Saturday, March 24, 2007

India Inc joins summer gold rush

THE HEAT is on, April is knocking on the doors. And marketers — from budget airlines and travel agents to cola biggies and AC makers — are drooling. Summer of 2007 promises to be packed with big action and big new launches... and the buzzword is the “young consumer.” “Companies will also be focused on kids, as they would be enjoying vacations and are the perfect target audience,” feels Harish Bijoor, CEO, Harish Bijoor Consults Inc. From Les Elfes, a company that’s organising two-week adventure camps in locales such as Switzerland and Australia for kids at Rs 1.5 lakh per participant, to Coca Cola’s ‘Red Lounge’ - a destination for the youth to hangout, surf the net, chat and watch TV — the kids will be woo’d in a big way this summer. And if it’s good to be young, it’s even better to be cool - specially in the sizzling summer. So from Lacoste’s French Riviera collection in innovative light fabrics, to funky, floral Tees and tank tops from Adidas, the cool quotient will be high in the branded fashion apparel section this summer. “All things cool and breezy will be the flavour of the season,” says Mr Bijoor. This is also set to be the summer of a big splash from the organised retail segment. “Summer 2007 will see new products being launched and jostling for space in the big retail outlets. In fact, we will see the launch of at least 15 international brands. This summer is also expected to see two to three times growth in mall traffic over last summer, partly because of new malls coming up in all the metros,” feels Prasenjit Roy, CEO In-Store Consulting Services, a marketing company that specialises in tracking shopper behaviour in the retail space. Unni Krishnan, country manager, Brand Finance, India, too agrees that this summer is going to see arrival of retail and a number of luxury brands. “We’ll see a lot more new launches especially in organised retailing,” predicts brand consultant Jagdeep Kapoor, chairman and managing director Samsika. But it’s not just new products at the malls, summer has brought with it new combo offers for Indian outbound tourists too, who are are growing in numbers. Air fares may be going up to shave off a part of your summer holidays budget but despite that hot destinations include Sri Lanka with South East Asia or Maldives and Mauritius with South Africa and Turkey.


Everybody loves a good summer
The sizzling season is just round the corner. From colas to ACs and from Switzerland to Bermuda...here's an update on the hot deals that Indian companies have lined up

John Sarkar
IT’S that time of the year again when the sun never seems to set. With global warming pushing up the mercury every year, most people dread the onset of summer. But there are some, to whom sunny days mean a superb business opportunity. No surprise that beverage majors are gearing up for the hot and humid season with a vengeance with a slight twist. While colas used to be big earlier, health drinks are currently in. The Indian soft drink market is worth about Rs 6,000 crore per annum. But here too, innovation is the key if you have to capture a share of the consumer’s throat. Coca-Cola has big plans for the oncoming summer and is all set to roll out a radical concept, The Red Lounge experience, in Pune. Coca-Cola officials say: “Red Lounge is a one-stop destination for the youth to hangout, surf the net, chat, watch TV and experience our entire portfolio, all under the same roof.” Other plans include beefing up their online presence with a one-stop interactive, online destination for Coke consumers in India. The innovative Internet platform has over 4 lakh plus registered users in the age band of 19-24 years. Coca-Cola has also launched new campaigns for each of its brands. Venkatesh Kini, VP- marketing, Coca-Cola India, says: “Over the years, we have made ‘thanda’ and refreshment synonymous with Coca-Cola. The new campaign ‘Sabka Thanda Ek’ strengthens the universal appeal of the brand. It offers a higher order of emotional benefit of bringing people together.” The cola giant has also launched a juice brand Minute Maid Pulpy Orange supported by a 360-degree marketing communication plan involving road shows, extensive experiential sampling sessions in markets, offices, malls, colleges, and a range of contests. “The roll out of the naturally refreshing, orange beverage with real pulp has been designed to extend the company’s market leadership in the juice drink segment,” adds Mr Kini. If Coca-Cola is there, Pepsi can’t be far behind. PepsiCo India has also launched its new drink Mirinda Sorbet and is planning to follow it up by reaching out to its consumers through radio tie-ups and activation plans across Modern Trade & BPOs. Pepsico officials say, “The sampling activation, planned across 22 cities will aim at targeting nearly a lakh consumer across channels. Mirinda Sorbet is a premium offering targeted at young consumers, ranging from students to first jobbers.” Dabur Foods is also going into overdrive with its summer preparations. Sanjay Sharma, GM, sales and marketing, Dabur Foods also reveals his company’s plans for summer: “We have reinvented our ‘Real’ brand to create a stronger differentiation from competitors’ products. In the juice segment 10 years back there was only one flavour that is mango. We have come out with new flavours like pomegranate and ‘mausambi’ this season. We also plan to target teenagers in the 13-19 age group with our new brand, Real Twist. For the health conscious we have launched a Soya drink too. With rapid expansion of distribution we intend to penetrate more towns and cities this season.” Similarly, Rasna also has a few aces up its sleeve. Penetrating small towns and cities seem to be the flavour of the season. Piruz Khambatta, CMD, Rasna says. “We plan to enter towns with product offerings that cost as less as 50 paisa. During the group eight matches of the World Cup we will launch a new campaign with a new Rasna girl,” he says. If beverage companies are planning strategies, can ice-cream companies be far behind. The Rs 800 crore branded ice cream market in India will see players grappling for market share. Currently the number one player in the market Amul is ready with innovative products in its probiotic and diabetic range. Jayen Mehta, AGM, marketing, Gujarat Cooperative Milk Marketing Federation (GCMMF) says, “There are 5-6 crores diabetic persons in India. Since we are first to introduce the innovation, we expect to build the market and generate additional business of Rs 30 cr this year.” In the beverage segment too Amul has plans to launch three new drinks in the summer of 2007 - Amul Kool Koko - in the branded ready to serve chocolate drink segment, Amul Kool Salted Lassi and ready to drink Nutramul. HLL, meanwhile, is playing its cards close to its chest. But by the look of things they have major plans for summer. An HLL spokesperson says, “For some of our product categories like ice creams there is a heightened seasonal demand. We will use this opportunity to launch product innovations, trade schemes and on ground consumer activities. These activities will help to strengthen brand equity and preference in consumers.”
Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Wal-Mart’s Japan unit posts fifth year of loss. Tough times ahead for global retailers.

