Croma to invest Rs 28 crore in seven new stores

Infiniti Retail, a Tata company announced the launch of its 25th Croma store in India at Phoenix Mills, South Mumbai spread over 15, 000 sq ft area. The total investment on the store is around Rs 4 crore of which 1.9 crore went into fittings and fixture and Rs 2 crore into product inventory, the store is tenth in Mumbai. The total equity investment from Tata Sons towards Infiniti retail stands to Rs 350 crore.

Croma plans to launch additional seven stores in the country by March 31, 2009 of which one store will be launched in Mumbai, three in Hyderabad and three in Delhi and the total approximate cost would be Rs 28 crore. By March 2010, Croma aims of having a total of 50 mega stores across India for which it is currently reviewing cities like Chandigarh, Chennai, Kolkatta, Jalandhar and Bangalore.

“We are not shutting any of the existing stores. When the tough times are over, we will be far ahead of the competition,” Ajit Joshi, CEO and Managing Director, Infiniti Retail said. Joshi even ruled out the option of laying of any employees and said that the stores have witnessed increasing size of cash memos. “November this year was the only tough period for the mall and retail industry where we must have experienced around 11-12 per cent slump in sales but it has returned to normalcy from December 10. We foresee better times ahead by April 2009,” Joshi added.

Besides the Croma Zip store at the Mumbai Airport, the company is also planning to launch a few more in the country that would be not bigger than 2500-6000 sq. ft. and will have limited but variety in product offerings.

The retail giant has arranged special partnership for Samsung’s upcoming laptops in India and also forged partnership with brands like Sony, LG, and HP for their entire range of products. Though he did not disclose the name of the brand, Joshi informed, “We are soon going to announce for the first time, the availability of an international entertainment brand in India that consumers are absolutely going to love.”

Croma is also expecting it’s newly launched private label to contribute 20 per cent to its total sales revenue that consists of products like- mobile air conditioners, foot massagers, two categories of irons, and three categories of microwaves- which Joshi claims are 10-15 per cent cheaper than existing brands. It is even looking at adding newer products to the range very soon.

“The idea of having a private label was to increase volume at our stores which would further help us to negotiate in the Chinese market. With the commodities price of steel and aluminum going down, production costs of electronics have also decreased,” Joshi informed. The private label products are purchased from the best factories in China and checked for quality, an additional layer of quality check is done at Hong Kong and by a private agency in India. To avoid the risk of any product defects, the store has combined a year’s product replacement warranty with each private label product.

Additionally, Croma has a partnership with Australia based retail major Woolworths that has a $47 billion turnover.

Sources:- Daily News & Analysis

Retailers adopting innovative strategies for this festive season

Early this month, consumer electronics and appliances retail chain Jumbo Electronics Co. included “wedding packages” as a part of its festive sales pitch. The idea was to cash in on the coming wedding season by putting together a basket of articles most likely to feature on every young couple’s wish list: a liquid crystal display (LCD) television set, expensive mobile phone, laptop, camcorder, MP3 players, digital camera… all squeezed together to fit budgets that range from Rs1 lakh to Rs5 lakh. Though heavy discounts are usually part of the festive sales pitch, retailers such as Jumbo are adopting innovative strategies and packages to cut through the clutter and grab consumer attention in a competitive market.

So, whether it’s customized electronics and appliances packages for newly-weds; an offer by Tanishq India Ltd for consumers to book their gold jewellery in advance; exclusive previews and sale of products at Tata group’s Croma retail chain; or Kirtilal Kalidas Jewellers Pvt. Ltd’s decision to partner with fashion designer Rohit Bal on a new collection for the festive season, retailers are leaving no stone unturned.

The idea is to get consumers to spend more during the festive season, traditionally considered a time when even families with the most modest means loosen their purse strings. With real inflationary pressure and a downturn on the stock market, retailers are worried that consumers may cut down or postpone discretionary spending such as buying jewellery and clothes during tough times. So, retailers are going out of their way to woo consumers with innovative offers, which are over and above the traditional offering of price discounts, freebies and easy payment options.

“India is one of the largest consumers of gold, so there is a tendency for upward fluctuation in gold prices during the peak season,” says Saumen Bhaumik, head of retail at Tanishq India, adding that up to 30% of gold purchased from Tanishq stores during the peak season is pre-booked through the company’s scheme. Croma, on its part, is offering consumers access to an exclusive preview and sale of certain products. “Not only does it help draw new customers and attract footfalls to our store, but it also helps position the brand in the onsumer’s mind,” says Ajit Joshi, managing director and chief executive of Infiniti Retail Ltd, the Tata subsidiary that runs the Croma chain.

Experts say that such innovations help retailers stand out in the crowd. “It helps attract consumers… Retail innovations such as these are a call to action,” says Gibson Vedamani, chief executive, Retailers’ Association of India. Retail chains such as Reliance Digital, the information technology and consumer durables arm of Reliance Retail Ltd, Salora Retail Ventures Ltd, Future Group’s Home Solutions Retail Ltd and Vishal Retail Ltd, among others, areeither offering products from television sets and digitalcameras to microwave ovens and refrigerators at a price lower than the maximum retail price (MRP) or bundling a number of products along with free gifts to attract customers.

