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February 20, 2007
By RASUL BAILEY
MINT (Exclusive Partner The Wall Street Journal)
DELHI, 20 February 2007
Bharti Enterprises, the parent of India’s best selling wireless service provider Airtel, confirmed that it will invest up to $2.5 billion (Rs. 11,026 crores) in the next eight years to roll out convenience stores and hypermarkets nationwide, joining a raft of companies looking to profit from an expected boom in organised retailing.
As reported on Monday by Mint, Rajan Mittal, the youngest of the three founders of Bharti, will head the retail foray, dubbed Bharti Retail Pvt. Ltd. Bharti’s Investment will be financed by a mix of debt, internal accruals and equity. The investment excludes the cost of real estate.
The company is targeting Rs. 20,000 crore of revenues by 2015 but didn’t say how many stores it plans to put up and where. The company will need 10 million square feet of space for its stores and did not say whether the company would go the leasing or purchase route, or a combination of the two. The first stores are likely to start a year from now.
Bharti is also partnering with Wal-Mart Stores Inc. for managing the back-end supply chain and logistics for its new retail foray. There were very few details on that front from Bharti pending a visit by Michael Duke, vice-chairman of the Bentonville, Arkansas-based retailer later this week.
“I think putting the supply chain in place will be the critical element for Bharti,” said Devangshu Dutta of retail research firm, Third Eyesight. “It makes sense for them to open early next year as an investment of this nature and magnitude needs a year or so for the supply chain and real estate to be put in place.”
Retail has become the latest target of Indian corporate giants trying to diversify and rush into emerging opportunities. As organized retail takes roots in India, as much as $25 billion is expected to be invested in the sector in the next five years, compared with $2 billion in the last decade.
France’s Carrefour SA and Britain’s Tesco PLC are also looking at ways to enter India’s $300 billion annual market. But analysts say Bhartis major competition is expected to come from other home-grown retailers including India’s largest listed retailer, Pantaloon Retail (India) Ltd. and Reliance’s retail arm as both companies separately plan to open thousands of stores in th enext five years. Much of the criticism about organized stores hurting mom-and-pop stores has pointed the finger at the likes of Wal-Mart, even though Bharti’s retail investment is significantly lower than what the likes of Reliance have said they will spend in more ambitious roll-outs of stores.
Mittal said Bharti Retail will create 60,000 direct jobs but would also “provide linkages to farmers and small artisans”, to its stores selling everything from food to furniture.
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February 2, 2007
By RASUL BAILEY
MINT (Exclusive Partner The Wall Street Journal)
DELHI, 2 February 2007
Targeting an emerging segment of night shoppers, New Delhi-based round-the-clock convenience chain Twenty Four Seven Retail Stores Pvt. Ltd plans to invest Rs 880 crore (US$200 million) in opening 1,000 outlets in the next five years., in a country where even late markets shut by midnight.
The company plans to open 178 stores in Delhi and its suburbs before expanding to the country’s commercial capital, Mumbai, next year and thereon to other major cities.
Last year, the K.K. Modi Group forayed into organized retail by opening India’s first 24-hour convenience store in New Delhi. So far, it has opened four such outlets in the city. The fifth store will open in April.
Round-the-clock stores are virtually unknown in India’s retail market, which is growing by 7% each year. Almost half the country’s 1 billion population is below 25 years and more than a million of them work in call centres and other offshoring firms that keep Western hours.
Samir Modi, president, Twenty Four Seven Retail, said Rs 440 crore of its expansion capital would be funded by internal accruals, the rest from private investors. Modi wants to franchise 80% of the new stores. He said there was potential for 1,00,000 such stores in India in the next 20 years.
“There is an emerging consumer segment that works
longer hours,” especially among the workforce in the country’s
outsourcing and technology industry, said Devangshu Dutta,
head of retail research group, Third Eyesight. “There has
to be something catering to them.”
Twenty Four Seven studied various global 24/7 store formats for two years before rolling out its first outlet.
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January 31, 2007
By MOLSHREE VAID, CNBC-TV18
31 January 2007
After FMCG, now the second biggest retail category – the Rs
19,000 crore branded apparel sector is sizing up the changing
retail scenario. While retail brands like Pantaloon are upping
brand spends and big chains like Reliance are expected to launch
private labels, branded players like Wills need to look at ramping
up distribution strategies and tap new segments like women’s
wear and accessories.
Pantaloon’s mass casual wear brand DJ&C, endorsed by Himesh
Reshammiya was one of the big winners at this year’s Republic
Day Sale. Within three months of its launch, Pantaloon claims
DJ&C has become a Rs 150 crore brand. Not surprisingly,
it and 27 other Pantaloon-owned brands like Jealous 21 &
UMM will by getting a big marketing push. A sizeable chunk of
its Rs 200 crore advertising budget will be earmarked for them.
This is also because Pantaloon wants to stock these brands in
stores and chains beyond its own.
