admin
September 7, 2015
Deepti
Chaudhary, Forbes India
Bengaluru,
7 September 2015
One
look at Dilip Kapur and you will know he wears his brand proudly
on his sleeve: Or, in his case, carries it on his arm. “It’s
like carrying a story, an emotional bond,” says the 67-year-old,
pointing to his Hidesign handbag which, he tells us, is at least
20 years old.
The promoter’s sentiment also speaks of the Rs 160-crore company’s ultimate goal—to emerge as a lifestyle brand that touches all aspects of a customer’s life. And its efforts over nearly four decades have been trained towards that. The last two years have been particularly busy as it delivered several ‘firsts’. For instance, the Puducherry-based leather firm unveiled its footwear collection for men and women; it launched sunglasses and also started offering discounts for the first time ever.
It has also set in place plans for the next five years, says Kapur, the effervescent founder of Hidesign, adding that the brand has to go beyond bags, the product group with which it is most closely associated. “We realise that the biggest hurdle in the development of a brand is to get stuck on one product. Gucci, Louis Vuitton… they all went beyond bags. I don’t want Hidesign to be just a bag brand, it has to extend into a lifestyle brand,” he says. Over the next two years, the footwear line is expected to contribute 12-15 percent of the company’s turnover. Hidesign clocked revenues of over Rs 160 crore in FY2015. It has also posted year-on-year revenue growth of 20-30 percent over the last four years. At over 60 percent, bags are the biggest contributor to its revenues.
This growth spurt, perhaps, is linked to the involvement of Louis Vuitton (LV) with the company. In 2007, the French luxury giant chose Hidesign to tap into the leather products space in India and acquired a five percent stake in the firm. While LV does not generally speak to the media about its investments, in 2007 it told Financial Times that “it liked the homegrown nature of the brand”. LV has been advising Hidesign on branding, marketing and training.
Hidesign’s products are currently offered across over 60 exclusive retail stores; it has a distribution network in more than 20 countries. Its leather collection includes handbags, clutches, briefcases, laptop cases, wallets and belts. Apart from the flagship brand, Hidesign launched Holii, a brand aimed at bringing distinct Indian design aesthetics to bags and accessories along with high production standards, in 2009, in a joint venture with the Kishore Biyani-led Future Group. The Hidesign group also runs two hotels in Puducherry: The Promenade and Le Dupleix. In 2012, Hidesign forayed into the luxury segment and launched its range of ‘Ciaschini’ bags named after Italian designer Alberto Ciaschini who joined Hidesign as lead designer in 2004.
The person behind it
For Kapur, it all started in 1978 as a hobby from a thatched shed in Puducherry. He had just returned to India from the US after earning a PhD in international affairs from the University of Denver. He seed-funded his ‘hobby’—designing bags—with Rs 25,000, using the money to buy a sewing machine and leather.
Since then, an adherence to quality has defined Kapur’s approach to the retail business. And his persistence seems to have paid off. For instance, Hidesign is the only firm in the country in which Louis Vuitton has invested directly and not through its PE arm, L Capital. But that’s not enough for Kapur, for he has another milestone to cross. “An IPO will happen for sure, but not right now. We will consider it when we have a top line of Rs 400 crore,” he says. In any case, Hidesign is in for the long haul, he adds.
Why it is a gem
Hidesign’s aesthetic focus has been on a classic contemporary look, catering to the educated and sophisticated urban professional. The company has three design teams based in Milan, London and Puducherry that work together to create two new collections a year. Besides its seasonal collections, Hidesign has a classic range of products that have seen minimal change for thirty years and continue to garner customer appreciation.
Also, the company has been able to hold its own in what is a very competitive handbags market, comprising organised and unorganised players. Over the last few years, brands like Lavie, Da Milano, Baggit, Caprese, Lino Perros and Esbeda have come up and are dominating the space. Not only are these brands cheaper than Hidesign (which plays in the Rs 3,000-8,000 price range), they also offer huge discounts, sometimes as much as 50-60 percent, during the sales season. Kapur is not overly concerned about the competition though, saying the Indian handbag story is a game of Chinese imports and Hidesign is not that.
