Reliance Retail plans private label sale to kirana stores

Mukesh Ambani’s Reliance Retail is understood to be exploring ways to supply its private labels in food and groceries to kirana stores and small retailers in the country. A separate entity, most likely to be named Reliance Foods, will carry out the private label business.

The move is expected to give high retail exposure to its products in innumerable kirana stores in the country, without having to spend much on advertising and marketing expenses apart from generating business volumes. When contacted, Reliance Retail spokesperson said: “As a policy, we do not comment on speculation.”

In a recent reshuffle at the company, Reliance Fresh head Gunender Kapur was made head of private labels business in the company, sources close to the development said. “We have plans in this direction. Once, we entirely cater to the demands of our stores, we can certainly look at supplying them to other retailers since we have required infrastructure, process and systems in place. But before that, we should completely cater to our own stores,” said a source in the company.

Sources said that after launching private labels in food and groceries, Reliance Retail is also expected to launch soaps, detergents, cosmetics and non-FMCG products under its private labels segment with a new brand name. The company’s flagship chain Reliance Fresh sells staples and food items under Reliance Select and Reliance Value brands, dairy products under ‘Dairy Pure’ brand.

Kishore Biyani’s Future Group, too, also have plans to sell its private labels to stores outside the group and it has already carried out pilot studies for this venture and is expected to start the business soon. Future Logistics, the logistics arm of the group, also has plans to foray into wholesale distribution of products such as food, apparel, grocery to organised retail chains in the country, which is expected to start from this month.

Nearly 30 months ago, Reliance Industries announced an ambitious plans to invest Rs 25,000 crore to expand its stores in the country to take the advantage of organised retail in the country. Initially, the company was planning to open 2,000 stores by 2008, and 5,000 stores by 2010, but due to a delay in delivery of properties, economic downturn and demand slump the company had to scale back its expansion plans.

Reliance Retail runs over 850 stores, which include stores for food and grocery, consumer durables, beauty and wellness, jewellery, footwear, among others. Its formats such as apparel chain Reliance Trends, beauty and wellness format Reliance Wellness, consumer durable chain Reliance Digital have private labels or are in the process of launching private labels.

“The whole idea of private labels is based on pricing and retailers get enough volumes on their shelf at marginal costing. Retailers have an opportunity to sell their private labels to kirana stores. But it depends on their strategy on pricing and marketing right products,” said Naimish Dave, a director with OC & C Strategy Consultants.

Added Sadashiv Nayak of Food Bazaar, a unit of Future group: “We do sell products of regional vendors in many stores and they compete exceedingly well with national brands. If product-price proportion is good, I do not see any problem in a retailer selling others’ private labels,” Nayak said.

Business consultancy Technopak’s Purnendu Kumar says retailers can sell their products to mom-and-pop stores only through their cash and carry ventures as reaching out to individual stores would be tough preposition.

“Supplying to kiranawalas is a tedious job as you need to have different points of sale, enough manpower and transport and delivery systems. But selling products through cash and carry stores is a viable preposition,” said Purnendu Kumar.

Sources :- Business Standard

Key players in the Indian Retail sector

Who are the top retailers in India today?
Here’s a brief summary of the key players..

Pantaloon Retail (India) Pantaloon’s managing director Kishore Biyani believes in changing the rules. When Pantaloon started the Big Bazaar discount stores in 2002, malls were not part of the shopping culture. Big Bazaar became a hit, as it combined the look and feel of Indian bazaars with aspects of modern retail like choice, convenience and quality. Headquartered in Mumbai, the Rs 3,500-crore company now operates over 5 million sq ft across 40 cities.

Shopper’s Stop A menswear store owned by K Raheja in the Mumbai suburb of Andheri in 1991 has now transformed into Shopper’s Stop, with 27 departmental stores. The company entered airport retailing in a joint venture with the Nuance Group. It also launched India’s largest hypermarket, Hypercity. In 2005, it bought the Crossword bookstore chain.

Lifestyle Growing from one store in Bahrain in 1973, the NRI-led Landmark Group today operates over 5 million sq ft in the Middle East and India. The group’s first Lifestyle store in India opened in Chennai in 1999. Now it has 325,000 sq ft in Chennai, Hyderabad, Bangalore, Gurgaon and Mumbai. Its first hypermarket, branded as ‘Max’, is expected to open soon.

