Wal-Mart and Bharti in India deal

A joint venture between Wal-Mart Stores and India’s Bharti Enterprises has been finalised, the pair said on Monday. Bharti Wal-Mart Private Limited will operate wholesale cash-and-carry and supply chain operations in India.  Opening 10 to 15 outlets by 2015, it plans to employ about 5,000 people selling groceries, consumer goods, fruits and vegetables.

India’s retail industry is worth $300bn (£148bn) a year and has attracted the interest of international retailers.  Large overseas retailers are currently barred by law at the retail level in India, but not in the wholesale market.  Tesco, France’s Carrefour, and Germany’s Metro are all big names who have expressed an interest in establishing operations in India.

The first Bharti Wal-Mart Private Limited cash-and-carry store is set to open by the end of 2008.  “This venture promises to bring great value to millions of farmers, artisans, small manufacturers and retailers across India,” said Sunil Bharti Mittal, chairman and group CEO of Bharti Enterprises.

“We are pleased to be a partner in developing this sector which is set to become a significant engine of India’s economic growth.”

Source: scotlandsoracle.co.uk

FDI in Multi-brand Retail in the offing

The global financial mess may have a silver lining for the Foreign Direct Investment in Multi-brand Retail with the government hinting the FDI may soon be allowed though the majority may have to be with the Indian promoters. The global economic turmoil may have achieved what the bureaucrats have not been able to achieve for retail sector in India which has not yet allowed any FDI in multi-brand retail due to strong political opposition, particularly from the Left. who feel  it could ruin livelihood of small traders and people employed with traditional form of retail business.

With fears of more outflow of foreign funds, the government has begun to seriously think in terms of revisiting its policy on FDI in the retail sector, says a report by Indiaretailbiz.com. If allowed, this will encourage inflow of new capital as foreign retail majors are very keen to enter India’s retail sector.

The possibility of wine retail in the regions where it is legally allowed through super markets cannot be ruled out too, thus making availability easier. At the present time, infusion of 100 per cent FDI is allowed only  in ‘cash and carry’ (B2B) retail, with only 51 per cent FD allowed in single brand retail. No FDI is, however, permitted in case of multi-brand retail.

While, companies like Metro AG (Germany) and Shoprite (South Africa) have already taken advantage of 100 per cent FDI in ‘cash and carry’ business and Carrefour (France) and Tesco (UK) have announced their intention to do so, single brand retailers like Marks & Spencer (UK) and Vision Express (Netherlands) have been forced to accept partnerships with local business houses for entry into single brand retail. Given the choice, many of them would have liked to go on their own.

Multi brand retail giants like Wal-Mart, Carrefour, and Tesco, on the other hand, due to current FDI policy, have been compelled to either take franchise route or provide technical (back-end) services. Some have even chosen to wait until the policy is completely changed to meet their requirements.

Although, no major policy decisions are expected as the general elections are due in the next six months, the government is believed to be considering relaxation in FDI norms for both single and multi-brand retail.

Kamal Nath, the union minister of commerce and industries, at a recent trade conference in Paris, had announced that the government is seriously considering permitting up to 100 per cent FDI (as against 51 per cent at present) in single brand retail, specifically in the area of luxury retail. The official line so far has been to consider allowing 100 per cent FDI in single brand retail in the segments that do not adversely affect local employment.

It is also believed that, despite pronouncements to the contrary, the commerce ministry has mooted a proposal that seeks to allow up to 49 per cent (as against Zero per cent at present) FDI in multi-brand retail.

Source:-indianwineacademy

‘Young spenders will drive India’s economy’

Sydney, Sep 28 (IANS) As the Indian consumer goes all out to seek new experiences from food and wine, installs an in-home spa and holidays in exotic destinations, modern retail is well on its way to becoming the key driver of the country’s economy, says Geoff Hiscock, an Australian author who studies the economies in Asia, especially India.Hiscock’s latest book “India’s Store Wars: Retail Revolution and the Battle for the Next 500 million Shoppers”, published by John Wiley & Sons, has just hit the stands in India while being available in Australia.

“Modern retail is well on the way to being the key driver of the Indian economy over the next decade because India’s consumer demand is simply unstoppable. For Australian suppliers of a whole range of goods and services, that represents a marvellous opportunity over the next few years,” Hiscock told IANS in an interview.

The book explores the changes in the demographic profile, tastes and spending habits of the Indian consumer, how younger Indians have more confidence and are willing to borrow to finance their consumption.

