Vishal Krishna, Businessworld

Bangalore, November 12, 2013

If the Rs 1,000-crore Page Industries, the Bangalore-based manufacturer and distributor of international innerwear brand Jockey is in the spotlight today, it’s because of a strategic move it made four years ago.

Sunder Genomal, managing director, Page Industries, introduced a women’s innerwear line, marking his entry into the $1.7-billion segment. He backed this up with a ramping up of Page Industries’ retail presence from 18,000 to 23,000 outlets over the next three years. The women’s range received a push-up, with over 100 styles on offer.

That appears to have paid off as the women’s range alone contributes 25 per cent to the company’s topline. Interestingly, about 45 per cent of the company’s sales comes from tier-3 cities. And that requires greater reach and availability of products on demand. To cater to this, Genomal reached out to some of India’s biggest e-tailers. Though e-tail sales — largely through Myntra, Jabong and Shoppers Stop — comprise less than 1 per cent of Page Industries’ revenues, they help tackle the bigger issue of customer dissonance with the brand when it’s not available despite the consumer’s ability to pay.

Page Industries was set up two decades ago with the purpose of manufacturing and distributing Jockey products in India. In the boardroom, you cannot but notice that the walls are lined with awards. Most are for best manufacturing and retail practices, but there is one award that stands out. Amid catalogues of the latest lingerie collections, there stands a large silver trophy in the shape of briefs. It is in recognition of Page Industries’ excellence in design and style.

In 20 years, Genomal has managed to make the brand synonymous with premium innerwear and has gone on to garner a marketshare of some 5 per cent. Leaders Maxwell Industries (VIP) and Rupa each enjoy a 15 per cent share of the organised innerwear market.

However, the Indian market continues to be dominated by the unorganised segment. The lower and mid-market segments form 86 per cent of the industry. According to Technopak, a retail consultancy, the size of the innerwear market in India is $2.9 billion; the category is also growing at a compound annual growth rate (CAGR) of 12 per cent and is expected to reach $5.1 billion by 2017.

“Corporate governance makes a company successful in the long run for both the promoters and the management,” says 58-year-old Genomal. He adds that a lot of his learnings were from his school days in the Philippines where his family held the franchise for the Jockey brand for five decades. “You need to create and maintain relationships if you are to be a long-term player. You need people who can also execute and believe in your vision,” he says.

In addition to Jockey, Page Industries is also the master franchisee of Speedo, a swimwear brand, with 12 stores across the country. It is also available through 730 retailers. Rival Maxwell Industries currently has over 110,000 distributors and sells through 550 retail outlets.

“Jockey has been a sought-after brand because of its style, fit, its representation of a young urban India and, most importantly, for being an aspirational brand,” says Devangshu Dutta, CEO of Third Eyesight, a retail consultancy.

Genomal has emerged number one in BW | Businessworld’s rankings of the Most ‘Value’able CEOs in the small companies (Rs 500 crore-Rs 1,499 crore) category largely on account of his modest compensation package of Rs 1.1 crore. He has achieved a 101 per cent CAGR on sales over two years. His closest competitor, P. Kaniappan of Wabco India, an automobile ancillary, has delivered around 47 per cent CAGR. However, Genomal is modest: “There are so many inputs like employee relations in the corporate structure that cannot be put down in numbers.”

“My goal as a leader is to ensure an environment and a culture founded on mutual respect, where everyone’s contribution is important, regardless of the rank or type of job,” he adds. The MD says such an environment instills a sense of bonding and belonging, not just as employees but as members of a family.

Finally, for Genomal, it boils down to passion. He loves golf and his BMW, but they aren’t the sole drivers for him aspiring to be the best. He got into the game to create an industry that stands the test of time.

(Sourced from Businessworld issue dated 2 December 2013.)

Zahra Khan, Sapna Agarwal, MINT

Mumbai, November 12, 2013

Marks & Spencer (M&S) on Monday said it expects to have 80 stores in India by 2016, making the country the largest international market by stores outside of the UK.

Marc Bolland, chief executive of London-based Marks and Spencer Group Plc, said India is the retailer’s new “priority market” and a “key sourcing hub”.

“We also want to expand to attractive tier-II cities like Surat and Kanpur, and aim for more than 80 stores by 2016,” he said in an interview, adding, “China used to be the priority international market, but now that has changed.” The company declined to give details of its investments plans.

The company runs its business in India through a 51:49 joint venture with Reliance Retail, owned by Mukesh Ambani’s Reliance Industries Ltd, called Marks & Spencer Reliance India Pvt. Ltd.

