Raghavendra Kamath, Financial Express

June 29, 2023

Zara, touted as “Fast Fashion Queen”, has achieved a unique feat in India. The Spanish brand has been growing its revenues without opening any new stores.

The fashion brand, run by a joint venture between Tata-owned Trent and Spain’s retail group Inditex, posted a 40.7% growth in its revenues to Rs 2553.8 crore in FY23. The catch is that while many retailers/brands garner sales from opening new stores, Zara did not open any store but closed one during FY23.

In FY21 and FY22, its store count remained constant at 21 but its revenue grew 61.2% in FY22. Zara’s revenues grew at a 15.5 % CAGR in the last five years.

“Zara did not foray into any new city and closed one store. That said, it saw an exceptional performance on store productivity (83% higher than FY19). The increase in revenues lead to highest ever Ebitda margins at 16.3%,” said Nuvama Institutional Equities in a recent report.

The contribution in productivity includes contribution from online and also increase in store sizes, the brokerage said.

A mail sent to Inditex did not elicit any response. Trent executives could not be contacted.

Experts attribute Zara’s success to increase in customer spends and improved offerings by the brand.

“The customer base they are targeting has grown and their merchandise mix has become sharper,” said Devangshu Dutta, chief executive officer at Third Eyesight, a retail consultant.

Dutta said when a retailer opens stores, it would immediately boost sales, but to maintain sales momentum, one has to have “right merchandise at right price and have stores at right locations”.

Zara is known to churn its designs and styles very fast, and target young customers. In its Indian venture also, its parent Inditex controls merchandise mix and so on.

“The said entities (Zara and Massimo Dutti) are obliged to source merchandise only from the Inditex Group. Also, the choice of product & related specifications are at the latter’s discretion. Further, the entities are dependent on Inditex for permissions to use the said brands in India subject to its terms & specifications,” Trent said in its FY23 annual report.

Zara is also focusing on opening in select locations, a reason it could not open more stores in the country, experts said.

“The incremental store openings for Zara continue to be calibrated with focus on presence only in very high-quality retail spaces,” Trent said.

Susil Dungarwal, founder at Beyond Squarefeet, a mall management firm, said that propensity to spend has gone up among Indian shoppers after the pandemic and Zara being a renowned global brand with its stylish merchandise seems to be have been the beneficiary of the trend.

“They understand customers very well and brought products which are liked by Indian shoppers in terms of looks, styles and so on,” Dungarwal said.

Zara is a case study for Indian brands as to how to run a retail business successfully, he said.

(Published in Financial Express)

SHARLEEN D’SOUZA, Business Standard
Mumbai, 10 October 2022

In early 1994, Titan started selling watches with precious stones in them and called this new line, Tanishq. It went on to become a separate division of Titan Company and grew into the country’s largest branded jewellery outfit, helping raise Titan’s sales to ~28,799 crore last financial year.

Thirteen years later, in 2007, Titan Eye+ set out to shake up the eyewear market. Though it also sells sunglasses of other brands, it is the prescription segment that Titan redefined and now, according to its website, has 550 Eye+ exclusive stores in 229 cities.

In 2017, Titan sought to do an encore in yet another large market in which the demand, as in jewellery and eyewear, was almost recession-proof and largely commoditised, leaving ample space for a pan-Indian branded chain. Thus was born Taneira, with an avowed intent to become the country’s largest organised saree retailer.

“Titan had earlier tried to organise the jewellery market through Tanishq, which is successful, and this is an attempt by Titan to organise the saree market,” Ambuj Narayan, chief executive officer (CEO) of Taneira, told Business Standard.

What is unsaid is that jewellery to sarees can also be seen as a horizontal brand extension, the two do go together on occasion.

Natural extension

The Indian wear market is a 5,000-year old segment estimated to be worth ₹50,000 crore a year and growing at a compound annual growth rate of 6 to 8 per cent. Sarees account for 80 to 85 per cent of its sales, with kurta sets, blouses, and lehengas comprising the rest. Yet, despite the size and growth, there is hardly any nationally known brand in this segment, with Nalli Silks being one of the notable exceptions.

