Saumya Roy and Gouri Shah
MINT (Partner to the Wall Street Journal)
Wed, 23 Apr 2008, Mumbai

Shopper’s Stop Ltd, the 24-store retail chain, got a new look at a glitzy function featuring actor Shah Rukh Khan, nightclub lighting and hundreds of saplings that will be planted as part of the stores’ Rs20 crore (Rs. 200 million) rebranding exercise.

The chain, which started in a defunct suburban Mumbai movie theatre in 1991, got itself a new black-and-white logo, uniforms, print and television campaigns, carry bags and even an anthem and an in-store radio channel. It will also launch an Internet shopping platform along with a Think Green campaign.

"Our customers are getting younger, so the brand cannot get older," said Govind Shrikhande, chief executive of Shopper’s Stop. "We wanted to get trendier without losing the experience of 17 years."

The rebranding comes soon after Lifestyle, a department store chain from the Dubai-based Landmark Group, announced a new campaign to highlight its shoes, kidswear and home accessories categories along with fashion.

"In the Indian market, the issue is of increased competition," says Devangshu Dutta, chief executive of Third Eyesight, a retail consulting company.

A slew of global apparel brands such as Guess, Esprit and French Connection have entered the market over the past two years, after foreign retailers were allowed to own majority stakes in their Indian operations. These brands have brought store design and experience in line with global standards along with fashion, encouraging Shopper’s Stop to change as well, Dutta said.

Just the creation of a retail destination brand was an innovation in itself, says Anand Halve, co-founder of Chlorophyll Brand and Communications Consultancy Pvt. Ltd. "But as the category grows tangible, differentiators
such as store environment and experience have become hygiene factors, and that is when branding becomes important. It adds intangible value to tangible things."

For instance, Shopper’s Stop found that while younger shoppers came and bought the new brands the store has been introducing, they did not associate with the store itself, says B.S. Nagesh, managing director of Shopper’s
Stop.

To woo younger customers, Shopper’s Stop will tie up with Blue Frog Media Pvt. Ltd, a Mumbai-based company that runs a live music club, and will have its own record label for an in-store radio station.

Shopper’s Stop, which currently occupies 1.5 million sq. ft in total, will add 89 stores or 1 million sq. ft every year for the next three years. It will increase the average size of its stores to around 85,000 sq. ft from
the current 65,000 sq. ft, Shrikhande said.

With organised retail expected to grow at around 42% till 2011, according to a report by Mumbai-based brokerage Edelweiss Securities Ltd, department stores will start to focus on subcategories within their stores.

"You will see subbrands being promoted in a big way to create an appeal among special segments in different categories," says Chlorophyll’s Halve.

By Sachin Dave & Vikas Kumar
THE ECONOMIC TIMES
14 April 2008, BANGALORE

Indian retailers are a worried lot these days. There has been a decline in margins and it’s one of the lowest ever, avow some retailers. As inflation touched a 41-month high, chains across the country, especially the smaller players, have been trying every trick in the book to attract consumers, and keep them coming in, even as they struggle to grow profitably.

The first and most critical area has been margins, and retailers have been bargaining harder with their suppliers. Says Pushpamitra Das, CEO of Wadhawan Food Retail that owns the Spinach chain of food and grocery stores in Mumbai, "Margins of all retailers have been affected and that includes us as well.

So we are trying to negotiate hard with our suppliers so that we can get goods at cheaper rates and pass the benefits to consumers." There has of course been a hit on margins as well, and that’s bringing in greater focus on supply chain efficiencies and vendors, adds Das.

"In our business supply is an important issue and we are now going to vendors who offer us a combination of the best price and quality." Spinach, like other stores, has been keeping a close tab on its competitors’ pricing on a daily basis, and adjusting their rates accordingly, if required. However, lately most retailers have ended up charging almost identical prices for groceries.

Data released by the Department of Consumer Affairs shows that retail prices of grocery products has reached a 39-month high. While sugar and oil increased by 11%, gram rose by around 3%, and vegetables such as onion have become dearer for consumers by 11%.

In manufactured items, sunflower oil shot up by 9% and vanaspati ghee (butter) went up 4%, while butter, mustard oil, sugar and groundnut oil became expensive by 1% each. And while the government took some significant steps to counter rising food prices, such as scrapping of customs duty on crude edible oil, reduction of duties on refined edible oils, and banning exports of non-basmati rice, among others, retailers are having to do much more to survive this bearish phase in consumer spends. Unable to reduce fixed costs, retailers are trying to control variable costs and thereby bring the total operating costs down.

