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Archive for August, 2008

Subhiksha Mobile to invest Rs 500 cr

Posted by retailigence on August 30, 2008

Telecom retail major Subhiksha Mobile is going for a major expansion and will invest Rs 500 crore this year to add around 800-1,000 stores to its existing 750 outlets in the country. The company which opened its 100th outlet in Andhra Pradesh today, said in a press release that the state is a important for Subhiksha and we are delighted to be the first mobile retailer to cross the 100 stores benchmark here.

The company said its has mananged to have 15 per cent share in the mobile retailing market in Andhra Pradesh since opening its first store there in second half of 2007, the release added.

Source: Economic Times

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Corner stores next hot spot for mobiles

Posted by retailigence on August 30, 2008

Organised mobile retailers like HotSpot and Mobile NXT have found a new way to deal with competition from mom & pop stores: make neighbourhood retailers their franchisees to sell mobile phones and accessories under their brand. Currently, more than 70% of the mobile retail sector is unorganised and market analysts believe there is a huge potential for the franchise model. “The return on investment (RoI) for the franchisee is somewhere around 60-65%. It will allow us to expand our presence and enter deep into the cities,” says HotSpot CEO Sanjeev Mahajan.

HotSpot has recently adopted the franchise model with 25 stores operational in Delhi alone and has plans to expand to 100 such stores besides the 400 company-owned, company-operated (co-co) stores across the country. “Customer experience and pricing is the crux of this business. Therefore, we provide stock management, professional training for the in-store sales team, and an after-sales customer support at all our franchised stores.

The role of the franchisee is restricted to the operational level,” says Mobile NXT CEO Vijay Menon.
Mobile NXT adopted the franchise model in tier-II and tier-III cities across India in 2007. The company operates more than 55 stores all over the country. Mr Menon, however, concedes that the franchise model in mobile retailing is difficult to adopt since there is no uniqueness in the product and the return on investment is not very attractive.

That is why players like Subhiksha and Mobile Store are refusing to join the bandwagon. They believe the franchise model is not profitable at this stage, given the low profit margins and low market penetration. “We are concentrating on a co-co model based on pricing. We don’t think franchise model is the way to go, since the business already accounts for low margins; expanding through franchise would dent the margins further,” says Subhiksha president-marketing Mohit Khattar. Subhiksha operates the largest chain of mobile stores with around 1,300 stores all over the country.

Mobile Store CEO Rajiv Agarwal also feels that the franchise model in the current scenario does not hold much ground. “There is the risk of our brand value being diluted. This is a business where you cannot allow your service proposition to get diluted,” says he. Mobile Store has significant presence in the country with more than 800 stores. However, RPG Cellucom head-marketing Biswajit Pandey feels that with improving margins and marketing strategies, the franchise model may take the front stage in future. The company currently operates over 25 stores.

It’s a win-win situation since it allows rapid expansion and presence in local areas for the franchiser and an opportunity for the traditional retailer to enter the newfound trend of organised retail. Moreover, the operational costs in case of franchise model is low in comparison to co-co model, giving both the parties a better RoI,” says global management consulting firm Technopak chairman Arvind Singhal.

Source: Economic Times

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Luxury bed-maker Hastens forays into India

Posted by retailigence on August 30, 2008

Sweden-based luxury bed-maker, Hastens, will foray into the Indian market by launching its first store here on July 27. The launch of the store in India is part of Hastens’ strategy to focus on the Asian markets, Mr Sanjay Verma, Country Manager, Hastens (India) Pvt Ltd, told newspersons here on Friday.

Priced between Rs 2.5 lakh and Rs 35 lakh, the beds are targeted at the upper-end customers. “Our prospective customers in India are those who own a Mercedes ‘S’ class or similar luxuries for whom price is not a deterrent,” he said. The price includes 32.8 per cent import duty as the beds are manufactured in Hastens’ facility in Koping, Sweden. Unlike beds in India which come without cots (bed frames), Hasten beds come with a bed-frame carrying patented springs.

Source: Hindu Business Line

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Kerala slaps 10 pc surcharge on retail chains

Posted by retailigence on August 30, 2008

Under pressure from the domestic traders, Kerala government has slapped a 10 per cent surcharge on the big retail chains, thus becoming the first state in the country to impose such a levy on super and hyper markets run by monopolies.

The proposal in this regard, made by state Finance Minister T M Thomas Isaac in the budget presented in March, came into effect with assembly adopting Finance Bill 2008-09 on Tuesday. The surcharge would be applicable on retail chains, including direct marketing chains, which import at least 50 per cent of their stock from outside the state or the country.