M&S said it will continue to work closely with its Indian partner and does not plan to invest directly in the country. India last year allowed 100% foreign direct investment in single-brand retail. “Sometimes, cooperations can be difficult, but this one (Reliance Retail) has been a great partner,” said Bolland.

The company said its India sales were up 28% in the first half of fiscal 2014, with double-digit growth across all stores. Apart from its growing store presence in the country, M&S has given a push to its local sourcing operations as well. Bolland did not disclose the revenue generated by the Indian subsidiary, but said going forward “the financial contribution will be much higher”.

M&S competes with local retailers such as Shoppers Stop Ltd and Dubai-based Landmark Group that runs the Lifestyle chain of stores. It also competes with stand-alone brands Benetton India Pvt. Ltd and Tommy Hilfiger (the latter is present in India through a joint venture with Ahmedabad-based Arvind Ltd). Japan’s Uniqlo and Sweden’s H&M are in the process of opening stores in the country.

M&S has always been aggressive about the Indian market and moved from a franchisee model to the joint venture model in 2008. In 2008, the British department store chain outlined plans to set up at least 50 stores in India by 2013, a target it could not meet, mainly because of an economic slowdown. Currently, M&S has 36 stores in India.

“We don’t focus on quantity, but on quality; we always look for good placing of our stores…and this time our strategy for India is different than it was three years ago,” said Bolland.

Devangshu Dutta, chief executive at Third Eyesight, a retail consulting firm, said M&S started cautiously in India with a franchise model, but moved to the joint venture as it considers India a key market. Over the years, the retailer has increased its India sourcing for domestic and global markets, and has lowered prices and widened the range of offerings to appeal to a larger number of consumers in India, Dutta said. As such, both Reliance and M&S have deep pockets and they can make the commitment to grow, he added.

M&S recently opened a flagship store in suburban Mumbai, a 35,000 sq. ft outlet with over five floors. “We require bigger stores as we have a bigger catalogue, but we will also have more mid-sized stores going forward,” said Bolland.

“We have been cutting pricing, mainly backed by our sourcing capabilities, and have brought it down to mid-market level,” he said, adding, “33% of all M&S’s products sold around the globe are made in South Asia, while 64% of products sold in India are sourced from local suppliers”.

India’s organized apparel market accounts for $8 billion, or 20%, of the overall domestic apparel market, according to Technopak Advisors Pvt. Ltd, a retail consultancy. “Most department retail chains in India are expanding and opening five or more stores per year depending on availability of real estate,” said Abhishek Ranganathan, vice-president (retail, real estate, institutional equity research), PhillipCapital (India) Pvt. Ltd.

Shoppers Stop and Lifestyle are also expanding. Shoppers Stop has over 65 stores and plans to open 8-10 stores a year. Lifestyle, which has 45 stores, plans to open three-four stores this year, Kabir Lumba, managing director of the Landmark Group owned company, had said in a 1 September interview.

The Times of India newspaper, in a report in March, had said M&S planned to launch its food retail business as well in India.

(Sourced from MINT.)

Meghna Maiti, KR Sudhaman, Financial Chronicle

Mumbai/New Delhi, November 11, 2013

PepsiCo and Coca-Cola are in a competition of another kind, both saying on Monday they would invest huge amounts in India. If they do come about as promised, investments amounting to a total of $10 billion will come in from the two cola giants by 2020.

Elections or no elections, PepsiCo’s India-born chairperson and CEO, Indra Nooyi, said the firm would invest $5.5 billion (Rs 33,000 crore) in India by 2020 to more than double its capacity here.

“We are not guided by elections. We are guided by the potential of India. We are not waiting for any election results. We are investing in India for its economic story,” Nooyi told reporters after her meeting with finance minister P Chidambaram.

The company has so far invested $2 billion in India since its entry in 1989. It said new investment would be made to strengthen its capability in various strategic areas, including innovation, manufacturing, infrastructure and agriculture. “The Rs 33,000 crore investment we are making is going to cover both food and beverages and we will more than double the capacity of our business over the next seven years,” Nooyi said.

Not to be left behind, Coca-Cola India said it planned $3 billion new investments in India till 2020 to further capture growth opportunities in fast-growing, non-alcoholic, ready-to-drink (NARTD) beverages. This would take Coca-Cola’s India investments between 2012 and 2020 to $5 billion, a company statement said.

“Achieving continued, sustainable and responsible growth in India is core to achieving our 2020 vision of doubling system reven­ues in this decade,” Muhtar Kent, chairman and CEO of Coca-Cola, said.

