Retailers look for fortune at bottom of pyramid

NEW DELHI: Major retailers around the country, who had adopted a ‘wait and watch’ policy till sometime back in the hope of real estate prices coming down, are now back in action. While on one hand, retail majors are pressing developers to go in for revenue sharing model along with providing other freebies, most of them that SundayET spoke to say that action will now shift to tier II & III cities.

Says Sanjay Dutt, CEO (business) Jones Lang LaSalle Meghraj; “In 2009, retailer brands will look at tier II and III cities. Luxury brands, however, will stick to metros. Pan India mall developers will look at more practical rentals in 2009. High streets may see consolidation with a high possibility of a revenue-sharing model in terms of the overall cost-to-retailer on many high streets. We have seen a decisive scaling up in transactions in the hypermarket category.

The demand is clearly higher for stand-alone high street locations rather than mall-based locations. This year is expected to be a year of consolidation for Indian retail sector. As a result of adoption of best practices and restructuring of business models by the retailers, organized retail is expected to realign itself to the market conditions and create new areas of growth in 2009.”

Future Group, the largest retail company in India, that has a presence of about 11 million sq ft plans to expand to about 30 million sq ft by 2011. But the retail space, the company says, was already finalised sometime back.

Says Kishore Biyani, CEO of Future Group; “So far there were no deals happening. Now suddenly there is activity being seen. We are also looking at striking new deals at a few places. Seeing the condition of real estate market, even developers are willing to negotiate now. We plan to expand our presence to at least 100 cities and the focus is now tier II and III cities.”

He feels it will be a win-win situation for both the retailers and developers. Future Group’s Big Bazaar aspires to be present in all the cities with a population of more than three lakh. They have stores in cities like Chandigarh and have recently opened a store in Nashik.

According to industry sources, the retailers are not only in negotiations on the fresh deals but the existing deals are also being discussed again. Brand House Retail (BHRL), a subsidiary of Mumbai based S Kumar’s Nationwide, has so far 700 stores across India and plans to open at least 400 more this year.

“With the situation changing, developers have realized that its no point charging the tenant what he can’t pay. Property prices coming down have ensured that our plans are on track,” says Tarun Joshi, MD, BHRL.

Developers, who till sometime back were not ready to even negotiate prices, are now offering freebies to attract tenants. According to industry sources, majority of the developers across the country have lowered the common area maintenance charges that include facilities like air-conditioning, toilets and general space upkeep. In fact this itself constitutes almost half of the rentals paid.

Says Ambeek Khemka, president, business development of Vishal Retail: “The situation has reversed now. There is more space in market than the demand. The developers don’t want vacant space in their malls as no one wants to be in a mall with low footfalls.”

Ajit Joshi of Infiniti, which runs the Croma electronics retail chain says, “Developers have accepted that they cannot dictate terms any more. Both retailers and developers are now arriving at an understanding that is beneficial for both the parties involved.”

According to a recent Cushman & Wakefield report, in certain micro-markets many retail spaces saw conversion into office space for quick revenue returns due to continued and increasing demand for office space. This trend is expected to continue in the coming few quarters too.

Sources :- Economic Times

Big bazaar launches second store in Nashik

Nashik: Big bazaar, country’s largest hypermarket chain from Future Group on Thursday launched its second store on Nasik-Pune road near Nehru Nagar.

With this launch we now have 103 stores in 62 cities, Pantaloon Retail (i) Ltd’s West Zone Head, Rajesh Joshi said.

The new store will display over 1.6 lakh products in various categories, including apparel, general merchandise, food, non-food, fresh vegetables and fruits as well as electronic, furniture, books music and stationery, mobiles, health zone and others, he said.

Various concessions, including shopping has been arranged till January 5, 2009 for consumers, he added.

Sources:- The Financial Express

Big Bazaar: Great Indian retail story turning niche & premium

In its infancy, organised retail in India has become amoebic—flexible and ever changing. While the great Indian retail saga has just be

gun, the unpredictable Indian customer is forcing retailers to shun their morphed formats and be a little more experimentative than before. Across cities, retailers are providing a range of brands and products to match consumer preferences.

Sample this: While Future Group’s Big Bazaar closed its two outlets in Ahmedabad, it launched its ambitious luxury format Ethnicity recently. Considering the urban-poor consumer in one pocket of the city couldn’t help the group realise its target, it has now focussed on the cash-rich consumers. The uncontested king of Indian retail, Kishore Biyani, however, is unperturbed with closures and intends to introduce yet another format ‘Central’ to the city in near future. “For any retail venture, the success rate is mere 20-30%. So, I do not think that there are any issues with stores closing down,” asserts the man who gave the country its first taste of organised retailing. Pantaloon Retail (India) zonal chief (Gujarat) Anand Adukia adds that there is room for every player in this kind of market. “You have to keep experimenting and create a category to click with your customer,” he says.

