admin
February 24, 2012
Shilpa
Phadnis , The Times of India
Bangalore,
February 24, 2012
Homemakers
are likely to love this – someone cutting vegetables for them
for free, someone making chappatis for them, again at no charge.
It’s the latest from Future Group’s value retail chain Big Bazaar.
They call it the Seva initiative, and the store at Rajajinagar
in Bangalore has become the first to launch the services.
Customers in the store can choose from a combination of different
grains that go into making a dough, and the store staff will then
grind, knead and make it into fresh chappatis. The promise is
that the entire process will take no more than 12 minutes. Customers
can go to the vegetable counter and get the vegetables sliced
and diced in different styles for free.
The ‘sevaks’ at the 1.3 lakh sft store will assist customers in availing free after-sales service for the electronic goods they purchase or in identifying a vendor for dry-cleaning their carpet. The store even has a Bangalore One counter where they can pay electricity or phone bills, and avail other public services.
"We don’t merely want customers’ share of wallet or mind. We also want their heartshare," said Ashni Biyani, director of Future Ideas, the innovation and incubation cell of the Group.
The retailer incurs additional costs to deliver these free services. But analysts say the cost is mostly related to labour. "This is a clever strategy to attract customers at relatively low-incremental costs," said Hemant Kalbag, partner at consultancy firm AT Kearney.
Usually, the cost attached to delivering a service gets embedded into the product. "But free give-aways along with experiential marketing become a hook for customers, which could potentially translate into a higher billing size at the counter," said Devangshu Dutta, chief executive at retail consultancy Third Eyesight.
The Future Group has both internal and external pressures to try and find innovative ways to build a more robust business. External pressure comes from Big Bazaar’s competitors like Spar Hypermarket, which offers a better ambience and attracts more upmarket customers. Big Bazaar has been upgrading its stores to enhance customer experience, and Seva can be seen as part of this. "Big Bazaar stores launched in the last one year are less chaotic and resemble a Spar," said an analyst who did not want to be named.
Internal pressure for the Group comes from its huge debt of about $1 billion and high interest cost, which has impacted profitability. The retailer is working on a plan to turnaround its retail operations. It is exiting some of its non-core businesses and shutting down loss-making stores. It has closed five Food Bazaar outlets and 11 E-Zone stores and has laid off 3,000 people in the recent past.
To cater to more evolved customers, the Group is rolling out FoodHall, a food store for value-added food products and international food ingredients. The Seva initiative will be rolled out to 12 Big Bazaar Family Centres in the next two months. The Family Centre sub-brand makes customized product and service offerings based on the needs of the people living in and around the catchment area.
admin
February 22, 2012
Meghna
Maiti, Financial Chronicle
Mumbai,
February 22, 2012
Kishore
Biyani, whose proposed licensing and distribution venture (JV)
with US footwear retailer Skechers fell through last year, has
revived partnership plans with the foreign firm. It has even seconded
one of its senior most executives Sanjeev Agrawal previously joint
CEO at Future Value Retail as CEO of the proposed JV.
“The group is in the process of signing a JV agreement with Skechers and Agrawal will head this venture,” said at least three company officials in the know of the development. Future Group already has a 50:50 joint venture with UK-based footwear brand Clarks which is steadily scaling up.
“The footwear segment is seeing evolution in terms of product mix, pricing and demand growth, helped by the availability of international brands,” said Devangshu Dutta, CEO, third Eyesight, a consulting firm focused on retail and consumer products sector.
Earlier Future group had tied up with Liberty Shoes in a joint venture that was scrapped because of poor customer response. India is one of the strategic markets for Skechers and the company is said to have done good research over the last three years to establish the right strategy and partnership to develop the brand in India.
An email sent to Kishore Biyani, group CEO at Future group on February 20, 2012 seeking comments on the Skechers JV did not elicit any response till the time of going to press. Sanjeev Agrawal, ex-joint CEO at Future Value Retail said, “No comments.” Skechers USA in an email said, “Your email has been forwarded to the appropriate department for review.”
Purnendu Kumar, vice president at Technopak Advisors said, “The growth opportunity in the footwear segment is very high primarily because of low penetration in terms of point of sales, number of brands. There is pent-up demand in the market. Growing affluence is also driving demand in this category.”
Skechers USA, incorporated in 1992, designs and markets Skechers-branded lifestyle footwear for men, women and children under several lines such as those for shaping up, running and walking. The over $ 2 billion Skechers had signed a deal with Pantaloon Retail in the year 2009 to licence and distribute Skechers footwear and apparel in India. The deal involved Winner Sports, a wholly owned subsidiary of Pantaloon Retail India (PRIL) as the licensee and distributor of Skechers footwear and apparel through Future Group’s retail format Planet Sports.
