Dabur changes strategy for retail venture

NEW DELHI: Having curtailed expansion plans of its retail venture, Dabur India’s wholly-owned retail subsidiary H&B Stores now plans to setup smaller format stores with revised targets. The company announced the opening of its latest store on Monday in New Delhi. Though the positioning of the outlet is the same as before – focusing on beauty, health and wellness products – it is of smaller format of about 800 sq ft. The company said in a statement that this outlet marks the introduction of branded private labels, beginning with baby care products.

The company proposes to set up 12-15 additional stores to its Newu network by the end of the 2009-10 fiscal. “The newu brand hopes to set new standards of customer focus and service,” Newu head (North) Manish V Asthana said. As of now, eight Newu outlets are operational across the country.

The company had initially planned to set up large format stores of 1,500-6,000 sq ft. But as part of the revised plan, most upcoming outlets will be in the range of 700-1,200 sq ft. Initial plans also included setting up 350 health and beauty stores on an investment of Rs 140 crore by 2010.

As first reported by ET last month, the CEO of H&B Stores Peter Baker has put in his papers. The company has not yet appointed a replacement to Mr Baker, and day-to-day operations of the retail venture are being overseen by the management committee of H&B Stores.

H&B Stores was set up in early ‘07.

Sources :- Economic Times

FMCG cos buck downtrend, may grow 17%

AMID the financial meltdown and the worst industrial growth in a decade, FMCG sales seem to be bucking the trend and are expected to remain steady in a scenario where consumer sentiments otherwise seems shaky. The sector is expected to post a robust 15-17% topline growth in the July-September quarter led mainly by price hikes even though volume growth could be relatively slower.
Henkel India MD A Satish Kumar says: “Consumption in the FMCG sector may get impacted if there is a prolonged liquidity crisis but as of now we are not witnessing any dip in sales. The current financial scenario does not have an immediate relevance to the FMCG sector, as the sector is, to some extent, insulated.”
Heavy dependence on the agri-sector and FMCG not being very capital-intensive are among the factors that have insulated the sector from the downturn. Angel Broking’s Anand Shah says: “We expect most companies, including HUL, to post a 16-17% topline in the quarter. Bottom line pressures, however, are likely to continue because of rising commodity costs and the impact may be felt in the third quarter.”
“There is no cause for worry at the moment. But, the overall state of financial chaos could have a bearing later. We need more innovation in products, packaging and price points to fuel growth,” said CavinKare CMD CK Ranganathan.
Dabur CEO Sunil Duggal said: “We find sectoral growth to be in aggressive double digits, aided by factors like a higher quantum of price increases. We are, in fact, seeing sharp increase in the uptake of charger brands with more people coming into the consuming basket, converting from unbranded to branded products, which we believe is because of higher commodity costs and government sops.”
Similarly, Godrej Consumer Products ED
& president Hoshedar Press said the company did not expect any immediate impact on consumer spending because of continued value growth. However, Mr Press said: “We will sharpen focus on our v a l u e – f o r- m o n e y brands such No 1 soap with additional advertising and distribution, because volume sales have been relatively lower.” But there are concerns about the future. Industry officials say average monthly spends have shot up by over 30% quarter over quarter while annual salary hikes have not kept pace with inflation. Most categories – soaps and detergents, shampoos, toothpastes and hair oils— have witnessed price increases of anywhere between 5% and 15% in recent months. Given stiff competition, companies have little choice but to increase spends on promotions, distribution and advertising. Also, the savings on account of tax holidays are expected to decline leading to pressures on margins.
Market watchers add there are signs of downtrading to lower-priced and smaller SKUs across key categories, resulting in companies stepping up focus on price-competitive brands.
Over the past several months, while average consumer spends on daily use products have shot up, modern retailers have not been able to offer any significant relief to consumers at a time when they are also dealing with higher operating costs. “We have tried to shore up individual category growths though consumer offers,” said the CEO of a leading Indian modern retailing company.

Source: Economic Times