Sobia Khan & Richa Maheshwari, The Economic Times

Bengaluru, 6 July 2016

Lifestyle International, the Bengaluru-based retailer, has set a target of becoming a billion-dollar (nearly Rs 6,750 crore) turnover company by March 2017 by adding more stores, a top official said.

“This will be the most aggressive expansion for the company post 2010. Our expansion plan is firm, we have been on track. But sometimes malls get delayed,” said Kabir Lumba MD Lifestyle International. The company clocked a turnover of Rs 5,700 crore during the last financial year. Lifestyle International operates stores under Lifestyle, Max and Home Center formats across major cities.

The company plans to open around 25-30 Max stores, 10-12 Lifestyle stores and 3-4 Home Center forums in tier I and II cities including Bengaluru, Delhi, Agra, Indore, Lucknow and Howrah.

“We started getting into tier II towns sometime back and we are seeing healthy traction across all regions for both tier I and tier II cities,” said Lumba. The company currently has around 230 stores across Lifestyle, Max and Home Centre formats in India. The Indian retail sector is seeing huge competition from e-commerce giants like Amazon, Flipkart, Myntra and Snapdeal.

“Overall there is greater confidence among retailers. Earlier, there was threat from ecommerce platforms in terms of discounting, impacting footfalls. But this is diminishing now and is positive for retail industry,” said Devangshu Dutta CEO Third Eyesight, a retail consultancy firm.

Globally, India is among the top 10 retail markets. According to a recent report by Confederation of Indian Industry (CII) and consulting firm The Boston Consulting Group, the retail sector in the country will double to levels of $1.1-1.2 trillion by 2020 from $630 billion in 2015.

(Published in The Economic Times)

Ankita Rai, Financial Express

New Delhi, 5 July 2016

Think ‘mobile wallet’ and you will probably think of recharges, DTH/bill payments or at the fringes of your mind, even e-commerce sites. But paying for a can of yoghurt at a milk-booth near your home with, say, a Paytm? Not an idea to be scoffed at — this is a reality today. In order to drive the next phase of revenues, the offline ecosystem poses a world of opportunities as far as m-wallets are concerned.

Ranging from the Big Bazaars of the world to the neighbourhood mom-and-pop stores, petrol pumps, auto rickshaws and milk-booths, mobile wallets are available across most retail formats. Top wallet companies are investing heavily in changing customer habits and creating as many use cases as possible which include exclusive tie-ups with merchants, co-promotions with brands, cashbacks and so on.

While currently a mobile wallet business typically covers fund transfers, services related to e-commerce transactions like utility and bill payments, ticketing, and recharges, offline commerce is expected to drive good traction. Research firms peg the current market size of the mobile wallet business at R350-400 crore with volumes expected to touch R1200-1500 crore by 2020.

“Offline transactions are an important step to increase mobile payments penetration as they offer the ability to operate even in zero/low connectivity zones. It also speeds up the transaction processing which is very important in rapid services like mass transport systems,” says Kunal Pande, partner, KPMG India.

Experts say a bulk of the big market for wallets resides at the mid-to-low-end retailers. Recruitment of offline merchants is crucial to the viability of payment solutions, since most consumer transactions still happen offline.

“Payment providers that want to win the game will need to focus on usages that are frequent,” says Devangshu Dutta, CEO, Third Eyesight. So what is the potential of the offline ecosystem as a revenue generator for m-wallets?

The payment industry must overcome the ‘network effect’ while fighting customer inertia to boost adoption. 

“Payments work off the network effect. Without an adequate network of both payers and payees, the currency — or in this case the wallet — is of limited or no value,” says Dutta. Each company has had to build a market for itself, both in terms of consumers using mobilewallets and merchants who would accept m-wallet payments.

Each wallet player has made significant investments in technology, back-end infrastructure and marketing to boost the adoption of wallets in the offline space. And rightly so, as online still constitutes only 2-3% of total commerce.

The latest Paytm Karo commercial not only reflects the adoption of Paytm across multiple age groups, but also highlights its QR code scan feature for easy payments to offline merchants.

While Paytm is spending R50 crore to execute this campaign, which runs till July, its overall marketing budget for this year is R600 crore. “There is a massive fight for the ‘real estate’ on the mobile phone. We need to establish ourselves as a viable alternative to cash and give more use cases to create an ecosystem,” says Shankar Nath, senior VP, Paytm.