“Our ongoing investment in India is focused on delivering innovation, partnerships and a portfolio that enhances the consumer experience, ensures product affordability and builds brand loyalty to deliver long-term growth,” he said.

Devangshu Dutta, CEO of Third Eyesight, said, “India is a fairly strategic market for Pepsi since its focus on non-carbonated beverage and packaged food has gone up significantly.”

Alpana Parida, president of DY Works, a brand strategy and design firm, said, “Pepsi could look at launching its own new brands and acquiring outside brands to make a deeper entry in the Indian food market.”

As per Euromonitor, Coca-Cola enjoyed leadership position in carbonates in 2012, accounting for 60 per cent of the total value of sales. It maintained a strong position with two brands — Sprite and ThumsUp.

“Also, stronger distribution in the existing categories and entry in new markets in rural India helped the company retain its strong position,” Euromonitor said.

Pepsi is the only other significant player in carbonates with 36 per cent retail value share in 2012, according to Euromonitor.

Pepsi has 42 plants in India, including franchises. Nooyi said, “India is a country with huge potential and it remains an attractive, high-priority market for Pepsi. We’ve built a highly successful business in India over the course of many years and we believe we’ve only scratched the surface. This investment is PepsiCo’s vote of confidence in India’s future.”

For the company, India is the largest market. Pepsi will continue to expand the range of foods and beverages in its portfolio. In India it has eight brands that generate Rs 1,000 crore or more in annual retail sales — Pepsi, Lay’s, Kurkure, 7UP, Slice, Mirinda, Mountain Dew and Aquafina.

Apart from raising capacity, Pepsi will expand its selling and delivery infrastructure. It will also step up collaborative farming that the company claimed has benefited 24,000 Indian farmers. “Most importantly, our investments will be aligned with India’s interests,” Nooyi said.

Since entering India, Pepsi claims it has created opportunities for more than 200,000 people through direct or indirect employment and agriculture collaborations. It is estimated that the strategic initiative announced on Monday will add more than 100,000 additional employment opportunities.

On the other hand, Coca-Cola said it had already invested more than $2 billion in India since it re-entered the country in 1993. The fresh investments will raise the amount to $7 billion.

Coca-Cola India directly employs over 25,000 people and indirectly more than 1,50,000 people. The carbonates market is projected to grow at 10 per cent annually in terms of retail volume, according to Euromonitor.

Growth will be driven by rural areas, as urban areas are facing a degree of saturation, as well as shifting to healthier options, such as fruit/vegetable juice and bottled water. Companies are targeting rural areas to build share.

Coca-Cola has equ­ipped retail outlets in remote rural areas with solar coolers. Smaller pack sizes are driving sales in rural areas whereas PET bottles are pushing sales in urban areas.

Coca-Cola bought up Parle’s four big soft drink brands — ThumsUp, Limca, Gold Spot and Maaza — which gave the company an instant 60 per cent share of the Indian softdrinks market when Pepsi had less than 30 per cent.

(Sourced from Financial Chronicle .)

Raghavendra Kamath & Sayantani Kar, Business Standard
Mumbai, November 10, 2013

Shikhar Dhawan has often twirled his much-coveted handlebar moustache after his blazing international cricket performances. But he will now be seen flaunting his moustache in ads for Fashion at Big Bazaar (FBB), Kishore Biyani’s flagship clothing brand sold in his hypermarkets. The yet-to-be-launched promotional campaign for FBB’s winter collection replaces the earlier Desh badla, bhesh badlo (new attire for a new nation), featuring cricketer M S Dhoni and actor Asin.

The close-to-Rs 200 crore budget for FBB’s promotions would mean the audience will soon see a lot more of brand Dhawan in the next seven to eight days when the campaign is launched. What it also signals is Future Group’s designs on the apparel industry, after its Pantaloons venture.

After selling off the department store format to the the Aditya Birla Group, Kishore Biyani, Future Group’s promoter and group chief executive (CEO) now wants to drum up the credentials of his other apparel brands.

Other hypermarkets across India are stressing on their apparel merchandising, too, because of the comparative high margins, starting from a basic layout change by bringing apparels upfront at the stores. Fashion carries 40-50 per cent gross margins, while food and grocery 10-15 per cent.

Devangshu Dutta, CEO of Third Eyesight, says non-food items always add more margins than grocery and food items. However, clothing also brings with it the extra task of product development apart from the merchandising and stock planning that are common to food and non-food for the retailer. He explains, “Future Group has its roots in fashion and textiles, having started with Pantaloons. So, it is now looking to redevelop the front-end presence with such campaigns. It will also have an impact on how Big Bazaar will now look as fashion items would need a zanier space than what grocery calls for.”

