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March 11, 2013
New Delhi, March 11, 2013
Ennovent,
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.
Learn more about Ennovent Startup Services
admin
March 7, 2013
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.
admin
February 26, 2013
Liz
Morrell, Retail Week
February
26, 2013
India
has long been an attractive target for international expansion
thanks to its size and a young, increasingly affluent population.
Retailers have been extolling its merits for some time, but it’s
a market where UK retailers have been hampered by everything from
regulatory restrictions to cultural challenges.
India closed off foreign direct investment (FDI) into retail
operations in the second half of the 1990s, and although it began
reopening the sector to FDI in 2006, it has taken until this year
for the country to announce changes that may finally make a difference
to UK retailers.
In November last year, the Indian cabinet passed a bill to allow, for the first time, the opportunity for single brand retailers to enter the market alone rather than with a partner.
While retailers that sell more than one brand – such as Tesco
– cannot own more than 51% of their Indian operations, single
brand outfits such as luxury fashion retailer Mulberry – which
already has a presence in the country – could now own 100% of
its business.
Political considerations
Within weeks, however, the bill was on hold after several political
parties opposed the decision. Planet Retail retail analyst Manu
Ghai says that politicians are trying to protect traditional retailers
in the country.
PricewaterhouseCoopers chief retail adviser Christine Cross agrees,
saying: "There is a paranoia in the local market." Many
smaller Indian retailers are worried about being put out of business
by their Western counterparts. The Indian government has been
nothing if not indecisive on the issue. In January, it reverted
to its November decision, meaning single brand retailers are now
able to enter the market by themselves. "The recent announcements
have led to an expectation that a lot of the luxury brands will
announce their entry or accelerate their growth plans for India,"
says PricewaterhouseCoopers director of corporate finance mergers
and acquisitions Alex Priestley.
Luxury houses that have been reluctant to partner with domestic
players in the past now have more options, and brands already
in India through joint ventures or partnerships may look to gain
more control over their operations.
A number of retailers are already in the Indian market by virtue
of working with franchise partners. But the policy change is likely
to prompt brands such as Ikea – the largest single brand retailer
in the world – to accelerate plans. "As of now, India is
a very interesting potential retail market for the Ikea Group,"
says an Ikea spokeswoman. "We are currently evaluating the
requirements of the FDI decision and hope to be able to present
more information shortly about our possibilities to establish
retail operations in the country once the conditions are right."
Partners preferred
But other experts believe retailers will still prefer to use
partners. "From the retailers we speak and work with, the
majority will probably still think about doing it with a partner
because it’s not just the regulations – it’s about life on the
ground too," says Julie Carlyle, head of the UK retail team
at Ernst & Young.
And that provides its own challenges – good partners are hard
to find. "There aren’t that many of them and they are being
wooed," says Ernst & Young head of fraud investigation
and dispute services group John Smart.
A decision on multibrand FDI, which would open up the market
to yet more retailers, is likely to be another couple of years
at least. This is further holding up the expansion plans of retailers
such as Tesco which currently operates 15 Star Bazaar hypermarket
stores under a franchise agreement with Trent – part of the Tata
Group conglomerate – but had talked of about 50 at its launch
in 2008.
Walmart, Carrefour and Metro have all also made in-roads into
India, setting up wholesale operations, dedicated supply bases
and other back-office functions, according to Priestley. But most
of this activity so far is in preparation for future growth. "While
of some benefit to their global operations, this is likely to
be all in readiness for when or if the multibrand retail environment
is opened up," he says.
But FDI restrictions aren’t the only challenges retailers face.
Understanding the regulatory framework, including tax laws, is
essential and by no means easy.
Many retailers also underestimate the bureaucracy involved, with
regional as well as central authority permissions required for
simple processes such as opening stores.
There can also be a tendency to simply underestimate the challenges
the sheer size of the country brings, which is reflected most
acutely in a poor supply chain infrastructure. "The distribution
infrastructure is pretty torturous – especially for chilled and
frozen food which further north is practically non-existent,"
says Cross.
There is also an increased risk of shrinkage according to Smart.
"There are always shrinkage risks in the supply chain, but
there are slightly more risks around intellectual property protection
in India because there are lots of small outlets where your product
can be diverted to," he says.
The scale of the country also brings the challenge of different
tastes, which vary widely across India. "Its continental
scale, as well as the mix of languages and cultures, makes it
as complex as the EU, or even more so," says Devangshu Dutta,
chief executive of Third Eyesight, which has helped a number of
UK brands enter the market. "Retailers that have been prepared
for this reality have done better in the country than those that
have taken a cookie-cutter approach," he says.
In contrast, those that performed the worst tried to impose their
global standards for everything onto the Indian business.
Insurmountable difficulties?
There is a concern that retailers could grow bored of the difficulties
of the market and turn their attentions and investment elsewhere
– something Ikea has previously hinted at – but Ghai says that
would be a foolish move. "It’s a vast, growing market with
a high spend. It’s going to take another couple of years to get
to where developed countries were in the 1970s or 1980s, but it’s
growing quickly and retailers really can’t ignore it," she
says.
