Shubh + Laabh Stores to give up aggressive expansion

With Indian Inflation hitting a 13 year high, Rajesh Exports owned Shubh and Laabh Jewellery retail stores went ahead and announced that store opening would be slower than what was announced earlier.

Rajesh Exports has given weak outlook for the growth in retail jewelry markets in India and hence is likely to go slow on expansion plans of its Shubh outlets. No of Shubh outlets by FY09 has been reduced to 40 stores. Overall the company witnessed an increase in inventory to Rs 1.3bn which is mainly due to rising inventory at Shubh stores (since company opened 6 Shubh stores during the quarter) and also due to diamond jewelry.

Jewellery is mainly sold during festival and marriage season. Adding to jewelry retailers woes is rising Gold & Silver prices have dampened the buying sentiments of Indian consumer.

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Italy's Paul & Shark Sportswear Ties up with Reliance Brands

Reliance Retail had spun off Reliance Brand to encourage Global Tie-ups in Fashion and Lifestyle space. The company has announced an equal JV with Italian luxury and leisure sportswear major Paul & Shark.

Mr. Andrea Dini, CEO of Paul & shark, said

While over the next years the Indian market will surely become one of the large new luxury markets of the world the feature that makes India most appealing for the Paul & shark brand is its "Youthfulness".

Mr. Darshan Mehta of Reliance Brands had lots of praise for Paul & shark and quoted that the brand is contemporary in fashion and yet does not lose its focus on comfort and elegance.

Reliance Paul & Shark Fashions is looking to open 15 mono brand stores in India over the next 5 years with the first store launching in Delhi NCR or Mumbai.

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Liverpool sets Limca Record - Is it a World Record too ?

Little known company Liverpool Retail India Ltd of Ahmedabad has entered Limca book of records by opening 151 exclusive retail outlets simultaneously across 15 Indian states.

Liverpool retails garments and fashion accessories catering to the lower middle class. They are offering a flat discount of 50% on its products till the next announcement. The normal price range of merchandise in Liverpool outlets is between Rs 399 and Rs 1,999.

Liverpool is promoted by Mr. Vijay Singh Rathore. The promoters have unveiled another retail brand Barcelona. Being an avid football fan, all of their brands will have some connection with football / cities hosting big league matches.

Representatives from Limca book of records were present at the occasion and said that Liverpool's opening of 151 stores has been included in the book. Is it a World Record too ?

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Indian Consumer's Beauty + Nutrition Shopping

The pressure to look and feel good is shaping new attitudes and lifestyles. Morgan Stanley had conducted a survey on urban Indian consumers and here is excerpt from the same.

80% of urban Indians feel that the pressures to look good are greater today than they were in their parents' generation of which only 30% of Indians agree that they are spending more on beauty products and treatments to enhance their appearance.
Also 32% of Indians check nutritional info while buying Packaged Food. Does it come as a surprise to you when you read 37% of the men invest monthly on hair care as compared with 28% of women :-) 21% of Indians get a monthly facial treatment done.

With surge in personal disposable incomes, a wealthier Indian would spend more on these categories and the beneficiaries are Retailers and Beauty and Wellness chains.

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Nebula Zeus Solid Gold Limited Edition Watches

Limited Edition Retailing seems to be gaining lot of Traction in India. From Jewelery to Watches, you name it, retailers are considering its launch. In Feb-08, we saw Vijay Mallya's Kingfisher Airlines launch edition watches in collaboration with Swiss Watch maker Hubolt.

Now its Ratan Tata's Titan Industries which has introduced Nebula Zeus - Mechanical automatic watch in solid Gold. Only 500 pieces are up for grabs and will cost approximately Rs 1,10,000 a piece. Nebula Zeus and Xylys are premium watch brands from Titan and the former uses 18K Gold.

