Sapna Agarwal

MINT, Mumbai, February 18, 2010

Grocery supermarket chain Spinach appears to be caught up in a slide that has seen a number of Indian retailers, particularly from low-margin food and grocery industry, down shutters in the wake of the economic slowdown.

Empty shelves and aisles greet you at the chain’s flagship store in Mumbai’s Bandra Kurla Complex. Its branch in Juhu, known for its prime location and suburban Mumbai clientele, presents a similarly dismal picture.

Fresh stock hasn’t arrived for past three months at any of the Spinach stores, owned by Wadhawan Food Retail Pvt. Ltd, a Wadhawan Group company. “We don’t have any official communication on when the fresh stocks will come,” said Ganesh Thyagarajan, a manager at the Juhu store.

Outlets in Versova and Kalyan have already downed shutters. Another employee said on condition of anonymity that the firm was thinking of closing down more branches in coming weeks.

A spokesman for Wadhawan Food said, “The company is in the process of cost-cutting and consolidation, and looking at store-level profitability across the chain, which could entail some store closures.”

Wadhawan Food runs food and grocery supermarket stores under the brand names of Spinach in western and eastern India, Sabka Bazaar in the north and Smart Retail in the south. Mumbai also has stores under the brand Maratha Cooperative. The group has close to 180 supermarkets under various formats and has closed nearly 50 stores across the formats in the past year, according to people close to the company.

Mint reported on 6 September that Sabka Bazaar outlets had stopped receiving supplies. They are yet to resume.

Wadhawan Group is not the only one to have taken a hit. Over the past year, the sector has seen 1,600 supermarket of Subhiksha Trading Services Ltd down shutters nationwide after defaulting on loans, vendor payments and staff salaries.

Vishal Retail Ltd, with 170 outlets countrywide, is seeking to reschedule debt of around Rs730 crore. The correction, which started last year with retailers such as Aditya Birla Retail Ltd, which has food and grocery stores under the brand name More, RPG Group’s Spencers, Reliance Retail Ltd, Future Group’s Big Bazaar and Food Bazaar, is still claiming new victims.

The Wadhawan Group has businesses spread across real estate, retail, food and beverage, education, financial services and hospitality sectors.

“Following collapse of Lehman Brothers and the ensuing liquidity squeeze, the group has prioritized its funds for investments in core?businesses and retail lacked the investments,” said Narayanan Ramaswamy, executive director, retail advisory service, KPMG Advisory Services Pvt. Ltd.

Industry watchers agreed organized food and grocery retail was yet to find its feet in India.

“Other retail formats saw one store closing for every 20 that have opened. In food and grocery retail, the number of closures versus the opening of new outlets is higher,” said Anuj Puri, chairman and country head of property advisory Jones Lang LaSalle Meghraj.

Devangshu Dutta, chief executive of consultancy Third Eyesight, said retailers were still finding out the right size, positioning, demand and supply equation for stores.

“There is no stigma attached to store closures,” Dutta said. “If a location is unprofitable, companies take a call on rationalization and profitability, and decide on store locations.”

But Ramesh Viswanathan, executive director, CavinKare Group, put the onus on retailers and said they needed to grow out of the “neighbourhood store” mindset. “The principal challenge for modern retailers is to innovate to drive footfall and increase consumption,” he said.

According to The Daily Telegraph, Asda has devised a system for customers to “buy fabric conditioner from a vending machine which pumps the liquid from a large vat in the stockroom directly into a pouch”. The project aims to cut packaging costs and help reduce prices for consumers. The scheme is partially funded by the UK government’s anti-landfill agency Wrap.

A lot of debate was generated on retailwire.com (“Do it yourself all over again”). A number of people who were underwhelmed by the whole concept and questioned the value, including labelling the initiative “anecdotal” and “one-off” with “limited appeal”.

I feel somewhat differently. A journey of a thousand miles begins with a step. A plastic-free landscape begins with a refill. I understand the cynicism expressed, but don’t want to give in to it.

Yes, changing habits is difficult. But, hard as it is to believe, there was a time when families didn’t have kilos of daily garbage. Consumer goods companies, retailers, marketers changed that. And they achieved the change through sustained and dedicated effort over a several decades, until waste became the “cheapest” and easiest choice.

I think it’s time to reverse the thrust on that flywheel.

(Click here to read the Telegraph article.)

Raghavendra Kamath
Business Standard, Mumbai, February 12, 2010

Aigner, the German luxury brand, and Genesis Luxury, the up-market retailing arm of Genesis Colors, have ended their tie-up in the country, as their plans did not go as expected, said a person close to the development.

Genesis and Aigner had agreed in 2007 to import and distribute merchandise. The partnership ended last month. Genesis Luxury, which ran the Aigner stores in Mumbai and Delhi (three in all), has shut these, through mutual agreement.

Aigner, part of Etienne Aigner AG, hadn’t tied up with any other company, sources said. The company did not respond to emails from Business Standard.

When asked, Sanjay Kapoor, managing director, Genesis Luxury, said: “Yes, we have ended the marketing tie-up with Aigner in India, after successfully running the brand for three years.”

Kapoor denied any difference of opinion between the partners. “In fact, we have had a very cordial relationship with the brand. It is a pure business-related decision. And, we will be looking at bringing in other newer brands to India in the next few months,” he said.