ALMOST five years since Wal-Mart Stores landed in Japan, the world’s largest retailer has yet to find itself on steady ground. Its 53% - owned local unit Seiyu has posted five straight years of losses, has not paid a dividend for a decade, and has lost three quarters of its stock market value since Wal-Mart first invested in the Japanese supermarket chain. The US retailer quit South Korea and Germany last year to focus on China and other promising areas, prompting speculation that it would also desert Japan in the manner of France’s Carrefour, which sold its stores to Aeon in 2005. Some analysts say Wal-Mart should either give up on Japan, where it has invested a total of more than $1 billion, or buy the whole of Seiyu to speed up an overhaul. Others say Japan’s $1.1 trillion retail market — the world’s second largest after the United States — is too big to pass up for Wal-Mart’s international expansion dream. “I believe that Wal-Mart believes they’re in Japan for the long haul and right now, that looks like the right bet,” said Darrell Rigby, head of the global retail practice at consultants Bain & Co. While the Wal-Mart chain is yet to get a steady footing in Japan, there seems to be crisis raging in the Carrefour group. A major stake-holder, the Halley family, is reassessing its holding in the retail chain. There is a possibility of a sale of the Halley holding.


Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

American fast-food chains adopt snappier menus

Eateries Experiment With Cheaper Snack Innovations


FAST-food restaurant chains, eager to increase sales during the sluggish afternoon hours, are working hard to satisfy snack cravings with an array of smaller, cheaper products. For fastfood chains, selling snacks is an opportunity not only to boost overall sales, but also to make better use of existing employees and real estate. “The typical restaurant makes a vast majority of its business in a fouror five-hour time period, and there are arguably 24 hours in a day in which we can eat,” said Bob Goldin of food research firm Technomic. “They are saying, ‘you know, let’s figure out ways to even it out.’“ Between 1998 and 2006, the amount US consumers spent on snacks rose 39% to more than $27 billion. That number is still growing, though not as rapidly. Snack sales are expected to total about $30 billion by 2011, according to market research firm Euromonitor International. In the last two years, both McDonald’s and Yum Brand’s KFC chain have introduced blockbuster products targeted specifically at snack time. For McDonald’s, the $1.29-Snack Wrap, a strip of grilled or fried chicken wrapped in a tortilla that was introduced last year, has been one of the chain’s biggest launches ever. And at KFC, the 2005 launch of the 99-cent Snacker sandwich — a fried chicken strip on a sesame bun — is credited with reversing a prolonged sales slide at the chicken chain. Now, other chains are following suit. Earlier this year, Taco Bell introduced a taquito, priced at $1.79, that it is marketing as a snack. More recently, Jack in the Box introduced a sampler of stuffed jalapenos, mozzarella sticks and spicy chicken bites for $3.99, though customers can get a smaller serving for $1.79. CKE Restaurant’s Carl’s Jr and Hardee’s chains are adding boneless Buffalo wings, priced at $3.19 for three and $4.69 for five, to their menus. In addition, CKE Restaurants marketing chief Brad Haley said its addition of hand-scooped ice cream milk shakes in 2005 helped increase late afternoon sales, as kids looked for a snack after school. McDonald’s said it is working on other ways to boost sales outside of traditional meal times. Don Thompson, president of McDonald’s US business, said at an investor conference this week that the company’s plan to introduce more speciality coffee drinks such as lattes and iced coffees would draw in customers at different times of day.

Courtesy: EconomicTimes
For more detail on Retail India visit:
http://www.retailindia.tv/

Eau dear, at what price haute water?


