Reliance targeting big on ‘BtoB’ business, hopes to garner 1 lakh crore in revenue

Reliance is betting big on BtoB business, being carried through ‘Rangers Farm’ cash and carry wholesale format.

‘Rangers Farm’ stores stores mainly sell fresh vegetables and farm produce in bulk to small merchants and push cart vendors. While, Rangers Farm stores service the needs of Reliance ‘Fresh’ stores on one hand, they help small time shop keepers and vendors to realise benefits of the supply chain efficiencies, on the other.

Cash & Carry business has huge potential in India, where 97% of estimated 12 million retailers are very small in size, who can not afford back-end support.

Currently, Germany’s Metro Cash & Carry chain, South Africa’s ‘Shoprite’ and home grown ITC’s Chaupal ‘Fresh’ are some of the players who have set shop in this format. However, competition is likely to hot up in a few months with the spread of these chains as well as the entry of the world’s biggest retailer Wal-Mart’s entry in the country with its Sam’s Club chain of stores.

The initial response to Rangers Farm format in Hyderabad has been very encouraging with more than 4,000 push cart vendors and small shopkeepers are said to be picking up supplies of food and vegetables in bulk, every day.

According to Reliance officials, the company is keen to garner Rs. 1 lakh crore revenue from this format in the next five years.

Reliance ‘Fresh’ at Pune, Bangalore, Hyderabad, Mumbai & Gujarat in 3 months

Having already opened 49 ‘Fresh’ stores in Hyderabad, Jaipur, Chennai, NCR and few smaller cities of Andhra Pradesh, Reliance Retail, the Rs. 30,000 crore retail initiative of Reliance Industries is gearing up to open 250 ‘Fresh’ within the next two months, in Pune, Bangalore, Hyderabad, Mumbai, Ahmedabad, Vadodara, Surat, Jamnagar, etc.

During the same period, apart from opening ‘Fresh’ stores, which is the existent food and grocery neighbourhood convenience format, Reliance will also open hypermarket and niche retail format stores.

These stores, apart from selling known brands, will also offer merchandise carrying private labels, including ‘Reliance Select’ an in-house label for staple products, which has already been introduced in the existing ‘Fresh’ stores.

Among new services, Reliance is considering offering free delivery of merchandise to customers’ homes. This may directly impact small retailers as customers could save time and effort on procuring goods without sacrificing on the advantages of buying from a big chain like Reliance. According to reports, such deliveries may, however, be restricted up to the distance of three kilo meters.

Reliance Retail opens 9 ‘Fresh’ stores in NCR; targets 1 trillion in revenues

Reliance Retail juggernaut moved into National Capital region (NCR) today with the opening of nine ‘Fresh’ stores in Noida, Greater Noida, Gurgaon, Ghaziabad and Faridabad. NCR is one of the economically fastest growing geographical regions of the country. Within the next three months, Reliance wants to take the tally of these ‘Fresh’ stores to 100 in the Delhi- NCR region. Reliance is believed to have invested about Rs. 1,100 crore in this region.

Having launched the first cluster of its ‘Fresh’ stores on 3rd November, 2006, today’s launch takes the pan-India tally of Reliance ‘Fresh’ stores to 49, spread across Andhra Pradesh (21), Jaipur (7), Chennai (12), and NCR (9). Three of these stores in Andhra and 12 stores in Chennai were launched during the previous week. Thus, 24 ‘Fresh’ stores have been launched within a short span of one week only.

Reliance expects to launch 1,000 stores before the year end. Occupying an aggregate retail
space of about 1,10,00 square feet, these neighbourhood convenience format stores occupy an average retail space of over 2,200 square feet and offer quality horticulture, grocery and dairy products at competitive prices. Apart from catering to house hold customers, Reliance also makes supplies of these items at wholesale prices to push-cart vendors and small kirana merchants through its wholesale format “Rangers Farm.”

Having already bought 74 nos. land plots for about Rs. 2,000 crore, Reliance has so far invested about Rs. 3,000 crore or about 10% of the first phase planned outlay of Rs. 25, 000 to 30,000 crore on its retail initiative.

According to Reliance Retail, President and CEO (Operations and Strategy), Raghu Pillai, Reliance would open bigger format stores like hypermarkets, supermarkets and speciality stores during the April-June quarter.

Reliance Retail, he said, would earn Rs 1 trillion (Rs. 1 lakh crore) in revenues in the next five years. This excludes additional revenues from the “Rangers Farm” wholesale business operations. Reliance’s experiment with this wholesale format in Hyderabad has been working fine, added Pillai.

Reliance juggernaut gaining momentum

The Rs. 25,000 crore, Reliance Retail juggernaut has begun gaining momentum.

Reliance, which began its journey in retail with the opening of a cluster of Reliance ’Fresh’  neighbourhood convenience stores in the state capital cities of Hyderabad and Jaipur, has opened 12 Fresh stores in Chennai on 24th January and has now begun moving to tier-II cities with the launch of seven stores in Andhra Pradesh on the 28th and the launch of nine stores today in the fast growing National Capital Region around Delhi.

