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January 1, 2010
By
Sunitha Natti
ExpressBuzz
(Indian Express), January 1, 2010
As the New Year celebrations wear out sooner or later bringing to the fore the harsh realities confronting the society today, the first thing that is likely to hit the denizens hard is the food inflation that is rising sharply.
Even as political unrest continues in the State, no one seems bothered about the spiralling food prices, except the common man on either side of the divide.
As a result of frequent bandhs, prices of essential edibles such as vegetables and fruits are hitting the roof.
Sample this: Tomatoes in both neighbourhood kirana stores and organised retail outlets — including Reliance Retail’s Fresh, Aditya Birla’s More, Big Bazaar, Heritage Retail’s @Fresh, Spar and Spencer’s Retail — costed Rs 15 per kg on Tuesday but increased to Rs 17 per kg on Thursday. Similarly, prices of onions and green chilli spiked from Rs 25.50 per kg to Rs 27 and Rs 20 per kg to Rs 21 respectively in just two days.
“Because of bandhs, frequency of trucks and lorries transporting vegetables from farms to mandis and outlets had come down. As a result of inadequate supply of some vegetables, increase in prices is only natural,” a senior official from More told Expresso.
While most retail chains do have robust inventory management and cold-storage facilities that can preserve vegetables for seven to ten days, due to continuing agitations, which began at the end of November, retailers feel that there is an impact on the overall supply-chain and distribution network.
“Typically, vegetable and fruit prices are fixed based on a combination of factors such as production, supply, demand, transportation and storage costs. Even if any of the factors gets disturbed, prices shoot up,” said Devangshu Dutta, CEO, Third Eyesight, a Delhi-based consulting firm focused on retail and consumer products.
Interestingly, some of the organised outlets, in a desperate bid not to lose customers, are selling raw tomatoes and overripe cucumbers at reduced prices. “Retail outlets dealing with perishables are severely hit due to the ongoing political crisis in the State. It causes customer inconvenience besides posting losses,” said K S Venugopal, Chief Executive (customer operations), Reliance Retail.
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January 1, 2010
By
BSReporters / Mumbai / Kolkata
Business
Standard , January 1, 2010
Tie-ups with international retailers and brands, emphasis on profitable growth and increased focus on private labels are set to be key trends in the Indian retail sector in 2010, say retailers and consultants Business Standard spoke to.
Though foreign direct investment in single-brand retailing and cash-and-carry ventures are allowed along with franchising and licensing pacts as of now, 2009 saw most of the foreign retailers focusing on manage the business in their home countries, where they were seeing declining sales.
“In 2010, a lot of international retailers and brands are most likely to look at India as global markets have stabilised and the Indian economy has proved to be better than most other countries. These factors give a lot of confidence for them to invest in India,” said Arvind Singhal, chairman of Technopak Advisors, a business consultancy.
Wal-Mart has set up its first unit in the country and Tesco, the UK’s largest retailer, is providing back-end support to Tata’s hypermarket Star Bazaar, Carrefour is said to be talking Kishore Biyani’s Future Group for a possible tie-up.
Industry sources said a number of international brands are also holding talks with Future Group, Reliance Retail and Spencer’s Retail for tie-ups.
Devangshu Dutta, chief executive of business consultancy Third Eyesight, believes franchising and licensing agreements could be a major avenue used by overseas brands to enter the country.
“Our research shows that 45 per cent of fashion and lifestyle brands, which have entered India in the recent past, have used this route because it gives a quick entry and allows tie-ups with partners who have good real estate capabilities,” Dutta says.
A profitable growth
Though retailers such as Reliance Retail, Aditya Birla Retail
and Spencer’s Retail closed hundreds of stores or shifted
stores to economical locations in 2008 and 2009 and took various
steps to cut costs, they are likely to continue to focus on profits
and boosting margins in 2010.
Shoppers Stop’s top management took 15 per cent salary cuts, while 300 floor-level staff were not replaced. The company shrank its office space 20 per cent and corporate office expenses by 40 per cent to cut losses.
Delhi-based Vishal Retail, which has been battling cash woes and mounting debt, relocated 25 stores in the financial year 2009 and 10 stores since April 2009. It is now planning to close 20 more and go only through the franchisee route.
“In 2010, our strategy is to increase margins, reduce costs and boost revenues. In 2009, we mostly focused on controlling costs,” says Thomas Varghese, chief executive officer of Aditya Birla Retail, part of the Aditya Birla group. “We will watch the situation and open stores,” Thomas adds.
