More stores expected to close in ‘09

Circuit City, KB Toys, Mervyn’s, Steve and Barry’s, Whitehall Jewelers, Linens ‘n Things, Showcase Home Entertainment. How many more will join the growing list of bankrupt and shuttered chain stores before the end of the economic crisis?

The International Council of Shopping Centers predicted in December that, by the end of 2008, 148,000 stores would close nationally. The New York-based retail trade group expects an additional 73,000 store closings in the first half of 2009.

Retailers face three main challenges in the tough economy: Increasing shopper frugality, tighter lending standards from banks and tougher bankruptcy laws. Experts say that some stores that might have emerged from bankruptcy a few years ago will close permanently under regulations that make it harder for stores in financial trouble to get loans.

Also, some retailers – including Sears Holdings Corp., Talbots Inc. and Ann Taylor Stores Corp. – have said they may close a number of underperforming stores in the new year. Other chains have said they will postpone expansion until the economy improves.

But retail is “not all doom and gloom,” said leasing expert Kim Choukalas, vice president for leasing at Westcor, the Valley’s biggest shopping center company.

Experts – including Choukalas; marketing Professor Stephen Hoch at the University of Pennsylvania’s Wharton School; and retail analyst Mary Brett Whitfield, senior vice president at TNS Retail Forward in Columbus, Ohio – have identified keys to retailing success in 2009.

“It’s an ever-evolving world out there,” Choukalas said.

Here are some trends to watch:

• Marketing to teens and young adults. Stores such as Buckle, Forever 21 and Aeropostale are coveted by many shopping-center developers. Forever 21 is expected to fill a number of vacant Mervyn’s stores. And even J.C. Penney has jumped on the trend and says it is no longer your grandmother’s store – but your teen daughter’s.

• Luxury within limits. Coach’s success shows that shoppers still want quality in the down economy but are unwilling to go into deep debt for it. Handbags at Coach range in price from less than $100 for a canvas wristlet to $300-plus for a large leather bag.

• Family-friendly. PetSmart, BestBuy and GameStop don’t have much in common at first glance. But experts expect all of them to do well in the new year for one reason: They sell products that families can use while cocooning at home with kids – or pets.

• Deeper discounting. It’s no surprise at least one report shows Wal-Mart Stores Inc. made more money during the holidays than its competitors combined. Even the wealthy want deals on groceries, basic apparel and electronics these days. Look for competitors such as Target to try to beat some prices at Walmart Supercenters.

• Uniqueness and interactivity. Stores that can come up with new and different products and formats will be winners. Think Apple, a store that is more focused on educating and entertaining customers with its product than making instant sales. Or Sephora, which allows customers to experiment with cosmetics in the store, or take home free samples to try.

In bankruptcy or gone

Amid a deepening recession, a number of big-name brands filed for bankruptcy protection or went out of business in 2008. Here’s a list of some of the biggest:

Retailers

• Circuit City Stores Inc., the nation’s second-biggest electronics retailer, is closing more than 150 stores and laying off thousands of employees as it keeps operating and attempts to restructure under Chapter 11 bankruptcy protection.

• Mervyn’s LLC filed for Chapter 11 bankruptcy protection in July and began liquidation sales at its remaining stores to wind down its business.

• Linens ‘n Things filed for bankruptcy protection in May. It announced liquidation sales at its stores in October after failing to find a buyer that wanted to operate the firm.

• Steve and Barry’s filed for Chapter 11 bankruptcy protection in July, then later abandoned plans to keep stores open and said it would liquidate.

• KB Toys filed for bankruptcy protection two weeks before Christmas and has begun to liquidate its stores and plans to shutter operations. It is the second time KB Toys filed for bankruptcy protection; the first was in January 2004.

• The Bombay Co. declared bankruptcy in September 2007 and shuttered the last of its stores in January 2008.

• Sharper Image Corp. filed for bankruptcy protection in February and closed all its stores in the past year.

• Woolworths Group PLC in the United Kingdom failed to find a buyer in December and put its nearly century-old business into administration. It is closing its 800-store business in stages, set to end this month.

Sources :- The Arizona Republic

Carrefour-MGF talks end without deal

The French firm’s troubles in finding an Indian partner come as the boom in organized retail sector is fading

New Delhi: The world’s second largest retailer by revenue, Carrefour SA is again struggling to find a partner for its Indian expansion after talks with the latest in a long line of potential allies, New Delhi-based real estate firm MGF Developments Ltd, ended without a deal.