Dutta says India’s track record speaks for itself. A few retailers
may have exited the market over the past two decades, but they
are a tiny fraction of the number that have entered.
"If a retailer approaches India as a market with low-hanging
fruits, they will be disappointed. India needs to be approached
with a long-term view on sales and investment," Dutta says.
India’s size alone makes it worth the effort – it may not be an easy market to break into, but for those that manage it, there are some big prizes to be won.
UK RETAILERS IN INDIA
– Marks & Spencer has 25 stores with its partner Reliance
Retail, opening around a store a month
– Mothercare boasts 74 stores in 17 cities, around half of which
are franchise and half with its joint venture partner DLF brands.
Has plans for 200 stores by 2015.
– Next has a wholly owned call centre in India and began trading
online last year
– Debenhams has a franchise store in Delhi and has pledged further
expansion
– French Connection Has more than 25 stores through its licensee
Brand Marketing India. More are planned
– Hamleys has stores in Mumbai and Chennai
– Accessorize has nearly 20 stores in India including six in Mumbai
– Austin Reed Is present in 17 Shoppers Stop stores.
– Clarks Has opened its first exclusive store in India in New
Delhi last April, having first entered the market in 2005
admin
February 26, 2013
Ashish K Tiwari & Nupur Anand, DNA (Daily News & Analysis)
Mumbai, February 26, 2013
Imagine
walking into a McDonald’s outlet for a McSpicy Paneer burger
and also getting to pick up a cup of cappuccino from a Cafe Coffee
Day (CCD) counter inside.
Going by a buzz, McDonald’s and CCD operators in India could
very well team up to create co-located stores.
Officials of both companies denied the move.
“There has been no move to tie up with or create associations
with Café Coffee Day or any other brand in India presently,”
said Smita Jatia, managing director, Hardcastle Restaurants Pvt
Ltd (McDonald’s west & south India operations).
K Ramakrishnan, president – marketing, Café Coffee Day, also refuted any such collaboration being worked out with McDonald’s.
Industry sources, however, say it makes sense for quick service restaurants (QSRs) to operate in a co-location format with rival brands that offer complementary product lines.
Call it the ‘frenemy format’, if you please. The least it can do for the players is help exploit synergies and increase footfalls and conversions by building on each other’s strengths and creating a fulfilling experience for customers.
“This may be for sharing property and floor space, for better supply chain management or for other franchisee synergies,” said Arvind Singhal, chairman, Technopak Advisors.
A recent collaboration between cafe chain Braista Lavazza and Mumbai based ice-cream chain Hokey Pokey is a case in point. Under the tie-up, those visiting Barista outlets can also savour ice cream flavours specifically launched for the cafe chain, said Rohan Mirchandani, co-founder, Hokey Pokey.
But there’s a caveat, said Devangshu Dutta, chief executive of consulting and advisory firm Third Eyesight. “Such offerings can work in certain catchment areas… But in case there is a conflict between what is being offered, then a format like this will not work.”
Devangshu Dutta
February 24, 2013
Luxury is an ill-defined concept. There is no specific line or limit of price, quality or availability that separates the luxurious from all that is not.
However, like other similarly intangible attributes such as power or grace, we all immediately recognise luxury when we experience it.
In fact, experience — vague as that may sound — is key to differentiating luxury, more than the tangible product being consumed. It’s not just the person’s own direct sensory experience, but also the prestige and status granted by others around her or him that creates the luxury experience.
Surely, with such intangible notions of experience, power and prestige, luxury brands should be among the most influential in the market. They should be pioneers that set the tone for change in improving retail management practices, upping customer service standards, driving quantum leaps in quality.
But is it so? The response from the rest of the retail sector may not quite be “meh”, but I suspect that it would not be far off.
There are strong reasons why luxury brands would have a lower influence as benchmarks in India and why, in fact, they may draw in more influence from the market themselves.
Market presence and location
As an example, in physical presence, luxury brands seem to demonstrate a delayed response to changes in the market, both in terms of market entry and location selection.
Prior to the entry of global brands, luxury products and services in India were naturally defined by niche, largely owner-managed businesses. Business scale was curtailed by internal limitations, and due to the small size, its market reach was also limited. While there were some designer brands that would occasionally get copied by mid-priced retailers, by and large luxury brands lived in their own separate bubble, with little or no influence on the heaving mass of the market.
In contrast, in the Western economies, from where many of today’s luxury brands originate, they are looked up to for inspiration. So, it is natural to expect Western luxury brands to lead the charge into the newly emerging modern retail economy of India. However, according to Third Eyesight’s research of international fashion and accessory brands in India, in the last 25 years it is mid-priced and premium brands that have opened the market. It is only in the last 10 years, well after the economic and retail growth was underway, that luxury brands stepped up their presence.
Sure, during the so-called “retail boom” from 2004, luxury brands went up to one-quarter of all international fashion and accessory brands present in the market. Then, when practically the whole world was in a recessionary mood, and mid-priced and premium brands took a call to defer their India launch plans, luxury brands pushed ahead. In 2009, luxury fashion brand launches accounted for two-third of all foreign fashion brands launched in India. Maybe the brand principals felt that this market could take on the burden of slowing growth elsewhere, or perhaps it was their Indian counterparts who were the source of optimism. Either way, the optimism took a hit in 2010 and 2011 when it was luxury brands that became cautious.