Reliance Retail Mukesh Ambani’s 15,000-people Reliance Retail has opened 250 convenience stores, branded as ‘Fresh’, across the southern states. It is now planning to launch 30 such outlets in Mumbai. Reliance Retail plans to invest Rs 25,000 crore on hypermarkets, supermarkets and specialty stores in the next four years. The first hypermarket will be up in Ahmedabad by the end of July.

Aditya Birla Retail The company, which will operate under the brand ‘More’, has selected two formats – hypermarkets and supermarkets – for its initial foray. The first store has opened in Pune. Last January, the company acquired Trinethra Super Retail, which has given it more than 5,00,000 sq ft and a strong presence in the South. The Birlas’ outlay for the business over the next three years is Rs 9,000 crore.

Bharti Retail The world’s largest retailer Wal-Mart, which prefers to go it alone outside the US, chose Sunil Mittal’s Bharti Enterprises as its partner in India. The venture will start with the cash & carry (wholesale) format, which could be extended to retail operations once foreign direct investment is allowed in multi-brand retail, as is expected. The entity is yet to start operations as the formal agreement has not been inked.

Sources:- India Retail News

The future of organized retail in India

What is the future of organized Retail in India?

There is no magic answer to this question. However, one can make some educated guesses based on established best practices and how Indian conditions will modify or replace conventional wisdom. Let’s consider some of the factors that could affect the future of organized Retail in India.

Consumers - Who understands the Indian consumer the best will win in the end. What do we mean by the Indian consumer? Is it the teenager in Mumbai who commutes by local train, buys fashionable clothes from Linking Road and watches movies at the multiplex? Or is it the housewife who buys vegetables from the sabzi mandi and saves up money for chicken on Sundays. Or is it the fisherman out at sea who uses a cellphone to communicate his catch to the market on the shore? The Indian consumer is hard to pin down. As someone wisely said, the Indian consumer shifts loyalties with every 25 kilometers and with every 10 Rupees. The dimensions to deal with include class, education, language, caste and local customs in addition to the standard marketing dimensions used in the West.

Merchandising – Merchandising is what retailers do. This aspect has not received much media attention in India. However, this is often what differentiates a successful retailer from a flash in the pan retailer. Examples that come to mind include Zara, 7-Eleven and Walmart. Put simply, merchandising is the art-science of deciding what to sell where, at what price and when. The retailers that understand the Indian consumers and provide the right products at the right price will beat the competition.

Talent - This is already becoming a bottleneck for several Indian retailers. Experienced corporate professionals as well as fresh talent at the store level are hard to come by. The retailers that are able to retain their talent and provide them with growth opportunities could easily gain an upper hand in running a successful operation in India.

Real Estate – This is a huge concern in India where quality real estate has become too expensive for many retailers to run a successful operation in cities. This is especially true for mass merchandise/discount retailers who operate on razor-thin margins. The acquisition of cheap leases in prime areas could decide whether a retailer becomes profitable at all or not. Another strategy is to expand in smaller towns and villages where real estate is still affordable and purchasing power is not as bad as one might think.

Supply Chain - This often quoted but not-so-often understood term basically refers to the back-end operations of a retailer. This includes the entire network of suppliers, warehouses, distribution centers and logistics operations. Effectively getting products to the right place at the right time is a lot tougher than it sounds when there are thousands of items and hundreds of stores involved. The supply chain infrastructure needs to be built from the ground up in India. This could easily affect the balance sheet of any retailer planning to start operations in India.

Policy - Although most people agree that FDI in Retail is just a matter of time, what this means is that till FDI is allowed, we will see our domestic players like The Future Group and Reliance Retail leading the way. What will happen when FDI is eventually allowed is anyone’s guess. If the examples of Brazil or China are taken into account, we will see a lot of consolidation with a few (6-8) large players remaining and several smaller niche players. Retail is a highly localized business (local preferences, local talent), so there is no guarantee that a foreign player will do better than an Indian player, as evidenced by Walmart’s failures in Germany and Korea. Surely, there are interesting times ahead!

Sources :- Indian Retail News

‘Big retail chains not meant for India’

Amid reports of a major national retail chain shutting some of its formats, a prominent traders’ body in Uttar Pradesh today claimed that big retail chains were not suitable for a poor country like India.“India is a tropical country where per capital income is low. The large retail formats, which are successful in the US, Canada and Europe are bound to fail here,” Uttar Pradesh Udyog Vyapar Pratinidhi Mandal president and Rajya Sabha MP Banwari Lal Kanchal told reporters.

