India’s telecom czar Sunil Bharati Mittal, which recently tied up with Walmart, the biggest retailer of the world today outlined broad contours of its investment plans. Depending on investments in the real estate and logistics, the company within four years, or by 2010, will invest US$ 7 billion in creating retail network in the country. This will include, opening 100 (large stores) hypermalls and several hundred small stores to cater to the growing needs of middle income segment comprising 300 million customers.
This investment is roughly 30% higher than Mukesh Ambani owned Reliance Retail, which plans to roll out 4,000 stores by 2011 at an estimated investment of US$ 5.5 billion. In retail business, comparing investments is rather irrelevant as the figures can differ substantially depending on who owns real the estate and the store premises. It may be recalled that Reliance made its retail foray with the launching of a cluster of 11 neighbourhood, convenience stores ‘Reliance Fresh,’ in Hyderabad on 3rd November, 2006. Since then, Reliance has added five stores each in Hyderabad and Jaipur, taking the current tally of stores to 21.
Reliance ‘Fresh’, a part of the Mukesh Ambani owned Rs. 25,000 crore retail initiative, which offers fresh vegetables, fruits and flowers besides staples in the neighbourhood convenience store format, has already launched 17 Reliance ‘Fresh’ stores in Hyderabad. It may be recalled that Reliance had launched the first cluster of 11 stores on 3rd November, 2006. Reliance hopes to take the tally of these stores to 40 in the coming weeks in the twin cities of Hyderabad and Secundrabad.
According to a news report published by the Hindu Business Line, reliable sources aver that 17 stores put together are averaging a daily turnover of around Rs 15-16 lakhs and daily footfalls of between 800 and 1,200. This translates into an average daily turnover of Rs. one lakh per store or on an average daily per squre foot revenue of around Rs. 30, as each store occupies between 2,500 and 4,000 square feet of retailing space.
- Wal-Mart operates more than 6,500 stores in 15 countries.
- Wal-Mart serve more than 25 million customers around the globe every day.
- Wal-Mart saves an average American household around $200 every year.
- Wal-Mart health-plans insure more than 1 million people. This makes Wal-Mart to be among the largest providers of health insurance in the U.S.
- Wal-Mart employs 1.8 million associates worldwide, including 1.3 million in the United States. More than 240,000 of these are senior citizens, who are 55 years or older in age.
- Wal-Mart has created more than 240,000 new jobs over the past three years in the U.S.
- At a recent store opening in the U.S., more than 25,000 people applied for 325 available jobs!
- More than three-quarters of Wal-Mart store managers began their careers with Wal-Mart as hourly associates.
- Wal-Mart is the largest private employer in the U.S.
India, with rapid increase in the purchasing power of middle class population, will experience a consumer boom supported by a sudden growth in demand for household products in the next few years, according to a study made by the Jersey-based investment managers Ashburton.
The number of people earning more than US$ 3,000 (about Rupees 1,35,000) a year is set to explode. The household income threshold of rupee one hundred thousand is widely viewed by economists as a trigger for the creation of a consumer society.
The number of households enjoying that level of income is expected to more than double from the last year’s 47 million to116 million, by 2010. Only 12 million Indian families had earned as much, in 1995.
This translates into more than 800 million middle class consumers, next only to China, where almost 80% of fast growing urban population would step into the consuming middle class by 2015 as against as low as 2% of population having such spending power in 1995. This growth will be primarily driven by demographics as the working population of both countries is expected to increase by 250m by 2020.
“The growth is staggering,” said Ashburton
Almost every one associated with retailing, marketing, media and consumer economics is required to deal with SEC categories. These categories are important as they help in effectively segmenting markets and targeting communication to core consumers.
Terms like, SEC A, SEC B, and the like are freely tossed around by all, however, only a few know their real meaning. Very few, for example, may be aware that many traders, who may be affluent with more spending power than most executives will fail to make the ‘high’ grade, if they are not graduates.
Although, MRUC & Hansa Research have come up with a new concept of Household Potential Index (HPI) to reclassify consumers, SEC continues to remain universally referenced classification of consuming classes. While, a detailed postings on HPI will soon follow, we explain below the basis of classification of different urban SEC categories and their relative importance in relation to marketing/ retailing potential: Continue reading
Here are some facts emerging on frentic pace at which new mall construction is taking place across the country, particularly in smaller tier II and tier III towns. According to summary of Knight Frank Research report as published by DNA Money:
- 361 new malls are under construction in diffent cities and towns; 227 of which are being constructed in top seven cities, while the balance 134 are being constructed in 50 small tier II and tier III towns.
- All the malls are expected to be completed by 2008.
- Total new space under construction: 117.4 mn. sq. ft.; 76 mn. sq. ft. or 65% of the total would be in top seven cities and the balance 117.4 sq. ft. or 35% of the total would be in 50 small tier II and tier III towns.
- NCR (National Capital Region) would account for 22% of the total new space, while Mumbai will contribute 15%. The balance 28% of the total would come up in rest of the seven top cities.
- Distribution of new space in smaller towns is going to be quite lopsided: North region would take lion’s share of 52% with West region accounting for 26% of the new space. Soth region and East region would account for 16% and 6% only.
Reacting to spreading of mall culture to smaller towns, Arvind K Singhal, Chairman of management consultancy Technopack, said:
“Till now, lack of planning has marred Indian cities – they just haven’t been able to fulfill the growing demands of a rising economy and population. Naturally malls are popping up all over to fulfill these demands.”