“Retailers will not book properties at ridiculous rentals and look at private labels to boost margins. Growth with profitability is the main mantra in 2010,” says Singhal.
Private labels to rise
Most retailers like Future Group, Spencer’s Retail and Aditya
Birla Retail, among others, are stepping up their private label
plans to boost margins. The reason: Private labels in food and
groceries carry margins of 25-35, while private labels in apparel
and accessories offer more than 40 per cent margins.
Future Brands, which manages the private labels of Future Group, is expecting a turnover of Rs 750 crore in 2010 (the group’s flagship Pantaloon’s financial year ends on June 30), 14 per cent growth.
Private labels contribute 30 per cent of its sales in FMCG and 25 per cent in personal care products. The group is expanding its private label portfolio further. It is planning to launch its own brands in lingerie and a toothpaste brand ‘Sach’, according to Future Group CEO Kishore Biyani.
Aditya Birla Retail, which has more than 400 products in its private labels, plans to take its share of private labels in overall revenues from 19 per cent to 25 per cent next year.
RPG’s Spencer’s Retail is also planning to double the contribution of private labels and fashion to its overall revenues in the next couple of years.
Spencer’s plans to launch several new private labels across categories. Under its brand ‘Smart Choice’, the company will launch floor cleaners, savories and chips, wines, air-freshners and cakes in the next two months. Under its ‘Livin Smart’ brand, the company has launched categories like quilts, handloom towels, dining accessories and, under its ‘Gerat’ brand, Spencer’s recently launched a mixer grinder and plans to launch a DVD player soon.
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December 9, 2009
By Aniruddha Basu and Nandita Bose
REUTERS
MUMBAI, 9 December 2009
* Cotton prices up 20 pct in six weeks
* Rising input costs to bite into profits
* Domestic players can raise prices, exporters constrained
MUMBAI, Dec 9 – An unforeseen drop in global cotton output has seen prices flare, putting at risk the fragile recovery of India’s textile industry that was battered by the global recession earlier in the year.
The rising demand the industry was hoping to cash on, bolstered by 25.5 billion rupees in government subsidies to upgrade technology, has started to look less promising as a sharp spike in input prices threaten margins in the coming quarters.
"Our textile exports have increased and so has our domestic consumption, and just when recovery was in sight cotton prices have started shooting up," said D.K. Nair, secretary general of trade body Confederation of Indian Textile Industry.
"Companies will continue to lose margins. Just when margins were recovering, the prices rose. The industry will then have to reduce production as that is the only way out," said R.K. Dalmia, senior president at Century Textiles & Industries
Cotton prices have shot up over 20 percent in the last six weeks. The benchmark Shanker-6 variety is at 26,500 rupees per candy of 170 kg from 23,500 rupees in October, data showed.
The global shortfall means the crop in India, despite being on expected lines, is being exported at a higher price, crimping supply at home.
About 6 million bales of cotton have already arrived in the first two months of the cotton marketing year and 4 million bales have been booked by exporters, Century Textiles’ Dalmia said.
PRICING DIVIDE
A cornered industry has few options. Raising prices would seem one, but analysts say that too is geography specific.
"Price increases are easier to implement domestically rather than internationally," said Devangshu Dutta, chief executive, Third Eyesight, a textile consultancy.
"If we look at exporters, they are driven by a more dynamic mix and trade across currencies, and in the current scenario the flexibility for price rise is not that high," he added.
Alok Industries
Customers the world over are able to source cotton products at competitive prices from Asian countries, making it difficult for Indian exporters to raise prices of finished products, said Rajendra Hinduja, managing director of the Bangalore-based Gokaldas.
"Domestic players will pass on whatever can be passed on…so there may be some possibility of recovering costs. But in exports you can’t even do that as there is a lot of choice for the importing countries," CITI’s Nair added.
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December 4, 2009
Reported by Diwakar Kumar
4 December 2009
"Rather than trying to fit the world to our business model, we need to fit the business model to the real world that exists," comments Devangshu Dutta, chief executive of Third Eyesight. At present, in the midst of a tough (but recovering) economic climate, when shoppers appear to have become even more conscious of value for their money, retailers need to re-engineer marketing strategies to trigger growth. Some analysts believe that the focus should be directed on retention of existing shoppers rather than tapping new shoppers who may or may not stay with them in these fickle times.