Titan insiders say the company believed sarees to be a natural extension for it, given its past success with design-led lifestyle brands. They say the company organised an internal competition to see who came up with the best expansion strategy.

The result is a bouquet of design-differentiated products — primarily sarees and kurta sets — made from pure natural fabrics sourced from all over India. The company put together more than 100 craft clusters representing the diverse weaves. These include the Banarasi sarees from Uttar Pradesh, Kanjivaram from Tamil Nadu, Chanderi and Maheshwari from Madhya Pradesh, and Jamdani from West Bengal. The output is a mix of contemporary ethnic wear for women across life stages and occasions — college, office wear, party wear, festivals, and weddings, with bridal sarees being the speciality. The prices range from ₹1,000 to ₹2,00,000.

“The Tata group’s ventures have always been consistent with their approach — they stay the course beyond initial hiccups and eventually scale up the business. This is very much how Titan and Tanishq worked their way from initial struggles to eventually scale and become nationwide brands,” said retail expert Devangshu Dutta, CEO at Third Eyesight.

To say that Taneira has had initial hiccups would be an understatement. Three years after its launch, the Covid-induced lockdowns and restrictions brought the entire retail sector down to its knees.

Baptism by Covid

“Pandemic restrictions and high Covid-19 anxiety among the people kept socialising and weddings at a very low level of activity over the past couple of years. For Taneira, being a nascent brand with a yet-to-be-established customer base, the operating environment has been particularly tough,” Titan Company said in its FY22 annual report.

Taneira used this time to realign its strategy of connecting with customers. Thus, during 2021-22, which braved the second Covid wave in its first quarter — the dreadful Delta — and saw the third wave creep into its fourth quarter, sales at Titan’s Indian dress wear division grew by 55 per cent.

Narayan, the CEO, attributes this growth to initiatives that included staying close to the customer through e-commerce. “We really drove e-commerce out and reached out to our customers through video calling and try-at-home activities,” he said.

As consumer sentiment started to improve, Taneira already had two collections ready — wedding weave and the summer collection — which boosted sales. During 2021-22, it also increased its store count to 20 by adding six more. During the fourth quarter, Taneira sales rose 4 per cent.

Today, there are 27 Taneira stores in 11 cities across India. It plans to expand to Tier 1 and Tier 2 cities in the first phase and then to Tier 3 in the second phase of its store expansion.

However, Vishal Gutka, vice-president of research (consumer and retail sector) at Phillip Capital, said: “Taneira follows the same principle Titan used for Tanishq, where it entered an unorganised category and expanded it. But it is still early days to gauge how Taneira will pan out. Also, the company needs to give more clarity on the unit economics of each store.”

Weaving an expansion plan Titan’s annual report talks of a robust expansion plan for Taneira this financial year: “We plan to grow at an exponential rate and make our store count around 60 by the end of the current fiscal year and open overseas stores in markets having an Indian diaspora such as the US.” It adds that Taneira will become a more significant contributor to the overall revenue of Titan in the medium term.

At the heart of this grand ambition lies the humble weaver. Taneira now has close to 1,200 dedicated looms and has a programme called Weaver Shala to support them with technical expertise and in modernising their facilities. It has introduced frame looms along with basic workspace facilities for the weavers in collaboration with the localised weaver-led organisations.

The brand has closely worked with the weavers in Varanasi, Uttar Pradesh, and Champa, Chhattisgarh, and aims to take Weaver Shala to other parts of the country.

Taneira leverages Tanishq’s brand strength; mannequins at Tanishq stores, for instance, are dressed in Taneira sarees.

However, Narayan said Taneira and Tanishq will not be sold under the same roof because Titan wants to establish Taneira as a distinct brand in its own right.

(Published in the Business Standard)

By Aishwarya Ramesh

Tata Consumer Products has rolled out ready-to-cook mock meat products under the brand name Simply Better.

Tata Consumer Products (TCPL) is the latest company to enter the plant-based meat segment in India. TCPL has launched a brand called Simply Better – which includes range of ready-to-cook (RTC) products, made of plant-based meat.

The RTC range is a mix of snacking dishes and traditional Indian dishes. It includes plant-based chicken nuggets, chicken fingers, chicken burger patties and Awadhi seekh kebabs. All these plant-based products are currently available on Amazon Prime and Flipkart.