The new Reliance ‘Fresh’ stores launched in Andhra Pradesh comprise four stores in Vijaywada and three in Guntur. Occupying an aggregate space of 17,000 sq. ft. each of the store on an average offers a retail space of over 2,300 sq.ft.

The nine stores in the NCR will be located in Gaziabad (4), Greater Noida (2), Noida (1), Faridabad (1) and Gurgaon (1).  These stores will occupy a retail space each of between 2,500 and 3,000 sq. ft. These stores are a part of the plan to open 22 stores in this region by the end of March of 2007. Reliance has set up two cold storage facilities at Kundli and Azadpur in Delhi of 1.75 lakh sq ft and 75,000 sq ft. respectively to service the needs of these stores.

All the new stores like other ‘Fresh’ stores will offer fresh fruits, vegetables, flowers, grocery and dairy products apart from a few staples under the Reliance’s private label of ‘Select.’ All the merchandise at these stores besides offering good quality will also be competitively priced.

All the new stores, as per the Reliance’s policy of according place of pride to its customers will be opened by the customers who first enter these stores.

Reliance is yet to begin its larger format speciality stores and hypermarkets. Three of such stores will be set up in East Delhi’s Star City Mall and Ghaziabad’s Shipra . and Jaipuria Mall, will follow in due course.

Ambani turf wars may extend to retail

Organised retail, if buzz in the pink media is to be believed, may be gearing itself up to witness a bitter fights between Ambani siblings.

After signing of the partnership agreement between Wal-Mart, the US-based, biggest retailerof the world and India’s biggest private telecom player Bharti, it seems that that Anil Ambani, the younger sibling of Mukesh Ambani, may be preparing himself for a bloody fight in the unchartered territory of organised retail.

It is no secret that the retail sector is getting hotter by the day, especially after the October, 2006, announcement of the aforesaid Bharti- Wal-Mart, tie-up.

Earlier, according to knowledgeable circles, Anil Ambani was working on a plan to enter the business of retailing pharmaceutical products by leveraging on the pan-India network of chemists and druggists, who are members of the All India Chemists Association. However, not only that plan was shelved, but in the meanwhile Anil Ambani got occupied with the much bigger ambition of becoming the country’s biggest telecom player by acquiring Hutch, the second biggest GSM mobile player, owned by Hong Kong based Hutchison Whampa.

However, when a number of parties have jumped into the arena to acquire Hutch, Anil Ambani seems to be working on the possibility of garnering a much bigger share of the retail pie by seeking to join hands with Carrefour, the France based, world’s second biggest retailer. The size and ambitions of this tie-up could be as big or even bigger as that of his elder brother Mukesh Ambani owned Reliance Retail.

While, the non-compete agreement between the two brothers, it may be noted, does not preclude either of them from taking up the retail business, Carrefour is scouting for partners for its India foray after ealier having called off negotiations with the Dubai-based Landmark group for setting up over 200 hypermarket and other store formats in the country. The UK-based Tesco, the world’s third biggest retailer, after failed negotiations with Bhartis, is said to be currently in talks with Tatas.

We had earlier talked about Munjals (Hero Honda group)  turning out to be a dark horse in the race for a tie-up with Carrefour, however, it now appears that apart from Anil Ambani, Carrefour may also be exploring possibilities of a tie-up with FMCG major Godrej and Bombay Dyeing owner Nusli Wadia.

Big Bazaars gearing up for 3 days of “Maha Savings Offer”

Do you recall the Republic Day, last year, when Police had to rushed in to restore order following a stampede caused by a large number of customers who had come to take advantage of the “Maha Savings” Offer. Big Bazaar is the hypermarket retail format of the Kishore Biyani owned India’s biggest retailer Pantaloon. In Mumbai, even medical help had to be sought for customers who waiting, since early morning, for their turn to buy the goods, were exhausted.

Republic Day is the day when the company makes its “Maha Savings” offer in all its “Big Bazaar” stores across the country. The offer, in view of the unmanageable rush last year, was extended for a period of three days between 26th and 28th January. The offer branded as ‘Sabse Saste Teen Din’ puts on offer merchandise across categories at at extremely economical rates. These concessions are made possible with the active support of several apparel, appliances and other manufacturers.

24 Big Bazaar outlets, last year, sold merchandise worth Rs. 43 crore during the three day periods. This year, there 43 Big Bazaars together with Food Bazaars across the country will be making this offer. While, it is not possible to estimate the business this year, company officials, expect to attract at least one million customers during the period.

In light of the previous experience, company officials are not taking any chances and are making adequate arrangements for extra cash counters as well as are providing extra space for easier movement of the customers visiting the stores.

News Source: Hindu Business Line

Titan to retail prescription eyewear

Titan, the biggest Indian watch and jewellery retailer, which also sells “Fastrack” range of sunglasses and frames has decided to enter the prescription eyewear retail market.