The organization was at the forefront of the anti-Reliance Fresh protests in the state last year forcing its abrupt closure. Kanchal said the establishment expenses of large retailers amounted to almost 20 per cent, while for small retailers, it is hardly 4-5 per cent.

“In the days to come, other major retailers would also face the heart,” he added. Kanchal informed that the Parliamentary Standing Committee on Commerce was studying the impact of big malls on small retailers and is expected to submit its report to the central government soon. He is one of the committee members.

Several countries such as Malaysia and Poland have promulgated the Shopping Mall Regulation Act to strike a balance between large and small retailers. The committee is also studying the Malaysian and Polish legislations in this regard. Kanchal claimed that in the last five years, an estimated 20 million traders had been rendered jobless due to the sprouting of big shopping malls in the country.

Meanwhile, he criticised the Mayawati government for implementing Value Added Tax (VAT). “The current spate of recession and implementation of VAT would cost the UP exchequer almost Rs 3,500 crore this fiscal,” he added.

Sources:- Business Standred

Reliance Retail’s JV with UK logistics co Wincanton falls through

NEW DELHI: Reliance Retail (RRL) and the UK-based supply chain powerhouse Wincanton have called off their proposed joint venture. The venture was to manage RRL’s transportation, warehouses and inventory so that stocks reached the stores in time. All these are critical for any retail business, and many of RRL’s problems arose due to glitches in its supply chain.

According to sources close to the development, the likely deal was shelved after Wincanton realised that RRL was unlikely to meet its initial growth projections and generate expected volumes. Asked about the new development, the Reliance spokesperson said: “As a large retailer in the country, we continue to explore various options to manage our various supply chain requirements. These include discussions with several global companies. We will make the relevant announcement on finalisation of a relationship.”

RRL and Wincanton had signed an MoU and negotiations had reached advanced stages. The talks, however, were derailed after Wincanton saw a gap emerging between its expectation and what was being rolled out on the ground in terms of RRL’s expansion. In November 2006, India’s largest conglomerate Reliance Industries announced its foray into consumer retail with Rs 26,000-crore investment.

“With regard to our plans in the retail business, we continue to be in expansion mode having added more than 80 stores in the past quarter, including two new formats, namely Reliance Living Homeware and Reliance Home Kitchens, taking the total number of stores to more than 816 stores in the country,” said the Reliance Retail spokesperson. But a source said Reliance Retail is no more in expansion mode and is ooking at consolidating its business. It has put a freeze on the acquisition of new properties.

“They are now opening stores in places where properties were locked up several months ago.”

The company has also initiated a slew of measures to tide over the current crisis, perpetuated by a slowdown in Indian retail consumption and global financial turmoil. The company has recently reduced the size of its Ahmedabad hypermarket by two-thirds and initiated several cost-cutting measures. A senior source pointed out that some tough measures are on the anvil yet again.

Almost all Indian retailers, including Reliance, are facing a tough environment today, as consumer spends shrink. The global financial turmoil and heightened fear of recession in much of the developed world have already hit Indian financial system and forced a crash on the stock market. With news of job cuts regularly making it to the headlines, people are increasingly worrying about the future of their employment and as a result, deferring their purchases and further tightening their purse string.

Reliance Retail currently has a supply chain network to service its retail stores, but hasn’t so far been able to attain a very high level of efficiency, as could have been provided by the $4-billion supply chain specialist Wincanton. The UK firm, which has a pretty large list of clients, including retail giants Tesco and Woolworths, auto companies Ford and DaimlerChrysler, and consumer goods firms P&G, Nestle, SABMiller and GSK, could have taken the burden off Reliance’s shoulders and made the supply chain more efficient for the Indian retailer.

This could have, in turn, brought down Reliance Retail’s expenditure, improved its delivery and ultimately, given it an edge over its rivals.

source:-economictimes.indiatimes.com

Triveni to sell off its rural superstore chain

MUMBAI: Triveni Retail Ventures, a 100% subsidiary of Triveni Engineering and Industries, is understood to have sounded out leading retailers for selling off its rural superstore chain Triveni Khushali Bazaar. Industry sources said the group may either divest the venture or offer controlling stake to prospective buyers. The company is planning to focus on its core operations. Grappling with a tough business environment, most corporates have been unable to infuse sizeable investments to scale up their non-core ventures.