Says Andrew Levermore, CEO of the K-Raheja group owned Hypercity, "Many products have become costlier and some customers are either buying less or postponing their purchases, affecting our sales directly." And while smaller players are finding the going tough, large players like Future Group’s Pantaloon Retail seem less ruffled. Kishore Biyani, CEO of Future Group, says, "Demand for low end products has seen a dip while high end products, which are not price sensitive haven’t been affected that much. We have still managed to give the best deals to our consumers in all segments." That may have to do with the leverage that more established chains like Pantaloon have with suppliers and manufacturers.

However, protecting margins can work only up to a point, says Devangshu Dutta, CEO of Third Eyesight, a retail consultancy firm based in Gurgaon. Eventually, with the prospect of thinning bottom lines, retailers need to work on making their businesses more productive and efficient. "There is a need to shift focus from expansion to optimising store operations," he says.

Meanwhile retailers are working on sustaining business through innovative promotional offers. Cross category promotions are now catching up where discounts are being offered on grocery purchases, redeemable against purchase of apparel and household products. Says RC Agarwal, CMD, Vishal Retail, "Most of us are now depending on promotional schemes. Even consumers have become more conscious and they would only go for the retail outlet which offers the best deal, in terms of offers and price."

Many brands on the other hand have marginally reduced the weight of their SKUs than increase prices. When asked whether the retailers have followed the same path for their in-house products, retailers deny any such measure for their private label brands.

Explains R Subramanian, managing director, Subhiksha, "I think on an average there has been a decrease of around 10% in the sales of grocery but year-on-year we have grown."

In the business of fashion, time has always been important. However, speed and efficiency are now both a strategic imperative and a tactical necessity. With greater unpredictability in the market, it is critical to have the correct product at the correct time in the right quantity. Fast fashion requires completely different thinking in the way product is developed, how pre-production processes are undertaken and how production is organised. The Fast Fashion Seminar will draw upon the live experiences of leading practitioners from the area of product development and supply chain. It will be structured as an interactive session. This Third Eyesight Fast Fashion Seminar will provide you with a valuable insight into how to effect rapid changes in the market to your benefit.

Among other aspects, it will:

• Describe in detail the concept of fast fashion

• Identify key strategic actions to meet fashion consumer demand

• Detail how leading brands such as Zara operationalise the concept

• Discuss how to achieve less than 1% inefficiencies in their processes from design to delivery, including inventories and markdowns substantially below the industry average.

• Understand the underlying principles of the fast fashion model and how these might be applied to retail and fashion business models in India

Attendance is strictly by pre-registration. Registration information is also available over phone (please contact on phone +91-124-4293478 or +91-124-4030162).

Prime Source Forum (Hong Kong) has become the ‘must attend’ annual event for the apparel industry, offering senior executives from all over the world the chance to meet and discuss current challenges and opportunities with their peers, providing also a meeting place where competitors speak freely to each other in the knowledge that many major issues can be resolved only through mutual understanding and common solutions. More than 50 senior executives from 14 countries will lead the discussions ranging over the challenges and opportunities confronting the industry in today’s changing economic and political environment.

The event will be prefaced on 31 March with industry workshops.

The main event will be opened by the Keynote address – “The World May Be Flat But the Terrain is Rough: Global Sourcing in The Next Three Years” – by Dr William Fung, Group Managing Director, Li & Fung Limited.

Devangshu Dutta, chief executive of Third Eyesight, will be moderating the panel on the emergence of brands as retailers in their own right, and the change this is creating in developed and developing markets. The panel will include

• Shuman Chatterjee, CEO, Levi Strauss (India) Pvt Ltd

• Edward A Gribbin, President, Alvanon Consulting Group, Alvanon, Inc

• So Hee Kim, Editor in Chief, Malcom Bridge, Korea

• Carlo Rivetti, Member of the Board of SMI-ATI, President, Sportswear Company, Italy

• Fernando Urrea, President, Leonisa S.A., Columbia

• Fritz Winans, Senior Vice President – Corporate, Global Manufacturing/ Sourcing, Liz Claiborne Inc

Devangshu Dutta will also deliver the closing summary at the event.

For more details on the event, including registration information, please visit the event website: http://www.primesourceforum.com/