Sector analyst Harish Bijoor points out that under the present circumstances change is the only constant. “Big Bazaar operates on the cafeteria approach whereby the retailer intends to convert footfalls for groceries to generate sales for other products like garments, consumer durables, et al. However, considering Big Bazaar has not been able to sustain consumers’ interest (in Ahmedabad) making it difficult for the company to continue with it, the group has decided to focus on Ethnicity and Pantaloon that are niche categories. Big Bazaars are the dollar stores of India, but as competition in the ‘mass category’ is huge, Future Group is learning from its experience and becoming amoebic in its offering. It has not arrived at a format and depending on a city it is changing its approach,” he points out.

No wonder then that the much-touted RelianceMart in Ahmedabad from the Reliance Retail stable has shrunk its operations by one-third to accommodate its partner Marks & Spencer in the same property. Reliance is even considering merging the management of hypermarkets (Reliance Hypermart), supermarkets (Reliance Super) and convenience formats (Reliance Fresh) just a year after these formats started as separate profit centres to make its retail arm more efficient.

Source:- economictimes.indiatimes.com

Big Bazaar footprint explodes all around

Kishore Biyani does not subscribe to the view of a global meltdown. His Future Group’s strategy is paying off in numbers and his outlets seem to have more and more goods on offer. In effect, he is increasing the real estate that has been leased out to his company for more and more retail outlets.

One wonders whether people are buying more things if they enter a pretty looking showroom or a mall such as Pantaloons or Big Bazaar. To put it in John Donne’s language , “Wasn’t the customer weaned till then?”

For one, the Future Group’s retail chain Big Bazaar is itself is planning to have 300 hypermarkets in the country by 2010-11 .

The company may also increase its annual turnover to Rs 13,000 crore by 2010-11 , up from Rs 3,600 crore last fiscal on the back of its expansion. They had reported begun with their first store in October 2001 and till date have crossed the 100-store mark. This was capped with three stores that opened recently in Pune, Cuttack and Delhi. The company’s top brass plans to increase the number of stores to 300 by end of the 2010-11 fiscal.

Big Bazaar chief executive officer, Rajan Malhotra has reportedly concurred on that figure. The company has also gone on record saying that it would have another 35 stores by the end of its fiscal in June 2009 to take the total number to 135. To achieve this they are targeting a turnover of Rs 5,000 crore in the current fiscal year and have formulated plans for reaching a figure of Rs 13,000 crore by 2010-11 fiscal.

Malhotra has also reportedly concurred on such figures as well.

Ror the expansion, the company would be looking at both the metros and Tier I cities, besides Tier II and smaller cities.

The strategy seems to be perfectly on track as the Big Bazaar hypermarkets had a footfall of 11 crore last fiscal and the company is aiming for an increase in the numbers up to 14 crore this year. The average size of a Big Bazaar hypermarket is 30,000 sq ft to one lakh sq ft.

The retail industry is the largest in India among the new and the old economy industries. It employs around 7.93 per cent of the total workforce in this happening economy and also contributes to over 11 per cent of Indian’s GDP.

The retail industry in India will keep growing as it is not yet targeting even one per cent of the potential customer base and their day to day needs.

The industry as a result is expected to rise by 25 per cent yearly growth being driven by strong incomes, mutating lifestyles, and a young and spending populating compared to an aging one in other parts of the country.

It is widely believed that by 2015, the burgeoning retail industry in India will be worth $175 – 200 billion. Incidentally, it seems that India’s retail industry is one of the fastest growing with revenue to touch $320 billion in 2009. It may also be growing at a rate of six per cent every year.

A still higher increase of seven to eight per cent is expected owing to growth in spending in urban areas, rising incomes, and a parallel rise in consumption in rural areas.

Source: Economic Times

Big Bazaar – India’s Real Retail Story

Big Bazaar, the flagship retail chain of the Future Group, is on the verge of achieving a unique milestone in the History of World Retail – by being the first hypermarket format in the globe to rollout fastest 101 stores in a short span of seven years.

Currently, Big Bazaar has 98 stores in the country, including the recently opened store in Mysore on September 26th 2008. Further to this, Big Bazaar will be opening three more stores in a single day – i.e. 30th September 2008, which will take the eventual count to 101 stores in the country. These three stores opening shortly in Pune (Kalyani Nagar), Cuttack (Darga Bazaar) and Delhi (Rajouri Garden).

Big Bazaar’s journey began in October 2001, when the young, first generation entrepreneur Kishore Biyani opened the country’s first hypermarket retail outlet in Kolkatta (then Calcutta). In the same month, two more stores were added – one each in Hyderabad and Mumbai, thus starting on a successful sojourn which began the chapter of organized retailing in India.