Ms. Suparan Mitra, Marketing Head at Titan said,

Mechanical watches is witnessing increasing consumer interest and the trend is coming back. With a million quartz watches around, consumers want something exclusive. Nebula Zeus harks back to an older era of luxury and romance.

Nebula Zeus is crafted using swiss made mechanical automatic movement with sapphire crystal back cover. Instant start, second hand stop device for accurate timings and auto wind convenience are some of the distinguishing features.

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Online Shopping - FutureBazaar and Hypercity's Big Plans

Retailers in India don't want to miss any channel to woo customers. FutureBazaar.Com which has got big money from Sherpalo and KPCB VC funds has struck yet another deal with Dubai based Aramex for Logistics handling. Aramex is one of the top-3 courier companies in Middle East will provide end-to-end solutions for FutureBazaar.Com including setting up a 66,000 sft logistics center near Bhayander. Revamped portal will be launched in Sept-08.

FutureBazaar.com CEO, Mr. Banerjee said,

We expect to increase our customer size to 3 million in 3 years and are taking necessary steps that could help us reach there.

Aramex is known for delivering two way product solutions. To and From customer [if the customer doesn't like the product] They plan to launch the service on PAN India basis.

In Mumbia, Rahejas promoted Hypercity has also unveiled its e-commerce strategy with the relaunch of HyperCityIndia.com [Online retailing except fruits and vegetables]. This is the second alternate shopping channel in addition to Catalogue shopping.

Mr. Rajeev Nair, Business Head, Hypercity Argos said,

As we concentrate on the big box format of retail, we will look to increase our sales from the multi channel routes of catalogue as well as online retailing of our products.

Company sources have said online shopping have been rolled out to customers in Mumbai / Thane and will cover Jaipur, Bengaluru and Hyderabad. In the first week of launch, their portal did 13-14 transactions every day and the company seems to be satisfied with the number.

Going by Hypercity's track record, one can be skeptical about their expansion plans which is probably the slowest in Indian retail industry.

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IPL Cricket a bane to Retailers - Sales Fall in April-May

Summer is the best time for people to do outdoor activities, really especially shopping at Malls and Megastores that have sprung up with the retail boom in India. However, this summer was disappointing to many retailers, blame it on IPL Cricket or Cheerleaders ;-).
An irresistible combo of cricketing icons and Bollywood superstars, backed by aggressive marketing, the IPL matches kept entire households, elderly people, youngsters and small children glued to the television. To make matters worse, the matches were played and screened at prime time, which coincided with the period when retailers conduct nearly half of their business.

According to managers of leading malls in India, such as Hypercity, Big Bazaar, Nirmal Lifestyle, The Mobile Store, Reliance Retail, etc, there was a decline of around 15-30% in the number of visitors during the IPL matches.

Pantaloon Retail recorded total sales of Rs.4963.8 mn in April 2008, up 57.8% Y-o-Y, as against a growth of 74.3% Y-o-Y to Rs.3146.2 mn in April 2007. For May 2008, sales increased by 55% Y-o-Y to Rs.5406.6 mn, as against 78.5% Y-o-Y to Rs.3488.3 mn in May 2007.

Although this is a marginal factor, we are really concerned about it becoming another seasonal factor to contribute to a sales decline for the Indian retail industry. Your thoughts ?

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Pantaloon opens stores aggressively

Reliance and Bharti Walmart maybe capturing the headlines of every major newspaper, but the reality is Pantaloon Retail continues to open stores aggressively and we are really surprised by the number of stores it opened last month.

Landmarks achieved by Pantaloon and Future Group in May are as follows,

• Opening of 7th Central in Oberoi Mall, Mumbai
• Big Bazaar stores were opened in Seven Seas Mall, Vadodara and Metropolitian Building, Kolkata. They totally have 89 Big Bazaars at the end of May-2008.
• Food Bazaars were opened in OSL Tower, Cuttak, Seven Seas Mall, Vadodara and Metropolitian Building, Kolkata. The company now operates 133 Food Bazaar stores. [equivalent to Reliance Fresh, Subhiskha, More etc]
• The 25th e-Zone store was opened in Rajajinagar, Bangalore.