All retailers spend a significant percentage of their business outlays in engaging shoppers (consumer engagement programs in support of sales promotions, discount schemes, contests and raffles, product bundling and promo items and such). So the adoption of a strategy to repose on existing shoppers – during a slowdown – reduces the risk of drop in revenues in case a plan to attract new shoppers fails.
Additionally, existing customers don’t need to be educated for product offerings and the cost of marketing to them (existing shoppers) is even lower. Hence, at least on paper, it looks less burdensome for a retailer to rest on its existing shoppers until such time the market looks up.
However, depending entirely on existing shoppers does also reek of complacence. While customer retention is critical to any business, all retailers and brands constantly look for ways to appeal to a wider demographic and broaden a potential consumption base. But, where should energies – and monies — be directed during a crunch?
We found some answers through an open poll question we threw out some weeks ago on the website.The question: It’s easier — and cheaper — for a retailer to build on existing customer relationships than to attract new shoppers; The answer: 80.95 per cent of the respondents supported – while 19.05 per cent of them negated – the question.
Responding to the question, S. Sivakumar, chief executive, Agri Businesses, ITC Limited, says, "Insights on existing customers are deeper, leading to superior and personalised offers that deliver greater value to those customers, in turn bringing higher margins. Cost of engagement with the existing customers is also lower than connecting with new consumers. Any retailer`s portfolio, however, has to be a mix of existing and new customers."
Echoing this view, Ravi Pahuja, VP – Operations, Odyssey India Ltd. says, "It`s certainly easier and cheaper for a retailer to build on existing customer relationships than to attract new shoppers. For new customers a retailer has to first attract them to come to the store and then build on the relationship. Having said that, it is important to build relationships with old as well as new customers to run the show."
"Retailers who work on their existing customer relationships also draw in new customers because of the positive word-of-mouth publicity by these customers, so it’s building relationships with old and new customers at single cost," he adds.
"In this era of high customer churn, what is essential is brand loyalty. Once a brand has cemented its relationship with its customers, there is immense opportunity to communicate with this loyal base – allowing for value-adds like customisation and on a one-to-one dialogue basis, which makes the experience much more personal and interactive," comments Manjula Tiwari, chief operating officer, Esprit.
She further opines, "It stands to reason that this method is also cost-friendly as it involves direct communication as opposed to mass media. That being said, one cannot dismiss the signifance of attracting a newer customer base, without which the brand begins to stagnate."
"It is of paramount importance for retailers to build on existing customer relationships (though it is not necessarily easier or cheaper). A positive word from one customer can get you 10 new customers while a negative word can cost you an even larger number of customers," concludes Viney Singh, MD, Max Hypermarket India Private Limited.
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October 27, 2009
27/10/2009
 Mr Bruce E Bergstrom VP, Vendor Compliance,Li & Fung |
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"Sustainability is a great concept like liberty. We are in a world with many problems and sustainability is the solution. This is the answer given by Bruce Bergstrom, VP vendor compliance of sourcing giant Li & Fung, who tackled the difficult question of What is Sustainable Fashion? at the first-ever Sustainable Fashion Forum held earlier this month. |
Session One:
Moderating the first session, Michael Lavergne, director-Asia, Worldwide Responsible Accredited Production (WRAP), posed to the panel "What does it really mean to be sustainable and what is best practice?"
Adding to his big-picture view of sustainable fashion, Mr. Bergstrom says economics play a strong role in the current approaches to sustainability, while solutions taken from social and environmental perspectives are sure to come.
"Sustainability is now a retailer and brand-driven initiative, but we need to convince the manufacturers to see the benefits of sustainable operation starting with raw materials,’" said Hong Lee, manager of Asia Pacific, Control Union.
But when widespread consumerism drives disposable fashion, is there really a place for sustainable fashion? The answer is yes, according to Janvier Serrano, creative director and founder of The 091/091’s Eco Couture brand, which features bags made from recycled scraps.
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"Although it is difficult to achieve sustainability right now and it is a big challenge, we must do it. We must be open, we must be proactive. We must educate the consumers to go for quality and not quantity," advised Serrano.
Agreed Amy Small, Creative Director at Green2greener, a b2b trade platform for eco-fashion: "Sustainability is a continuous goal, it is to put back the same amount as what you take out". In her opinion, small companies, successful in sustainable production, can inspire big companies to follow.