Though a price war is not a part of Hidesign’s plans, staying affordable is. For the first time, Hidesign has started offering discounts. Kapur says it’s a market “compulsion”. “We would be the only shop in the malls not to offer sales and our staff would complain,” he says, chuckling. “But our discounts are not like others. They are small, only for handbags and are never more than 25 percent. The sales are never on classics.”
Instead of going through distribution channels, the company is now working on a direct presence in overseas markets and is in the process of setting up its US business in California; Kapur’s son Vikas is overseeing that. Experts say the biggest USP of Hidesign is its product. “It’s not a mass product, it’s not a copy of others and it’s not a me-too product,” says Devangshu Dutta, chief executive, Third Eyesight, a retail consultancy.
And finally, Kapur’s openness to adapt and change helps. “We believe beauty comes naturally… it is in cotton and linen, not synthetic or nylon. Are we getting into clothing? No brand can survive without getting into that,” says Kapur. “Apparel is a bit too early for us but we will get there in five years. Apparel is the final step. Typically brands get into apparel late.”
Why it was hidden
Despite operating in the retail space, Hidesign isn’t quite an over-exposed name yet. Its premium positioning and pricing has restricted it from becoming a mass brand in the leather products category. Shying away from regular print and television advertisements, Hidesign’s promotional push is comparatively niche and targeted predominantly at an aspirational urban clientele.
The leather goods manufacturer has also stayed away from celebrity endorsements, a common trend in the retail and lifestyle business.
Further, the Hidesign brand is synonymous with the handbag business and very few are aware of its footwear line, its ecommerce portal or its presence in the hospitality space.
Risks & challenges
One of the variables that this business faces is that its products are made from cow leather. With tanneries shutting down in cities like Kolkata and Kanpur, procuring leather has been a challenge. There are, of course, also the global protests regarding the ethics of using leather.
Then, there is the expert view that Hidesign needs to spend more time in India before it gets into brand extension. “Globally, it is the second or the third generation that goes for brand extension,” says Harish Bijoor, chief executive at Harish Bijoor Consults Inc, a brand consulting firm, adding that creating too many categories can affect the company’s focus.
Dutta of Third Eyesight says brand extension can be undertaken by a company only if it is confident of maintaining the consistency of its product quality. He adds that it is imperative for companies to understand that brand extension works well in adjacent categories. “It should not devalue the brand,” he says. Especially not one that the promoter himself likes to wear like a badge of honour.
(Published in Forbes India .)
admin
September 3, 2015
Writankar
Mukherjee, The Economic Times
Kolkata,
3 September 2015
Mahindra
Retail will rename its maternity and childcare stores as ‘Babyoye
by Mahindra’, dropping the name ‘Mom & Me’ in favour of shopping
website Babyoye. com, which it acquired earlier this year.
This is the first time that an Indian retailer is adopting the name of an online entity for its brick and mortar stores, indicating the bigger pull of e-commerce in certain segments. The retail arm of Mahindra & Mahindra had been operating its 115 maternity and childcare stores under the name ‘Mom & Me’ for six years.
The company said it wants a single unified brand presence across channels and that ‘Babyoye’ has a larger recall, is more youthful, and resonates better with younger parents who would interact simultaneously with online and offline.
"The Babyoye brand brings with it a connect due to its big online presence and we also wanted to capitalise on the Mahindra brand, which is our parentage and has its own legacy," said Mahindra Retail chief executive officer Prakash Wakankar. "Sufficient evaluation was done where both Mom & Me and Babyoye brands stood, and we decided to go for the latter not because it was superior, but since it’s more vibrant and a reflection of current consumer trend," Wakankar said. Wakankar said Mahindra Retail will completely integrate operations between the online and offline entity as part of the company’s omni-channel strategy.
"While Babyoye online would offer a wider range, consumers would eventually be able to order from the store any product sold online, pick it up from the store and even return it to the store," he said. Mahindra Retail had earlier shut down its Mom & Me online store and integrated it with Babyoye.com.
Analysts said it makes sense to put muscle behind one brand rather than two, if the segments targeted are identical.