A person with knowledge of the development who didn’t want to be identified confirmed the ending of talks with MGF. As a result, this person added, the French company no longer expects to sign a franchisee partner in India in 2008. He said the firm was talking to several possible partners, but declined to name these.An MGF spokeswoman said the company “continues to explore strategic relationships with leading domestic and global brands”. She added that her company had never “committed to any discussions” with Carrefour and that any “conclusion or reference in this regard is nothing but mere speculation”.

Shopping around: A shopper outside a Carrefour store in Paris. Antoine Antoniol / Bloomberg

In a November interview with Mint, Gerard Freiszmuth, general manager for Carrefour in India, said he hoped to sign a franchise deal with a local firm by March and that it was in talks with “three very willing Indian partners” that he would not identify.

Six months after the deadline, Carrefour is still without a partner. Somesh Dayal, marketing director of Carrefour in India, declined comment on whether his firm had ever been talking to MGF for a potential partnership, and said while it is still looking for a partner, the primary focus is on the wholesale venture.

He added that there were six companies with whom Carrefour was talking to for a potential partnership, but discussions were still in an initial stage.

Last year, Carrefour had floated two separate units in India, Carrefour WC and C India Pvt. Ltd to roll out fully-owned wholesale stores, and Carrefour India Master Franchise Co. Pvt. Ltd, which was to partner with an Indian company to open the French firm’s branded stores in the country.

Although India allows foreign retailers to sell directly to other retailers or institutions, it bars them from selling to individuals. Single-brand retailers, however, are allowed to own up to 51% in Indian arms that can sell to anyone. The franchise route, where a foreign retailer appoints an Indian firm as a franchisee, is one way companies such as Carrefour can operate in India.

Over the years, Carrefour has been in preliminary conversations with Bharti Enterprises Ltd, real estate companies DLF Ltd and Parsvnath Developers Ltd and Mumbai-based business house Wadia Group among other local firms, for a possible alliance.

Carrefour’s troubles in finding a partner come even as a boom in the nascent organized retail sector in India is tapering off, with firms that entered the business struggling to succeed in a complex market.

So far, Reliance Retail Ltd has around 700 stores, though well short of its September 2007 target of 2,000 stores. Basmati exporter Rei Agro Ltd entered retail with some 200 grocery stores called 6Ten but has shuttered dozens of these in recent months.

Indiabulls Retail Services Ltd, part of the group that also has a presence in financial services and real estate, has shut four of its nine Indiabulls Megastores. Mumbai-based HyperCity Retail closed its pilot small stores and abandoned plans to open about 250 grocery outlets by 2012.

Analysts and experts, however, say India’s modern retail business will grow over time.

A recent report by consulting firm McKinsey amd Co. said the number of potential shoppers at branded stores in India will jump fivefold in the next eight years from 13 million households currently to 65 million households or 300 million consumers.

That could explain why the world’s top retailers including Wal-Mart Stores Inc., Tesco Plc., Metro AG and Carrefour are betting on India. Wal-Mart has forged an alliance with Bharti Enterprises for a wholesale retailing venture while Tesco plans to set up a wholly owned cash-and-carry unit similar to Germany’s Metro.

It is unclear whether Carrefour’s inability to enlist a local partner will in any way affect the company’s plans to open its fully owned cash-and-carry stores by mid-2009.

In Wal-Mart’s case, the joint venture it has with Bharti will feed into retail stores wholly owned by the latter. And Tesco has a similar arrangement with the Tata group’s Trent Ltd.

Metro AG plans to double its presence in India

Germany’s Metro AG aims to double the number of its cash-and-carry centres in India, a senior official said on Thursday, as global rivals draw up their plans to tap the fast-growing economy.

Metro, Germany’s biggest retailer, plans to invest $120 million in at least four new wholesale cash-and-carry centres in the eastern state of West Bengal, Henry Birr, the firm’s vice president of international affairs, said at a news conference. It has four other centres in India, which only allows foreign multiple-brand retailers to operate via wholesale or franchise and licence arrangements.

“We see the same growth potential in India as in China,” Birr said. In West Bengal, the company was waiting for the state to issue licences so it can deal in agricultural produce that it can source directly from farmers, Birr said. Metro, one of the earliest entrants in the sector in India, has been measured in its approach.

Its global rivals have recently struck deals to enter the market, estimated at about $350 billion, and widely forecast to nearly double in size by 2015. Wal-Mart Stores Inc , which has a venture with Bharti Enterprises, plans to open its first wholesale centre in India next year, and aims to roll out 10-15 centres over seven years.

Britain’s Tesco Plc last month said it would set up its first wholesale centre in India towards the end of next year, while Carrefour has also said it plans to enter.

Source: Economic Times