Rashmi Pratap, Hindu BusinessLine
Mumbai, 4 July 2016

Apart from changing business models, mall operators are also benefitting from the challenging times in the e-commerce space. Though online sales are expected to zoom to $55 billion by FY2018 from $14 billion in FY2015 – according to Retailers Association of India – investors in e-retailers are tightening the reins. They are questioning the business models of e-commerce players, who have been forced to re-think their strategy.

Hedge funds have been actively funding Indian start-ups so far. However, with economic slowdown in China and rising interest rates, they have scaled back their investments.

With tightening fiscal environment, the expectations of investors have also undergone a change. “While earlier the expectation was to deliver much more in terms of growth, now they are asking for better balance between growth and profitability,” says Alok Mittal, angel investor and CEO and co-founder of Indifi Technologies.

To add to it, investors are also cutting down valuations of e-commerce ventures. Flipkart’s investor Morgan Stanley marked down the e-retailer’s valuation from $15 billion to $9.39 billion earlier this year.All this means investors are now less bullish on e-commerce firms. And that, mall operators hope, will translate into lower discounts for customers who will throng the malls.

Devangshu Dutta, Chief Executive at retail consultancy Third Eyesight, says e-retailers have a reach that is unlimited by time and geography.

For standard products such as diapers, online convenience may win over the need for a physical experience.

However, non-standard products such as apparel or jewellery lend themselves to experiential buying, where a physical retail store definitely has an edge, he adds.

But all this doesn’t mean that e-commerce is no more a challenge to retailers. “I think e-commerce remains a threat to retailers who refuse to change,” adds Dutta.

But for successful malls like Viviana, DLF and Forum, e-commerce has been a teacher. “It has made us re-think some of the ways we do our business. We now know it is important to engage closely with customers,” says Suresh Singaravelu, Head – Retail, Prestige Group.

(Published in The Hindu Businessline)

Ankita Rai, Financial Express

New Delhi, 3 July 2016

The convenience of mobile wallets is being put to the test, not just with increased competition in the space, but also due to the National Payments Corporation of India’s unified payment initiative (UPI), which is expected to create the next level of growth owing to a more seamless backend. In response to market pressures, m-wallets are expanding their scale of operations and tying up with offline merchants to move beyond recharge-related services, DTH and bill payments. From the likes of Big Bazaars to neighbourhood mom-and-pop stores, petrol pumps, auto rickshaws and milk-booths, mobile wallets are not leaving any offline retail format unexplored.

Clearly, the recruitment of offline merchants is critical to the viability of payment solutions, since most consumer transactions still happen offline. “Payment providers that want to win the game will need to focus on usages that are frequent,” says Devangshu Dutta, chief executive, Third Eyesight, a retail consultancy.

This is exactly what Paytm is doing with focus on small but frequent transactions. Paytm wallets can be used at petrol pumps, education (school and college fees), restaurants, Mother Dairy and large-format retailers such as Spencer’s and More. “The payment business runs on scale. There is a small margin. So the attempt is to create an ecosystem where consumers use wallet for frequent transactions, though small in amount,” says Shankar Nath, senior vice-president, Paytm.

Out of three million daily transaction on Paytm, it claims 40% are coming from offline. Paytm currently has four lakh offline merchants using its platform, including mom-and-pop shops.

To facilitate payments through wallets at PoS terminals and online payment gateways, mobile wallet player Freecharge has partnered with payment aggregators like ePaisa and CCAvenue.

It has also forged partnerships with retailers like Shoppers Stop, McDonald’s and Caf� Coffee Day. It claims to have crossed a million transactions in February, with a growth rate of 15-20% per month. Similar is the case of MobiKwik, whose wallet is currently accepted at 25,000 retail outlets, which includes Big Bazaar and Central Mall. “Since last July, the biggest focus area has been on offline merchants. The next big use case is unorganised grocery stores,” says Akash Gupta, GM, marketing, Mobikwik.

Even as wallet players are tying up with big format retail stores, experts say a bulk of the big market for wallet resides at the mid-to-low end retailers. “Even in China, one-third of wallet transactions are remittances, a third is peer to peer and the remaining one third is commerce. We expect the Indian market to follow a similar lead,” says Pramod Saxena, founder and chairman, Oxigen Services. The volume of transactions through mobile wallets stood at 255 million in FY15. The value of transactions carried out through mobile wallets has grown by 500% between 2014-2016. “In value terms, however, mobile wallets contribute just 0.1% to the consumer payments market. Average transaction size still remains low,” says Kalpesh Mehta, partner, Deloitte.

(Published in Financial Express)

AFP/New Indian Express
New Delhi, 3 July 2016

Islamic State jihadists released gruesome images of corpses lying in crimson pools on the cafe floor as they claimed responsibility for the deadly 11-hour siege. Most of the victims were Italian or Japanese.

“This attack will turn away foreigners,” said Faruque Hassan, senior vice-president of the Bangladesh Garment Manufacturers and Exporters Association, which represents 4,500 factories.

“The impact of this attack will be very damaging for the industry. We are now extremely worried,” added Hassan, whose Giant Group supplies clothes to retailers including Britain’s Marks & Spencer and Next.

Even before the cafe siege, Bangladesh, the world’s second-biggest exporter of apparel after China, was reeling from a wave of Islamist-linked killings of religious minorities, liberal activists and foreigners, including an Italian aid worker last September.

Concern is mounting that the South Asian nation, wracked by political instability since independence in 1971, is sliding into deeper chaos, with under-pressure police arresting 11,000 people last month in a desperate crackdown.