We have reliable information from company sources that Pantaloon will open the following stores in June and July-08,

• 12 Big Bazaar stores, including cut-in Food Bazaar's [14 in number]
  
• 4 Pantaloons Fresh Fashion stores are scheduled to open during the months of June & July 2008.
• 4 E-Zone's, 1 Furniture Bazaar outlets, 3 Home Town and 5 Home Bazaar stores.
  

What is truly amazing is inspite of retailers poaching talent from Pantaloon, the company has managed to run a far better show than its competitors. Reliance, Bharti and Birla's have deep pockets but are still unable to match Pantaloon's retailing ability [at least till now]Its not just Money Power, but the right execution and ability to understand Indian consumer and the market that will make a difference between the winner, the survivor and the loser.

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Reliance Jewels in Ludhiana

Reliance Retail opened its specialty store "Reliance Jewels" in Ludhiana, the hometown of Bharti Walmart founder, Sunil Mittal.

This is the third Reliance Jewels store which is spread across 5,000 sft on two floors. The store offers merchandise in Gold and Diamond jewellery specially crafted with designs from Kolkatta Filigree, Rajkot Antique, Kundan from Rajasthan and Jadau from Amritsar.

Speaking at the launch, Mr. Bijou Kurien, President & CEO of Reliance Retail's Lifestyle division said,

Reliance Jewels is another milestone in our effort of bringing a unique shopping experience with assured purity of gold and certification of diamonds.

You may recall, Reliance Jewels had sent ripples across the streets of Jaynagar when it opened its first store in Bengaluru. Will the same happen in Ludhiana ? Will Bharti Walmart respond to the Reliance challenge ?

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Subhiksha - Operation Cleanup + Makeover

Subhiksha, the retailer with high footfall and highest sales per sft is all set for operation cleanup and makeover. Yes, finally you will see those neighborhood Subhiksha stores lot cleaner and with little bit of face lift too, which is expected to be uniform across all stores.

Mr. Mohit Khattar, President Sales & Marketing said,

Customers look for value and convenience not ambiance. With the revamp of the stores, now customers can enjoy both shopping experience and savings in price.

Subhiksha is spending up to Rs 250,000 on every store and has identified 1,000 such stores of the total 1,300 that are operational by the company. where is this spending exactly going into ? Expanding the width of the isle for easy navigability, upgrading billing sections and deploylent of SAP in the backend.

The upgrades have started in some places and guess by how much the sales has shot up by ? Company said whopping 50% compared to pre-revamp days. That's a lot I should tell you. Assuring customers that they are getting the best on offer is the goal of Subhiksha and so far it seems to be winning :-)

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Palladium Luxury Mall Mumbai

Atul Ruia along with his fashionvista wife Gayatri Ruia have unveiled a Luxury Mall - Palladium in High Street Phoenix. The Mall will be built next to Luxury Hotel Shangri-La and will share a common lobby and is expected to be completed by March-2009.
Ms.Gayatri Ruia said,

We find that the brand is strong enough and we really believe in them, the quality, the brand equity and the product line. We would certainly look at the revenue share model.The mall will have 3 floor levels with a dining restaurant on each floor. It will house the world's best luxury and premium brands. Palladium when operational will compete with Vijay Mallya's The Collection Mall at UB City, Bengaluru.

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E-Zone + Electronics Bazaar - Exlcusive Insight

E-Zone and Electronics Bazaar are two electronics retailing formats of Home Solutions a subsidiary of Pantaloon Retail India Ltd [PRIL].The business is run independently as a separate profit centre by professionals with prior experience in the consumer electronics space.