Mr. Bhaskar Bhat, Managing Director, Titan Industries, disclosed this while talking on the sidelines of a seminar on advertising organised by the Advertising Club Madras, in Chennai.

Initial introduction of the prescription eyewear products will be done from 3rd March, 2007 on a pilot basis in a few of the company’s “World of Titan” stores, he added. Glasses, frames and lenses for a new yet to be named brand will be made by Titan on its own without seeking help of any outside partner.

The company has notified the stock exchanges of its proposal to start the new business.

ITC plans big on retail; to open 140 Chaupal ‘Fresh’ & over 50 ‘Sagar’ stores

Having launched three Chaupal ‘Fresh’ stores in Chandigarh, Pune and Hyderabad, tobacco, food, packaging and hospitality major ITC is gearing up to launch the fourth store in Kolkata. ITC has chalked out plans to set up 140 of such fruits and vegetables stores in 54 towns, across the country. These stores are slated to come up within three to four years. ITC’s ‘Fresh’ format, in contrast to most others, is a combination of both the wholesale and the retail formats, where these stores remain open between 4 and 7 AM for wholesale and thereafter for retail.

ITC’s engagement with farmers began a few years ago with the opening of its first Chaupal Sagar hypermarket in Sehore, a small town near Bhopal in Madhya Pradesh. Today, while there are 12 Chaupal Sagar stores in operation, 11 more are under construction. All of these stores are located in the rural areas of Madhya Pradesh, Uttar Pradesh and Maharashtra. In the coming months, ITC has plans to set up 40 more of such stores. The concept of these stores is slightly different from hypermarkets.

Chaupal Sagar stores, besides selling home products but also sell farm inputs like fertilisers, pesticides and implements required by the farmers. In addition to selling products, these stores also procure farm produce from the farmers. They also disseminate information on commodity prices, crop patterns, and farming methods to these farmers. Even, crop demos and cold chain support are made available, where needed.

In short, Chaupal Sagar stores have become meeting points for farmers not only for transacting commerce but also for collecting and exchanging useful information.

News Source: The Hindu Business Line

Nirula’s ride retail boom; launch two new formats

With the recent launch of a Nirula’s “Express” restaurants at Delhi’s domestic airport and MMX Mall at Mohan Nagar as well as Shoprix Mall at Noida, the home grown, North Indian fast food retail chain has decided to ride the retail and real estate boom.

Nirula’s “Express” counters, admeasuring about 200 sq ft, to be located in high traffic areas including airports, railway stations, malls and metro stations, would among others offer ‘take away’ food like sandwiches, pastries, ice creams, soft drinks, other beverages, apart from gift items and consumer products.

Reliance’s new Ranger Farm stores in 3 AP towns

‘Ranger Farm,’ the cash & carry format of Mukesh Ambani owned Reliance Retail, is launching at least three new stores in Vijayawada, Guntur and Visakhapatnam in Andhra Pradesh. These stores are being launched as a precursor to the opening of Reliance Fresh stores in these towns in February, 2007, according to a news report in DNA Money.

Reliance had earlier launched this format of stores prior to the opening of 22 Reliance Fresh stores in Hyderabad and Jaipur.

The format is in the same mould as Metro AG’s Cash & Carry stores in Bangalore, Kolkata and Hyderabad as well as ITC’s Chaupal Fresh stores in Hyderabad, Pune and Chadigarh.

These stores, which open at an unearthly hour of 2 AM in the morning, supply fresh fruits, vegetables and food in bulk to small shop keepers including push cart vendors. These stores, which have not been publicised much, remain open for business until 11 AM. ITC’s Chaupal stores remain open for bulk business between 4 AM and 7 AM and for consumer business, thereafter.
The initial response, according to the report, to this format has been very encouraging in Hyderabad with more than 4,000 push cart vendors and small shopkeepers picking up food and vegetables in bulk.

Retail push helps Raymond’s Q3 profits zoom up

Raymond’s net profit for the quarter ended December 2006, against corresponding quarter in the previous year, on the back of retail push, zoomed up by 26% even though in sales for comparable products was only 13%.

“The company has identified retailing as its thrust area for future growth in the branded textiles and apparel space,” said Gautam Hari Singhania, chairman and managing director of Raymond, while announcing the results. “The company has embarked on an expansion plan for increasing its retail penetration and also entered into strategic partnerships with leading international players to enter new product categories,” he added.

During the quarter, the company signed a 50:50 joint venture with an Italian company, Grotto, for retailing of premium casual wear and accessories under the GAS brand.As a part of Raymond’s strategy to expand its retail network across the country and the middle east, the company launched its flagship store in Mumbai. Raymond’s is also increasing exclusive brand outlets for various brands in its portfolio.

Kishore Biyani conferred ‘international retailer of the year’ award

It was a a proud moment for nascent, organised retail industry of India to have been recognised when one of its visionary leaders Kishore Biyani, CEO & MD, Pantaloon Retail, was conferred the International Retailer of the Year award by the National Retail Federation (NRF) at the 96th annual convention of in New York, on 16th January, 2007.