The market for premium shoe products is growing at 15-20 per cent annually, according to Technopak Advisors. The growth potential has prompted several firms to enter the market in the past few months. Tata global trading arm Tata International started its chain of stand-alone stores, Tashi, targeting the segment late last year. Reliance Retail has entered into a licence dela with US-based Timberland.
Future Group’s other footwear JV Clark, has five standalone
stores and around 10 shop-in-shops across India. “This venture
will take two years to become profitable and it’s now in
scale-up mode. By the end of the next financial year, we are confident
that cash accruals from existing stores will be able to take care
of the growth requirements of the lifestyle footwear, bags and
accessories joint venture,” said a top Future group official
involved with that business
admin
February 6, 2012
Vidya
Padmanabhan, Mint
Chennai,
February 6, 2012
Banking
on the growing purchasing power and busy lifestyles of urban,
dual-income families, a slew of firms are now offering to help
them run their homes, attempting to bring a measure of professionalism
to a largely unorganized sector.
While there’s no dearth of cook’s cousins or aunt’s office assistants who will repair a ceiling fan, wash the car and even fix software bugs, entrepreneurs are now seeing an opportunity to step in with streamlined services for affluent professionals who want to avoid the uncertainties of the informal ecosystem.
“We did the research and saw the shift,” said Siddharth Bhatia, the head of operations of Gurgaon-based eTechies.in, a company he co-founded in mid-2010 to provide onsite and remote information technology support for individual users and small businesses. Bhatia and his co-founders, who had previously worked for several years in a firm providing remote technical support to users overseas, received a $2 million infusion in January from venture capital firm Inventus Capital Partners on top of an angel investment from Google India’s managing director Rajan Anandan.
“People in the middle and upper-middle classes are now ready to pay to get professional service and peace of mind,” Bhatia said.
With more than 1,500 individual subscribers and over 400 small-business subscribers for the company’s Rs. 3,000-per-computer annual contract—a 20-30% premium over rates at local repair shops, according to Bhatia—eTechies plans to extend its services to Bangalore and Mumbai in the next four months.
The move to organize the home-focused services sector is prompted by the same economics that drives the retail industry, which has seen mega malls and hypermarkets springing up in anticipation of the increase in the disposable income of India’s burgeoning middle class.
According to a recent report by the National Council for Applied Economic Research, India’s middle class, defined as families with an annual income between Rs. 3.4 lakh and Rs. 17 lakh, will grow 67% from the current level to 53.3 million households or 267 million people in the next five years. Further, according to the report, the typical middle class household spends half its income on basic daily expenses, leaving the other half for saving or discretionary spending.
Along with the growing affluence, however, comes increasing demands on the time of upwardly mobile professionals, which is where those who seek to organize the home-directed services economy come in.
“Given today’s busier lifestyles, with long commutes and extensive work-related travel, people have less time to hunt for a specific individual handyman—this offers an opportunity to companies that can offer a comprehensive set of services,” said Devangshu Dutta, chief executive of Third Eyesight, a retail and consumer products consultancy.
“Our target is the typical working couple that doesn’t have the time to deal with (service-related) issues at the end of the day,” said Prerna Bhutani, co-founder of Chennai-based One Call India, which facilitates home appliance purchase, delivery and after-sales service. She regularly sets up stalls in information technology parks, high-end apartment complexes and supermarkets to reach out to her target audience.
For Rs. 1,000 as annual subscription, or Rs. 100 per call, the company researches best prices among retailers, offers discounts through tie-ups with the retailers, arranges pick-up and drop services for purchases and repairs, and otherwise coordinates with retailers and repair centres to improve customers’ service experience, according to Bhutani.
With around 1,000 customers in Chennai, One Call India started operations in Bangalore and Gurgaon late last year, and may seek venture capital funding to expand to all major metros in the next three years.
“We have the exposure today to the kind of services people are using in the West, and customers are demanding that,” Bhutani said.
The potential in upscale Indian homes hasn’t escaped the big guns. The Indian arm of ISS A/S, a $14 billion Danish multinational that maintains facilities for the corporate sector, began a domestic cleaning service last year.
“Our research states housing and utilities make a prominent presence in the average consumer spending pattern of people in metros, hence a huge potential exists for ISS Homecare,” Stanley Britto, chief operating officer, said in an email.