Consumer durables retailers earn an average margin of around 10-12% across product categories, experts say.
Some categories such as mobile phones offer lower margins. Most of the retailers are bearing the cost of thepromotions and offers on the basis of the margins they get from manufacturers. Also, volumes help them negotiate a better deal when it comes to bundling different products together. “Retailers are building on the opportunity which the festive season offers, even if it means letting go the margins to some extent, since they deal with a lot of brands and huge volumes,” Anil Rajpal, vice-president of consumer goods and retail, KSA Technopak, a New Delhi-based retail consultancy, said. From the manufacturers’ point of view, the focus of the leading consumer durables brands will be to offer value for money instead of playing up the discount part.
“The industry is seeing a healthy trend where the consumers are opting for products which provide value for money. Most of the leading industry players are talking about features and the USPs (unique selling propositions) of the product, others will also follow soon,” said Suresh Khanna, secretary general of the Consumer Electronics and Appliances Manufacturers Association.

The first half of the year was difficult as increasing input costs put pressure on margins. Profitability suffered as retailers could not pass on the entire burden of high input costs to consumers despite price hikes. With new firms entering organized retail and existing ones expanding their operations, the total share of the organized consumer durables retailers is likely to double this year.

“Last year the consumer durables retailers had 7% share of the total market, which is likely to go up to 12-15% this year,” Khanna said. “The consumer durables industry’s turnover is expected to touch Rs30,000 crore this year.” Most retailers are also offering to the consumers on their private label items. “Consumers can look forward to a discount in the range of 10-35% across product categories on the MRP if they buy our private label (Z-line) items. We are also extending the discounts on the branded products as given by the companies,” said Kushagra Seth, head of marketing at Vishal Retail.

Retailers such as Reliance, Vishal and E-Zone already sell a wide range of electronics items under their own brand names. Croma is likely to soon jump on the bandwagon. Future Group’s HomeTown is all geared up for Diwali. “For Dussehra, Hometown is giving free gifts, which will be followed by cash-back offers around Diwali,” Mahesh Shah, chief executive officer of HomeTown, said.

Salora Retail’s Terminal is offering discounts of 29-35% on health care items, free gifts such as DVD players, printer and pen drives on purchases of laptops. Consumers can also look forward to getting a direct-to-home TV connection with installation free on purchasing an LCD television.
Source: Livemint

Samsung looks at increasing sales in India

NEW DELHI: Consumer durables major Samsung is aiming for a 30 per cent increase in the company’s sales in the Indian market this year, on the back of increased research and development (R&D) activity and new product launches. The company has appointed Olympic gold medallist Abhinav Bindra as its new brand ambassador and also plans to set up 30 additional brand outlets in various cities.

“We clocked a sales turnover of 1.3 billion dollars in India under our various consumer durables categories and expect to increase the figure by 30 per cent this fiscal,” Samsung India Deputy Managing Director R Zutshi told reporters here. He said the company would be focussing on enhanced R&D as part of the effort and also bring out new products in various segments this year.

“We are doubling the number of our R&D engineering staff from the existing figure of 2,000 to 4,000 within the next two years for our Noida facility,” Zutshi said. The company is planning to put special emphasis on the LCD TV and Flat CRT TV segments as part of its growth strategy.

“We currently enjoy a market share of 42 per cent in the LCD TV and 21 per cent in the Flat CRT TV segments and our target is to increase our share in the two segments to 45 per cent and 26 per cent, respectively, by end of the year,” he said. The company is also increasing its sales branch offices by more than double this year. “We have 20 branch sales offices located across the country and are planning to take the number to 50 by end of the current fiscal,” he added.

The number of Samsung’s exclusive brand shops are also set to witness an increase of 50 per cent this year. “We had 120 brand shops by end of last year and have increased the number to 150 this year. Our target is 180 such stores by end of 2008-09,” Zutshi said.

The company expects a growth of 80 per cent in its retail business and is planning to tap new large format retails chains including Croma, Reliance Retail and Aditya Birla Group.

He said Samsung is planning to bring out a series of new products across various segments in the approaching festive season. The company is launching six new variants of its home theatre and the 14.7 megapixel NV 100 HD and the 10.2 megapixel NV 9 digital cameras this month, as part of the strategy. Its brand ambassador Abhinav Bindra, for the period of next one year, would campaign for the company’s all consumer electronics products through print and electronic media.

Regarding the impact of inflationary pressure, Zutshi said the company has hiked the prices of its products across all segments by an average of five to six per cent during past few months.

“Although prices can escalate further, we hope the market will sustain,” he added.

Sources:-www.economictimes.indiatimes.com

Jashanmal brings Kuwait’s Xcite electronics retail chain to India

Tony Jashanmal, one of the promoters of the Middle-East business group Jashanmal, has struck a franchisee agreement with Kuwait-based conglomerate Alghanim to launch large format multi-brand electronics retail chain in India. The retail chain branded Xcite has been launched through an Indian firm Impact Retail, which is owned by Tony Jashanmal.

Xcite joins the list of new breed of specialised electronics retail chains Croma, Ezone, Reliance Digital, among others.

Alghanim, which has diversified business interests, including manufacturing and Xcite branded electronics retail chain in the Gulf, also operates Kirby Building Systems, which is engaged in pre-engineered building systems in India.

It was earlier eyeing various routes to enter the Indian retail sector. However, foreign investment norms doesn’t permit international firms in multi-brand retailing in the country. But Indian nationals and NRIs are allowed to operate multi-brand retail companies through franchisee arrangements with foreign retailers.

As per the deal with Tony Jashanmal, Alghanim will lend its retail brand Xcite besides giving technical know-how. According to Impact Retail CEO Srikant Gokhale, the retail venture will also launch the private label brand Wansa, which is owned by Alghanim, to the retail business in India.

“We are looking at investing Rs 200 crore in the venture by 2009. We have just opened our first store in Hyderabad and this year we will have eight stores in various locations, including Gurgaon, Pune, New Delhi and Bangalore. By 2009 we would have around 30 stores which would all be operated by us and are planning to concentrate on the top five brands in each product category,” according to Mr Gokhale.

Source: Economic Times