Nupur Anand, DNA (Daily News & Analysis)
Mumbai, March 13, 2013
Taste this: the organised (or upmarket) Indian cafe market is estimated to have notched up sales of $230 million (Rs1,246 crore) in 2012. And the figure is expected to bubble up to $410 million (Rs2,222 crore) by 2017, as per Technopak estimates.
No wonder, 5-7 more foreign players are keen to give the likes of Starbucks, Coffee Bean and Costa a run for their rupee income.
The identity of cafe kings eyeing India remains tightly guarded, but it is believed they are from Europe, South-east Asia, the UK and Australia.
Sunil Chaudhary, assistant vice-president of Tecnova, a retail consultancy that has been approached by a few foreign players, attributes the growing interest in India to “a combination of the Starbucks effect and the expectation that the market will double in five years”. They are all on the lookout for Indian partners, a task that is proving tough, according to retail consultancy firms.
Devangshu Dutta, CEO of Third Eyesight, a consulting and advisory firm, says that in the past one decade, the cafe has emerged as both a preferred hangout point and an informal meeting place in India.
This, he says, provides headroom for growth. “The growing propensity to spend and the growing eating-out habit in urban India is another attraction for foreign chains. Besides tea and coffee, other ‘experimental’ drinks such as bubble tea, a south Asian specialty, will be offered at cafes.”
Foreign chains’ interest extends beyond the cafe segment to the wider quick service restaurant (QSR) market, says Arvind Singhal, chairman of Technopak Advisors. “That’s understandable because the food market is still underdeveloped, compared to other countries. Niches like Chinese food, bread and sandwich are particularly popular.”
Most players are keen on entering the Indian QSR segment via the franchisee route. QSRs account for 18% of the $74 billion (Rs4 lakh crore) informal eat-out sector in India, including restaurants that serve traditional Indian snacks like idli, dosa and chaat, as per Euromonitor estimates.
New Delhi, March 11, 2013
a company that accelerates innovations for sustainability in low
income markets, is launching its new offering, Startup Services,
in partnership with Deutsche Gesellschaft für Internationale
Zusammenarbeit (GIZ). Startup Services is aimed at developing
and refining the business models of enterprises with products
and services that improve the lives of low-income people in India.
Often, when entrepreneurs bring innovations such as solar lamps or low-cost education to market, they face several barriers that stem from a lack of peer and expert support networks, and a difficulty in engaging with mentors and service providers. Ennovent’s Startup Services aims to address these challenges in an affordable and accessible manner.
Compared to a traditional brick and mortar incubator, Ennovent’s Startup Services will offer a mix of virtual and on the ground support through a diverse group of expert mentors, sessions and workshops.
Ennovent’s Startup Services will initially be focused on entrepreneurs in untapped smaller North Indian Tier 2 and Tier 3 cities, such as Jaipur, Kanpur and Chandigarh. In these smaller, lower-income cities, such services are currently not available. In turn, many high-potential enterprises end up developing models that are not designed to be scaled effectively and thereby fail to create a sustainable impact.
To provide support for early-stage entrepreneurs, Ennovent will create local Hubs of enterprises in different cities, which will collaborate via an online platform, the Ennovent Network, to share knowledge, insights, challenges and other resources. The Hubs will provide hands-on mentoring support, workshops and short training sessions with industry leaders. Customized mentoring modules will also be provided to meet the specific needs of early-stage entrepreneurs.
“Mentors, with their experience, enable entrepreneurs to challenge and clarify basic assumptions on which he or she may be making critical decisions,” notes Devangshu Dutta, Managing Partner at PVC Partners as well as CEO of Third Eyesight. “The mentor can also add credibility to an organization and open new doors for the entrepreneur. Ennovent’s Startup Services that aims to focus on the facilitation of hands-on support for early stage entrepreneurs, especially for those working in Tier 2 and Tier 3 cities is, therefore, a great development for the startup ecosystem in India”.
Stephanie Bauer, Advisor of Sustainable Economic Development at GIZ adds, “Ennovent brings forth a unique network based approach for providing support to early stage enterprises. We are very excited about this partnership and look forward to accelerating the development of high potential impact-focused startups”.
While many social enterprises with innovations for low-income markets exist in India, recent studies indicate that only 1 – 2% get sufficient funding to scale operations for sustainable impact. Through their Startup Services, Ennovent hopes to help these enterprises refine their business models and become investor ready by leveraging both on-ground and network based support.
Startup Services will be hosting a wide range of workshops and sessions from March onwards. Mentors, investors, entrepreneurs and other key market players are invited to join.