This honour, which is the first for any Indian, is especially significant because the US National Retail Federation (NRF) is the world’s largest retail trade association, which represents combined annual members’ turnover of US$ 4.5 trillion.

Explaining the reasons influencing the Federation’s choice this year, Karen Knobloch, Senior VP, NRF said: Pantaloon is interesting because it is very agile; focused on giving what customers want and offers whatever format is needed, from food to electronics to high fashion apparel. And they really are a good example to all the other retailers who come here to learn.

“I think what we have to learn from the US is how consumption can drive our economic growth,” said Pantaloon Retail MD Kishore Biyani adding that the US market is all about thinking big in terms of number of stores, technology and consumerism.

This award has been conferred when the world’s biggest American retailers like “Wal-Mart” have already stitched up necessary agreements, while others like “Starbucks” and “Costco Wholesale” are waiting in wings to make their foray into the world’s second most populous as well as the world’s fastest growing market.

Pantaloon joins hands with Staples to become leading office products’ supplier

Pantaloon Retail (India) has announced signing of an agreement to set up a JV between the US-based, world`s largest office products company, Staples and Future Office- its 100% subsidiary business unit.

The Boston -based USD 16.1 billion, Staples, which invented the office superstore concept in 1986, is the world’s largest office products company, has presence in 21 countries through a network of 1,800 stores and 69,000 employees. Staples’ range of office products include supplies, technology, furniture, and business services.

While, the JV agreement will allow Staples to enter the office products’ market in India, it will allow Pantaloon Retail to benefit from the industry expertise and sourcing network of Staples. In a related development, Future Office had recently announced acquisition of the operations and management of Officedge, an online B2B office products company providing contract delivery services to corporate customers across the country.

“The office products business in India presents tremendous opportunities for growth. Through our partnership with Staples, the industry leader, we can become the office products provider of choice for businesses throughout India,” said Pantaloon Retail MD and CEO Kishore Biyani, commenting on the deal.

Staples Future Office would serve businesses of all sizes through delivery as well as cash-and-carry locations, offering a wide range of office products from core office supplies, printers as well as computers. Future Office would expand its delivery operations in all major cities of the country, including Delhi, Mumbai, Bangalore, Hyderabad, Chennai, Kolkata, Pune, Ahmedabad, Indore and Chandigarh.

The deal is a part of the group’s strategy to become the leading provider of office products in India.

Retail News Roundup

Retail push to reverse farm income slideAmul to launch pro-biotic ice cream ranges

Punjab farmers’ incomes are expected to get a big push with the arrival of the corporate sector in retail.

Pantaloon hunts for European partners to sign joint ventures

    The company will set up joint ventures with three European firms in menswear, premium suits wear and kidswear categories.

Trinethra launches FabCity in Mysore

Trinethra Super Retail Ltd launched FabCity, its hypermarket brand, in Mysore.

Rajesh Exports launches more `Laabh’ outlets    The Company announces the simultaneous launch of 30 `Laabh’ outlets in 23 cities across the country.

Catalogue retailer Argos mulling expansion with Rahejas in India

UK-based, catalogue retailer, Argos, one of the Britain’s most successful, trusted and respected retail chains, owned by Home Retail Group, is looking at India as a possible future market, according to Finance Director, Richard Ashton, who was speaking to reporters in London on Wednesday, reports Reuters.

Founded in 1973, Argos sells – online and over telephone – a range of over 8000 top quality, branded products comprising general merchandise and home products, including furniture, electricals, toys, and leisure, from over 670 stores throughout Britain and Ireland, serving over 130 million customers annually.

“India is a possible area we’d consider in the future. We’re not active there, but we’re keeping an eye on it,” he added.

Founded in 1973, Argos sells – online and over telephone – general merchandise and home products from over 670 stores throughout Britain and Ireland, serving over 130 million customers annually.

Retail Week, a trade magazine, had reported last week that Argos could soon do a joint venture deal with Raheja owned Shoppers’ Stop/ HyperCity for its operations.

Tesco, Carrefour in the last lap of finalising tie-ups: Kamal Nath

The second and third biggest retailers of the world, France-based Carrefour and the UK-based Tesco respectively, are in the last lap of finalising their tie up arrangements with local partners in India, according to Kamal Nath- the Union Minister of Commerce and Industries. He revealed this while speaking to Shireen Bhan of CNBC TV18.

He, however, skirted a question relating to Tesco’s imminent tie-up with Tatas. Tesco, it may be recalled, was earlier snubbed by Bharti, for a possible retail tie-up for its foray into India. Similarly, Carrefour, has also withdrawn from talks with the Dubai-based Lifestyle for a possible India related retail tie-up.

Only a day ago, ministry sources, it may be recalled, had confirmed that there was legally nothing wrong with the Bharti’s tie-up, announced earlier in November, 2006, with the world’s biggest retailer Wal-Mart.

