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April 7, 2014
Bindu D. Menon, The Hindu Businessline
Mumbai, April 7, 2014
When it comes to retail trade, there seems to be room for negotiation in BJP’s 2014 manifesto.
From being “open” to retail trade in 2004’s vision document to a total blanket ban to FDI in retail in 2009; the party’s latest poll manifesto states that it is “open to FDI in job creating sectors but against FDI in multi-brand retail trade”.
Trade watchers point out that the manifesto should be seen as a political document rather than an economic one and with the party being largely seen as pro-business, it is likely to bring changes in the current FDI policy particularly in retail once voted to power.
Barring multi-brand retail sector, FDI will be allowed in sectors that allow job creation, says the manifesto. The party also said it would make the functioning of the Foreign Investment Promotion Board (FIPB) “more efficient and investor-friendly”.
However, industry sources said the party may soften its stance and allow FDI in retail but with riders. They pointed that an indication of this softening can be seen in a speech by BJP’s Prime Ministerial candidate Narendra Modi given in February where he made strong pitch for use of technology in retail sector.
Arvind Singhal, Chairman, Technopak, a retail consulting firm, said, “The manifesto is a document of political convenience. Almost all parties want to woo voters and the BJP is no exception. Having said that, once the party comes to power it is unlikely to remain silent on the subject. BJP Government in its past avatar has been highly liberal with business. We see room for negotiation in retail as well”.
A Deloitte report notes that emerging markets enjoy strong demand and retailers based in India, Brazil and Russia continued to see strong consumer demand.
“Economically, India appears to be on a low growth trajectory largely due to the astronomical growth turning out to be unsustainable, leading to bottlenecks that created inflation. However, as an emerging market, India promises a positive long-term outlook for global as well as Indian retailers. Many reforms pertaining to the retail sector of the country are likely to take a speedy implementation route post the upcoming elections,” Gaurav Gupta, Senior Director, Deloitte Touche Tohmatsu India, had said in a report.
Our Mumbai Bureau adds: Devangshu Dutta, retail consultant, said that the “explicit” declaration is not only a major disappointment for international multi-brand retailers that are looking to invest in India, but also for large Indian multi-brand businesses that might be looking at attracting equity.
However, experts are also of the opinion that this single agenda would not impact the party’s chances, because there are several other issues that make for perhaps bigger and more immediate concerns for the electorate in this election.
(Sourced from The Hindu Businessline.)
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April 5, 2014
Fairy Dharawat, Point of Purchase Online Network
Mumbai, April 5, 2014
Retail consultants and shopper marketing experts share their take on the retail trends in the Indian beverages market and where it’s headed.
"The growth in the beverage market, both in-home and out-of-home consumption, is being driven by rising incomes as well as lifestyles changes. Packaged drinks in bottles or tetrapacks are boosted by the consumers’ desire to ensure hygiene and partly by convenience. The tipping point in consumption happens when these drinks become part of the lifestyle, as has happened for tea and coffee, and that is what most beverage companies aim to do, both by deepening penetration and availability and by way of their marketing campaigns." – Devangshu Dutta, Chief Executive, Third Eyesight
"The nutritional drinks are occupying far greater share of shelf now and the retail off-take ratio has also grown significantly even in non-pharma stores. It would be rewarding for the marketers, however, to expand the target segment definition to sustain the momentum. The current focus is primarily on young health conscious males." – Kamaljit Anand, MD, KiE Square Consulting Pvt Ltd
"The industry is seeing a transition as there is shift in the consumers’ preference for non-carbonated fruit beverages, thanks to obesity and other health related issues. There is huge potential and scope in the industry resulting in a lot of investment and growth at the point of purchase." – Harsh Nayak, Regional Director Posterscope Asia Pacific
"With the temperatures rising, the heat on branding and brand promotions has begun in the beverages category. We are seeing price wars, introduction of new SKUs and surely expect new variants. The shopper has multiple options to choose from, right from powdered, to concentrated, to non-fizz to fizz drinks and the list can go on. It would be interesting to see how the shopper behaves and how beverage players will woo the shoppers." – Bharat Virmani, Director, Saatchi & Saatchi X
(Sourced from Point of Purchase Online Network.)
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April 5, 2014
Vaishnavi Bala, Financial Express
Mumbai, April 5, 2014
Last
year, Kishore Biyani’s Future Group closed about 40% of its
food and grocery chain of Food Bazaar stores that were not performing
well, even as it continues to undergo restructuring in neighbourhood
stores, KB’s FairPrice and the home-furnishing chain, HomeTown,
apart from Food Bazaar.