TCPL’s Simply Better products as seen on Amazon.

When it comes to multinational companies, ITC has a play in this (RTC) category. Its Master Chef range includes a plant-based burger patty, priced at Rs 630 for 300 grams. The range has both vegetarian and non-vegetarian frozen snacks and kebabs. The Incredible range also has plant-based chicken nuggets, priced at Rs 475 for 300 grams.

ITC’s IncrEdible plant-based RTC range

Compared to ITC’s offering, Tata’s Simply Better line is priced slightly differently. 270 grams of plant-based chicken nuggets costs Rs 390 and the plant-based burger patty is priced at Rs 450 for 300 grams.

According to a report by Research and Markets, the Indian meat substitutes and mock meat market is estimated to reach over USD47.57 million in value terms by the end of FY2026 and is forecast to grow at CAGR of 7.48% during FY2021E-FY2026.

Devangshu Dutta, chief executive and founder at Third Eyesight, a specialist consulting firm, mentions that the presence of Tata Consumer Products and ITC could help in increasing adoption of the category over time, since both are large players intending to scale with mainstream customers.

“However, both companies will be advertising and targeting the same cohort of customers. Additionally, the two will also be competing against the multiple D2C brands in the category,” he added.

The plant-based meat market, or smart protein market, includes D2C brands. Some of these brands are also backed and endorsed by celebrities and athletes. The Good Dot is endorsed by Olympic athlete Neeraj Chopra, cricketer Virat Kohli and his wife and actress Anushka Sharma have invested in Blue Tribe and actor-couple Riteish Deshmukh and his wife Genelia Deshmukh have invested in plant-based meat startup Imagine Meats.

Anchit Chauhan, AVP – planning, Wunderman Thompson, mentions that the plant-based industry has been built by a set of startups, and now Tata has decided to enter the segment – somewhat late.

“If you look at the e-commerce segment too, Tata entered late with Tata CLiQ, almost 10-12 years after the e-commerce category had been built by the likes of Amazon and Flipkart. But the advantage Tata has is that the trust factor will always be associated with it. It will be able to leverage that brand equity and create success out of it.”

Dutta points out that for years, the most popular plant-based meat product had been Ruchi Soya’s product – Nutrela’s soya chunks and granules (soya chunks available at Rs 499 for 200 grams and granules at Rs 250 for a kilogram). Soya chunks have been available in India since the 1980s and Dutta calls it the ‘poor man’s meat replacement’.

He says that Indians already get protein in their diet through lentils, pulses and beans, and even those who consume non-vegetarian food don’t do so on a regular basis.

Reasons for turning to plant-based meat

“Plant-based products are essentially for non-vegetarians, who have a certain taste but are willing to give it up because they feel for the environment or animals. But that’s a very urban niche right now. If you’re a ‘woke’ urban consumer, the price point of the products may not matter,” says Chauhan.

“One of the factors for this segment to grow in India is availability. Whether it is a startup or a company as big as Tata or ITC, it has to have financial muscle to sustain growth and must be easily available to consumers. Visibility and user trials are important, especially to attract consumers who wish to make a lifestyle switch in their diet. That’s why modern retail is an important channel for these products,” Dutta adds.

Different brands in the segment right now

Dutta explains fundamental consumer behaviour and calls expansion in this market ‘tricky’, since it is difficult to get people to change their behaviour.

“This is even more the case in smaller cities and towns, where people may have a more traditional mindset. Take the example of Kelloggs – it has been in the country for almost 30 years and there hasn’t been a mass behaviour switch as far as breakfast meals are concerned.”

Chauhan adds that it is not just plant-based meat, there is now demand for alcohol-free products – which taste the same as alcohol but do not have any of the side effects that come with drinking alcohol.

Dutta mentions that people in Tier-II and III cities may not be aware of plant-based meats. This is a tricky category that requires a lot more development. “It’s possible that plant-based meats will remain an urban phenomenon for a long time.”

Source : afaqs.com

Written By Mukherjee, ET Bureau

Top listed retail chains such as Aditya Birla Fashion & Retail, Avenue Supermarts and Tata-owned Trent are going to lead store additions through the next financial year, as they double down on expansion after the pandemic, company executives and analysts said.

