admin
March 11, 2012
Madhurima
Nandy, MINT
Bangalore,
March 11, 2012
Planet
Retail Pvt. Ltd, which sells a clutch of international clothing
and accessory brands in India, has shrunk both its expansion and
investment plans on the back of a weak global economy and slow
sales.
The retailer of Guess, Body Shop, Accessorize, Next and Nautica brands in India may also miss its 2015 break-even target.
Planet Retail, after a substantial restructuring and clean-up
exercise in 2010, embarked on an expansion plan not just for a
wider reach but also to bring in new brands and build existing
ones. All that is on hold now.
“The plan now is to restructure and reduce the pace of expansion across our brands and recast investment plans to half,” said chairman Ramesh Tainwala, adding that it shouldn’t be surprising if Planet Retail is unable to break even as planned by 2015. He didn’t disclose revenue details.
Planet Retail also has a licence to run a chain of Debenhams lifestyle stores in the country.
“Macro-environment issues such as rupee depreciation, weak retail sales in the last two quarters were not at par with expectations for most premium brands and the entry of FDI (foreign direct investment) in the retail sector not happening anytime soon, are some of the reasons that forced us to restructure business,” said Tainwala, who is also president, Asia-Pacific and West Asia, at Samsonite.
Many global brands in India have changed their pricing, positioning and sourcing strategies during the slowdown of 2008-09 to adapt to the local consumer palate, while some including Dockers and Springfield decided to exit the country.
Global brands that have survived and done reasonably well in India, such as Marks and Spencer, have incorporated some flexibility to adapt to the local market, said Devangshu Dutta, chief executive of retail consultancy firm Third Eyesight.
The UK-based retailer restructured prices and sales strategy to suit the Indian market three years ago, and decided to source locally, making it possible for the company to price its products competitively.
Marks and Spencer recently said it will continue to open stores in India and source locally. Six new stores were opened in 2011-12 and Marks and Spencer Reliance India Pvt. Ltd will continue to expand in the country as a priority market, a company spokesman said by email. Besides local sourcing and pricing, even designs have been adapted to India, he said.
Planet Retail’s global brands, on the other hand, are entirely imported.
The retailer has shrunk its investment plan of Rs200 crore by half and is deciding on whether it should focus its capital on existing brands or on a few strong ones such as Debenhams and Accessorize.
Retail sector analysts said that brands that come into India through licensing agreements, such as the brands Planet Retail sells, face challenges in terms of both pricing as well as their product mix.
Tainwala admitted that both pricing and positioning may have been an issue for some of Planet Retail’s brands in India, and these aspects are being reworked.
For instance, Next, which had 15 stores earlier, now has only two in Delhi. Its positioning is being widened from being a garments-only brand to include accessories. Planet Retail will open a full-format Next store in Pune that will have the look and feel of any of the brand’s UK stores.
“We will consolidate our brand portfolio and exit one-two brands if required. For both Next and Guess, we will do an honest evaluation of (the) brands’ potential over the coming months,” said Tainwala.
Another retail analyst, who didn’t want to be named, said premium brands such as Guess will need a substantial capital input to grow. “What largely went wrong with both Next and Guess is that both the brands were not positioned appropriately here and prices were way too high,” he said.
Planet Retail had intended to grow aggressively to 300 stores by 2014 from 80 now, but expansion will be scaled down now.
While international premium brands may be dealing with their unique problems in India, domestic brands have not downsized their expansion momentum despite sales slowing.
Jacob John, brand head, Louis Philippe, a premium menswear brand under Madura Fashion and Lifestyle, said the brand opened 40 stores in 2011, including some large ones of 3,000-10,000 sq. ft, despite sales dropping due to an inevitable price rise.
“We increased prices by almost 30% last year and may raise them further by 10% and we will remain aggressive on expansion plans this year too,” said John. Relatively, most domestic premium brands such as Louis Philippe have an entry-level pricing of Rs1,500 or below for a shirt and only compete with foreign brands for their high-end segments.
admin
March 11, 2012
Malini
Goyal, The Economic Times
New
Delhi, March 11, 2012
Satish
Kumar used to hate shopping. The 43-year-old techie from Delhi
found the crowds intimidating and the haggling tiresome. The fickleness
of his mother and wife jangled his nerves. Kumar would come back
from shopping in a foul mood.