For Paytm, recharge is an anchor use case, followed by DTH electricity bills etc. The idea now is to expand offline as that is where the growth is. In the offline space, the traction comes from sub-thousand rupees transactions and out of three million daily transactions on Paytm, offline constitutes 40% according to the company. Paytm currently has four lakh offline merchants using its platform and 125 million wallet users. The wallet can be used at petrol pumps, educational institutes (school/college fee payments), restaurants and large format retailers such as More.

Clearly, the payment business runs on scale with thin margins. So frequency of transactions is the only way to profitability, even if for small ticket sizes. Apart from Paytm, mobile wallet player Freecharge plans to spend R2,000 crore over the next 18 months on marketing.

Freecharge’s last brand campaign Lo. Do. Khatam Karo was released in April  this year during the IPL season to cater to metros and tier-I cities. To facilitate payments through wallets at PoS terminals and online payment gateways, it has partnered with payment aggregators like ePaisa and CCAvenue.

It has also forged partnerships with Shoppers Stop, McDonald’s, Caf� Coffee Day, Cleartrip, RedBus and OYO, and  claims to have crossed a million transactions in February, witnessing a growth rate of 15-20% per month.

“Freecharge features such as on-the-go-pin and chat-n-pay are for peer-to-peer transfer and person-to-merchant payment. It is meant for merchants in the unorganised space who do not have the means to accept the payment,” says Sudeep Tandon, chief business officer, Freecharge. “The chat-n-pay feature is finding wide acceptance among taxi drivers, salons and kirana stores with almost 45% of our customer base using it.”At Freecharge, 85% of the transactions take place through the app and 15% through desktop and web. Currently the wallet can be used to pay at over one lakh merchants, including both online and offline segments. About 50% transactions are from tier-I cities and rest from tier-II and tier-III.

Or take MobiKwik, whose offline journey started about a year back with an association with Future Group’s Big Bazaar. It has top-down strategy for offline expansion starting first with large brick-and-mortar retail and then moving on to unorganised merchants. It has an over 30 million user base, of which 50% is active monthly users.

“Since last July, the biggest focus area has been offline merchants. The MobiKwik wallet is currently accepted at 25,000 retail outlets. The next big use case is unorganised grocery stores,” informs Akash Gupta, GM, marketing, MobiKwik.

To enable expansion, it has also launched cash pick up and loading to support offline consumers in tier-II and tier-III cities. Offline today contributes to 20% of its GMV. The wallet is available at Relaxo showrooms, Burger King outlets and Domino’s’ 1,000 stores, among others. It has also tied up with Madura Garments for its Van Heusen and Peter England stores.

Partnering with large retailers

To be really accepted as a currency and an alternative to debit and credit cards, mobile wallets must evolve from small transactions to larger transactions, thus, also increasing the average ticket size. For example, Future Group has an exclusive tie-up with MobiKwik. Currently, 320 Future Group stores across Biz Bazaar and Central malls accept MobiKwik wallet for payments.

“Mobile wallets bring incremental traffic to the store as consumers tend to use the store connected to their wallets, and we also benefit from the promotions run by MobiKwik,” says Vinay Bhatia, CEO, analytics and loyalty, Future Group.

Big Bazaar is also working with Oxigen for a co-branded wallet to create customer loyalty. Pramod Saxena, founder and chairman, Oxigen Services, says, “This solution is specifically designed for big merchants like Big Bazaar and airlines.”

Oxigen plans to spend Rs. 100 crore on marketing and branding this year. Currently, 150 million customers are transacting at Oxigen retail points and online which includes 25 million wallet users.

The company says it is adding 2-3 million wallet users every month. Then there is Shoppers Stop which entered into an exclusive one-year tie-up with the wallet company Freecharge last year across its 230 stores including Shoppers Stop, Crossword and Hypercity.

“The big advantage is convenience of payment. I see this is a great way ahead for people who don’t have credit cards,” says Govind Shrikhande, customer care associate and managing director, Shoppers Stop.

At Shoppers Stop, card transactions stand at 56% while the rest is cash. “The objective is how much of the cash can be converted to wallet. To enable this, we are targeting young customers at stores who don’t use cards,” he says .

Shoppers Stop is also leveraging wallet data for targeted and personalised promotions. “We are using our physical space to promote Freecharge while Freecharge is using digital to drive traffic at our stores. Therefore, it’s a win-win,” Shrikhande adds.

Caf� Coffee Day (CCD) accepts multiple mobile wallets such as Paytm, Mobikwik and Oxigen. “On the business side, wallets help in reducing the operational cost of handling cash,” says Bidisha Nagaraj, group president, marketing, Coffee Day. CCD has recently launched its mobile app in Bengaluru, Mumbai and Pune with an integrated mobile wallet feature.