There’s a drinking water revolution happening out there. But in India, we’re still bottled up about it

AT 360 o , the favoured haunt of Delhi's terminally trendy lunch crowd, we had the misfortune of being seated next to a high-maintenance kitty party this Monday. All 12 kitties, er...ladies, were slim, dressed in obviously branded designerwear and nibbled delicately on Caesar's Salad or vegetarian sushi as they chatted loudly about trips to Paris and Milan. But what caught my eye wasn't their identical matt makeup or similarly coiffed hair but that they seemed to have replaced Diet Coke with...water! As the magenta-labelled bottles of Himalayan weren't opened fast enough to keep up with their (go)sipping, many of them just tap-tapped briskly on their stilettos to the bar and topped up their glasses with paani and baraf. As I picked up my own glass of water feeling distinctly au courant, I remembered some water related incidents that may have been prophetic! There's been a significant change in attitudes towards water in the west, at least in the past decade that I've been observing it. Has India caught up with this water mania? Slumming it at our favourite downbeat Chinatown eatery in London's Soho area in the mid-1990s, it was always a pain to get water. It became a wearying cantation: “Could we have water, please? Water. Still water. Plain tap water in fact.” It needed several repetitions before glasses arrived and we said it so often that it was indelibly imprinted on our four-year-old's mind. One day he embarrassed us all by repeating it ad verbatim (including the weary tone) to a bewildered friend who asked him what he would like to drink... Cut to London 2006. At the local Waitrose, the non-alcoholic beverages section had as many brands of water (including Evian in 2-litre packs) as colas. And as we lunched with our now-teenaged son at the fashionable restaurant called The Ivy, more bottles of Hildon spring water stood on celeb tables than expensive wines. Iqbal Wahhab of London’s Cinnamon Club says, “Water sales are massive and growing. In London we’re a boozy lot, so it’s wine and water on restaurant tables. New Yorkers don’t drink much wine at lunchtime so they pour bottles of water like there’s no tomorrow.” Little wonder then that beverages lists at many tony eateries included water sections too - still, artesian, spring, sparkling, mineral, glacial, you name it. They are even categorised regionally - European, American, Asian water - and by taste and texture! In fact, Wahhab insists tht a “small bottle of water is a must-have accessory along with an iPod and a Blackberry.” But before you coo, “Aaah, how eco-friendly!”, imagine how many tons of carbon gases are emitted flying those distinctive bottles of “fresh spring water” across the world to fashionable haunts. That's why, even as bottled water sales worldwide have hit $1 billion, there's a counter-revolution in cool cities like New York in favour of plain tap water; many topselling brands are nothing but bottled, purified municipal water anyway! But since our rising bottled water sales are largely due to fears about the quality of the stuff supplied by our municipal water utilities rather than fashion, tap water drinking has expectedly not caught on. In India, therefore, we have a piquant situation. We want to be seen drinking the right stuff but premium imported brands Perrier and San Pellegrino have come - and gone. Evian is still hanging in there. Only just. The first two probably didn't succeed because they were sparkling and we prefer still water; we keep the fizzy stuff for whisky or nimbu. Evian (still) passes muster, but that's because its price imbues it with a special aura! So, as hotels and top notch restaurants in India spruce up their wines and spirits lists, water brands are conspicuous by their absence. Water’s just not haute enough here, yet say Delhi and Mumbai restaurateurs. So water drinkers stick to desi mineral water brands . Will India ever join the international drinking water revolution? Sadly, for that we have to depend on quality improvement by sarkari water mandarins. Eau dear.

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Acer aims for third slot in Indian PC market

ACER, the number four PC vendor globally, is gunning for the third spot in the Indian market with its current position hovering between fourth and fifth.The top three in the are held by HP, HCL and Lenovo respectively, with the fourth and fifth spot alternating between Dell and Acer.“We are looking at achieving the number three position in two years,” said, Acer India MD WS Mukund.The firm has been in the Indian market since 1999 with a manufacturing plant in Pondicherry. It provides an array of products ranging from laptops, desktops, servers and peripherals. According to IDC India, in the overall client PC (notebooks and desktops combined), HP retained the top slot with a market share of 21%, followed by HCL a 14% and Lenovo at 9% in terms of unit shipments. The total shipments in the Indian market crossed 5 million units in 2006, recording 25% year-on-year growth with notebook PCs touching nearly one million units. Acer India is looking at expanding its retail presence in the major metros as well as smaller towns. Currently it has around 252 retail outlets in 109 towns and this would be expanded to over 350 outlets. Besides, it is also looking at expanding its presence in the large format retail stores and has been in talks with a host of retail players.The Acer official said most of its growth would be coming outside the top 16 cities in India as there is higher adoption of PCs in the B & C category towns from home and SME segment. Mr Mukund said the growth drivers for PC will be the latpops and form factor, those PC which would consume lesser space as well as being aesthetic.Acer traditionally has been very strong in the laptop segment and is the number one player in 17 countries. Even IDC has projected that 2007 is also expected to be the year when overall PC shipments through retail outlets, especially the notebook PC form factor would see a higher traction.

Courtesy: EconomicTimes
For more detail on Retail India visit:
http://www.retailindia.tv/

Brand getting lost in private-equity haste


The trade unions hate them. Investors love them. Germans refer to them as locusts. The Economist describes them as a ‘superior model of capitalism’. They may soon get their hands on even bigger ones like Sainsbury’s and Boots. Suddenly, private equity is everywhere