The company charges Rs. 5-7 per sq. ft for cleaning services including specialized floor care, carpet care and glass cleaning, according to Britto. ISS Homecare earned about Rs. 1 crore from its operations in Mumbai, Bangalore and Chennai in the past year, and expects the figure to double every year, with services to be extended to other cities across India in the next 12-18 months.
However, Third Eyesight’s Dutta sees a gap between the demand and most efforts so far to tap it. “Most (of the companies) rely on a network of individuals as subcontractors, and there are gaps in terms of filtering these individuals for skill level, there is little or no roster management, and the result is highly inconsistent customer service. Therefore, customer retention for repeat contracts is an issue, and with time, if the poor reputation spreads, new customer acquisition also becomes difficult.”
In the case of eTechies, it was the management outlook, more than the market demand, that motivated Inventus’ investment.
“Yes, Indian consumption growth (of devices) was clearly a driver for eTechies,” Parag Dhol, a director at Inventus, said in an email. “We tend to be hugely entrepreneur driven, though.”
The founders’ work experience in remote technical support and their business model, proven successful in the National Capital Region, clinched the funding decision, Dhol said.
The companies, naturally, insist that their services beat what’s currently available. “Personally, as a working woman living alone, I found it very difficult to repair a broken tap or flush—just waiting for the guys—and safety was an issue,” said Shaifali Agarwal, founder of Delhi-based EasyFix Solutions, which provides plumbing, electrical and carpentry solutions.
The company checks recruits’ background, technical competency and basic reading skills needed to help them check and reply to mobile text messages, Agarwal said. They also undergo behavioural training to make customer interaction smoother, she said.
EasyFix, which charges a minimum of Rs. 100 per visit, has had about 1,300 customers in the National Capital Region, and plans to expand to Mumbai, Bangalore and Hyderabad by March.
Agarwal admitted that handling a large group of workers—24 in her case—was a significant challenge, one that probably has kept the sector mostly free of corporatization.
Pegasus Facilities of Chennai, which provides cleaning services for residences and vehicles, combines attractive employee benefits with a nifty micro-management system to stay in control of its workforce of 40 full-time employees. The company’s cleaning staff earn about Rs. 7,500 a month as salary, besides conveyance fare and a customer-referral bonus, plus tips, co-founder Vijay Simha said.
Employees must check in to the company with missed calls when they reach a customer’s residence, when they finish the job and when they leave, Simha said.
The company offers several cleaning packages—entire residence, kitchen, fans and fittings, windows—of which the bathroom cleaning service begun two years ago has been the most in demand, according to Simha. For a minimum of Rs. 5,500 per year, the company cleans two bathrooms twice a month. Of 9,000 households that use the company’s services in Chennai, about 60% are dual-income families, Simha said, adding that he gets three-four new contracts and one or two renewals every day. Pegasus expects to expand to Pondicherry and Coimbatore this year, and is seeking franchisees in cities across India. Simha gets occasional complaints from customers, he said, and he tells them, “I can’t make your bathroom new—I can just clean it. What you don’t have the time to do, I do—that’s all.”
admin
February 3, 2012
The Economic Times
Bangalore, February 3, 2012
The world’s largest online retailer is tiptoeing into India, using cover from a comparison shopping site Junglee.com it acquired 13 years ago.
Amazon, whose moves have been closely watched for any sign of an imminent entry into the Indian retail market, will not sell or buy anything in the country for now. Instead, it will direct customers to both online and offline vendors listed on Junglee.
Amit Agarwal, vice-president of Amazon, would only say Junglee would "help customers discover products from online and offline retailers in India and from Amazon.com". He declined to say more about the company’s plans.
Conspicuously missing from the list of vendors on the Junglee site is Flipkart.com, India’s biggest online retailer founded by two former Amazon executives. Flipkart expects to post sales of Rs 500 crore by March 2012. Amazon ended 2011 with revenues of $48 billion (about Rs 2.5 lakh crore).
"Its recent moves to set up a fulfillment centre (in Mumbai) and now the Junglee launch certainly look like precursors to a retail launch whenever the government allows FDI in multi-brand retail," said Devangshu Dutta, CEO of retail consultancy Third Eyesight. A legal expert at one of the country’s largest law firms said Amazon was making a ‘clever entry’.
Agarwal said Junglee will display over 1.2 crore products and 14,000 brands for Indian consumers. The company has also launched Amazon seller services in India where vendors can hook up to Amazon’s portal to acquire customers.