Aigner entered India in 2004 on a tie-up with Sports Station India Pvt Ltd (SSIPL) and set up the first store in Delhi. SSIPL had plans to open three more stores in the country, but the partnership didn’t continue beyond 2007. Aigner then signed the deal with Genesis.

Aigner is not the only luxury brand in recent times to end its relationship with an Indian company. The Murjani Group, promoted by Vijay Murjani, parted ways with luxury brands such as Gucci, Bottega Veneta and Jimmy Choo as part of its plans to shift its focus to premium retailing from luxury retailing. Bottega Veneta and Jimmy Choo are now with Genesis.

In fact, half-a-dozen international brands have pulled out of their partnerships or from India in recent memory. Raymond, the apparel maker and retailer, ended its partnership with Italy’s GAS. Kishore Biyani’s Future Group ended a tie-up with Italian brands Replay and Etam.

Britain’s Marks and Spencer ended its franchisee agreement with NRI businessman V P Sharma’s Planet Retail and tied up with Mukesh Ambani’s Reliance Retail, as it could not expand the way it wanted.

"Typically, break-ups happen when there is any shortfall in the performance expected from both sides. From the international brand side, either enough sales were not happening or Indian firms found returns on investment too low,” says Devangshu Dutta, chief executive of Third Eyesight, a management consultancy.

However, Genesis has planned to open more stores under its luxury portfolio, including those of Jimmy Choo, Bottega Veneta and Just Cavali — in all, 10 to 12 stores each for these international luxury brands over the next three to five years. Also, 100 Tie Rack Landon stores and 50 Satya Paul accessory stores will be opened over the same period, to achieve a target of becoming a Rs 1,000-crore company in five years.

Recently, Genesis signed a joint venture with Burberry, the British luxury goods retailer, where it took a 49 per cent stake. The company plans to open stores in metropolitan cities.

Reporting by Aniruddha Basu; Editing by Ramya Venugopal

Reuters, Thu Feb 11, 2010

Utilisation levels are high and given the growth in domestic consumption it would be very encouraging if the allocation under TUFS is increased as textile makers are investing more," said Sunil Khandelwal, Chief Financial Officer at Alok Industries Ltd.

The textile industry had been battered by the economic slowdown for much of 2008/09 but has begun to recover in the past 2-3 quarters with major textile firms such as Alok Industries, Raymond and Century Textiles & Industries Ltd reporting higher sales and profits in Oct-Dec.

But analysts said that the government needs to quicken disbursement of funds as there was no clarity on how soon a unit can receive the funds under TUFS, which is essentially a low interest-rate loan.

"TUFS is not a grant, the interest waiver is what you are getting. A fundamental issue is to see how the funding is disbursed and how long it takes for the units to get the waiver," said Devangshu Dutta, chief executive, Third Eyesight, a textile consultancy.

The industry has also asked for removal of duties on man made fibres to increase utilisation in the country, CITI said in a statement.

Currently there is a ratio of 62:38 in the utilization of cotton and man-made fibres in the country, as against the global ratio of 40:60, it said.

VALUE ADDITION

Excise duty on man-made fibres had been increased from 4 percent to 8 percent in the last annual budget.

The industry has also asked that liquid fuels used by textile and clothing units for captive power generation be exempted from duties to encourage them to cut energy costs, said D.K. Nair, secretary general of CITI.

"The thought process needs to be on value addition rather than capturing percentages of low value items," Third Eyesight’s Dutta said.

Industry participants are also asking that export credit for textile and clothing units be provided at a uniform rate of 5 percent interest. Export credit is currently provided at about 8 percent interest.

"They may get more export benefits, but I don’t expect any major stimulus to be given this time. Overall the budget would be slightly conservative or negative," said an analyst from a Mumbai brokerage who declined to be named.

The budget will be presented on Feb 26.

An article in the San Francisco Chronicle sparked off a debate on whether ecologically friendly can be mainstream, whether customers will switch from traditional to eco-friendly fashions and if so, when. There is the view that eco-friendly products are necessarily niche and cannot match up in fashionability and affordability to ‘mainstream’ products.

I don’t think it is an either/or choice between styling and eco-friendly. To sell, eco-friendly merchandise absolutely MUST be comparable to or better than eco-unfriendly merchandise, both in style and quality.

Pricing is another story. The article also quotes Joslin Van Arsdale (founder of Eco Citizen, a San Francisco boutique devoted to Earth-friendly clothing) as saying, “When it comes to buying green or price, the general public will more likely choose the cheaper item on anything, whether it’s fashion or tomatoes.”

While most consumers will not willingly pay higher prices for eco-friendly merchandise, that may change as the cost of being eco-unfriendly goes up through awareness and legislation. There was a time when safety belts in cars were optional at an extra cost. No one would argue against paying the extra price for safety today.

Perhaps many of us would rather trash the planet cheaply because we may not feel the heat within our lifetimes. That is no reason that others, who feel more responsible, will allow that to happen indefinitely.

One way or the other, eco-friendly merchandise will compare in price, too.

Some of the parity will come from reducing the cost of eco-friendly stuff, but the bulk will probably happen because the cost of being eco-unfriendly will go up.

The original article is here – “Green fashion has new cachet“.