Business Growth Strategy: Fitting into overall PRIL's strategy to dominate in top-5 cities, its electronics division is also adopting a strategy to dominate the top five cities. E-Zone has already achieved dominance in Bangalore despite the existing six strong entrenched local players and has plans to achieve dominance in Hyderabad, Kolkatta, Delhi and Mumbai over the next 6-12 months.

Mega e-Zone in Tier-I Cities:It has plans to set up one mega E-Zone in each of the key cities to enhance its brand image and dominance. It has already opened its first 30,000 sq ft mega E-Zone in Bangalore which has met with very good consumer response.

Private Labels: Private labels now contribute a strong 12% of total revenues, up from 5% last year. Home theatres and air conditioners are the key drivers for PRIL's private label business and the target is to achieve 20% penetration for their private label business.

Strong growth: E-Zones are clocking same store growth of around 30% due to strong growth in lap tops and LCDs. Contrary to expectations mobile phones contribute only 7-8% of their total electronics business revenues.

Bottomline: The electronics business is likely to achieve a turnover of Rs7.5-8.0 bn in F2008e which is nearly 2x larger than its nearest competitor. The current gross margin in this business is 15% which is expected to stabilize at around 18% with improvement in the scale and operating leverage. Interestingly, the division has chalked out an ambitious growth plan to roll out nearly 175-200 E-Zone stores by F2011 from the existing 40 taking the total turnover of the division to around Rs30bn. Around one-third of the division's revenue is likely to be contributed by Electronics Bazaar.

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Godrej Aadhar + ITC Choupal Sagar + DCM Hariyali Kisaan Bazaar

India is a diverse country home for four of the top 10 global billionaires and also home millions of people under poverty line. Retailers are not just embracing the Urban Indians, we have ITC, Godrej-Future Group, DCM and others active in the rural Indian market. We compare the primary business goals of each of these rural retailers here.

Godrej Aadhar:
Godrej Industries has started an experimental retail format called Godrej Aadhar for the rural markets. This format sells FMCG products, fertilisers, animal feed, etc. Services like banking, insurance, pharmacy, postal services and petrol pumps have also been planned to make them complete convenience hubs in rural areas.

At present, there are 24 outlets in eight rural locations across the country and each outlet services 20 villages in its vicinity. Godrej Aadhar has already forged JVs with Apollo Pharmacy, Tata Agrico, Bajaj Allianz Life Insurance and HPCL for value added services at the outlets. The company plans to set up more than 1,000 stores by 2010.

DCM Hariyali Kisaan Bazaar:
DCM Shriram Consolidated’s (DSC) rural retail chain provides end-to-end ground level support to farmers. A typical centre caters to 50,000–70,000 acres; currently, there are 33 such bazaars spread across the north and west of India. Many urban brands piggyback on such rural chains to take advantage of their distribution and local know-how - for example, Motorola has an alliance with the Kisaan Bazaars for sales and distribution of its handsets.

ITC Choupal Sagar:
ITC launched the Choupal Sagar in 2004. It is 100,000–150,000 sqf of retail space with a trading area, weighing facilities, telemedicine kiosks, special products for farmers, etc. These networks are also used for ITC’s rural distribution. The company plans to open over 700 such
hypermarkets.

The company has changed its rural model from simply having IT-enabled kiosk services (echoupal) to having a Choupal Sagar for 25–30 e-choupals. The Choupal Sagars double up as retail outlets for the consumers and also as infrastructure to support ITC’s rural procurement.

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Ray-Ban Ultra + Revolution + Parx brand launches

Last we reported how Limited Edition Watches are popular in India. Sunglass retailer, Ray-Ban took a note of this and has introduced Ray-ban Ultra limited edition produced with precious metal of 22K gold. It is available in Ray-Ban Aviator and Ray-Ban Outdoorsman styles and priced upwards of Rs 25,000.

REVOLUTION launched its spring-summer 2008 line for women in large and regular sizes. The range starts from Rs 499 to Rs 2,999.