Commercial ventures, whose 75 per cent of the total business is in retail space and total turn over exceeds Rs 5 crore a year would come under the purview of the surcharge. The retail chains run by the state and those in the co-operative sector such as Civil Supplies Corporation and Consumerfed, would, however, be exempted from the levy. Curbing the entry of both national and multinational monopolies in retail sector has been an openly acknowledged policy of the ruling party.

The coalition, however, is aware of the constraints it has in imposing total ban on monopolies and that it could only restrict them through regulatory measures like additional levies. The well-organised trading community in Kerala has been spearheading a campaign demanding tough measures to curb big retail chains and earlier this month organised a statewide shutdown to press its demand.

Source: Economic Times

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Dabur’s retail arm to open six new stores across country

Posted by retailigence on August 30, 2008

FMCG major Dabur India‘s retail subsidiary H&B Stores on Wednesday announced plans for setting up six new outlets across the country as part of its expansion plan. The company will open new stores in Delhi, Gurgaon, Amritsar and Panchkula during the next three months, H&B said in a statement.

“This marks the opening of our third outlet in Hyderabad within a span of just 3 months. As the business strives forward, so does our ability to deliver even better value and choice,” H&B Chief Executive Officer Peter Baker said. H&B Stores is a wholly-owned subsidiary of Dabur India and operates a pan-India chain of beauty, health and wellness retail outlets under the brand name ‘newu’. The stores offers a range of health, beauty and wellness products.

“Our private label development programme and exclusive brand offering continues to grow, delivering international quality products, at very competitive prices,” Baker said. H&B is also planning to launch of its customer loyalty programme ‘Advantage U’ intended to demonstrate its commitment of customer experience and service, as well as great value and choice, the release added.

Source: Economic Times

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Gloria Jean’s to set up cash-&-carry subsidiary in India

Posted by retailigence on August 30, 2008

US-based coffee chain major Gloria Jean’s is setting up a wholly-owned cash-and-carry subsidiary in India to supply coffee beans, merchandise and equipment to its cafes in the country operated through the franchisee route. The retailer currently has a master franchisee agreement with Citymax Hospitality (India). Gloria Jean’s has applied to the Foreign Investment Promotion Board (FIPB) for permission. Under the current law, 100% FDI is permitted in the cash-and-carry wholesale business.

The proposed Gloria Jean’s subsidiary would be involved in local procurement of roasted coffee, apart from paper cups, syrups and equipment. It would also import incidental products from China, Australia and other countries. The cash-and-carry subsidiary would sell coffee and other incidental products to Gloria Jean’s master franchisee in India.
This is similar to the model being followed by Wal-Mart, the world’s largest retailer, in India. The retail giant has invested directly in a cash-and-carry subsidiary which will supply to the front-end stores under a franchisee agreement with the Bharti Group. Taking a different approach, Starbucks, the world’s largest coffee retailer, had last year applied to the FIPB for setting up a 51:49 joint venture with an Indian partner for investing in single-brand retail stores in the country.

However, the application was rejected twice for lack of clarity over the shareholding pattern of the proposed JV. Starbucks withdrew its application last July, without citing any reasons. Gloria Jean’s entered into the master franchisee agreement with Citymax in December 2007 to set up 500 coffee outlets across the country over the next 10 years. The cafe chain is known for its hot and cold coffee drinks including traditional espresso, blends and whole bean coffees, specialty teas, pastries and coffee accessories. In India, it is targeting executives in the age group 25-45 years, positioning itself higher than Cafe Coffee Day and Barista and closer to Costa Coffee. Gloria Jean’s also plans to retail roasted coffee under the brand name GJC in India.

Source: Economic Times

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Pantaloon’s Brand Factory ropes in Planet M, Globus into retail format

Posted by retailigence on August 30, 2008

Pantaloon Retail’s fashion value retail format, which opened its seventh outlet in the country and the second in Bangalore on Thursday, expects to touch revenues of Rs 500 crore by June 2009. Plans for the year include six more outlets by June 2009, according to Mr Rajesh Seth, Vice-President, Marketing, Central and Brand Factory, Pantaloon Retail (India) Ltd. The company has budgeted investments of around Rs 6-10 crore a store, he said.

Brand Factory will now offer products from Planet M, Globus, Staples and Dollar stores. “We want to make this a lifestyle store and all out future Brand Factory outlets will be similarly designed,” Mr Seth said. Spread across 55,000 sq ft of space, the new outlet offers over 200 brands at 20-50 per cent discount 365 days a year. Products offered are across various categories including apparel, footwear, eyewear, watches, home and kitchen accessories, travel and cell phones.

“This will be bigger and better than other Brand Factory stores, not only in terms of size, but also in our brand offerings,” said Mr Seth. Bangalore’s first Brand Factory outlet located at Marathahalli, the heartland of discount and value retail stores in the city, experiences footfalls of around 150,000 a month. Value retailing in India, estimated at Rs 45,000 crore, is growing at 20 per cent every year. Brand Factory reported revenues of Rs 200 crore in June 2008, out of which Rs 60 crore came from the Bangalore store alone, Mr Seth told Business Line.