On being queried about the status of Starbucks’ pending proposal, he said that the matter would be sorted out soon, as there were no insurmountable difficulties in clearing the proposal.

Reliance pays Rs. 986 crore to acquire 5 lakh sft of retail space in Delhi

Mukesh Ambani owned Reliance’s retail juggernaut rolls on with the acquisition in the past two days of eight properties in the capital at the reported spend of Rs. 986 crores, according to PTI and other media reports. Accordingly, Reliance has paid one of the highest prices for commercial properties seen anywhere in the country at about Rs. 20,000 per square feet. It may be recalled that even earlier, Reliance had bought property in Kurla Bandra Complex in Mumbai at about Rs. 13,000 per sq. ft.

Although. Reliance officials have declined to comment on the matter, according to sources, Reliance Retail has purchased over five lakh square feet of space in the eight properties, six of which are reported to be located in Dwarka near the Indira Gandhi International Airport, while the other two are located in West Delhi at Vikaspuri and Rohini. Reliance is expected to be also bidding for another auction of two more properties at Vasant Kunj in South Delhi.The properties acquired by Reliance Retail were a part of auctions by the Delhi Development Authority.

These acqusitions are part of Mukesh Ambani owned Reliance Retail’s Rs. 25,000 crore retail initiative, which envisages setting up multi-format retail stores in 684 towns across the country within 18 to 24 months.

Reliance Retail to source mobile services from biggest rival Bharti

It may come as a big surprise, however, according to sources, two of the biggest rivals in organised retail, Reliance Retail and Bharti have joined hands to ink a deal which will allow Reliance Retail to source mobile and enterprise communication services (which includes mobile, broadband and leased line services) for its retail venture from Bharti Airtel, the telecom outfit of Sunil Mittal owned Bharti group.

It may be interesting to note that it was Mukesh Ambani owned Reliance Industries, which had earlier rolled out Reliance’s CDMA mobile network across the country in the teeth of stiff opposition from Bharti backed GMA mobile operators. After the split of Ambani brothers, Reliance Mobile is now owned by Anil Ambani group.

All decks cleared for Bharti-Wal-Mart retail deal; way paved for big ticket retail foray into India

The Government of India has found ‘no fault,’ with the tie up between telecom major Bharti and the world’s biggest retailer Wal-Mart, announced earlier on 28th November, 2006, reports PTI. The Government, in the teeth of opposition from the left lobby, was forced to agree to examine contours of this retail alliance within the framework of existing FDI policy guidelines on retail.

The government in the previous year (10th February, 2006) had put the FDI in wholesale ‘cash and carry’ on the automatic route. As such, Bharti-Wal-Mart alliance, which envisages 100% ownership of Bharti Enterprises, a local entity, in front-end retail, has been found to be in conformity of the existing policy on FDI in retail, said high-level sources in the Ministry of Commerce and Industry.

While, Bharti will wholly own the front-end, back-end of the retail alliance, involving logistics, cold chain and supply chain management, according to the announcements made so far by Bharti, will be jointly managed by the two partners. Wal-Mart is also expected to operate cash and carry business based on the Sam’s Club model.

Currently, ‘Metro Cash & Carry’ of Germany and ‘Shoprite’ of South Africa have set up 100% owned wholesale retail operations in India.

This clearance of the government, also paves way for the world’s second and third biggest retail players, Carrefour of France and Tesco of the U. K. respectively, and indeed many more like them, to set shop in India with active participation of a local partner.

Tesco, with whom talks with Bharti failed on account of differences between the two on the pace of joint retail roll out in India is said to be in talks with Tatas now for its foray into India. Tatas themselves may perhaps prefer a slower roll out than Bhartis, in tune with the wishes of Tesco.

Carrefour has also withdrawn from talks for a possible alliance with Lifestyle of Dubai and may, perhaps, now be exploring possibilities with Birlas or even Biyanis, although, both of whom like Reliance Retail have announced their intentions to go alone.

In any case, this removes major hurdle for entry of big ticket, multi-brand, retailers in India. All major retailers are eyeing at India as it is not only the fastest growing but also the second most populous retail market in the world. This becomes more critical when there is hardly any growth in developed markets of the world.

Of course, players like Hutchison Whampa of Hong Kong who are looking for majority ownership stake in the multibrand, front-end may have to wait for some more time. In any case, this is more a matter of formality as the savvy retailers have already found an effective hole in the policy and, notwithstanding the noises being made by the left parties, the government is willing to look the other way.

Costco, US’ fifth biggest, eyeing India?

Costco (Costco Wholesale Corporation), the fifth biggest retailer of the U.S., which was founded in 1983 in Seattle (Washington), and which operates membership warehouse club format, modelled on Wal-Mart’s Sam’s Club and Metro’s Cash & Carry, may soon follow Wal-Mart, its legendary competitor, by foraying into India, according to an Economic Times report.

