Written By Rasul Bailay

NEW DELHI: Jeff Bezos, the founder of Amazon, will visit India in January when he is likely to meet Prime Minister Narendra Modi. During his visit he will kick off the US retailer’s annual event around small and medium enterprises, which are perceived to be hurt by deep-pocketed ecommerce companies.

The world’s largest online retailer is said to be worried about the changing ecommerce rules in India, where the Seattle-based company has invested more than $5 billion and created one of its largest foreign subsidiaries.

Bezos comes calling amid protests by a group of small traders against foreign-funded ecommerce companies. The Amazon founder is expected to highlight that it is generating jobs in India and empowering SMEs and other small businesses, according to two people familiar with the matter. He will also raise aspects such as stable business environment and policy continuity for foreign companies, they said.

“We do not have any plans to share at present for this,” an Amazon spokesperson said in an emailed response to a questionnaire regarding Bezos’ upcoming visit.

The outcry against ecommerce companies escalated after the Diwali festive season, when small traders accused Flipkart and Amazon of “unfair business practices” and violation of foreign direct investment rules. They blamed the predatory pricing strategies of the two foreign-owned marketplaces for a slump in traditional retail business during Diwali.

Flipkart and Amazon generated combined sales of Rs. 31,000 crore ($4.3 billion) during the 15-day festival period in October, according to a report by Red Seer Consulting.

The government has been stepping up its scrutiny of Amazon and its India rival Flipkart over their compliance with India’s foreign direct investment laws for ecommerce marketplaces.

The commerce ministry had asked Amazon and Flipkart to furnish details including their shareholding, subsidiaries, business structure and information on their top sellers and their tax details.

Amazon and Flipkart have responded to the questions raised by the government and maintain that they are in full compliance with FDI legislation.

“It is a huge distraction for us,” a senior ecommerce executive said, asking not to be identified. Amazon has reasons to be nervous. The US giant considers India its fastest-growing market with a potential to reach $10 billion in gross merchandise value and outpace the UK, Germany and Japan as its largest overseas subsidiary. In October, Amazon pumped in Rs. 2,800 crore into the flagship Amazon, in marketplace after injecting Rs. 9,450 crore in the unit last year.

So far, Amazon has invested more than $5 billion in India. “The various twists and turns in policies and caveats over the years have created ambiguity and room for interpretation as to what is allowed under the ambit of foreign investment,” said Devangshu Dutta, CEO of retail consultancy Third Eyesight.

“If any foreign-owned or foreigninvested entity is operating in the fuzzy zones of policy and law, there is bound to be concern. ‘Interpretation’ is a double-edged sword — on the plus-side it can give businesses strategy flexibility, but the downside is that government officials can also interpret it strictly.”

In October, Walmart CEO Doug McMillon had written to Modi, seeking certainty and a predictable business environment in India.

Last year, Walmart had purchased Flipkart, India’s largest ecommerce entity, for $16 billion, bringing the US adversaries to a direct fight over market share in the nation’s burgeoning online retailing market.

Following Walmart’s acquisition of Flipkart, India amended the FDI rules for online marketplaces in December, plugging many holes that Amazon and Flipkart are alleged to have misused. Opponents of foreign-funded ecommerce accuse both the global titans of virtually running inventory-led ecommerce, which India bars.

The legislation called Press Note 2 restricted bulk purchases by any vendor from any entity or group company of marketplace to 25%. The rules banned any financial affiliate of the marketplace operator from selling on such platforms. These changes came as blows to Amazon and Flipkart as they either sold through partner entities or through independent vendors that sourced directly from wholesale units related to the FDI-funded

Source: economictimes

By 2022, the company hopes to have 2,000 operational stores. Interestingly, two thirds of these will be located in the tier III, IV, V and VI towns, in the smaller retail format — The Mini Raymond Shop.

Written By Venkata Susmita Biswas

Merchandising in the smaller stores will veer towards affordable price points.

Raymond recently demerged its lifestyle business comprising branded apparel, branded textile and garmenting from its other businesses namely, FMCG, realty, auto components, and tools and hardware, to “unlock the potential of its textile and apparel business”.

The company has been trying to make the nearly-100-year-old brand more relevant to younger consumers. Apart from launching a ready-to-wear range, shoes, accessories and a premium service called Raymond Made to Measure over the last five years, Raymond has recently added ethnic wear and athleisure to its offerings.

Going places

The company has been rapidly expanding its retail footprint, claiming to open “nearly one store a day”. “We have doubled our retail footprint in the last five years, going from just 750 stores in 2014 to 1,500 stores today,” says Sanjay Behl, CEO – lifestyle business, Raymond.

Source:

Written By ET Bureau

BENGALURU: US retail behemoth Walmart incurred a non-cash impairment charge of $290 million on account of it writing off its investment in fashion portal Jabong, Chief Financial Officer Brett Biggs disclosed in an earnings call.

When it bought Flipkart last year, Walmart attributed 77% of Flipkart Group’s $24.1 billion in assets to intangibles and goodwill. Barring its flagship brand, Flipkart owns Myntra, PhonePe and the Jabong trade names.

In 2016, Flipkart bought Jabong for $70 million in cash & has since then been struggling to figure out a definitive long-term strategy for the fashion portal.

“At the end of last year, we decided to consolidate back-office functions for Myntra and Jabong to drive efficiencies. This year, after looking at fashion demand trends, customer overlap, and marketing investments, we have decided to focus on a single premium fashion-focused platform — Myntra,” a Flipkart spokesperson said in a statement. “There will be no impact on employees as we have a unified workforce for Myntra and Jabong which can work across all our existing and new businesses.”