In terms of store openings and location selection too, luxury brands seem to have waited for the overall market to upgrade itself, and have then latched on to that growth. Previously luxury brand stores, such as there were, largely restricted their presence to five-star hotel shopping arcades, while a few took up non-descript sites as they were confident of being destinations in their own right or clustered together to create a precious few bohemian locations in surroundings that were far from luxurious. As modern shopping centres emerged in recent years, these presented an environment where rich consumers — especially the ‘new’ rich — could flock to buy globally benchmarked lifestyle statements. While these were mainly targeted at mid-market to premium brands, some of them are now even attracting designer brands such as Canali at Mumbai’s Palladium mall rubbing shoulders with Zara. These new luxury stores in mid-market or premium locations are performing better than the original “luxury” sites.
Thus, in terms of expressing confidence in the market, luxury brands seem to be following market trends rather than leading them. And far from being the anchors to create demand, they seem to be following where the demand goes.
Design and product development
The most important impact that luxury brands could have on the market is by influencing product design. This fashion trickle-down is supposed to work in two ways: one, through “inspiring” knock-offs by cheaper brands; two, making luxury customers act as opinion leaders and trend-setters for other consumers.
However, various factors dilute the luxury brands’ product and design influence in India: the preponderance of domestic (“ethnic”) style and colour, especially in womenswear, the existing domestic variety in products, the flood of premium (non-luxury) international brands and a customer base that is oblivious to the difference between the premium and luxury segments. In spite of their small size, Indian luxury and designer brands possibly have a larger direct impact, not to mention the massive Bollywood machine that drives mainstream fashion trends on a day-to-day basis. The international luxury giants are conspicuous by their small influence.
In fact, increasingly the influence is flowing the other way. A few luxury brands have attempted to create India-specific items to give the customer what they might want. Some of these may be indulging in superficial pandering such as putting an Indian image on a global product, but others have created Indian products that genuinely reflect what the brand stands for. While some use India as a production sweatshop to minimise the cost of high-skills jobs, others are now beginning to use Indian crafts to design products that are relevant to other global markets. A few examples, without passing judgement on which category they fit into, include: Lladro’s Spirit of India collection, the Hermès sari, the Jimmy Choo “Chandra” clutch bag, Louis Vuitton’s Diwali collection and Canali’s nawab jacket.
Slow, but not yet steady
Another issue with India is the sheer numbers, or the lack thereof!
China’s GDP is about four times the size of India’s but its luxury market size is estimated to be six times that of India. There are 1.7 million households in China that meet the high net-worth criteria, as compared to 125,000 in India. What’s more, according to industry estimates, only about 30 per cent of luxury consumers in China are actually wealthy, while the overwhelming majority are people with mid-market incomes who are given to conspicuous consumption, whether buying luxury goods for themselves or as gifts.
Indian consumers also have a penchant for buying overseas rather than shopping from the same brands’ stores in India. This is not just due to higher costs and import duties in India, but because of wider and more current selections of merchandise in stores overseas. Indians’ luxury shopping destinations include the usual suspects: London, New York, Paris, Milan, Singapore and Dubai. This has meant that while luxury brands recognise Indians as a large, emerging base of customers, for most brands India itself remains an operating market for the future.
Having said that, when compared to any other sector of business, luxury brands in India probably get the most media coverage for every rupee of sales earned. Although they are a small fraction of the sales, luxury brands rule in terms of column centimetres or telecast seconds. The coverage is not restricted to consumer-oriented media such as lifestyle magazines or mainstream newspapers, individual luxury brands are also extensively covered in business media.
One may argue that such is the nature of luxury: this disproportionate visibility and share of mind happen because luxury is not just aspirational, but inspirational. However, that inspiration and influence is yet to become apparent in the business at large. Until we see significantly larger numbers of upper-middle-income customers in India, luxury brands will find it difficult to expand their reach beyond the small base of ultra-rich consumers. The aspiration and price gap is just too wide for the Indian middle class, and there are very few who will emulate their Chinese counterparts and save up a year’s salary for a single luxury item.
And so…
One thing is beyond doubt: the luxury sector in India is undergoing significant change. We could even say it is in active ferment. There has never been so much interest among so many people, or so many brands so widely promoted, as now.
The question is still open on whether it is a good ferment such as the one that produces wine from raw grape juice and fine cheese from plain curds, or the unguided rot that results in a putrid, smelly mess unfit for consumption.
My bet is on the first possibility. In the short term, the luxury business appears to be a mess, littered with fractured partnerships and bleeding financial statements. But the brew needs time to mature. Gradually, as the luxury segment matures along with the rest of the market, we will see the influence trickling down into other segments. But remember, the finest brews do not only impart their flavour to the cask, but imbibe the cask’s characteristics into themselves. So it is with luxury and the Indian market. The message that we have given many other international businesses seems to hold doubly true for the global purveyors of influence, the luxury brands: “As much as you think you would change India, India will change you.”