The US-based, over $60 billion, Costco, which employes over 1,25,000 persons, operates 502 wholesale retail stores across the world. 370 of these store are located in the US and Puerto Rico, while the balance 132 stores are located in six other countries of the world.

Metro Cash & Carry and South African Shoprite are the only two wholesale retailers currently operating in India, although Wal-Mart, Reliance and Pantaloon are also gearing up to roll out this format across the country.

While, current policy guidelines, unlike Wal-Mart, does not bar Costco to enter the country without a local retail partner, Costco may be looking for a partner like Bharti, who may help accelarate its entry into the fastest growing and the second most populous retail market of the world.

At Costco, which sells national and regional brands at prices below traditional wholesale or retail outlets, on a membership model with monthly billings, no branded item can be marked up by more than 14 percent, and no private-label item by more than 15 percent, whereas, supermarkets in the U.S. by contrast in general mark up merchandise by 25 percent, and department stores by 50 percent or more.

Burger King to dine with Pantaloon in India?

Close on heels of the announcement of Kishore Biyani owned, Rs. 2,199 crore, retail major Pantaloon tieing up with Starbucks- the world’s biggest coffeee shop chain, comes the buzz of Pantaloon’s possible tie up with the US-based, world’s second biggest, US$ 2,048 million, 37,000 employees strong, international fast food restaurants chain, Burger King.

Burger King, founded in 1954, in a suburb of Miami, is a large fast food chain of more than 11,100 restaurants spread across 65 countries. The restaurant chain is predominantly selling burgers, French fries, soft drinks, desserts, and sandwiches. Burger King’s trademark product is a hamburger called the Whopper. The Whopper is also a line of sandwiches, all made with the same ingredients.

Burger King Chain, which is the world’s second biggest fast food chain after McDonalds, follows a strong franchisee based model. 90% of the chain’s restaurants are, family owned, independent franchisees. It is speculated that Burger King for its foray into India would like to follow a similar model.

S Kumars’ retail push results in all round growth

S Kumars Nationwide (SKNL), the Kasliwals owned textile and apparel major, has registered a whopping 39% (Rs. 315 crore) and 29% (Rs. 33 crore) growth in sales and profits respectively in the 3rd quarter ending December, 2006, over corresponding quarter in the previous year.

Nitin S Kasliwal, managing director of SKNL, has ascribed the growth to the company’s aggressive thrusts into ready made apparel, consumer textiles and retailing earlier in the year.

SKNL plans to set up 1,000 exclusive outlets for its umbrella brands in the next three years from the current 90-odd stores across the country.

As reported earlier, SKNL will focus on fashion and accessory retailing and mostly deal with luxury, high-end super brands in the country.

‘Starbucks’ to enter India with Pantaloon owned JV

Starbucks, the world’s biggest coffee-shop chain with 12,440 stores worldwide, subject to government nod, is gearing up, to enter the country in partnership with New Horizon- a joint venture jointly owned by Kishore Biyani owned Pantaloon (49%) and V.P. Sharma (51%), reports Bloomberg. V.P.Sharma is the Head of PT Mitra Adiperkasa, Starbucks’ Indonesian franchisee, which operates 45 Starbucks outlets in Indonesia. We had earlier reported about the Starbucks’ possible tieup with Kishore Biyani owned Pantaloon.

Starbucks plans to open its first store in New Delhi and subsequently in Mumbai, the nation’s commercial capital, said Sharma. The first Starbucks store may go on stream by the year end.

Starbucks will have to compete with already established home grown Barista and Cafe Coffee Day coffee shop chains in India. By the year end, Barista is expanding its network of 100 shops to 225 shops.

People in most parts of India, except south, like to drink tea than coffee. Even, south Indians drink ground coffee. Preferences are, however, changing fast and increasing number of young Indians, especially students and upwardly mobile professionals, are favouring coffee shops as meeting and socialising places. About half of India’s population is less than 21 years old.

“It’s a status symbol to have a Starbucks cup in your hand in the countries like China and I think that’ll translate to India as well, as more Indians are working in professional jobs that give them more disposable income,” said Rick Drake, director of research at ABN Amro Asset Management, which among others manages Starbucks shares.

Louis Vuitton shops at international airports

Paris based, world’s largest luxury goods conglomerate, LVMH, constituted in 1987 by merging 102 years old, Louis Vuitton Malletier (“Louis Vuitton Trunk-Maker”) with the champagne producer Moët et Chandon and Hennessy, has been permitted by the FIPB to open duty free shops in India at Mumbai and Delhi international airports. These duty-free shops will be operated by DFS Venture Singapore- a LVMH subsidiary based in Singapore. LVMH is already present in the Indian retail sector having entered earlier through single brand FDI route.

LVMH will set up the airport shops by investing Rs 40.5 crore, divided between Delhi (18 crore) and Mumbai (22.5 crore). LVMH will build infra-structure facilities including warehouses. LVMH is also expected to offer quality merchandise at reasonable prices by leveraging on its sourcing network spread across the world.