Managing Director, Pantaloon Retail, Kishore Biyani told CNBC-TV18, “We want to do Rs 30,000 crore by 2010, Rs 10,000 crore needs to come out of the fashion business. It can’t come by only selling other people’s labels – we want to build up our own labels into brands, which can compete with any national brand in the country.”
In the last 10 years, retailers have seen volumes come in
courtesy private labels or store brands. This pads up the bottomline,
as well as offers 15%-20% higher margins than regular brands.
Tata-owned Westside built its business on the back of private
labels. The multi-branded Shoppers’ Stop rakes in 1/5th of apparel
sales through store brands. It has moved up from the competitively
priced shirt to fashionable and upmarket designs. It even claims
to be making headway in western menswear, the original bastion
of branded apparel.
Managing Director, Shoppers’ Stop, BS Nagesh explains, “Tradtionally,
more branded players in the men’s category are advertised. So,
it’s difficult to move up in private labels in the men’s category.
We felt so in the first 5-6 years of operations but in the last
two years, we actually find we have a brand called Vittorio
Frattini that has done well; Life’s done well in casuals for
men, so now we find it easier because the customer is trusting
us – not only for basics but also for fashion – and we are competing
with the brands in the stores.”
With an obvious shift in the balance of power in favour of big retailers, apparel brands from groups like Raymond and Arvind are expanding their retail operations. While a brand like Van Heusen may not increase its adspends, but will invest on a tailor-made shopping experience at shop-in-shop counters or exclusive stores.
| BRAND | Retail Turnover (Rs Cr) |
|
Madura Arvind Raymond ITC Blackberry |
600 450-500 270 180 90-100 |
Pinched by high rentals in metros, brands like Cottons by Century, are also looking at smaller cities to expand their retail footprint. They are wooing mom-and-pop apparel stores and small multi-brand outlets to become their sole franchisee. Also, the brands are broadbasing. Wills Lifestyle launched a premium range under a tie-up with designer, Manish Malhotra. Louis Phillipe has entered sub-segments like luxury, formal and casual wear, Allen Solly is offering accessories like bags and shoes, and Arrow has started womenswear. Clearly, in the middle of this retailer-manufacturer tussle lies a fashion product, that needs innovation every season. Analysts say, there’s scope for brands to survive and thrive.
CEO, Third Eyesight, Devangshu Dutta says, “Women’s wear and children’s wear are difficult categories. Therefore, given a choice, I think the retailer would let suppliers handle the category and create a brand. So there exists an opportunity for branded players to create a footprint across markets, using the retail footprint of larger retailers for the launch.”
But analysts expect a shakeout in the branded space, which remains pretty fragmented. The largest player, Madura commands barely 2% of the market. Here again, retailers like Pantaloon and Reliance are snooping around for buyouts or strategic alliances.
Both retailers and standalone brands are also trying to outdo each other by roping international brands into their stable, whether it’s Shoppers’ Stop tying up with Mothercare or Madura getting Esprit on board. Going by the market buzz, as and when Reliance and Bharti-Wal-Mart start apparel retail, brands will be squeezed further. But given that brands have just 1/5th of market sewn up – there’s a good way to go.
admin
November 30, 2006
Business Standard, MUMBAI, 30 November 2006
The growth of financial sector was to a large extent responsible for the current consumption boom in the country and that there ought to be further collaboration between financial service providers and retailers to keep this going, said Suman Bery, director general, NCAER, at the National Retail Summit 2006.
“Sentiment is a big driver behind consumer behaviour and retailers should get ready for a bumpy ride ahead,” he added. Commenting on other factors that will boost growth, Roopa Purushothaman, chief economist and strategist, Future Group, pointed out how increase in the number of women in the consuming class would give a boost to retail.
“Increased participation of women on the professional front will result in an increased demand of 10 per cent over the next five years while per capita income will be boosted by five per cent by 2015, 12 per cent by 2025 and 25 per cent by 2050,” she said adding that at present, the country was at a ‘sweet spot’, where it could improve its demographic ratios.
Ireena Vittal, partner, McKinsey & Co, clarified a few myths surrounding the sector saying that changing demographic patterns and not changing incomes would determine the consumption patterns in India.
“Increasingly, as women and younger people enter the consuming class, the product mix will undergo a tremendous change,” she said adding that because of that reason, it wasn’t possible to compare the consumption mix in India at present to the kind of consumption mix seen in other countries, when they were at a similar stage in retail.
Devangshu Dutta, CEO, Third Eyesight, pointed out that it was important to look at an Indian model of retail development given the kind of disparities that existed in the Indian market.
“It is as important to share the growth downwards as much as we are pulling it upwards in terms of aspirations,” he said.
Though the retail sector in India is expected to grow rapidly over the next few years, analysts point out that this will definitely not be a smooth ride.
As the market develops, it will see its share of ups and downs, and just because it’s at a nascent stage does not mean that the going will necessarily be good.
admin
November 29, 2006
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