As per a recent report by ICICI Securities, 16.7 million square feet of retail space would be added by eight large, listed retail chains between FY21 and FY24 as compared to 8 million square feet added in the preceding four years of FY18-21. These companies also include Titan, Bata, V-Mart, TCNS and Shoppers Stop.

The buoyed sentiment comes after the recovery of retailers to more than their pre-Covid levels in the last two quarters, and is also driven by pentup demand, strong sales despite increasing prices and expansion into small-tier towns, the report said. There has been an expansion of the market which is happening along with a consolidation, said Devangshu Dutta, chief executive of consulting firm Third Eyesight. “Not all locations might turn out to be viable, but in every expansion cycle there are boom and bust. And the bust is not as big as the boom. Right now, we are in the expansion cycle,” he said.

Aditya Birla Fashion & Retail managing director Ashish Dikshit told analysts recently that the company would expand rapidly since plans were held up in the last two years due to the pandemic, with faster growth for fashion business, ethnic wear and inner wear. The company, which had raised ₹2,195 crore from GIC Singapore, intends to invest ₹600-800 crore for expansion in the next couple of years.

“…we continued to believe both in the long-term growth potential of the market and intrinsic strength of our brands and we feel now the time is to accelerate to catch up on what we have not done over the last 12 to 18 months and I would go back almost till the beginning of the Covid period from 18 to 24 months where some of our growth initiatives have held back,” said Dikshit.

As per the ICICI report, Avenue Supermarts would add 7.5 million sq ft during FY21-24 for the DMart stores as compared to 3.9 million sq ft added in FY18-21. Aditya Birla Fashion & Retail would add 3.1 million sq ft as compared to 1.2 million sq ft in preceding four years, while, among others, Trent would add 2.7 million sq ft (vs 1.5 million sq ft), Shoppers Stop would add 0.8 million sq ft (0.2 million sq ft) and Bata would add 0.7 million sq ft (0.2 million sq ft).

India’s largest retailer, Reliance Retail, too has accelerated expansion plans including taking its stores into new geographies, Gaurav Jain, head of strategy and business development told analysts recently.

Source: economictimes

Written By MONEYCONTROL NEWS

The biggest winner in terms of sales was BigBasket, which accounted for 50 percent of the sales growth followed by DMart, Grofers, Spencer’s Retail and StarQuick (Tata)

Representative Image (Reuters)

Online grocery sales for the largest online and offline retailers grew by a combined 65 percent to Rs 6,820 crore in FY20, while collective losses measured Rs 1,175 crore.

The biggest winner in terms of sales was BigBasket, which accounted for 50 percent of the sales growth, followed by DMart, Grofers, Spencer’s Retail and StarQuick (Tata), a report by The Economic Times said.

Moneycontrol could not independently verify the report.

BigBasket owner Innovative Retail Concepts clocked a net sales growth of 43 percent, or Rs 3,418 crore, while losses rose to Rs 424 crore, as per data with the Registrar of Companies and business intelligence platform Tofler, the report said.

Most executives and experts credit the growth jump to the COVID-19 pandemic and lockdowns, which pushed consumers towards online options for grocery and other purchases, it added.

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A spokesperson for Grofers told the newspaper that the value of goods the company sold in FY20 vaulted 88 percent to Rs 3,000 crore, with losses at Rs 637 crore, largely due to investments for strengthening delivery services and building awareness.

Among offline retail chains, DMart’s e-commerce business saw sales zoom to Rs 345 crore, with losses at Rs 79 crore. StarQuick operator Fiora Online saw revenue of Rs 33 crore against a loss of Rs 21 crore and Spencer’s owner Omnipresent Retail reported Rs 15 crore sales with a loss at Rs 14 crore.

Devangshu Dutta, CEO of consulting firm Third Eyesight, said that the customer shift to online propelled investments to enhance capabilities in the space, while a concurrent rise in the average order values would likely benefit companies with a “healthier bottom line”.

Nielsen noted that online sales in the FMCG segment were notable, accounting for 3.1 percent of the India market value–in metros this surged to 8.6 percent as of the September quarter.

Source: moneycontrol