Louis Vuitton’s signature leather goods are highly regarded in the fashion world and have created a cult-like following among consumers, who proudly display the logo and designs and refer to the products as “Louis.” The Louis Vuitton “monogram canvas” design, which was created in 1896 with the intent of preventing counterfeiting, is considered the very first designer label on a product in the world. Ironically, the Louis Vuitton brand has, however, become the most counterfeited brand in fashion history as more than 98% of all items branded with the Vuitton logo are counterfeit.

Unlike other less exclusive brands, Louis Vuitton products are sold only through Louis Vuitton boutiques in upmarket locations in wealthy cities and in concessions in other luxury goods shops like Harrods in London.

More global brands from VF stable

VF Arvind Brands, the 60:40 joint venture between, the US$ 6.4 billion VF Corporation, one of the world’s largest over 100 years old US based apparel companies, and Indian textile major Arvind group owned, Arvind Brands, is working towards bringing over 45 odd global VF, jeans and casual wear, brands in the country.

VF’s world famous Lee and Wrangler jean brands are already present in the country for over a decade, the company had earlier in 2006 had introduced VF’s super premium brands, JanSport, Kipling and Nautica.

Presently, the company is in the process of launching Hero and Riders brands owned by VF Corporation. These mid-price brands are planned to be sold through the multi-brand outlets and departmental stores. These brands offer a wide range of products including caps, shirts, T-shirts, belts, knit and woven tops.

While, the Riders brands is yet to be launched by the company, Hero brand has been introduced about a month ago through Metro C&C.

VF Arvind Brands, before bringing additional brands from the VF stable, will try to establish the existing brands in the current year. The company, however, is hopeful of introducing all of the VF brands in the country, in the next three to four years.

Arvind VF expects to clock a turnover of Rs 200 crore this year registering a healthy annual growth of 30%. It also expects to maintain this growth in coming years.

Subhiksha crosses halfway mark; well on its way to 1,000 in 2007

Subhiksha – the chennai based, no frills, discount retail chain, which recently hit the 500-stores mark, has catapulted itself into one of the country’s largest supermarket chains, with over one million sq. ft. of retail space, spread across five states of the country.

Speaking on the occasion, R Subramanian, MD, Subhiksha said, “With Maharasthra we will complete our 600-store target, and we will shortly activate Phase 2 of our expansion plans foraying into 5 more states including Chandigarh, Punjab, Madhya Pradesh, Uttar Pradesh, Haryana and West Bengal. We hope to hit the 1000-store mark during 2007.”

“Our goal of becoming India’s favorite neighborhood store is now well on its way. We want to be able to provide customers from all segments of society, in all parts of the country, with a viable smart shopping option,” added Subramanian.

Unlike Big Bazaar, its discount, food and grocery, retail counterparts, Subhiksha believes in setting up non-air conditioned small neighbourhood stores (near the community) measuring around 2,000 sq.ft. in retail space. As such, while Subhiksha competes with big store chains on regular discounts, it competes with traditional ‘father and son’ kirana stores on close proximity to its customers.

Subhiksha operates in four verticals — fruits and vegetables, pharmaceuticals, FMCG and telecom. Beside loyalty discounts and regular discounts of 10% on medicines and 8 to 10% on FMCCG products. The retail chain also makes the Every Day Low Price (EDLP) offer to its customers, which is sustained through discounts obtained by the chain from direct supply arrangements with manufacturers, along with bulk purchase and cash transactions.

While the discount model of Subhiksha is based on world famous Wal-Mart strategy, the carpet bombing model is based on the ‘Starbucks’ strategy, in which the coffee retail chain opens a cluster of stores in close proximity to each other, in a geographical area which has high population density with purchasing potential. This enables the chain to cannibilise sales within its own network rather than allowing them to go to other individual stores or retail chains. Even, Reliance, so far seems to have followed a similar strategy having opened a Cluster of ‘Fresh’ stores in Hyderabad and Jaipur.

While, the decade old, Rs. 340 crore in turnover, Subhiksha retail chain, has invested about Rs. 300 crore on its first phase of expansion, the total outlay for 1,000 stores will be around Rs. 500 crore. It may be recalled that ICICI Venture Capital holds 24% of the equity in the company. The company is mulling over making Initial Public Offering (IPO) in the second half of 2007.

futurebazaar.com, the new online shopping destination

Future Bazaar, a subsidiary of the Kishore Biyani owned, India’s biggest listed retailing company, Pantaloon, has recently launched its online retail initiative – futurebazaar.com, in direct competition with virtual shopping sites like ebay.in, indiatimes.com, rediff.com. Although, present online retail turnover is estimated at Rs. 180 crore, futurebazaar.com is targeting to achieve a sale of Rs. 300 crore in the first year itself. Unlike other aforesaid portals, the futurebazaar.com is backed by brick and mortar retail chain Big Bazaar of the Future Group. The portal is reported to be getting a traffic of around 40,000 hits every day with a conversion rate of 1 per cent.