(Read our perspective on this launch on our blog.)
admin
February 1, 2012
Raghavendra Kamath & Sharleen D’Souza, Business Standard
Mumbai, February 1, 2012
Spending
on the High Street has never been cheaper for such a long period
of time. If you walk through Mumbai’s Linking Road that houses
the showrooms of some of the world’s biggest brands, it’s
almost a surreal experience: be it Mango or Vera Moda, or Jack
& Jones, or even shoe brand Aldo – all these premium
retailers are literally shouting from the rooftops that they are
offering up to 70% discounts. Some like designer wear Mogra has
gone one up and is offering up to 80% ‘sale’.
“At this rate, I won’t be surprised if they go up to 100% discount one day,” quips Vinita Chandran ,a regular shopper.
Welcome to the Great Indian Discount Bazaar— something no retailer likes but nobody can do without, as a dull Diwali and poor offtake in the following months have forced brands to dole out more for less.
The value retailers, as the low-cost brands like to refer themselves to, are also feeling the pinch as the raison d’etre of their business is now being hijacked by the bigger players.
Vasant Kumar, executive director of Landmark group’s value retail chain Max, was worried during the end of the season sale as many brands offered up to 80% discounts and shoppers flocked to stores to buy goods on discount.
“We could not offer such discounts because of our margin structures,” Kumar said. To woo customers, Max lowered its sale prices from Rs 399 to Rs 299 and played its value card to compete with big brands. “There was no meaning of 20 to 30% discount when big ones were giving flat 50 to 60% discounts. So we lowered our sale prices and said our prices are still lower when others gave steep discounts,” he said.
Kumar is bang on. While French menswear brand Daniel Hechter offered flat 60% discount to shoppers for two days, apparel chain Bombay High was offering ‘buy two get two free’. Apparel retailer Provogue went for a flat 50% off over the Republic Day weekend and is now offering a flat 40% off.
Experts say the ‘sale’ tsunami was bound to happen. “There was a double impact—the like to like sales growth was below par and new stores could not be opened as planned…So they have more inventories to get rid of,” said Devangshu Dutta, chief executive of retail consultancy Third Eyesight. Like to like sales refers to sales coming from stores which are in the business for more than one year.
Besides steep discounts, brands are also keeping higher amount of inventory in the discount basket, say industry experts.
“If brands were keeping 30 to 35% of their merchandise on sale, now we are seeing 60 to 70% of their goods on discount. We are also seeing brands going for flat 50% discounts rather than upto 50%,” said Kumar of Max.
If that was not enough, many malls such as Raheja-owned Inorbit, Oberoi Mall run by Oberoi Realty and Kishore Biyani’s Central came out with shopping events wherein 50-100 brands offered a flat 50% discount.
It’s no surprse that many in the industry are not happy with the steep discounts brands are offering.
“I think retailers are overdoing discounts. By giving 70% discounts every other season, they are killing the full price purchases. They are sensitizing the customers to wait for the next season and do not buy full priced product,” said Jaydeep Shetty, founder and chief executive of apparel brand Mineral.
“When sales end in February, March will be empty month for brands as customers exhaust money to shop,” Shetty adds.
Govind Shrikhande, managing director of Shoppers Stop, which offers customers upto 51% discount, said: “We do not believe in this (steep discounts). It is tough and it is race to the bottom.”
But will brands be able to sustain such discounts? “I think brands believe that it is better to liquidate stock at higher discounts than cash getting stuck in merchandise,” said Dutta.
The inventory issue came to the fore when many brands advanced their end of the season by a few weeks to clear their inventory before the next season kicks in.
Though brands normally start their end of the season sale after January 15, this time around, they came out with the sale from third week of December.
For instance, Mango started its sale from December 22, while Aldo started beginning this month. German brand also Esprit also advanced its end-of-the-season sale by a over a fortnight to December 31 this year (it was January 16 last year). Spanish brand Zara also started its sale from early January.
“Some retailers started their sales from Xmas weekend and advanced sales by two to three weeks. It is obvious that they wanted to have more topline,” said Nirzar Jain, vice president, Oberoi Mall, Mumbai.
Kumar added that: “There was drop in demand in September and October. Hence brands decided to go early and get rid of inventory.”
Some brands have also extended their sale to shore up the topline. French menswear retailer Celio, which has a joint venture with Future group, is on a sale for almost one-and-a-half months till February 14, UK-based brand French Connection is having its year-end sale till March. Normally, these brands have their end-of-the-season for a month.
Steve Madden, an international shoe brand, which started sale
from beginning this month has extended their sales by another
week.