Despite the recent shocks caused by the sub-prime crisis in the US, young Indians are prepared to borrow money to buy a new two-wheeler or car, a digital TV, air-conditioner or even a house. They are also more aware of the sources of credit available to them, says Hiscock.

According to the latest research in the India Retail Report 2009, retail spending by Indian consumers is expected to rise from Rs.13.3 trillion (US$0.28 trillion) now to Rs.18.1 trillion ($0.38 trillion) by 2010.

“That is a huge increase in spending, and we can put it down to the fact that not only are incomes rising but younger people entering the workforce are more prepared to spend money than their parents were. The ’save’ mentality is being replaced by the ’spend’ mentality,” Hiscock told IANS.

For the author the most interesting aspect of India’s consumer boom has been the far faster growth in the modern retail sector – hypermarkets, supermarket chains, mini-marts, department stores and specialist shops in shopping malls – than the traditional retail sector made up of the 12 million ubiquitous grocery stores, wet markets, bazaars and weekly or monthly rural fairs.

Until only a few years ago, modern retail’s share of the total consumer spending was only 3-4 percent. But after growing at more than 40 percent in 2007, modern retail has a share of 5.9 percent and by 2010 could have a 13 percent share, according to a report prepared by Images F&R Research, and released at the 2008 India Retail Forum held in Mumbai last week.

The book provides rich insights on the intriguing subject of what makes India tick and the challenges facing the country’s retail sector.

For three years in a row (2005 to 2007), consulting firm A.T. Kearney has ranked India the top retail destination globally, ahead of Russia and China.

“However, the outlook is not all rosy. Apart from the global economic situation, there are some specific problems India must contend with. Perhaps the most obvious is the poor supply chain, which leads to terrible wastage rates in the shipping of fresh fruit, vegetables and dairy products. India desperately needs better logistics, including a comprehensive cold chain system in transportation,” the author warns.

“There is a lack of retail management skills and the information technology backbones necessary to run modern stores efficiently. Retailers face high real estate prices and extreme competition in the key metropolitan markets,” he adds.

The author also draws attention to the volatile political environment where market middlemen, small traders’ associations, grocers and street vendors, fearful for their economic future, are opposing big domestic retail newcomers such as Bharti Group, Reliance Industries and Aditya Birla Group, and foreign contenders such as Wal-Mart.

“But overall, I’m confident India’s modern retail sector can work through these issues, and the consumption boom will continue, thereby driving up India’s growth rate,” says the veteran journalist-turned author.

Hiscock’s other hugely successful books include “Asia’s Wealth Club” (1997), “Asia’s New Wealth Club” (2000) and “India’s Global Wealth Club: The stunning rise of its billionaires and the secrets of their success” (2007).

source:-www.thaindian.com

India feels the retail pinch

With shoppers deserting US retail stores, India is feeling the pinch. Leading American retailers, which outsource goods ranging from shirts to carpets from India, are in the process of reducing their orders.

“There is a 20 per cent decline in apparel orders for the spring-summer season as compared to the last year,” said Premal Udani, MD, Mumbai-based Kaytee Corporation. “Consumption is coming down in the US in a big way.”

Udani’s Kaytee Corporation, which exports to leading US retailers, is among the companies that had ramped up capacities in a big way in 2000 when the quotas on apparels were phased out. “Elimination of quotas was meant to boost our orders. But we do not see any large rise in orders,” said Udani.

Target, one of the leading retail chains in the US, reported a drop of 2.1 per cent in sales in August.

The closure and consequent filing of bankruptcy by some mid-size retail chains have worsened the problem. For instance, Steve & Barry’s, an apparel retail chain firm, has filed for bankruptcy under chapter 11 in July. The New York-based chain was started in 1985 and had 276 retail outlets.

The crisis is going to balloon with leading US retailers like Wal-Mart, Target and JC Penney forced to cut down their orders from India, according to experts.

“It is clear that there will be some slowdown and even Wal-Mart will not be immune to it,” said Rajan Hinduja, MD, Gokaldas Exports. “Though it is too early to give out a strong reaction, the possibility of Indian suppliers getting affected is not ruled out.”

Wal-Mart and JC Penney had set up huge outsourcing offices in India for large-scale outsourcing. Wal-Mart, according to estimates, imports close to $600 million worth of goods from India.

Source: Hindustan Times