To keep things simpler, the Kumar household divided its shopping chores a few years ago. His wife took care of shopping for veggies, clothing and household items. Kumar had the job of lugging the groceries from the kirana shop, even though Mrs Kumar prepared the monthly list of items to buy. And finally, Kumar called the shots on big ticket purchases like a TV or a fridge.
Of late though, things have changed. In January, Kumar stepped out with his family on an impromptu shopping spree in which he ended up splurging Rs. 50,000 at the Great India Place, one of the largest malls in the country. The shopping list: shoes, a warm jacket for the next winter and three formal shirts that he didn’t need but liked. While at it, the Kumar’s also bought new curtains and changed their mixer-grinder.
"Modern retail format is changing the way men shop," says Adrian Terron, VP, Nielsen India. "Traditionally, they do not succumb to sales, stick to their favourite brands and do not indulge in impulse buys. No longer so in India," he adds. Retail watchers contend that a combination of factors – better shopping environment, a wide variety of products and brands, nuclear households, better disposable incomes and a growing breed of metrosexual men – is making middle class Indian men shop like never before.
From apparels to accessories, gadgets to grooming products, their shopping list is expanding.
Why Do They Shop?
Damodar Mall, president, Food Bazaar, sees more and more men shopping. At least 40% of the shopping carts that are wheeled into the billing counter of Future’s high-end food retail chain, Foodhall, have a man paying the bill. With multiple shoppers from a family, bill sizes are typically 25% higher than a single shopper. "Self service modern store with comfortable environment is luring more men into the stores," says Mall.
The rising footfalls of male shoppers can be gauged by looking at the ever increasing display space for male grooming products at shopping malls. Companies like Garnier and Emami are tapping the fast growing market. In 2009, Garnier entered the male grooming segment with Garnier Men. Within three months, it became the second largest player in the men’s skin care market.
FMCG company Marico recently paid $100 million to acquire the male grooming products of Paras Brands from Reckitt Benckiser. Emami’s Fair & Handsome, targeted at men, is growing at 23% and Emami’s revenues from the product were Rs. 162 crore in 2011.
Bling Bling
Jewellry is another area that is doing brisk business. In an interview with ET last year, R Radhakrishnan, MD of GRT Jewellers said male jewellery accounted for 20-25% of total sales. Kolkata-based Shree Ganesh Jewellery has launched a men’s jewellery range under the brand, Gaja.
Not surprisingly, a Euromonitor 2011 study reports that India has overtaken the US to become the third largest men’s luxury jewellery market.
So, what has made the Indian man fall out of love with the couch and take to the shopping cart? The biggest reason: modern retail.
Malls today have everything under one roof. "It is no longer so physically exhausting. It has become lot more fun," says Kumar. With a range of stores and activities – from gadgets to furnishings to clothes, accessories, food and game zones – all available under one roof, solo shopping trips are fewer. "Earlier a man had to tag along and bear the drudgery if the store was not relevant to them. Today in a mall, there are options all under one roof which is making the difference," says Arvind Singhal, chairman, Technopak Advisors.
What Men Want
Remember the old Surf detergent campaign and the almost shrewish Lalitaji? Well, before modern retail started off in India, women shoppers ruled the shopping space, thanks to their better bargaining skills which mattered so much while dealing with mom and pop stores.
Today, "discounting is a lot more formalised," says Terron. From the end of season sale to 26th January bonanza, bargaining is no longer ad hoc and random. It is lot more structured, transparent, more pervasive and hence more acceptable for men today. Devangshu Dutta, CEO, Third Eyesight, says because the buying process is becoming complex and information led, deals and bargains are becoming a lot more mainstream.
[Article continued below the ad…]
admin
March 9, 2012
Shilpa Phadnis, The Times of India
Bangalore, March 9, 2012
Titan
Industries, which started as a watch brand in 1984, is taking
a fresh gamble-to turn into a full-scale lifestyle company. The
firm’s youth brand Fastrack will drive this transformation, an
effort partly to ensure that the parent brand Titan is shielded
from any risk. Fastrack is already into watches and eyewear, and
now it is looking at categories like bicycles, helmets, shoes
and apparel.