Currently, RBI regulations limit digital wallets to transactions worth R10,000 without a KYC. However, a full KYC increases the limit on digital wallets to R1 lakh per month. This can enable high value transactions for customers. MobiKwik has launched Aadhaar-verified eKYC to enable upgrades in real-time.

However, the mobile wallet ecosystem is fragmented with each player operating in a silo. Most non-banks currently offer semi-closed wallets which pose a limitation to the usability of wallets primarily to the ecosystem built by the wallet operator.

Dutta says the Unified Payment Interface (UPI) should boost growth as the backend would be more seamless. “The key for the wallet companies will then be to differentiate themselves in terms of service and to more intensively craft the market for small merchants,” he surmises.
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(Published in Financial Express)

Rashmi Pratap, Hindu BusinessLine
Mumbai, 4 July 2016

Apart from changing business models, mall operators are also benefitting from the challenging times in the e-commerce space. Though online sales are expected to zoom to $55 billion by FY2018 from $14 billion in FY2015 – according to Retailers Association of India – investors in e-retailers are tightening the reins. They are questioning the business models of e-commerce players, who have been forced to re-think their strategy.

Hedge funds have been actively funding Indian start-ups so far. However, with economic slowdown in China and rising interest rates, they have scaled back their investments.

With tightening fiscal environment, the expectations of investors have also undergone a change. “While earlier the expectation was to deliver much more in terms of growth, now they are asking for better balance between growth and profitability,” says Alok Mittal, angel investor and CEO and co-founder of Indifi Technologies.

To add to it, investors are also cutting down valuations of e-commerce ventures. Flipkart’s investor Morgan Stanley marked down the e-retailer’s valuation from $15 billion to $9.39 billion earlier this year.All this means investors are now less bullish on e-commerce firms. And that, mall operators hope, will translate into lower discounts for customers who will throng the malls.

Devangshu Dutta, Chief Executive at retail consultancy Third Eyesight, says e-retailers have a reach that is unlimited by time and geography.

For standard products such as diapers, online convenience may win over the need for a physical experience.

However, non-standard products such as apparel or jewellery lend themselves to experiential buying, where a physical retail store definitely has an edge, he adds.

But all this doesn’t mean that e-commerce is no more a challenge to retailers. “I think e-commerce remains a threat to retailers who refuse to change,” adds Dutta.

But for successful malls like Viviana, DLF and Forum, e-commerce has been a teacher. “It has made us re-think some of the ways we do our business. We now know it is important to engage closely with customers,” says Suresh Singaravelu, Head – Retail, Prestige Group.

(Published in The Hindu Businessline)

Ankita Rai, Financial Express

New Delhi, 3 July 2016

The convenience of mobile wallets is being put to the test, not just with increased competition in the space, but also due to the National Payments Corporation of India’s unified payment initiative (UPI), which is expected to create the next level of growth owing to a more seamless backend. In response to market pressures, m-wallets are expanding their scale of operations and tying up with offline merchants to move beyond recharge-related services, DTH and bill payments. From the likes of Big Bazaars to neighbourhood mom-and-pop stores, petrol pumps, auto rickshaws and milk-booths, mobile wallets are not leaving any offline retail format unexplored.

Clearly, the recruitment of offline merchants is critical to the viability of payment solutions, since most consumer transactions still happen offline. “Payment providers that want to win the game will need to focus on usages that are frequent,” says Devangshu Dutta, chief executive, Third Eyesight, a retail consultancy.

This is exactly what Paytm is doing with focus on small but frequent transactions. Paytm wallets can be used at petrol pumps, education (school and college fees), restaurants, Mother Dairy and large-format retailers such as Spencer’s and More. “The payment business runs on scale. There is a small margin. So the attempt is to create an ecosystem where consumers use wallet for frequent transactions, though small in amount,” says Shankar Nath, senior vice-president, Paytm.

Out of three million daily transaction on Paytm, it claims 40% are coming from offline. Paytm currently has four lakh offline merchants using its platform, including mom-and-pop shops.

To facilitate payments through wallets at PoS terminals and online payment gateways, mobile wallet player Freecharge has partnered with payment aggregators like ePaisa and CCAvenue.

It has also forged partnerships with retailers like Shoppers Stop, McDonald’s and Caf� Coffee Day. It claims to have crossed a million transactions in February, with a growth rate of 15-20% per month. Similar is the case of MobiKwik, whose wallet is currently accepted at 25,000 retail outlets, which includes Big Bazaar and Central Mall. “Since last July, the biggest focus area has been on offline merchants. The next big use case is unorganised grocery stores,” says Akash Gupta, GM, marketing, Mobikwik.