"Fashion is not only in clothing but it is a lifestyle and attitude of life. We have to be vigilant on sustainability in day to day operation and living. It is important to impress upon the students of today the concept of sustainable living so that it can be passed down to the next generations", said Mary Yan Yan Chan, director of Style Central Ltd, the exclusive agent of Perclers Paris.
Taking questions and opinions from the floor, the panel and audience agreed that a paradigm shift is needed for the fashion industry to tackle sustainability effectively. There is a need to drive innovation. Governments can also play a part, through education and green policies.
Session Two:
Devangshu Dutta, chief executive of Third Eyesight led the 2nd session panelists to discuss "Is Sustainable Fashion Profitable?" He commented that sustainability is not viable in the long term without financial returns and a good business sense.
"Sustainable fashion can be profitable because shoppers today are looking for something more meaningful. Consumers are accepting the concept of reuse and recycle in a creative way", said Olivier Grammont, founder of eco fashion brand Francs-Bourgeois. He described how his company uses second hand materials for handbags and the finished products are selling well in boutiques.
Concurred James Ockenden, director of publishing house Media Karma which specializes in the environmental technology, energy and finance industries. Ockenden citied the case of an olive oil company that used olive pits to generate energy for the plant. The company has now expanded to processing palm oil waste to produce a power supply to 400 households. Ockenden strongly believes that green legislation is the way forward but subsidy for new technology is necessary. He proposed adding ‘government’ to the three pillars of sustainability, that being economics, environment and social.
 Session 2 Panel: Mr Olivier Grammont, Mr James Ockenden, Ms Cassandra Postema, Ms Dong Shing Chiu |
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Meanwhile Carolina Rubiasih, VP sourcing & product development of the SAK questioned whether today’s consumers, who want value-for-money products, are indeed ready to for sustainable options that generally incur greater costs. The younger generation, however, is adopting healthier lifestyles that will likely encompass sustainable fashion. As time goes by, sustainability will be the norm and a way of life and perspective.
Offering ideas on how to be profitable with sustainable products, Ms Rubiasih advises to produce only what you can sell, improve on the design to reduce wastage, use less packaging layers, increase efficiency in logistics and study the tariff code to tap lower tariff categories with minor adjustments to the material & design. Her privately owned company took such steps and yielded good results, outperforming their previous year’s revenue.
Echoing Rubiasih’s emphasis on the importance of design, Cassandra Postema, director of fair trade fashion brand Dialog said "As designers, we have to design a product that can sell and sustain and compete with the regular products. It took People Tree, an eco-friendly company, 10 years to breakeven."
Some audience members felt that sustainability must be price neutral if not cheaper to sell to consumers and noted that supply chain efficiently is critical to profitability, while innovation and good management can bring costs down. It was also suggested that designers should place attention towards engineering so as to produce more efficiency.
Session Three:
In Session 3 Mr Ockenden facilitated the panel to probe into the question of "Who Wants Sustainable Fashion?" People buy fashion for various reasons, but experts often agree is linked to an emotional element. Companies can encourage sustainable fashion purchases by strengthening its ‘feel-good’ factor.
Sustainable fashion is in-demand among fashion brands, but under the financially low-risk terms of cost and time-efficient production, says Mr. Lavergne. NGOs are nudging the concept of sustainability onto the brands and retailers and the social climate is ripe for them to take such a stand.
Meanwhile Mr. Dutta says that general perception of fast fashion is quite wrong; it is actually not about throw away clothing but a management system that can improve the efficiency of the supply chain. Fashion is by nature not a sustainable concept but how can we make it sustainable? He hopes that in 10-20 years time we will truly have sustainable fashion.
 Moderator: Mr James Ockenden, Direct, Media Karma |
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Summary:
The panelists recognise that sustainable business is still in its infancy, and urge the brands, retailers, buyers and suppliers to take small steps towards sustainability. There is no one answer to the complex and multi-faceted issue and finding solutions will require a collaborative effort. Improvements in education, innovation, technology and government policies will make sustainable fashion possible – and profitable.
Moderator: Mr Michael Lavergne
Session 1 Panel: Mr Javier Serrano, Ms Mary Yan Yan Chan, Mr Bruce E Bergstrom, Mr Hong Lee 
Moderator: Mr Devangshu Dutta 
Overview of the forum