THE concept is relatively straightforward: a partnership of business brains raises a load of investment capital from pension funds, wealthy individuals and their own pockets. Then they go out and buy companies, often taking them private in the process. As soon as possible after this, they sell the company or float it on the stock market and make a sizeable profit for everybody involved. The term private equity simply connotes the fact that the acquired companies are not publicly listed on the stock market, but privately owned through the money raised from investors. The absence of public shareholders also means that the industry is notoriously secretive about its aims, operations and profits. Essentially, there are two types of private equity. The first, venture capital, focuses on buying a stake in a small business and injecting extra capital and expertise to grow the company’s value. But it is the second, in which a fund acquires a big company, which is making all the headlines. Central to any private-equity acquisition is the premise that the purchased company can be sold for more than it was acquired in a relatively short amount of time. The problem comes when you begin to explore exactly how this profit can be realised. In some cases, notably New Look or Travelodge, the privateequity fund actually recognises that the brand has far more potential than its current owners appreciate. Money is invested in the brand and the company grows. Unfortunately, there are other, frankly more reliable, methods enabling these groups to make a profit on their newly acquired company. They can identify a big brand such as the AA, which has lots of overheads and infrastructure and a relatively captive consumer base, and fire 3000 staff with no immediate negative impact on sales and a very positive one on profitability. They can then make a huge performance-based profit and even more money when they offload the streamlined company, which may or may not prosper in future. It really is a tale of two equities. On the one hand, it can represent a very beneficial force for brand revitalisation and investment. On the other, it can resemble the old assetstripping era of the 80s.Confusingly, most private-equity funds can play either role, depending on which will deliver the most profit. There are no black or white hats in this game, just lots of grey suits. I’ve worked for private-equity firms several times during big-brand acquisitions. I can happily report that, like every other major player in the corporate finance world, they pay extraordinarily well and don’t have the faintest clue about branding or brand equity. Indeed, whenever the dreaded ‘b’ word comes up, noses wrinkle and eyeballs head skyward. Pace is the big danger for brands in this new era. The success of private equity depends upon rapid acquisition, fixing and divestment; often, the whole process takes just a matter of months. During these frenetic ownership cycles, it’s all too easy to forget about brand equity. Our challenge is not to debate the relative merits of private-equity ownership - let’s leave that to the unions and politicians. Instead, let’s help our new masters appreciate (in both senses of the word) the value of the brands they have acquired.

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Fedders Lloyd to become a durables company

FEDDERS Lloyd is reviving the Lloyd brand to become a consumer durables company. The Delhi-based BR Punj group company had over the years shifted its business model to commercial airconditioners, a B2B space. It’s now reviving the consumer brand not only for ACs but also for new categories like electronics and other appliances with a dual positioning in the mass-premium and mass-market segments. According to the strategy, Fedders Lloyd would launch airconditioners, microwave ovens, DVD players and LCD televisions under the Lloyd brand as the categories are growing faster than the overall durables industry. Over a period of time, Lloyd would further expand its presence in televisions though restricting itself to the mid-premium segment. The company is planning an initial investment of about Rs 50-60 crore. All products except ACs would be initially imported. Currently, Fedders has two plants in Noida and Himachal Pradesh while the third plant is coming up at Uttarakhand. The company has roped in Pavan Bhargava as president, who was earlier heading Hyundai Electronics in India. At the same time, former Electrolux India marketing executive Sanjeev Wadhwa has joined as the head of sales & marketing. According to Fedders Lloyd chairman and managing director, BR Punj, “Our change in market strategy reflects the developments in the domestic market which has been on a high growth path. This is especially true for home appliances.’’ The last few years saw Fedders Lloyd focusing on commercial airconditioners targeted at institutions like Railways, defence, mining and telecom markets because it was marginalised in the consumer retail space since the late 90s. Fedders Lloyd had in the distant past also sold refrigerators under the Zenith brand which was discontinued. Zenith however, doesn’t form part of its new gameplan. One of the reasons for Fedders Lloyd’s diversification into other product categories is linked to the distribution challenges faced by single product companies. In the recent past many such companies in the durables industry have expanded their brand across categories which helps in pushing products to dealers while capitalising on the brand extension.

Courtesy: EconomicTimes
For more detail on Retail India visit:
http://www.retailindia.tv/

Madura Garments eyes 3-fold growth next year

MADURA Garments expects to see its business venture with global lifestyle brand Esprit grow three-fold next year as higher salaries and glitzy shopping malls boost demand for premium apparel brands. “This (fiscal) year we’ll post sales of about Rs 20 crore. Next year, we are looking at a figure of about Rs 70 crore as the demand (for premium brands) is growing sharply,” Aditya Birla Nuvo director Vikram Rao said on Friday. Although the global brand is also bullish about the growth in India, it said it would count India and China as its main markets only after it sees the trends for the next five years. Esprit is still focused on Europe and North America as its growth areas. Madura Garments, a unit of Aditya Birla Nuvo, formed a partnership with Esprit, to retail the global company’s products in the women, premium and accessories segments in India. The venture has over 10 stores in India, which will be increased by an additional 15 stores, in the next two years, said Madura Garments president Hemchandra Javeri. “The business will be driven by a combination of new spaces and growth in like-tolike stores,” he added. The $5-billion Esprit is present in 44 countries and manages over 640 outlets globally. “We are optimistic about India , but honestly, we are here for the long term and would like to wait for some more time (to see the growth),” said Esprit chairman Heinz Krogner. A surge in manufacturing and services sectors in the world’s second-fastest growing economy after China, has led to a demand for premium lifestyle products. The trend has also fuelled a growth in the retail sector. According to Morgan Stanley, India’s organised chain-store retail industry is at an inflection point. We estimate it has the potential to deliver around 32% CAGR (compounded annual growth rate) over the next 10 years.” Madura Garments had joined with Esprit to boost its brand portfolio in segments such as women’s ready-to-wear, premium relaxed clothes and accessories. The move aims to offer Indian shoppers all the latest merchandise at prices “almost similar to those retailed in Dubai or Hong Kong and at the same time,” Mr Javeri added.


Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Modi Revlon to launch mass brand Color N Care

COLOUR cosmetics player Modi Revlon plans to take on Garnier, the mass hair colour market leader, with the launch of its mass brand, Color N Care. While this would be Revlon’s first India-specific brand, it would also mark a detour from Revlon’s premium positioning. Priced at Rs 120, Color N Care would compete with Garnier, which commands about 75% share of the mass hair colour market, and Godrej. About 60% of the Rs 200-crore hair colour market is dominated by mass brands priced around Rs 100. “It is the first India-specific brand from Revlon. If it succeeds, we would like to have the brand rights to distribute it in other markets,” said Umesh K Modi, chairman, president and CEO, Modi Group. The Rs 150-crore Modi Revlon, a 74:26 joint venture between Modi Mundipharma and Revlon, has hair colour brands like Colour Silk, Top Speed and Colour Stay, priced at Rs 250, Rs 375 and Rs 450 respectively. With the launch of Color n Care, it is targeting a 15% market share in the first year. The new brand would be promoted through a mix of mass media campaigns and instore promotions through its beauty advisors. For Modi Revlon, about 20% of its revenue comes from the hair colour business. It has a 12% market share of the total hair colour market. The company is also planning to strengthen its skincare range with the launch of a mass brand in the anti-ageing category and launch of a new premium hair care brand. It currently has Flex in its haircare portfolio.

Courtesy: EconomicTimes
For more detail on Retail India visit:
http://www.retailindia.tv/

Mall mania gives a lift to elevator companies

IT’S THE mall mania and it looks like the escalator manufacturers are taking a stairway to heaven. The long strip of moving stairways that relieve shoppers of many a legwork is a Rs 400-crore business in India. The coming three years is expected to be nothing short of heaven for escalator manufacturers, as an additional 500 malls would become operational. As per retail experts, around 4,000 escalators would be required over the next two years to cater to this demand. Leading manufacturers like OTIS, Kone, Schindler, Thyssen and Johnson are pulling up their act by ramping up operations and bringing in latest technology and product features.Close to 2,000 escalators were sold in 2007. Around 50% of the demand for escalators came from malls, and the rest from airports, hotels, convention centres and railway stations. OTIS is by far, the largest player in the world, with a market share of 35% and the Indian market is not expected to be any different. One unit of an escalator (that leads you from one floor to another) typically costs between Rs 12 to Rs 25 lakh. The price varies based on the length, brand, technology and other specific requirements. For instance, the cost of an escalator increases as it gets installed at higher floors and so on. There are no ballpark estimates as to the extent of escalator and elevator that would go for, say, a million square feet of mall space. This is because the mall designs are different and so are the traffic estimates. Says Dharmesh Jain, CMD of Nirmal Lifestyle: “Mall designers mainly decide on the placement (of the escalator), while consultants decide on the vendors. We have requirements for 100 escalators for the 3.6 million sqft of retail space and we are most likely to prefer one vendor per project”. OTIS recently got orders for 62 elevators and 28 escalators for the 1.1 million sqft Dreams mall in Mumbai. A section of the industry feels that the West is more scientific in its approach towards determining the optimal number of escalators and elevators for a mall than the local players. “While the primary role of the vertical transportation system is to enable least resistance (in flow of traffic), the current design and selection priority focuses on making it part of the attraction, even to the extent of totally neglecting the primary role,” says TAK Mathews, associate, TAK & Associate, an independent vertical transportation consultant. While proper placement of escalators is no assurances of sales for its tenants, the attempt is to ensure the shoppers are forced to see a whole range of tenants before exiting. For instance, an anchor tenant, who could be a multiplex or a food court, could be placed at the top floor to drive traffic. The escalators could be placed in such a manner that the shoppers are forced to see a whole range of tenants on their way up and down. This not only provides maximum exposure to the sub-tenants, but also leads to impulse purchase. But then, the game plan could for a toss if a holistic view is not taken. Mr Mathews cites the example of how, in a certain mall the anchor tenant placed strategically at the top-most floor didn’t get the intended traffic as only two lifts were installed creating congestion downstairs. People preferred to stroll on the ground floor instead.

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Car sales in India may see slowdown next fiscal

MOTOWN’S top-gear run may slow down by 50% in the new financial year and the first signs are already visible in March. According to top auto financiers, the new fiscal should see car sales slowing down to 12-15% from the current trot of well over 20% as the interest increase and price mark-ups pinch auto demand. Says Kotak Mahindra Prime CEO Sumit Bali: “The slowdown will become visible from April onwards and we expect growth to come down to 15-17% from 28-30% earlier.” Dittoed HDFC executive vice president Ashok Khanna: “The rate hikes and price increases will definitely impact demand and growth will likely come down to around 12-15%.” Auto financiers say March, which is usually a good month for car sales due to depreciation demand, is already beginning to feel the hit. “This month has been bad so far,” says Khanna. “The sentiment is down and heavy tax returns have also dampened spirits.” A company or a business can write off 10% or 20% of the asset if they purchase a car in March. Some even split their car purchases in case of multiple buys to claim 10% depreciation in March and another 10% in September. Bali, for his part, feels March will pick up speed in the last week like 2006. “March has depreciation demand though it has been rather slow in the last 10 days but it should pick up in the fourth week,” he says. “But the slowdown will be apparent from April.” Industry experts expect the growth slowdown in new cars to perk up sales in the used car business. “Interest rates have also gone up for used cars but as budgets shrink people are more willing to settle for the latter so demand will be better and growth may not come down,” says Khanna.Car sales registered a nearly 25% growth in the April-February period this year. Including utility vehicles and multipurpose vehicles, the total tally was up 23%. The growth pep came after last budget cut excise on small cars to 16%. Last fiscal, cars closed with 7.5% growth while the entire passenger vehicles market clocked 7.6% growth.