Titan’s play in the lifestyle category is similar to what US watch and accessory brand Fossil did — diversifying into eyewear, handbags, jewellery, shoes and apparel (in some geographies). Fastrack started as a sub-brand of Titan in 1998 targeting early jobbers, but is now a separate business unit. "Fastrack is the logical vanguard to present a range of lifestyle products since it targets the young — not only is this a large and growing population, they have a propensity to experiment with style, where Titan’s design advantage can be leveraged," said Devangshu Dutta, CEO of retail consultancy Third Eyesight.
Titan has picked categories where the market is fragmented and design is a key differentiator. It is betting on its marketing expertise that has built brands in categories where brands did not exist before, the best example being the Tanishq brand in jewellery. "Over 1 million two-wheelers are bought every month in India. With unorganized players currently driving the helmet business, we see large business potential. We are looking to launch helmets in the next financial year," said Ronnie Talati, VP and business head for Fastrack and New Brands.
Design leads fashion, so Fastrack will do the design and marketing in-house, and outsourcing manufacturing. "We want to source helmets from China. We still have to work out the logistics for bicycles," Talati said. Talati wants to make Fastrack a Rs 3,000 crore brand in the next 5 years.
admin
March 7, 2012
Priyanka
Golikeri , Daily News & Analysis (DNA)
Bangalore,
March 7, 2012
There
was a time when ready-to-eat and ready-to-make edible products
relating to India’s traditional cuisine were available only
at neighbourhood provision stores. Now, they are careening their
way into ultra-modern supermarkets / hypermarkets across India,
as if to give company to Western foods like Dutch Gouda and Edam,
and the Italian Parmigiano.
Take the Big Bazaar at Malleswaram in Bangalore for example. Right opposite the entrance, a wheel-cart, emblazoned with the Hinglish term “Banana Mandi”, sells traditional bananas like yalakki (yellow-skinned finger-sized bananas), nendran (big- sized plantains used in making crisps), red banana and poovan (small-sized). This mandi (Hindi for market) is run by the husband-wife couple Baburaj and Jyothi.
Four paces ahead, another kiosk — it is operated by Bhagyalakshmi Butter and Gulkand Store, a popular Bangalore outlet of 1953 vintage — sells bottles of syrupy-sweet gulkand (dried rose petal jam). Next up: a 30-square-feet kiosk run by Murugan Ghee and Butter, another well-known local store of 60 years’ standing,now peddling avakai (spicy mango pickle of Andhra Pradesh), puliogare mix (tamarind-and-lemon-flavoured rice), gongura pacchadi (herbal pickle), bisi bele bhaath (rice savoury) and vangibhaath powders, all stocked in transparent glass jars.
Step out and saunter a few hundred metres across to the Spar
Hypermarket. A similar sight greets you. Glass jars laden with
murabba and chunda (both mango pickles), pudina (mint) and putani
(fried chana dal) chutney powders enliven the food section. Trays
full of nipattu (disc shaped crispy snacks), dink (edible gum)
laddoos, and sakarpare (flour and sugar snacks) jostle for space.
There is a simple reason why mega-retailers stock traditional Indian food. It expands the customer base and builds loyalty, say retailers. And by absorbing well-known local stores into their fold, retail chains hope to ensure goodwill. Good PR, if you will.
While some neighbourhood vendors open kiosks within retail outlets, others supply their food items to retailers who then display them beside FMCG mainstays like noodles, chocolates and biscuits.
Thus, the outlet becomes a destination for wide-ranging grocery from pickles to international foods, says Venkateshwar Kumar, Big Bazaar’s vice-president in charge of south India operations. Gaurav Gupta, director, Deloitte India, says that local food items act as an additional product category for existing customers while bringing in new customers.
Furthermore, with the growing number of migrants in metros, outlets look to provide a “taste of home”, says Devangshu Dutta, CEO of Third Eyesight, a consulting firm. “This extends market share as new shoppers are targeted,” says Mohit Kampani, chief of merchandising and operations, Spencer’s Retail.
At the Spencer’s outlets, which vary from 2,000-50,000 square feet in size, the food-and-beverages (F&B) section occupies 60% of the floor space. Local fare like mathri (spicy and savory crackers), pinni (sweet dish from wheat flour), tapioca chips and sorpotel (non-vegetarian delicacy) started treading in over a year ago. “This is already making 3% contribution to the overall F&Bbusiness,” says Kampani.