While Future Retail (FRL) shut down 18 supermarkets, it opened
only one store last year. At the end of December, the company
had 26 stores. With a cut in consumption spends resulting in slowing
same store sales growth — at 3.3% in the three months to
December — and rising cost of operations, FRL is revamping
the food and grocery space now.
The company is currently renovating existing stores in terms
of design and product mix by exiting slow-moving categories, going
in for visual appeal. The format is also allocating space for
categories that have higher margins, for example in-house bakery.
“With the company laying more emphasis on Big Bazaar Direct,
there is a sort of reorganisation that is taking place. Big Bazaar
Direct will have lower operational costs than running Food Bazaar.
So they are clear to keep only those Food Bazaar stores that are
operationally profitable,” says Prashant Agarwal, joint managing
director, Wazir Advisors. Big Bazaar Direct is a franchisee-based
model where franchisees personally visit consumers and take orders
for products.
At the end of December, Future Retail had a total debt of R5,065
crore. The company raked in revenue of R2,200 crore, with a net
profit of R20 crore in the December quarter. These numbers are
not comparable. Future Retail did not respond to an email seeking
details on its format.
Food and grocery retailing, which forms the largest chunk of organised retail, is a tough business to be in. Food and grocery typically has a gross margin of 10-15%, compared to 40-50% for apparels. “Supermarket chains are struggling to create a profitable model. At the store level, it can take 12-18 months to break-even but is taking much longer now,” says Devangshu Dutta, chief executive of retail consultancy Third Eyesight.
With many challenges at hand, retail baron Biyani has been equally ruthless with his other food and grocery chain — KB’s Fairprice — closing about 35 stores of the neighbourhood grocery store format last year. Most of these stores are from the Big Apple chain of food and grocery stores in New Delhi that the group acquired in 2012. The company closed these stores as they were not profitable and were located in more expensive locations, thereby increasing rental costs. At present, the company has a total of 175 Fairprice stores.
According to Fairprice CEO K Radhakrishnan, “The company is now repositioning itself for the lower-middle class segment. We are not keen on serving the same customer who also goes to a supermarket or a hypermarket. We want to go one level lower to the lower-lower middle class.”
“We are making some changes in our new stores that will have a self-service option, with better visual appeal and systematic stacking of products,” he said.
Apart from these two food and grocery formats, the company is also revamping the HomeTown format by streamlining its supply chain management and exiting categories like heavy furnishing. “The format will be in a position to be profitable at the Ebitda level next year," according to Future Group president (retail strategy) Rajan Malhotra. This comes after FRL managed to turnaround its eZone format last year that turned Ebitda positive in the April-June 2013 quarter.
The rejig in the formats follow a big-bang round of restructuring where Biyani sold Pantaloons to Aditya Birla Nuvo in 2012, divested a 53% stake in consumer finance company Future Capital Holdings and signed term sheets to exit both the insurance businesses of Future Generali India Life Insurance and Future Generali India General Insurance.
(Sourced from Financial Express .)
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April 3, 2014
Fashionunited.com
April 3, 2014
After starting delivery services to Indian patrons through its global site, American lifestyle clothing retailer Gap is now inching closer to them by partnering with ecommerce portal Myntra. As per reports, talks are on to finalize a deal with Myntra to launch its online store in India.
It may be recalled that the largest casual wear retailer in the US is also said to be in talks with Arvind Lifestyle Brands to open brick-and-mortar stores in the country.
According to a Third Eyesight survey, eight US department stores and brands are currently shipping their products to India. Experts feel that this strategy being adopted by most foreign brands and retailers indicate their strategy to test the market before making a formal entry.
If the Gap’s deal gets through, Myntra may handle the operations of San Francisco-based Gap’s online store. Both offline and online stores may be launched simultaneously early next year. After securing funding from PE investors recently, Myntra is racing ahead to be the leader of India’s ecommerce store amid tough competition from rivals like Flipkart and Jabong. Sources say the fashion e-tailer, which is projecting sales (gross merchandise value) of around Rs 2,000 crores this fiscal, may also partner with the Dutch clothing brand Scotch & Soda.
The e-tailer, currently at half the sales figure of Shoppers Stop and Lifestyle, aims to match their figures in another 15 months. While on one hand, the portal is looking at becoming India’s largest retailer, on the other, it would utilize the raised amount to increase mobile-led services, while focusing on expansion of in-house fashion brands. The company aims to reach a turnover of Rs 1,500 crores in fiscal 2015 and grow to Rs 10,000 crores in the next three to four years.
(Sourced from Fashionunited.)