SPEED BREAKER
New Financial year to see sales growth slowing down to 12-15% from 20%
March considered good month for car sales owing to depreciation demand is already feeling the pinch
Rate hikes and price increase to impact growth
Used car sales likely to pick up

Courtesy: EconomicTimes
For more detail on Retail India visit:
http://www.retailindia.tv/

Britannia Industries launches fortified biscuits

Britannia Industries and Global Alliance for Improved Nutrition (GAIN) on Friday signed an MOU to address malnutrition. Britannia has developed a specially designed 5 mg iron-fortified Tiger Biscuit, which in association with Naandi Foundation and GAIN, will be used to supplement the Andhra Pradesh government’s midday meal programme for 1.2 lakh school children. ‘’This is in line with Britannia’s central theme of promoting a healthy lifestyle,’’ says Mr Neeraj Chandra, VP, sales, marketing & innovation.

Courtesy: EconomicTimes
For more detail on Retail India visit: http://www.retailindia.tv/

Kishore Biyani reshuffles top management with an eye on Future

KISHORE Biyani’s Future Retail, India’s largest retail house, is undergoing a major restructuring exercise to gear up for competition from the likes of Reliance and Bharti-Wal-Mart. Mr Biyani’s cousin, Rakesh Biyani, is taking over as head of the retail business from him and will be responsible for the four main retail formats of the company—Big Bazaar, Food Bazaar, Central and Pantaloon—each of which will function as independent profit centres with new operational and finance heads. So far, Kishore Biyani was directly looking after these businesses. All existing new businesses like Home Solutions, Depot, Wholesale Club and all future joint ventures and alliances will be under Damodar Mall, who will take charge as the head of incubation and innovation, and will report directly to Kishore Biyani. In addition, the heads of the group’s other four verticles—Future Brand, Future Capital, Future Media, and Future Logistics—will directly report to Mr Biyani. When contacted by ET, a Future Group spokesperson confirmed these developments and said, “As we grow, there is a need for accountability and such restructuring will ensure better top line and bottom line growth.” With the restructuring in place, Future Retail’s flagship venture Big Bazaar will now be headed by Rajan Malhotra. The two other important businesses of Future Retail—Central and Pantaloon—will be headed by Vishnu Prasad and Sanjeev Agrawal, respectively. This restructuring will free Kishore Biyani from day-to-day operational responsibilities and will enable him to focus on the big picture.


Courtesy: EconomicTimes
For more detail on Retail India visit:
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Retailscape Is Now All Set To Cash In On The Growing Retail Boom In India

PROFESSIONALS infected with the entrepreneurial bug and deciding to take the plunge is by now the most oft heard news. But what’s different about Manish Shukla, founder of Mumbaibased Retailscape, was his decision to set up a retail strategy, design and merchandising outfit to enable brands to work closely with the general trade — millions of shopkeepers and outlets dotting the Indian retail landscape. The initiative may look a tad surprising, given that today, modern trade is the flavour of the day and everyone seems to be predicting the demise of the corner shop. But Shukla after having invested nearly a decade in building his outfit knows that brands will need to work even more closely and help them upgrade. And here’s where he believes Retailscape fits in.Armed with an MBA degree, Shukla’s career followed the usual trajectory. Working with JWT, Gillette, Bausch & Lomb and Coca-Cola India, Shukla learnt the ropes of brand marketing. However, it was his stint at Coke as head of merchandising which exposed Shukla to the kind of work done on retail and merchandising globally. On a study tour to Mexico in 1995 to understand why the country has the highest per capita consumption of soft drink in the world, Shukla noticed that even people living on the street were consuming Coca-Cola. “I did a retail study on how Coke was an essential part of their daily life and similarly developed a programme for India. However, people here were not ready for it,” says Mr Shukla. Having seen how retail and merchandising could increase offtake, he began looking for a someone who could offer the same expertise in India. What he found was that there was no one. There was a vacuum and Shukla decided to fill it by starting his own outfit in 1996. Initially, it was consulting MNCs like HLL and Pepsi on retail plans for brands like Kwality Walls and Pepsi. On Kwality Wall, Shukla recollects that he recommended the use of tricycles and push carts to sell an impulse purchase item like ice cream. “This we did ten years ago and today nearly 75% of Kwality Walls sales now comes from tricycles and push carts,” he states. His success with HLL and Pepsi meant that word soon spread and brands like Bharat Shell, Bacardi, Parker Pens, Heineken and Evian to name a few wanted to avail of Retailscape’s services. Shukla says one of the challenges he faced initially was hiring people as work was pouring in. “No one in the industry had expertise, so I had to pick up people from backgrounds like sales, FMCG and event management and train them.” From a one-man operation, Retailscape today has a total headcount of nearly 80 employees across India.From pure strategy, Retailscape ventured into design and execution as well. Shukla say that through out the focus has been helping brands upgrade their value proposition towards the general trade. “We have done work for the modern trade, but while organised retailing is growing, the largest chunk of business still comes from general trade. So, even if modern trade becomes 15% of the total trade in the years to come, 85% still comprises of the general trade,” he says. So the work involves enabling companies understand how to leverage the general trade by raising their benchmark. Initiatives like Super Value Stores and Unicare programme conducted for HLL involved upgrading the grocer outlets and chemist stores through signages, planogramming and proper layouts. Retailscape, from a single office in Mumbai, has today ramped up to branches across the major metros in India. And using a hub-and-spoke model, it has created a network where it can reach nearly 30 cities across the country. “And all this has been done because the clients want to take our services across India,” he says. Shukla states while there is a need to acquire new clients, the focus more importantly is to retain clients like LG, Motorola and HLL by continuously offering them more and more services. “From strategy to doing retail audits to design and execution, the entire business model is geared towards meeting the clients’ requirement. From a turnover of few lakhs in the beginning, Retailscape today has a turnover of Rs 5 crore and is expected to grow almost 100% in the coming time.While Retailscape is on a fast growth track, Shukla has another ace up his sleeve. A retail academy which will be the one stop retail resource centre for independent and small retailers. For this, Shukla is sewing up an alliance comprising of knowledge inputs from IIM-A, technology from IIT Powai, various retail associations across the country and companies. “The idea is to develop relevant content and infrastructure which will enable the small retailers stand the onslaught of modern trade and the resultant changes it’s bringing to the marketplace,” he states.