Speaking on this momentous occasion and remembering the days of conceptualising the hypermarket idea Mr. Kishore Biyani said, “We initially decided to name the format as “Bazaar” because we had designed the store keeping the Indian mandi style in mind. Since the size of the hypermarket was big than an average mandis, the thought came to name it as “Big Bazaar”. However, we had freezed on the punch line “Isse Se Sasta Aur Achha Kahi Nahi” much before we met the creative agency to design the final logo of Big Bazaar.”

Though, Big Bazaar was started purely as a fashion format including apparel, cosmetics, accessory and general merchandise, the first Food Bazaar format was added as Shop-In-Shop within Big Bazaar in the year 2002. Today, Big Bazaar, with its wide range of products and service offering, reflects the aspirations of millions of Indians.

The journey of Big Bazaar can be divided into two phases – one pre and the other post January 26th, 2005, when the company rewrote the retail chapter in India, with the introduction of a never-before sales campaign “Sasbe Sasta Din”. In just one day, almost the whole of India descended at various Big Bazaar stores in the country to shop at their favourite shopping destination.

Further, what followed was the time and again rewriting of the Indian Retail experience, wherein understanding of the Indian consumers reflected in the products and services offered, creating innovative deals, expanding in the tier II and tier III towns, tying up with branded merchandise to offer exclusive products and services to its customers.

Big Bazaar is present today in 59 cities and occupying over 5 million sq.ft. retail space and driving over 110 million footfalls into its stores. The format is expecting the number of footfall in the stores to increase by over 140 million by this financial year. Over the years, Mr. Biyani for his vision and leadership, and Big Bazaar for its unique proposition to its customers’, have received every prestigious consumer awards both nationally and internationally.

Says Rajan Malhotra, President, Strategy & Convergence, Big Bazaar, “What is important in our journey is not the number of stores, but the customers’ faith in us. It’s the India and the Indians, which have helped us, reach this feat in such a short time span and today our country is creating a history in the World organized Retail.

Rajan Malhotra, who is also the first employee of Big Bazaar, joining the organization in early 2001 adds, “Since beginning, we have kept Big Bazaar as a soft brand, which reflects the India and the Indianess. We believed in growing with the society, participating and celebrating all regional and local community festivals, giving customers preferences above everything else.”

Every Big Bazaar is a small family by its own and the head of the family – Karta – is the store manager. Kishore Biyani, the CEO of the Future Group, has a vast understanding of the consumer’s insight, has inculcated the habit of ‘observing, understanding  customers’ behaviour’, in every employee of the group.

Future Group is confident of the Indian Retail Story. The Group has not slowed down its expansion plans despite the fiscal woes in the economy present today. Future Group plans to have 300 stores and is expecting revenues of Rs 13,000 crore by year 2011.

source:- money control.com

Biyani moves on with 4 new stores in 5 days

Kishore Biyani’s, and Big Bazaar’s, march comes at a time when several new retailers are slowing expansion.

Mumbai: Other companies and entrepreneurs who entered the organized retail business in India may be slowing, but not the man who sees himself as India’s Sam Walton.

And so, Kishore Biyani’s Future Group will on 30 September open Big Bazaar stores in Pune, Delhi and Cuttack. With Friday’s launch of a store in Mysore, that will make four in the space of five days, and Biyani’s handlers are touting it as the fastest roll-out in the retail industry.

There’s another numerical significance to these four stores. With them, the number of Big Bazaar stores in the country will grow to 101. Biyani, never one to lose an opportunity to advertise, announced this fact to the world at large from a makeshift stage in the middle of Mumbai mall High Street Phoenix on Thursday evening.

“The story is not about us, but this story is about the people who visit our stores. This is a proud moment for India.”

Biyani’s, and Big Bazaar’s, march comes at a time when several new retailers are slowing expansion, reducing the number of outlets, effecting layoffs, even exiting the business. Basmati exporter REI Agro has shuttered dozens of the more than 200 grocery stores it opened; Indiabulls Retail Services Ltd has closed several of its hypermarkets; Mumbai-based HyperCity Retail has abandoned plans to open 250 grocery stores by 2012; Ludhiana textile firm Oswal Group has downed shutters on its two-dozen-store-strong lingerie chain; and Reliance Retail Ltd has fallen short of its September target of 2,000 stores of all formats by more than half.

But even as other entrepreneurs who have made a mark on Indian retail such as Subhiksha Trading Services Ltd’s R. Subramanian and Vishal Retail Ltd’s Ram Chandra Agarwal are slowing, Biyani is pushing ahead.

By 2011, he claims, there will be 300 Big Bazaars, and Pantaloon Retail (India) Ltd, his flagship, will have revenue of Rs13,000 crore. The company ended 2007-08 with Rs5,048 crore in revenue.

“We were not caught in the euphoria,” he said.