Also, corporates have been unable to take on the challenges of managing a retail venture, the supply-chain dynamics and scaling it up. As a result, the ventures have been largely confined to certain states and, therefore, unable to achieve economies of scale. Very recently, the Godrej Group sold off a 70% stake in Aadhaar, its rural retailing initiative, to the Kishore Biyani-led Future Group.

Sources said investment bankers have sent feelers to players like Future Group, Aditya Birla, ADAG and Reliance Retail for the Triveni entity. When contacted, an official spokesperson declined to comment on the move. “If there are some discussions at the board level, we would be unaware of it,” he said.

At an analysts presentation on April 29, 2008, a company official had said in response to a query that “partnerships are the mantra for retail going forward at least in the near term, where people are looking at consolidation of supply chain, both in terms of sourcing of farm produce and bringing produce for sale right down to the rural areas.” “So, we are certainly open to relationships,” the official had said.

Triveni is in the business of sugar, steam turbines and engineering activities. Triveni Khushali Bazaar has over 40 stores, primarily in the northern rural markets, with verticals like agri products and services, non-agri products and financial services. These are essentially one-stop shops for farmers and rural customers to buy agri-inputs, cattle feed, cycle, plastic furniture, FMCGs, automobiles, etc.

Retail majors like Future Group and Reliance Retail are keen on stepping up their presence in rural markets, which constitute a significant portion of the Indian consumer base. Aadhaar now serves as a procurement hub for the Future Group’s retail formats like Food Bazaar and KB’s Fair Price, and will also be a supplier to other retailers. In 2007, ADAG’s Reliance Money had tied up with Triveni Retail Ventures to retail financial products and services.

Reliance Retail had announced plans to set up town centres with low-cost malls and rural hubs in towns with a population of less than 50,000. India’s rural retail market is expected to grow by 29% to Rs 1.8 trillion by 2010, helped by rising incomes and changing consumption patterns, an industry body report said. Issues like poor infrastructure, supply chain inefficiencies and competitive pricing in the rural markets are the main challenges in tapping an otherwise large consumer base.

ITC’s e-choupal and Choupal Sagar, Triveni Khushali Bazar, DCM Shriram’s Hariyali Kisaan Bazaar, IOC’s Kisan Seva Kendras are some of the main players in the rural retailing sector.

source:-economictimes.indiatimes.com

Hindu festival brings Indian shoppers back to malls

NEW DELHI (AFP) — Indians thronged stores for last-minute shopping on Tuesday for the Hindu festival of lights, largely ignoring the global financial crisis that has slowed down the economy.

Some malls in national capital New Delhi reported record business on the eve of Diwali as buyers rushed to get clothes, food, jewellery and cosmetics for Tuesday’s celebrations, traders said. “Footfalls peaked on Monday and the largest presence of buyers were at the chain stores, especially clothing, footwear and cosmetics,” said O.P. Goyal from New Delhi’s largest mall, the Great India Place. In the eastern city of Kolkata, the Reliance Retail chain also reported brisk sales. “We did 200 million rupees (four million dollars) in sales during the weekend and we hope to do well today also,” Reliance Retail sales vice president S.S. Shekhawat told the Press Trust of India (PTI) on Tuesday.

Kolkata jewellers also reported brisk Diwali sales. “In value terms, the growth is 20 percent higher than the previous year while in volume terms it could be around 10-15 percent higher,” Kolkata-based Senco Gold Ltd. executive director Subhankar Sen said. Shopper Anuradha Kapoor, a New Delhi-based architect, said the global economic slowdown had not dented enthusiasm for Diwali shoppers. “Just around two percent of our population form India’s investor community so it does not really effect us directly — at least not now,” she said while shopping for a microwave in the suburbs of Noida city.

Indian shares have fallen more than 36 percent in the past four weeks on sustained overseas fund selling.

The global slump muted celebrations on Tuesday, however, in the southern city of Bangalore, India’s computer software hub, PTI reported. “There is a lot of cutdown in gifting for customers,” said T V Mohandas Pai, a director in Infosys Technologies, India’s second largest software firm. “Exuberance has given place to seriousness,” he added. Diwali is celebrated with fireworks but the firecracker business in New Delhi reported lacklustre trade as only a fifth of some 5,000 city retailers were permitted to set up stalls this year, traders said.