Courtesy: EconomicTimes
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Friday, March 23, 2007

THE FRESH (RETAIL) REVOLUTION IN INDIA


The once ubiquitous push-cart vendor’s days look numbered. Many of the big retail players are setting up fresh fruits and vegetables and daily needs stores close to your homes, with innovative products and convenient options like shopping on the phone

As you enter the Reliance Fresh store on Coles Road in Bangalore that opened on Thursday, amongst the first things that catch your eye is this whole range of trays on a rack, neatly packed with cut vegetables. There are cut vegetables for English salad, for Mexi, spicy corn salad, for sambar. For harried working couples and lazy cooks, there are also options like cut vegetables for pulav, for Chinese fried rice. For those who hate peeling pineapples, there are peeled pineapples nicely wrapped in thin plastic filament. For those who want a quick bite of a watermelon, but don’t want to buy a full watermelon (which is typically the only option you have), there are similarly wrapped watermelon slices. The rest of the airconditioned and neatly arranged store, with nearly 150 varieties of fruits and vegetables, is equally distinctive. Till now, the fruits and vegetables section in organised retail formats have constituted a small fraction of the store space, the only exceptions being Namdhari Fresh, and cooperative initiatives like Hopcoms and Safal. In Reliance Fresh, this proportion is 40% to 50%. In Spencer’s Express — part of the RPG Group’s Spencer’s Retail — which too opened its first store in Bangalore this week in RT Nagar, this proportion is 40%. It goes up to 75% if you include all perishable items like milk, paneer, idli batter and fresh flowers, says Spencer’s Retail vice president (marketing) Samar Sheikhawat. The idea of this emerging retail format, as you perhaps guessed, is to tap into your daily needs, and wean you away from the local vegetable seller, grocer and push-cart vendor by providing a better ambience, a wider range of products, innovative offerings and the assurance of quality. A host of players — Heritage Foods, Fabmall/Trinethra and Subhiksha, apart from Reliance and Spencer’s — are now beginning to set up these neighbourhood stores of an average size of 2,000 sq ft to 3,000 sq ft (the traditional kirana store is no more than 100-500 sq ft). Since they are smaller than supermarkets, they find it easier to find locations closer to your homes. S Jagdish, vice president (retail) in Heritage Foods, says fruits and vegetables constitute about 22% of the average monthly household consumption expenditure in urban areas of Rs 4,300. Food and groceries as a whole accounts for about 50% of the monthly expenditure. “This is the rationale for us setting up exclusive food and grocery stores, with at least 30% of space reserved for fruits and vegetables,” he says. Greater options Most players are trying to build distinctiveness by offering a wide range of products. In traditional stores, you wouldn’t find more than 30-40 varieties of fruits and vegetables. “Reliance Fresh will have some 150 varieties,” says Gunender Kapur, chief executive of Reliance’s foods business. There are products you would normally not see, things like Chinese cabbage, jalapeno, broccoli, American corn, colour capsicum, avocado and anchovies. There are both packed and loose options. About 80% of buyers still prefer the loose option, says Spencer’s Sheikhawat. Most Indians still like to touch and feel the products. Some customers are wary of packed products partly because they are seen to perish faster. When the vegetables breathe, they cause humidity inside the pack that could lead to fungal growth. “But there are others who think fewer people would have touched the packed stuff, so they prefer that. Besides, it’s very convenient for those like working couples who are in a hurry,” says Sunil Chandran, chief executive (customer operations) of Reliance (Karnataka). Reliance has thin plastic bag rolls around the store which customers can pull out to put their vegetables or fruits into. There’s even a weighing scale next to the racks for anybody who wants to check the weight before going to the cash counter. Most are planning to offer the home delivery option, and even of taking orders on the phone. “But phone-ordering will require us to build a lot of confidence in people’s minds about our quality,” says Heritage’s Jagdish. Competitive prices The prices in the newer stores are competitive with general market prices. In some cases, it is actually lower, but whether these will be sustained remains to be seen. Most of these players eliminate part of the ‘middle-men’ costs and reduce wastage by handling the products better. But against these benefits are the signficantly higher infrastructure and retail costs, compared to those borne by the roadside vendor. The cut vegetables are likely to offer higher margins. While shredded carrots are sold by Reliance in a packed form at Rs 3.60 for 250 gms (or Rs 14.40 a kg), the same carrot in its loose form is Rs 11.50 a kg. Company officials say that part of this difference is on account of greater wastage when a shredding machine is used. Farm connect Most players are investing heavily in backend infrastructure and supply chain. There are collection centres across the state, where farmers come and deliver the produce. Spencer’s has its own huge farm in Hoskote. There are processing centres and distribution centres closer to the store locations. The processing centres are where the products get cut and cleaned, most of those operations untouched by human hands. Big investments have gone into setting up cooling facilities — in every location and in the transport vehicles — to minimise wastage and increase shelf-life. “Normally, a lot of the capsicum and tomato are broken in transport. But we provide crates to farmers, which ensure proper handling,” says Chandramouli, head of agri-business in Reliance (Karnataka). THE OUTLETS Reliance Fresh: Koramangala, Banashankari, Indira Nagar, Frazer Town, Malleshwaram, Rajarajeshwari Nagar, Basveshwar Nagar, Modi Hospital, Mahalakshmipuram Layout, Mathikere, Hebbal Kempapura Spencer’s Express: RT Nagar