These facts haven’t missed the attention of analysts.In a 22 September research report to clients, Vandana Luthra, Manish Sarawagi and Anuj Bansal of Merrill Lynch wrote: “We like Pantaloon’s speed in store roll-outs across formats, management’s long term focus on property lock-ins and industry-wide peaking of rent and salary costs.” But they still had an “underperform” rating on the company.

“We remain negative (because of): sharply higher interest costs, dull FY09 earnings and likelihood of sharp consensus downgrades.”

Restructuring and revaluation

It isn’t that everything Biyani touches turns to gold. But he has 25 retail formats to juggle with, and juggle them he does, tweaking and refining his portfolio till he has the right store for the right market.

In New Delhi, for instance, in the Raja Nagar area, he is converting an existing Pantaloon (apparel) store into a Big Bazaar. He’s doing the same thing in Ahmedabad.

And in a research report dated 21 September, CLSA’s Anirudha Dutta and Prakhar Sharma wrote that Pantaloon had moved out of its airport retailing joint venture with Alpha Airports and managed to book a profit of Rs29.8 crore in the process.

The analysts added that Pantaloon’s sales growth of 35% was below expectations (45%) and that Ebitda (earnings before interest, taxes, depreciation and amortization —a measure of operating profitability) growth was higher (than expectations) at 149%.

Still, the analysts put out an “underperform” rating on the stock. Biyani, however, is unfazed by these ratings. He isn’t keen on talking about Pantaloon’s financials or fund-raising plans (there is some speculation that Pantaloon may tap the markets for some money). The Merrill Lynch report said: “We forecast Pantaloon’s interest cost to grow 2.7 times over financial year 2008-10 thus limiting bottom line growth to sub-10%.”

If the numbers worry Biyani he doesn’t show it. Instead, he is keen to talk about the people who helped him grow Pantaloon. On Thursday, Biyani was flanked by some of the executives who have been with him since he launched the first Big Bazaar in 2001—in Hyderabad.

“The team is intact,” beamed Biyani.

Beaming beside him were Rajan Malhotra, who heads the Big Bazaar format and Hans Udeshi, CEO, general merchandise of Pantaloon.

Malhotra remembers the many trips he and others made to small stores in the back lanes of Chennai and Hyderabad, understanding consumer behaviour by watching them buy everything from groceries to innerwear.

That was seven years ago, but one question from those days that still greets Biyani is whether he plans to sell out.

Not here to sell

The frequency and pitch of that question have increased in recent times, after companies such as Reliance Retail, Bharti Enterprises Ltd and Aditya Birla Retail Ltd announced their entry into the business of organized retail. Some of these firms, and some others, have also formed partnerships with foreign retail firms. The Tata group that owns retail firm Trent Ltd has a partnership with Tesco, and Bharti with Wal-Mart Stores Inc.

“It is insulting,” Biyani replied calmly when asked whether he will look to partner with global retail firms.

“We will achieve scale (without partnering with a global firm),” said Biyani.

“We connect well with the Indian customer.”

“We have become the natural choice.”

“We built this retail model from scratch.”

“Why should we tie up with them? We can source it (merchandise) ourselves and we too can have a large scale.”

Last year, almost 112 million people walked into Pantaloon’s various store formats. This year, according to Malhotra, the number will be close to 120-130 million, almost 10-12% of the Indian population.

Some of those people looked on curiously on Thursday as Biyani and his executives took the stage.

High Street Phoenix stands where a textile mill once used to. Today, it is one of Mumbai’s most popular malls. And Pantaloon is the anchor tenant, the main draw. Biyani said real estate developers were keen to have his stores as anchor tenants because they “act as the glue to attract other tenants and shoppers”.

And his stores are loved, he added.

No opposition

Other retail firms may have faced opposition from small store owners and local politicians but not Pantaloon, Biyani said, because it believes in “preserving the ecosystem”.

His stores, he added, haven’t faced “any opposition from anybody from anywhere even for a single day”.

“Opposition may be in the minds of some people, but it never came to the fore. We believed in a model, where we never sold any product below the cost price.”

When Pantaloon opened its fourth store, its market capitalization was just around Rs200 crore. At its peak, Pantaloon’s market value was around Rs12,000 crore. On Friday, it was around Rs4,400 crore.

The fundamentals, however, are still strong, Biyani said.

And the allure of the retail business in India remains what it was seven years ago.

“Nearly 1.2 billion people in one part of the world were aspiring to shop. Then the story began and people began to believe in us and that’s how our financial journey started.”

source:-livemint

Big Bazaar achieved new milestone

Big Bazaar opened three more stores in a single day – i.e. 30^th September 2008, these three stores opening shortly in Pune (Kalyani Nagar), Cuttack (Darga Bazaar) and Delhi (Rajouri Garden). With the addition of these stores Big Bazaar has become the fastest(in the globe) to roll out 101 stores, in Hyper Market format, in just 7 yrs.