Futurebazaar.com, among others, claims to have on offer the widest range of apparel, books, entertainment, cameras, consumer durables, home decor, kitchenware and kitchen appliances, mobile phones, toys and games, laptops, watches and accessories. The current range of over 5,000 products is categorised under 15 major headings and 185 sub headings.

All the products on offer at futurebazaar.com carry manufacturers’ warranty and are delivered at the customer’s door step through Big Bazaar chain and logistic carriers like Blue Dart and Gati in more than 1,500 cities and towns spread across the country. Unsatisfied customers have the choice of unconditionally returning the merchandise within 15 days of purchase. The portal can deliver merchandise. Portal also claims to provide customer support through real persons as against virtual support throgh computers provided by its competitors.

“Leveraging the tried and tested ‘brick and click’ strategy, futurebazaar.com is the only e-commerce portal with a strong offline presence, quite different from the current e-commerce players who have adopted a ‘marketplace’ model. Backed by our end-to-end supply chain and the ability to source nearly a million products, our economy of scale gives the customers the lowest prices,” said Sankarson Banerjee, CEO, Future Bazaar, while formally launching the shopping the portal.

Subhiksha to storm Kolkata with 90 stores in four months

Subhiksha, the Chennai-based, R. Subramanian owned, over 500 stores strong, discount food and grocery chain, in its now familiar carpet bombing strategy of simultaneously opening a large number of outlets in a single location, is gearing up to storm Kolkata with a cluster of 90 outlets in four months. It has already begun the process of identifying store locations and building distribution centers in the city.

Subhiksha will have more stores than Post Offices in Kolkata, said a company official.

Subhiksha would also set up a regional hub in Kolkata for procurement so as to avoid paying central sales tax, which despite proposed reduction in the rate, will continued to be levied at 3% from April, 2007.

Kolkata, which has a Rs 300-crore-a-month market for food and groceries, offers a huge potential as the organised retailers in the city like Arambagh, C3 and Food Bazaar, account for just Rs 10 crore.

At the moment, Subhiksha does not deal in poultry or fish, however, it would consider offering these items in Kolkata as “Fish and Kolkata are inseparable,” said R. Subramanian, M D of the company. Subhiksha offers an average discount of 9-10 per cent, compared with 2 per cent at Food Bazar. Subhisksha has no takeovers in mind and the entire chain will be created from scratch, added Subramanian.

Unlike other retail stores in Kolkata, Subhiksha will have the added advantage of remaining open between 9 AM and 9 PM.

Kolkata foray for the retail chain is part of second phase expansion for the retail chain in which it wants to take the number of stores in the network to 1,000 by the end of 2007. The expansion will be spread across five states of Bengal, Punjab, Madhya Pradesh, Uttar Pradesh and Haryana, including Chandigarh.

‘Odyssey’ embarks on expansion drive

Odyssey- the South-based book and entertainment retail chain, is expanding furiously. Against present 13 stores spread across six cities — Chennai, Hyderabad, Salem, Coimbatore, Tiruchi and Varanasi — it wants to at least have 20 new stores by March-end. It will be adding 65,000 sq ft in retail space to its existing 80,000 sq. ft., reports the Hindu Business Line.

Odyssey has partnered with Deccan Chronicle promoters Ravi Reddy and Ram in Hyderabad, and V Subramaniam, a silk trade entrepreneur, in Varanasi.

In the next two years, the retail chain plans to invest around Rs. 125 crore, add about five lakh sq ft in retail space, and have presence in 20 cities across the country, including Pune, Vizag, Mumbai, New Delhi and NCR, Chandigarh, Mangalore and Thiruvananthapuram.

Odyssey opened its first store in Bangalore yesterday with plans to add two more stores soon.

Flying Machine to change tack; sell from exclusive stores

Textiles major, Arvind which has a bouquet of home-grown brands include Excalibur, Flying Machine, Newport and Ruf N Tuf, is riding high this year on its lifestyle brand Excalibur. This repositioned brand is likely to deliver a growth of 40% in turnover, increasing to about Rs. 60 crore this year against Rs. 43 crore in the previous year.

Flying Machine, the first indigenous jeans brand of India introduced in 1997, which is sold through 200 multi-brand stores, is however languishing in sales at about Rs. 25 crore a year, is now being repositioned by the group, to ramp up sales. According to the new plan, Flying Machine jeans will now be sold through exclusive brand-dedicated stores from this year at a slightly pushed up price range of Rs 895-1495, which is Rs. 100 to Rs. 200 more than the present according to a DNA reports . Through revised strategy, Arvind envisages to pull up its sale of Flying Machine from Rs. 25 crore to about Rs 40-crore in the next fiscal.

Jeans’ market in India, estimated at Rs. 5,000 crore, is a highly crowded. There are plethora of brand and only 15% of this is accounted for by the organised sector, which includes brand leaders like Levis, Lee and Pepe, who each of whom sales around Rs 100 crore per annum.