"The pros and cons of picking one over the other depend on which one is more visible and has higher weight with the consumer. Also, since Mom & Me has been targeted at a broader age range, with Babyoye being selected as the operating brand the merchandise mix in the stores will also be significantly refocused and narrowed down," said Devangshu Dutta, chief executive at consultancy Third Eyesight.
Last fiscal, Mahindra Retail had revenue of Rs 210.5 crore and incurred net loss of Rs 118.9 crore, according to Mahindra & Mahindra’s annual report.
Wakankar said that with more than 92 company-owned stores, breakeven
is still a couple of years away, but the retailer has undertaken
several initiatives to increase per sq feet revenue which will
ultimately deliver results.
(Published in The Economic Times.)
admin
August 28, 2015
Rashmi Pratap, The Hindu Businessline
Mumbai, 28 August 2015
As
online shopping grows more popular by the day, Kishore Biyani,
the man who catapulted brick-and-mortar retail to new heights
in India, found himself scouting for the next big idea. The founder
and chief executive officer of Future Group has now identified
a new frontier to conquer — customers at Rajasthan’s
public distribution system (PDS) outlets. This group of buyers
includes those below poverty line and beneficiaries of various
food programmes of the state government. All of them get a monthly
quota of sugar, wheat and kerosene at subsidised rates. Biyani
wants to sell them deodorants, mosquito repellents and floor cleaners,
besides fairness creams and noodles, at the hundreds of PDS outlets
across the state.
“Consumer aspirations are rising and they want to try new
products. You can sell a lot more through fair price shops,”
says Biyani, explaining the potential inherent in the Annapurna
Bhandar Yojna, a public-private partnership (PPP) scheme between
the Rajasthan State Food and Civil Supplies Corporation and Future
Consumer Enterprise (FCEL).
Rajasthan has nearly 25,000 fair price shops. As much as 67 per cent of the state’s 6.8-crore population, about 4.5 crore, visit PDS outlets at least twice a month.
That presents a huge business opportunity for Biyani’s Future Group.
To begin with, the company will tie up with 5,000 PDS store owners, turning them into entrepreneurs. Currently, these stores operate not more than six to seven days a month, and remain closed after the monthly ration has been distributed. After the tie-up with Future, the store owners will have an incentive to remain open longer and sell more.
“It is an experiment, but the results so far have been encouraging,” says Biyani, referring to the five stores that have been launched in Jaipur on a pilot basis.
“This is a different market. (The products) in these stores will be limited to just 250 SKUs (stock keeping units),” he adds.
So rather than every kind of household item, the shops will initially stock grocery, personal healthcare and homecare products.
Although other brands will be available too, a majority of the products will belong to the group’s own brands, as that will allow it to offer competitive pricing and drive volumes.
Margins on private label goods are, on average, about 10 per cent higher than those on similar branded products. Retailers pass on the benefit of higher margins to customers in the form of lower prices. So those using Rajasthan’s PDS services will now have access to a wider range of products at prices that are lower than those of national brands.
“It is a good opportunity for both Future Group and the customers, who get much more variety on the shelves. Mr Biyani is an experienced retail entrepreneur and he would be able to select the right merchandise for this segment,” says Arvind Singhal, chairman at consultancy firm Technopak.
Devangshu Dutta, chief executive at retail consultancy Third Eyesight, says the tie-up gives the company a phenomenally stronger presence through the additional outlets. “They get a vast geographic reach through these stores,” he says.
The second advantage is the access to a different segment of customers. “The customers coming into PDS shops are different from the people visiting the modern retail outlets that the Future group has. It gives the group a better critical mass and can help it grow the business more efficiently and profitably,” he adds.
The group is also ready with the supply chain for the backend, as it is present in Rajasthan through its Big Bazaar and Food Bazaar formats. “We have the backend operations already in place,” says Biyani
This new experiment, for Biyani, is an attempt to ride the storm of competition whipped up by e-commerce players and corporate giants such as Reliance and AV Birla group in the retail sector. If it succeeds, the Rajasthan government might invite bids to bring more PDS stores under the ambit of the tie-up. Eventually, other state governments are likely to follow suit.
“That is what we want — to replicate this model in other states,” Biyani says.
