated, and the business has been modelled with costs that are in line with the over-expectation of revenue. "Rather than trying to fit the world to our business model, we need to fit the business model to the real world that exists," he says.