Likewise, at Spar, F&B is a key category covering nearly one-third area in hypermarkets measuring 50,000-60,000 square feet, says Ponnu Subramanian, senior vice-president, merchandising (foods). “Traditional items are stocked on different shelves across the section.”
For local vendors, on the other hand, a presence within modern retail ensures wider reach. Since opening a 120-square-feet kiosk at Spar two years ago, U S Mahendar, managing partner of Hatti Kaapi, a chain serving South Indian filter coffee and snacks like bisi bele bhaathand khara bhaath, has seen a 40% growth in business each year. “Hypermarkets guarantee footfalls,” says Mahendar, adding that their Rs7-8 pricing for a cup is “minuscule” in a mall set-up and helps in pooling people.
Today, the Hatti Kaapi kiosk sells an average 1,500 cups on week
days; the count zooms up to 3,000 on weekends.
Jyothinathan, who mans the Murugan Ghee kiosk, says monthly sales
always exceed Rs10 lakh, with the average bill per customer exceeding
Rs200. “The footfalls are about 500 on week days and double
that on weekends.”
It’s not hunky dory all the way. Local vendors say often the rentals at retail chains are exorbitant and prevent their entry into newer malls. Going to every big retailer is not viable, says Mahendar. Why? Some retail chains, he says, demand a 30-40% share in profits “which is impossible for players like us who sell each cup for Rs7-8.”
For retailers, sourcing local food items has its own set of challenges. Traditional food processing industry is highly fragmented, say experts, with 75% of the units belonging to the unorganised sector. Moreover, some units neither have trained manpower nor clean manufacturing facilities to generate quality produce.
“This makes procurement of products tough. We have a team of trained manpower who visit and give guidance on food quality and new product lines,” says Spencer’s Kampani. Kumar says Big Bazaar has tie-ups with specialists in community food from where they source the products. “Most products are sourced locally which helps in keeping costs to a minimum. We also stock products from women entrepreneurs,” says a spokesperson from Bharti Retail which operates Easyday (neighbourhood stores) and Easyday Market (compact hypermarkets).
admin
March 5, 2012
The
Times of India
Bangalore,
March 5, 2012
Prepaid
cards have become the latest retail tool to keep consumers hooked
to brands. They offer convenience and safety, because customers
don’t have to carry cash, and they often come with a variety of
offers , including discounts.
Brands like Cafe Coffee Day, Pizza Hut, Provogue, Kaya, Fastrack, Gili and a host of others have launched prepaid cards. A prepaid card works like a debit card with a PIN number that can be redeemed at the brands’ outlets. The cards in India are based on the closed loop model – that is, they can be redeemed only at the brand’s stores. "When I have money loaded on the card, the tendency to come to the same place is higher," says K Ramakrishnan, marketing president at Cafe Coffee Day. The brand’s card Cafe Moments , launched this month, offers a 5% bonus on cards with a value of Rs 100 to Rs 499, 7% on Rs 500 to Rs 999 and 10% on Rs 1,000 and above.
A prepaid card obviates the need to pay cash every time, and it also enables faster accumulation of bonus points or other offers . Prepaid cards in India are currently being used more as gift cards. Some brands have used it to launch a promotion or a service. What the prepaid gift card did for Kaya was to generate incremental walk-ins ," says Suvodeep Das, marketing head at Kaya Skin Clinic. In Kaya prepaid cards, currency can be reloaded in multiples of Rs 500 to up to Rs 2 lakh. Kaya sells about 250-300 gift cards a month.
Global Prepaid Exchange recently estimated that the size of the organized prepaid gift card and gift voucher market in India is Rs 2,000 crore and would grow to Rs 8,000 crore by 2015. "The acceptance of gift cards in proportion to vouchers has increased significantly," says Pratap T P, chief marketing officer at QwikCilver Solutions , a provider of prepaid card solutions.
However, Devangshu Dutta, CEO of retail consultancy Third Eyesight, says growth in prepaid cards would be restricted by the fact that they can be used only at a particular brand’s outlets. "Also, a customer cannot claim the minimum residual value in the card. He will have to top it up to redeem it," he says.