“The hostage crisis in Dhaka is a terrible tragedy reflecting how security has deteriorated in the country,” said Sarah Labowitz, co-director at the NYU Stern Center for Business and Human Rights in New York.

The violence presents “a serious threat to the economy,” Labowitz said. “This kind of attack will surely keep (fashion) buyers away in the months leading up to the holiday shopping season.”

Although a quarter of its 160 million people still live below the poverty line, Bangladesh has clocked growth of around six percent nearly every year since the turn of the millennium.

That’s largely thanks to garment exports, the lifeblood of its economy, accounting for more than 80 percent of total outbound goods last year.

Between them the nation’s clothing factories employ more than four million people, most of them impoverished rural women.

Ulrica Bogh Lind, a spokeswoman for H&M, which sources many of its clothes from Bangladesh, told AFP the Swedish chain was “deeply sad about the tragic incident”.

“We are of course monitoring the situation in Dhaka closely.”

Echoes of Pakistan

Trade-dependent Bangladesh may suffer the same fate as its restive rival Pakistan, fears Ahsan Mansur, a former representative for the International Monetary Fund in Islamabad.

“I saw the decline of a promising economy into a terrorist hotspot. This attack reminds me of those days, although I hope things won’t turn out that way,” said Mansur, now executive director of the Policy Research Institute in Dhaka.

When extremist violence began to spread in Pakistan, he said, the first sign of financial malaise was expat families packing their bags, then trade and investment crumbled.

“The perception that Bangladesh is a potential terrorist hotspot can seriously hit our export potential and growth prospects.”

Yet plucky Bangladesh has ridden out numerous storms, seeing off threats from labour unrest, mass transport blockades and large-scale political paralysis — as well as workplace disasters.

Clothing exports swelled nearly 10 percent in the year to June, to $27.3 billion, industry figures show.

The deadly Rana Plaza factory collapse that killed at least 1,138 workers in 2013 shocked the world, heaping opprobrium on Western retailers seen as exploiting impoverished workers.

But the tragedy prompted retailers to act on appalling safety conditions in their factories, where fires and other accidents are frequent.

Brands set up two global alliances to make workshops safer and cleaner — although it remains a work in progress.

Global threat 

While retailers will watch Bangladesh closely, industry experts point out that unrest plagues many developing countries where labour is cheap.

As Islamist attacks in France, Brussels and the United States over the past year show, the threat of extremist violence is not confined to single countries.

“If foreigners give in to fear, terrorism’s political mission will have succeeded,” said Devangshu Dutta, chief executive of Third Eyesight, a retail consultancy in New Delhi.

“Exports and foreign investment are both critical (in) the upliftment of a very large poverty-stricken population,” Dutta told AFP.

“The contribution of foreigners is vital. It is important for everyone to remain engaged.”

(Published in The New Indian Express)

Ateeq Shaikh, DNA (Daily News & Analysis)

Mumbai, 30 June 2016

The e-commerce sector is likely to benefit from the implementation of the Seventh Pay Commission, but not immediately.

“If the entire amount of arrears is paid it will boost consumption in a relatively shorter span,” said Harish H V, Partner, Grant Thornton India LLP.

But if the payment is staggered, it may take time for increase in sales through e-commerce platforms.

Devangshu Dutta, managing director of Third Eyesight, a retail consultancy firm, said, “The increase in consumption would be over a period of time. In the short term, the increase would be in durables and lifestyle oriented purchases.”

“E-commerce is only a channel and not a different business. It is just a fraction of overall market,” he said.

There also has been reduction in overall discounts and discount-led promotions offered by e-commerce players in the last 12 months, bringing the prices of products nearly at par with brick and mortar outlets.

“There would be promotional pushes, but the same will also be followed by retailers (not having exposure online),” said Dutta.

On Wednesday, the government announced that the Seventh Pay Commission award will cost the public exchequer Rs 1.14 lakh crore during 2016-17. The revised salaries of central government employees are likely to be paid from July 1, 2016. The employees will get arrears for salary from January 1, 2016, but allowances will be paid only from July 1, 2016.

(Published in Daily News & Analysis (DNA))

Sagar Malviya & Richa Maheshwari, The Economic Times

Mumbai/Bengaluru, 22 June 2016

Apparel brand US Polo crossed the Rs 1,000-crore sales mark in India in the fiscal ending March 31, less than five years after it entered the country, according to a top executive of the company. US Polo’s fastpaced sales puts it in the same league as Zara, which became the biggest apparel brand in India within four years of setting up shop.

Zara now clocks over Rs 1,000 crore in retail sales here. In comparison, brands such as Louis Phillipe, Van Heusen and Benetton had taken nearly a decade to reach this mark.

“We caught the consumer trend with a fashionable but highly affordable brand,” said J Suresh, managing director of Arvind Retail, which holds licence to sell the brand. “The iconic logo with two polo players on horses helped too. India is possibly fastest growing market by sales and stores addition.”

Arvind Retail opened the first US Polo store in India in 2011 and has since added nearly 230 more. The 750-sq ft store at Select City Walk in Delhi on average rakes in Rs 225 per sq ft a day. Zara, on the other hand, makes on average Rs 150 per sq ft each day from the same mall, although from a bigger store.

According to Suresh, the company plans to open one US Polo store every week over the next few years as part of Arvind’s broader push to grow its retail business. 

“Two factors have worked: they are more casual driven and less about fashion and second, they are a value international brand and well positioned on price, which appeals to wider audience,” said Devangshu Dutta, CEO at Third Eyesight.

(Published in The Economic Times)