The average billing ticket size of a customer in Brand Factory is around Rs 1,500 and is expected to go up to Rs 1,700 in the new format, with the introduction of segments other than apparel and footwear. About 80 per cent of the billing comes from the apparel sections, Mr Seth said.

Source: Hindu Business Line

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Reliance sets up Autozone in Gurgaon

Posted by retailigence on August 30, 2008

Reliance Autozone launched its automotive specialty store at Ambience Mall, Gurgaon in continuation of its move to bring world class auto retailing facilities to India. Reliance Autozone, Gurgaon spread over an area of 6,500 sq ft, matches the global auto retailing standards. The product offerings at Reliance Autozone include a comprehensive range of car and bike accessories, electric scooters, tyres, batteries and many more useful accessories.

Reliance Autozone would be retailing electric scooters by offering multi-brand choice under one roof. Tyres and batteries are the other two focus areas at Reliance Autozone. Mr Arun Dey, Chief Executive of Reliance Autozone, said, “This new format provides a one-stop solution to automobile owners who face inconvenience by having to crisscross between various touch points for accessories, batteries, tyres and lubes etc. at different locations at different times.”

Reliance Autozone has ambitious plans to capitalise upon this business opportunity. This accessory store format shall offer consumers a comprehensive range of products in a pleasant and conducive retail ambience at best value along with quick fitment facility. The range shall include accessories of utility, audio, videos, safety, car care, upholstery, navigation systems etc. The range also includes an exciting array of products sourced from overseas.

Source: Hindu Business Line

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Timex to launch three luxury brands

Posted by retailigence on August 30, 2008

Timex on Monday said it plans to introduce three high-end brands in India in the next few months, besides launching its iControl watches, which connect Apple’s music device I-Pod, very soon.

The company is planning to launch Ferragamo brand by next month while another luxury brand Marc Ecko would be introduced by September. It has recently started marketing the Nautica brand.”We  are launching two-three luxury brands in India starting with Ferragamo next and Marc Ecko by September. We will also bring iControl very soon,” Timex Group India Managing Director, Mr Kapil Kapoor told reporters here.

“We will first introduce iControl in the metros and later take it to smaller cities. It will be priced at around Rs 5,000,” he added. Timex is also looking to expand its retail foot-print in the country, with adding 40 stores in the current fiscal to ta ke the total number of outlets to about 100. It currently has 62 stores. “We will open new stores in smaller cities like Lucknow and Coimbatore,” Mr Kapoor said. The company opens all its stores through the franchisee model.

Source: Hindu Business Line

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Reliance Retail to bring in 250-year-old Hamleys

Posted by retailigence on August 30, 2008

Reliance Retail has clinched a deal with the world’s largest toy shop, Hamleys. India’s largest private conglomerate will be the partner in one of the biggest international expansions by the 250-year-old Hamleys till date. Sources said Hamleys and Reliance have struck a franchise deal to open large format stores. ET first reported on the discussions between the two players on March 21. Reliance Retail is believed to have pipped the Wadias and Kishore Biyani’s Future Group in snapping up the deal.

The Mukesh Ambani-led Reliance and the Icelandic investor Baugur Group-controlled Hamleys are expected to make a joint announcement shortly. Reliance had also explored an arrangement with the US chain Toys ‘R Us before deciding to strike a deal with Hamleys.

Hamleys’ foray into a potentially big market like India could be interesting. The seven-storey Hamleys store on London’s Regent Street is one of the top tourist draws. Despite its cult appeal globally, Hamleys has largely restricted itself to the UK market. It is believed that Reliance plans to open four standalone Hamleys stores in the first 24 months, which is a significant expansion move for the marque UK brand. Baugur is also working on expanding Hamleys to Middle-East, Russia, Turkey and China. Hamleys operates a standalone store in Jordan’s capital Amman. While the local stores may not be as big as the London flagship, it will surely be unlike anything seen before in India’s toy retailing space. The Indian stores will be around 25,000 sqft and will be opening doors in metros like Delhi, Mumbai and Bangalore initially. With Hamleys selling toys of several brands besides its own, Reliance had little elbow room to work on an equity structure. Indian regulations don’t allow foreign players to hold stakes in Indian companies that sell multiple brands. It, however, allows foreign retailers to hold up to 51% in a company in India if it sells goods under a single brand only.

The Hamleys deal marks Reliance’s third engagement with a major international brand in recent times. It has unveiled JVs with iconic apparel retailer Marks & Spencer and optical chain Vision Express.

Source: Economic Times

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