ET reported on July 12 that Flipkart had started nudging users away from Jabong to Myntra, in what could be a precursor to the imminent shuttering of Jabong as an independent brand.

“After Walmart’s acquisition of the Flipkart businesses, strategic and operational rationalisation was inevitable. Walmart is looking at paring costs and focusing on assets that are core to future growth, which will inevitably come with some hard calls,” said Devangshu Dutta, chief executive at management consulting firm Third Eyesight.

Walmart said in a statement earlier that it had “adjusted EPS (earnings per share) for an impairment charge related to the Jabong.com trade name as a result of a strategic decision to focus on the Myntra.com fashion platform.” Operating income declined 5.4%, in part due to a non-cash impairment charge for Walmart International, the company said.

Walmart’s International sales which include Flipkart went up by 1.3% to $29.2 billion during the third quarter. Total revenue grew 2.5% to $128 billion from $124.89 billion a year ago, but fell below expectations of analysts. However, Walmart shares rose 1.7% in premarket trading on account of the company’s strong performance in the US online business which saw a growth 41% year on year.

Separately, in its guidance for fiscal year 2020, Walmart also forecast that earnings were expected to “increase slightly compared to FY19, including Flipkart, and increase by a high single-digit percentage range, excluding Flipkart.”

“As expected, the inclusion of Flipkart negatively affected operating income,” Walmart said.

Source: economictimes

While shares of top five foreign promoter-owned FMCG companies jumped 18.9 per cent, on an average, so far this year, the top five domestic FMCG players logged negative returns

Written By Nevin John

HUL is the most valued FMCG company in the stock market at Rs 4.5 lakh crore

The stocks of domestic fast moving consumer goods (FMCG) companies are struggling on Dalal Street compared to its foreign peers, as demand slowdown has gripped rural and urban markets. While shares of top five foreign promoter-owned FMCG companies jumped 18.9 per cent, on an average, so far this year, the top five domestic FMCG players logged negative returns.

The five subsidiaries of the foreign multinational companies – Hindustan Unilever (HUL), Nestle India, Colgate-Palmolive (India), Procter & Gamble Hygiene & Health Care and GlaxoSmithKline Consumer Healthcare – have recorded gains in the range of 13 per cent to 28 per cent year-to-date. By comparison, the Sensex spiked 11.22 per cent during the same period. HUL is the most valued FMCG company in the stock market at Rs 4.5 lakh crore, while the second biggest player ITC is Rs 1.3 lakh crore behind at Rs 3.2 lakh crore.

Among the ten FMCG companies evaluated, Nestle is the top performer that increased its market value by 28.3 per cent to Rs 1.36 lakh crore so far in 2019. Dabur India, the top domestic FMCG player, grew its market cap by 13.11 per cent to Rs 84,315 crore. The stocks of ITC and Godrej Consumer Products (GCPL) fell the most by 8 per cent and 9 per cent, respectively. The two other Indian companies – Britannia and Marico – registered almost muted growth.

Deven R Choksey, managing director, KR Choksey Investment Managers, says that the key differentiating factor between domestic and foreign players in FMCG is promoter holding and floating stock ratio and the better dividend payouts. “Foreign parents hold more shares in their Indian subsidiaries and the dividend payout is the major earning for parents. It helps investors in the companies to earn better yield for their investment. So the demand is more for the shares of foreign FMCG companies,” he said.

Shaky consumer sentiment and the liquidity squeeze slowed the sales volume growth of FMCG companies in the second quarter of this financial year compared with last year, when consumer sales were strong thanks to a long festive season and rural growth. The volume growth for consumer goods companies was around 3-7 per cent during July-September. Another surprising element is that the corporate tax rate cut did not benefit Indian FMCG companies in supporting their stock performance.

Retail expert Devangshu Dutta, Chief Executive at a management consultancy Third Eyesight, says that the stock market is driven by sentiments and both Indian and foreign players are well-footed to cash in on the growth. Another FMCG analyst says, “There could be a possibility that investors are seeing more scope in the business strategies of foreign FMCGs compared to Indian players.” Commenting on the financial performance of the second quarter, Nisaba Godrej, Chairperson, GCPL, said, “Our India business has delivered a robust volume growth of 7 per cent amid a general slowdown in staples consumption. We expect a gradual recovery in the coming quarters for the FMCG industry and also for our business.”

Research agency Nielsen reported that the FMCG market has clocked value growth of 7.3 per cent in the September quarter, down from 16.2 per cent. About half of the growth was because of the increase in average price realisations, it noted.

Sanjiv Mehta, chairman and managing director of Hindustan Unilever said, “First half of 2019 witnessed slowdown in demand led by rural. Rural consumption has been weak for the last few quarters due to macro economic factors… Urban consumption has also softened. However, the pace of deceleration is comparatively starker in rural markets.”

According to Sanjiv Puri, the Chairman and Managing Director of ITC, “There is slowdown for sure and fairly widespread but India is a consumption market. We are still growing and the headroom to grow is enormous.”

Source: businesstoday

Written By Devangshu Dutta

Retail is such a pervasive and dynamic a sector of the economy, that it is impossible to identify a single point at which modernisation began. I’ve met countless people who perhaps entered the (Indian) retail sector during the last 15 years, and who mark the beginnings of modern retail around then. There is no doubt that there has been an explosion of investment in retail chains in the last 2 decades, but we need to acknowledge the foundation on which this development is built. The current titans of the sector are standing on the shoulders of previous giants who have created successes and failures from which we are still learning.

This piece is not an exhaustive history of the evolution of the retail business in India, nor a census of all the brands operating in this sector, but the aim is to capture the flavours of the phases of development.

Source: slideshare