Even as wallet players are tying up with big format retail stores, experts say a bulk of the big market for wallet resides at the mid-to-low end retailers. “Even in China, one-third of wallet transactions are remittances, a third is peer to peer and the remaining one third is commerce. We expect the Indian market to follow a similar lead,” says Pramod Saxena, founder and chairman, Oxigen Services. The volume of transactions through mobile wallets stood at 255 million in FY15. The value of transactions carried out through mobile wallets has grown by 500% between 2014-2016. “In value terms, however, mobile wallets contribute just 0.1% to the consumer payments market. Average transaction size still remains low,” says Kalpesh Mehta, partner, Deloitte.

(Published in Financial Express)

AFP/New Indian Express
New Delhi, 3 July 2016

Islamic State jihadists released gruesome images of corpses lying in crimson pools on the cafe floor as they claimed responsibility for the deadly 11-hour siege. Most of the victims were Italian or Japanese.

“This attack will turn away foreigners,” said Faruque Hassan, senior vice-president of the Bangladesh Garment Manufacturers and Exporters Association, which represents 4,500 factories.

“The impact of this attack will be very damaging for the industry. We are now extremely worried,” added Hassan, whose Giant Group supplies clothes to retailers including Britain’s Marks & Spencer and Next.

Even before the cafe siege, Bangladesh, the world’s second-biggest exporter of apparel after China, was reeling from a wave of Islamist-linked killings of religious minorities, liberal activists and foreigners, including an Italian aid worker last September.

Concern is mounting that the South Asian nation, wracked by political instability since independence in 1971, is sliding into deeper chaos, with under-pressure police arresting 11,000 people last month in a desperate crackdown.

“The hostage crisis in Dhaka is a terrible tragedy reflecting how security has deteriorated in the country,” said Sarah Labowitz, co-director at the NYU Stern Center for Business and Human Rights in New York.

The violence presents “a serious threat to the economy,” Labowitz said. “This kind of attack will surely keep (fashion) buyers away in the months leading up to the holiday shopping season.”

Although a quarter of its 160 million people still live below the poverty line, Bangladesh has clocked growth of around six percent nearly every year since the turn of the millennium.

That’s largely thanks to garment exports, the lifeblood of its economy, accounting for more than 80 percent of total outbound goods last year.

Between them the nation’s clothing factories employ more than four million people, most of them impoverished rural women.

Ulrica Bogh Lind, a spokeswoman for H&M, which sources many of its clothes from Bangladesh, told AFP the Swedish chain was “deeply sad about the tragic incident”.

“We are of course monitoring the situation in Dhaka closely.”

Echoes of Pakistan

Trade-dependent Bangladesh may suffer the same fate as its restive rival Pakistan, fears Ahsan Mansur, a former representative for the International Monetary Fund in Islamabad.

“I saw the decline of a promising economy into a terrorist hotspot. This attack reminds me of those days, although I hope things won’t turn out that way,” said Mansur, now executive director of the Policy Research Institute in Dhaka.

When extremist violence began to spread in Pakistan, he said, the first sign of financial malaise was expat families packing their bags, then trade and investment crumbled.

“The perception that Bangladesh is a potential terrorist hotspot can seriously hit our export potential and growth prospects.”

Yet plucky Bangladesh has ridden out numerous storms, seeing off threats from labour unrest, mass transport blockades and large-scale political paralysis — as well as workplace disasters.

Clothing exports swelled nearly 10 percent in the year to June, to $27.3 billion, industry figures show.

The deadly Rana Plaza factory collapse that killed at least 1,138 workers in 2013 shocked the world, heaping opprobrium on Western retailers seen as exploiting impoverished workers.

But the tragedy prompted retailers to act on appalling safety conditions in their factories, where fires and other accidents are frequent.

Brands set up two global alliances to make workshops safer and cleaner — although it remains a work in progress.

Global threat 

While retailers will watch Bangladesh closely, industry experts point out that unrest plagues many developing countries where labour is cheap.

As Islamist attacks in France, Brussels and the United States over the past year show, the threat of extremist violence is not confined to single countries.

“If foreigners give in to fear, terrorism’s political mission will have succeeded,” said Devangshu Dutta, chief executive of Third Eyesight, a retail consultancy in New Delhi.

“Exports and foreign investment are both critical (in) the upliftment of a very large poverty-stricken population,” Dutta told AFP.

“The contribution of foreigners is vital. It is important for everyone to remain engaged.”

(Published in The New Indian Express)