Raghavendra Kamath, Business Standard
Mumbai, March 7, 2013
Aditya Birla Group’s retail chain ‘More’, which closed more stores than it opened in the last four years, is changing tack. Its new strategy: Open more stores but only those that work with customers.
‘More’, which closed nearly 150 supermarkets in the last four years, is looking at opening 100 supermarkets every year in the next three years to bolster its retail presence. It is also planning to open half a dozen hypermarkets next financial year. It opened five of them this financial year. More currently has 496 supermarkets and 14 hypermarkets
Birla had made a big bang start to its retail foray by acquiring the 172 store-strong South based retail chain Trinethra Super Retail in 2007. Though Birla had plans to set up 1,000 stores at an investment of Rs 9,000 crore by 2010, the slowdown upset all its calculations.
Left with unviable stores and dwindling sales, the chain closed over 100 loss-making stores in 2009 and 2010 and another 40 last year.
"Aditya Birla Retail made an inorganic foray into retail and aggressively expanded the stores which put pressure on operations. But then, all retailers closed stores that were not working during the slowdown," says Devangshu Dutta, chief executive of Third Eyesight, a retail consultancy.
‘More’ initially focused on supermarkets but later shifted focus towards hypermarkets where stock turns can be managed and higher margin products can be pushed, say consultants.
The retail chain wanted to achieve break even by FY 2013, but the jury is still out on whether it will be profitable this year, given that it made losses of Rs 535 crore on revenues of Rs 1,029 crore in the last financial year. Pranab Barua, business director, apparel and retail, Aditya Birla group, says "More has seen high single-digit growth in the current financial year and the trend will continue next year as well. "In the current year, we expect to achieve a topline growth of 30 per cent as compared to the previous year," he adds.
Russel Berman, CEO, hypermarkets, Aditya Birla Retail, says the ‘More’ network is store contribution positive. " We are very close to be comfortable with the model; hence we are opening more stores", he adds.
However, Third Eyesight’s Dutta says hypermarket chains are yet to get the right model for themselves as customers and markets are fast evolving in the country. "Hypermarkets need humongous investment. You will achieve huge success if you get it right. But if you make mistakes, that can be very expensive," he adds.
As it becomes aggressive again, ‘More’ doesn’t want to make the same mistakes it made in the past, especially in supermarkets. "The market for supermarkets exists only if you put them at the right location and have right properties," says Vishak Kumar, CEO, supermarkets, Aditya Birla Retail. "We shut stores which were not making money and properties were expensive", Kumar says.
Kumar says ‘More’ supermarkets now give better freshness and convenience than others. All its stores are linked to ‘flow-through’ distribution centres which mean the stock comes in and goes out in quick succession.
"We keep enough merchandise for a couple of days so that freshness of merchandise can be maintained. But we also get daily supplies to maintain adequate stocks," he adds.
‘More’ supermarkets range from 1,200 sq ft to 6,000 sq ft. "We do not open a 6,000 sq ft store just because we get it for Rs 25 or Rs 30 per sq ft," says an executive from Aditya Birla Retail.
For hypermarkets, it is doing catchment surveys among focus groups in the one to five km radius of the stores to find out what exactly the consumers in that area are looking for.
These surveys also helped the chain to differentiate the stores from each other. For instance, at the store in Bangalore’s Mahadevpura which has a cosmopolitan crowd, it offers more non-vegetarian and bakery products in the day-to-day needs category. But at the Bull Temple store in the same city where the majority of customers are traditional Kannadigas, it keeps puja flowers, rice and local fruits and vegetables.
The floor space of the recently opened Jayanagar store, which is three km away from the one in Bull Temple, is 30,000 square feet, as against the 50,0000 sq ft stores in Mahadevpura/ Bull Temple. Its offering comprises grocery and general merchandise, unlike the other two stores which house consumer durables and apparel as well.
"We are trying to map their needs more closely and offer what they want," says Berman.
But ‘More’ has a lot of competition in this customisation strategy, given that Kishore Biyani’s Big Bazaar, Tata’s Star Bazaar and others are also doing a lot of things to attract customers.
Big Bazaar has launched a project called Seva in its Rajaji Nagar store in Bangalore, where it has grinders for wheat, soya or ragi and help make multi-grain floor. It also helps shoppers cut vegetables at no extra cost. The store also has counters that help shoppers with payment of utility bills.
Big Bazaar plans to expand these services across its 166 stores. On its part, Star Bazaar is the first one to have live kitchens and is also looking at having community foods at its stores .
But More has an edge in apparel, a high margin business, due to its association with group company Madura Fashion & Lifestyle which has brands such as Louise Philippe and Van Heusen. ‘More’ hypermarkets sell a lot of this apparel.