Parx introduced Sports Range for spring-summer 08. It included shirts, trousers, denims, polos and jackets. Available at all Parx outlets.

Nokia has launched yet another mobile in its popular N series the Nokia N78 convergence device. It is mainly targeted at the Indian youth and has a "location tagger". Suggested retail price Rs 20,000.

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Fitness One Opens in Hyderabad

Fitness One health club which started offering customized fitness solutions to fitness freak HNIs at their doorstep and to employees at their corporate office is on a major expansion spree. Fitness One 'Home Gym' costs anything between Rs 50,000 to Rs 500,000 depending on one's requirements. More details can be requested directly from info@fitnessone.co.in

Fitness One opened its first health club on Kondapur Road in Hyderabad and may ramp up the count to four in the city by the end of this financial year. Fitness One currently has 36 fitness centers of which 9 are company owned, 7 operated by franchisees and the remaining 20 developed for corporate houses. The company also hopes to double the Gyms under corporate segment to 40 by the end of this year.

Fitness One also operates a Training Academy in Chennai and may open the second one in Bengaluru as the number of centers increase.

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Calvin Klein in all Tier-I Cities by FY08-09

American fashion retailer - Calvin Klein has ambitious expansion plans to woo Indians who are increasingly adopting and switching to premium and Global fashion brands. Calvin Klein currently has 2 exclusive stores in Delhi / NCR and 7 shop-in-shop across India. It plans to have 30 selling points by the end of March-09.

The company hopes to spread its wings to all Tier-I cities in India. It will establish presence in Chennai, Hyderabad and Punjab shortly so that Calvin Klein brand loyalists don't have to fly to Bangalore or Delhi/NCR to shop, though flying to Bangalore is a good idea because Calvin Klein has established its presence in the new Bengaluru International Airport retail center.

Calvin Klein launched its summer-08 collection [a bit late for India], at its shop-in-shop in Lifestyle Oasis Mall, Bangalore. Calvin Klein's denim wear is the fastest selling product in India in both the Women and Men's category priced upwards of Rs 3,500.

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Realtors drag Retailers Bottom Line

The Real Estate lobby across India with vested interest from Politicians and Bureaucrats is a serious threat to the growth of organized retail in India. Indian Council for Research on International Economic Relations (ICRIER) recently released its report on the Indian organized retail industry, which suggest that performance of the major organized retailers in terms of revenue per sq ft remains quite subdued, and, hence, lease rental costs would have to be controlled within INR 50-INR 70/sqft/month to maintain profitability.

The Revenue per sqft of major retailers is as following,

• Trent Ltd - Rs 6,036
  
• Pantaloon Retail - Rs 6,108
• Spencers - Rs 7,714
• Subhikasha - Rs 13,333
  

Subhiksha, which has the highest number, derives 60% of its sales from the high-turnover, low-margin category of fruits and vegetables. In Chennai, the revenue per sqft which peaked to about INR 1,100 per month by 2004, has now come off to around INR 700 per month.

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Womenswear in Indian Terrain's Portfolio

Celebrity Fashion's Ltd owned retail and export brand Indian Terrain has launched Womenswear including accessories and bags. The company has invested Rs 7 crore to build the Womenswear portfolio. Mr. Narshiman of Celebrity Fashions said,

With our womens wear foray, the whole dynamics change in terms of store size, investments in staffing, inventory and training in soft skills.

Celebrity Fashion invested Rs 15 crore in retail expansion of the Indian Terrain brand which included a complete overhaul of design and identity across company-run flagship stores Pune, Lucknow and Chennai. The company also opened its first store in India's favorite retail city - Bangalore and the store is located on Brigade Road. Indian Terrain brand is sold across 400 retail counters in multi-brand outlets, Lifestyle stores and Central Mall. Reliance Retail [Hypermart] also sells Indian Terrain Brand.

The company clocked turnover of Rs 100 crore previous year and expects to achieve Rs 150 crore this year.

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