And when that happens, the Indian retail sector will get to chase a new and bigger opportunity — this time, right at the bottom of the pyramid.
(Published in The Hindu Businessline.)
admin
August 27, 2015
Mehak
Sharma, Indiaretailing.com
New
Delhi, 27 August 2015
Joining
the league of e-tailers with offline presence, furniture e-tailer
Pepperfry has taken on lease 1,800 sq ft of retail space on a
Mumbai high street, property consultant JLL said in a recent report.
"Pepperfry has joined the list of e-tailers going ‘hybrid’ by recently leasing a 1,800 sq ft space at Linking Road, Santacruz," JLL India Chairman and Country Head Anuj Puri said.
The trend of ecommerce players foraying into physical retail is fairly new to India. However, in the past few years, a slew of pure-play e-tailing companies, including Lenskart, Healthkart, Fabfurnish and Caratlane, among others, have already opened physical stores to directly connect with customers.
In the current retail scenario, where developing an omnichannel identity is a must-do for most brick-and-mortar retailers, the rationale for the reverse strategy can be to either boost online sales or to deliver a more real, ‘five-senses’ experience for customers.
"For products that have a touch-feel element, the physical retail environment continues to be attractive for the customer. Also, an offline store can help to create more credibility and a more direct customer connect, especially in an environment where online sales are dominated by discounts and deals," Devangshu Dutta, CEO of retail and market analyst firm Third Eyesight, explains.
According to market sources, in 2014, over 70 per cent of ecommerce website-based transactions came from the top 10 cities of India. This means that a vast majority of transactions, particularly in cities within tier-II and beyond, happen in physical stores.
"There are more offline consumers today than online ones," Harminder Sahni of Wazir Advisors, asserts.
"While retailers can choose to be exclusively online or offline, the consumers aren’t going to get classified like that. Consumers will shop across offline as well as online. Thus retailers will have to have a mix of both and find their own profitable balance," Sahni adds.
Paytm, an online payment solutions company, has also installed over 50,000 kiosks for customers to be able to load their e-wallets. By being offline, the company is building trust with customers who would otherwise have felt lost in the already-crowded online space.
"So strong is the urge to move offline globally that for the time ever, Amazon US has opened a physical store in the US in early 2015, and it plans to open more such stores by mid-2015," Puri says.
"As more and more brands and retailers move online, there is bound to be a convergence between channels. Retailers need to — and will — see themselves logically serving customers across multiple channels that are appropriate for their product mix as omnichannel evolves from being a buzzword, to being a reality," Dutta observes.
(Published in Indiaretailing.com.)
admin
August 21, 2015
Anumeha
Yadav, Scroll.in
New Delhi, 21 August 2015
On Thursday, the Rajasthan government signed an agreement with Kishore Biyani’s Future Group, best known for its retail chains Pantaloons and Big Bazaar, to launch the new Annapurna Bhandar Yojana. Chief minister Vasundhara Raje described the scheme aimed at an upgrade of ration shops as the beginning of a “new era of public private partnership in the public distribution system.” Raje had earlier in July announced that public schools and health centres will be handed over to private players under a PPP model.
Ration or fair price shops provide wheat, rice, sugar, kerosene, and, in some states, edible oil and pulses to beneficiaries at subsidised prices. On Thursday, Raje said the tie-up with the retail giant will improve the lives of villages as the “upgraded ration shop in villages will mean that beneficiaries can buy all goods at one store, like a shopping mall.”
While the government is yet to make the Memorandum of Understanding public, this is how the new scheme will work on the ground.
Will the ration shops be replaced?
No. The agreement does not mean ration or fair price shops in Rajasthan will be replaced by rural and peri-urban versions of Big Bazaar, or that the Future Group will now own or its staff manage ration shops in villages.
Subodh Agarwal, principal secretary, food and civil supplies department in Rajasthan, said that under the agreement, Future Consumer Enterprise Limited, a Future Group company, will be able to sell multi-brand consumer goods at ration shops. In the first phase of this experiment, Biyani’s company will supply processed food items, home care and hygiene products to one-fifth, or 5,000, of Rajasthan’s 25,000 ration shops in cities and villages. Ration shops will continue to be managed by existing ration dealers, Agarwal said. He added that the 5,000 shops had been selected on the basis of their existing capacity. In the next phase, more may be brought under this scheme.