“The police have issued only 1,000 licences this year to retailers, besides prices of firecrackers too have shot up by 30 tp 40 percent over last year,” said trader Amrit Jain from the city’s Mayur Vihar middle-class district. A spate of bombings across India since May coupled with environmental concerns have forced the authorities to clamp down on the sale of Diwali firecrackers.

Source:- afp.google.com

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

Retailers bullish on festive sales, to open more stores

Retailers across the country are upbeat about sales prospects with the advent of the month long traditional festive season which sees millions of shoppers go on a spending spree.

Companies like Kishore Biyani’s Future group, Vishal Retail and Reliance Retail among others expect more Indians to spend money on a variety of consumer goods of middle-class shopping habits, including clothing, mobile phones, televisions and refrigerators among others.

A cross section of retailers that Business Standard spoke with were gung-ho on sales prospects, even as concern over slowing credit availability, higher interest rates and high prices is expected to hurt consumer demand. A key reason for the upbeat assessment is the fact that the recent pay hike and arrears for an estimated 4.6 million central government employees leaves more disposable income in their hands.

Several states are also likely to give pay hikes to their employees, even as the private sector executives are hoping to pick up their annual bonuses. Central government employees including those in the Indian Railways will receive arrears of nearly Rs 11,750 crore, in addition to their enhanced pay this month.

Unlike overseas, retail consumer spending in India is not quantified as extensively, but the nine-day Hindu festival of Navratra, along with Eid which Muslims are celebrating this Thursday, sees people buying household necessities and goods with gusto. Buying continues right through up to Diwali, which falls at the end of October. A key reason for the upbeat assessment is also the fact that this year all the key festivals fall in October, unlike last year when Navratri was in October and Diwali the month after.

Kishore Biyani’s Future group has already started opening the first few of at least 12 new stores planned this month, including some dedicated to retailing electronic goods, at various locations across the country. Other retailers also have similar plans.

“We expect sales growth at 10 to 15 per cent or even higher in some categories like clothing,” says Rakesh Biyani, chief executive, Future Retail. The group expects sales of Rs 175 crore in consumer durables this October, over double of what it did in the same period last year.

Essar Group’s mobile handset retail chain is opening 100 stores during October. “I think the festive season should be fine and we have already seen 25 per cent improvement in sales after the Shraadh period got over,” says Rajiv Agarwal, chief executive, The Mobile Store. “We expect 45 per cent growth in sales during this month,” he adds. The Mobile Store has 1200 stores and planning to take its total tally of stores to 2,000 by 2009.

Delhi-based Vishal Retail is also increasing its presence, mainly in north India, to cash in on the festival boom. It plans a mix of company-owned and franchisee-run stores this month. The company is opening three stores at Lucknow, four at Delhi, one each in Varanasi and Rae Bareli and giving out franchisees in Ludhiana, Bakshi Nagar, Mirzapur, Fatehabad, Bharatpur and Jaipur.

“We are all set to launch our new stores and increase our presence in India. Diwali is the right time,” says Ambeek Khemka, president, Vishal Retail.

A Reliance Retail executive said the company was geared up for Diwali in a big way across its stores with special products and offers. “This is the best time of the year for sales. We are opening new stores in lifestyle and other formats during the festive season”, he added.

However, there are some who have a more conservative outlook. “With overall economic sentiment negative, it would be challenging to achieve higher sales. I expect festive season sales will be down 20 to 25 per cent this time and if retailers do not offer discounts and promotions, sales can fall 40 per cent,” says Susil Dungarwal, a Mumbai-based retail analyst.

Adds Purnendu Kumar of business consultancy Technopak Advisors: “Given the current conditions, even if retailers do the same business as they have done last year, it would be good enough. We expect lesser corporate gifting this time and a sharp drop in sales of lifestyle goods such as laptops, jewellery etc”.

Retailers are already launching promotional schemes to woo customers. For instance, Trent, the retail arm of Tata group, is offering higher discounts on particular categories at its Star Bazar stores. Starting this Thursday, the store will offer discounts on food, extending it later to the kids category, to gifts and finally to apparel towards the end of the month.

The country’s retail sector is projected to grow to $700 billion, while organised business is expected to be 20 per cent of the total market by 2010, according to consultancy Northbridge Capital. The retail market, which is currently worth $400 billion, is growing at annual rate of 30 per cent.

Source: Business Standard