The new campaign is geared to achieve an image makeover for the brand, which Biyani expects to clock Rs 3,000 crore next year. Dhawan is seen inviting viewers for a makeover and a chance to feature with him in further ads, with the refrain: “My mooch (moustache), my style”. Referring to H&M, the Swedish departmental store’s racy campaigns, Biyani says, “We are styling our campaigns on similar lines with edgy shots and ambassadors with an attitude. If H&M has (UK footballer David) Beckham, we have Shikhar Dhawan.”

Abneesh Roy, associate director, institutional equities, research, Edelweiss Securities, says, “Biyani sold Pantaloons because of the stress on the company. Pantaloons had EBITDA (earnings before interest, taxes, depreciation and amortisation) margins of 13-14 per cent. That must have given him confidence in building the next big brand. But the question is how many years it will take him to build the next Pantaloon despite investing heavily in advertising, given the market slowdown and a competition more intense than the time Pantaloon was launched.”

But unlike in the past, Future Group has access to scale, as Biyani points out, in both retail outlets and the supply chain. Sourcing from multiple suppliers across Tirupur, Jaipur, Ahmedabad, Delhi, among others, with 29 designers on board and a lean supply chain (a national distribution centre at Nagpur has cut supply chain and transport costs by 20 to 40 per cent and inventory by half, say group executives). Biyani insists that the scale would be an entry-barrier for others to replicating FBB’s strengths. The retail reach would span all of

Big Bazaar’s stores and 30 standalone FBB outlets. “Hypermarkets/supermarkets have 10 to 15 per cent sales coming from fashion but Big Bazaar gets 35 per cent of sales from fashion,” Biyani says.

While the communication for FBB would be aspirational, a la departmental stores, the ground play would see a lot more stress on volume sale. The selling strategy would be as much about the price points as about the looks its new spate of ambassadors will sport. Apart from Dhawan who will make eight to nine appearances for the brand and feature in national campaigns over the next couple of years, the brand will focus on regional celebrities, like actor Jeet in a campaign leading to this year’s Durga Puja in Kolkata. Print ads would carry the prices for the items of clothing that Dhawan and company will be sporting.

“My idea is to sell a lot more under the FBB brand. Europeans buy fashion items eight to nine times a year and 11-12 items together but Indian buyers buy three to four times a year and two-three pieces. The real challenge is how to make people pick up eight pieces instead of three pieces of clothing, which they are now doing at our stores,” says Biyani, while pointing out FBB has a low-cost supply chain that ships in bulk as prices (beetween Rs 199 and Rs 999) are low and encourage cluster-buying. FBB is targetting selling 100 million pieces next year. Biyani plans to set up neighbourhood stores for more modular consumption of the brand, with such stores selling basic T-shirts, salwars, churidars and such for mix-and-match purchases in 4,000-5,000 sq ft stores. The group has already done some pilots in cities and is looking to open such stores soon. However, FBB will face stiff competition from Reliance Trends, Max of Dubai’s Landmark group and Megamart by Arvind who are aggressively expanding their footprint and wooing customers with offers.

(Sourced from Business Standard.)

Nupur Anand, DNA – Daily News & Analysis

Mumbai, October 26, 2013

Happy hours, a concept limited to liquor, is finding its way into quick-service restaurant and cafe chains.

Dominos, the pizza chain, is giving buy-one-get-one free offer, while fine-dine restaurants such as Blue Frog in Mumbai are offering 50% discount during lunch time.

Costa Coffee has also been running a happy hour programme post 7 pm.

Devangshu Dutta of Third Eyesight said though this concept originates from bars, other retailers are also increasingly using it to drive footfalls.

“No doubt there is a slowdown and consumer sentiment has been dampened. Retailers generally use the happy hour concept during a low footfall period.”

In fact, Dominos has been witnessing the slowest growth ever since it got listed in 2010.

Since there are very few players in the quick-service restaurant space which are listed, experts believe that Dominos growth story can explain the entire industry’s scenario.

Santosh Unni, CEO Costa Coffee, said they have come up with the happy hour promotional offer to increase the coffee drinking hour. "Typically after seven consumers don’t have coffee. With this, we are aiming at extending the hours by giving them a value for money offer." He said with the promotional scheme, business transaction during that time has trebled.

The domestic quick service restaurant business, estimated to be Rs 3,400 crore in 2012-13, has been struggling with slowing growth in the past one year.

To provide more value offerings to the consumers, restaurants have been coming up with low price point products or increased discounts and promotions.

Experts said such promotions are going to continue and even intensify.

(Sourced from DNA.)