Currently, 4.5 crore of the total 6.8 crore or 67% population buys subsidised wheat at Rs 2 per kg, sugar at Rs 13.5 per kg, and subsidised kerosene from ration shops. They will continue to get these at the same rates, while new products will be made available. It will be the Future Group’s responsibility to stock and procure these through its own network, separate from the existing public distribution network, said officials.
What’s in it for beneficiaries?
More availability and choice in consumer goods, at discounts.
As per the agreement signed on Thursday, Future Group will make available 146 items in 48 categories at the new Annapurna Bhandar or the selected ration shops at discounted prices. As per a government statement, the products that will be added to the ration shops will include oil, ghee, pulses, jaggery, spices, flour, other processed food such as noodles, wafers, biscuits, chocolate, “personal care products such as hair oil, shampoo, toothbrushes”, “home care products such as toilet cleaners, detergent bars, mosquito repellent”, and stationery such as pens and notebooks. The company will be required to stock products of multiple brands instead of only procuring their own products, as per the agreement.
What will it do to retailers?
The entry of a large retailer with big pockets is expected to hit the existing small retailers. In several villages, farmers with small and medium size landholdings supplement their livelihood with self employment by running neighbourhood grocery stores or selling such items as soap and shampoo in small quantities. Their businesses may be affected, if not immediately, then over a period of three to five years.
Retail experts say the entry of Biyani’s group may also have an effect on suppliers as any large retailer will prefer to transact with fewer large suppliers, rather than a high number of small suppliers.
Officials said that though the government had been in talks with several companies – including Reliance, Sahara and Metro – before the launch of this scheme, when an expression of interest was invited in January, only Future Group applied.
Retail experts said the move may open up a new market segment for the group. “By doing this, Biyani will be able to have critical mass in the market, build an understanding of the segment of the consumer serviced by this platform in Rajasthan, and potentially use this as a springboard for building a new company,” said Devangshu Dutta, the Chief Executive of Third Eyesight, a retail and management consultancy.
A retail expert working with a rival company, who did not wish to be named, said the experiment may or not work for Biyani since rural consumers prefer to buy in very small quantities, in the form of pouches, for instance, which is different from the Future Group’s current consumer base. This may require the company to re-engineer its processes to a significant extent.
Is this a first?
NC Saxena, a retired Indian Administrative Service officer, said Kerala and Gujarat had already experimented with providing more consumer items at ration shops.
Ashok Khandelwal, an activist with the Right to Food Campaign in Rajasthan, cited the case of Punjab, which provides 18 consumer items such as candles and low price cloth through ration shops, to demand that Rajasthan also provide more items at controlled prices to consumers. “Between 2011 and 2013, 21 items were offered at a few ration shops run by ration dealers who procured and sold them,” Khandelwal said. “Some items such as tea and salt worked fine, and were made available to beneficiaries at lower prices, but in the case of pulses, there were problems. The prices of pulses at ration shops went up higher than market prices because of irregularities in procurement.”
At present, local entrepreneurs apply to get the dealership of running ration shops. In some villages, the Gram Sewa Sahkari Samiti, or village level cooperatives, manage the ration shops. This new scheme, Annapurna Bhandar Yojana, was started on a pilot basis last August in six ration shops. Biyani’s company got the contract to run five ration shops in Jaipur, while the local cooperative Gram Sewa Sahkari Samiti has been operating one upgraded Annapurna Bhandar ration shop successfully in Udaipur.
Khandelwal argued that the government could have worked on smoothening the procurement and allowed existing local entrepreneurs, ration dealers, village cooperatives to procure and sell more items at the upgraded ration shops.
Amra Ram, a former MLA of the Communist Party of India (Marxist), said there was a risk that while the government might tightly control the prices of goods in the initial years, it will stop doing so later. “There is nothing to stop private players from charging higher prices in subsequent years to make more profits. The same pattern is visible in private hospitals and schools run on cheap land from the state,” Amra Ram said.
(Published in Scroll.in.)