courtesy:timesofindia

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Retail biggies’ surplus takes escape route to wholesalers

YOU have heard of yen carry trade. Now showing the retail ‘cash-n-carry’ trade. Mukeshbhai Chhadwa, a wholesaler who also runs a retail shop in Masjid, was witness to a curious sight a couple of months ago. Tempos carrying extra cases of ketchup, condensed milk, baby foods and other such products — the goods made by companies like HLL, Dabur, Nestle and Heinz — were doing the rounds of the wholesale market, selling at a discount even to the wholesale prices. Typically, wholesaler gets the best prices from the manufacturers. Soon the penny dropped. These goods were essentially excess inventory from companies in the modern organised retail. Says Mr Chhadwa, “I didn’t want to buy these products as my sales and demand from the customer are fixed. Besides, in areas like Masjid, it’s difficult to sell the kinds of items like condensed milk.” Unknown to some companies and — if some wholesalers are to be believed — with the tacit understanding of other companies, a parallel, informal cashand-carry market is taking shape. Both organised retailers and the stand-alone formats in Mumbai have been regularly moving stock back into the retail market. According to sources in the wholesale market, truckloads of goods come at night to Crawford Market and Masjid, but sometimes even individuals come in from outside Mumbai with two-three cases by train so they can avoid octroi. This happens predominantly with FMCG categories like foods and personal care. The scale of these operations isn’t small. Says a wholesaler who doesn’t want to be identified, “Every month we’ve bought goods worth Rs 30-40 lakh from the people who dump it back into the channel. There must be at least 50 wholesalers and semi-wholesalers doing the same.” This implies that goods worth Rs 15-20 crore are re-routed every month. Says former CavinKare COO KS Ramesh, “Dumping stocks back into the channel is a regular method to get rid of the excess inventory. But it’s mainly companies that don’t have a strong management direction that would let this continue.” Heinz India CEO Nilesh Patel said that he wasn’t aware of this but he was insistent that it wasn’t the company’s doing. Says Mr Patel, “This practice isn’t something that the company encourages. At the end of the day, both the small retailers and the consumers are getting hurt, and the brand suffers as well.” A reply from HLL to ET’s queries said, “There are adequate controls on our trade schemes and plans. The inference drawn is incorrect and speculative.” It’s not difficult to see where this comes from. Many companies offer trade discounts to both organised retailers as well as stand-alone formats. Typically, the modern trade including retail chains like Big Bazaar, Foodworld as well as the stand-alone self-service stores get a trade discount of up to 4% on FMCG on an average. For example, a jam costing Rs 100 to a kirana store will cost the big chains Rs 96 or less. This is where the arbitrage opportunity shows up. The big retailer sells his ‘unsold’ stock to the wholesaler at Rs 97. The wholesaler sells it to the kirana at Rs 97.5. The kirana guys, who would have otherwise had to buy the stock at Rs 100 and sell it to you and me at Rs 102 and make a profit of Rs 2, is now able to make Rs 4.5 per bottle of jam. This is great for everyone. The big retailer clears his unsold stock and keeps Rs 1 per bottle. The wholesaler makes 50 paise risk-free profit and the kirana person makes an additional Rs 3.5, which is also risk-free. Sometimes, discounts increase substantially if there are promotional offers running in retail stores. This is when huge stocks are then bought and dumped into the wholesale and semi-wholesale market in Masjid and Crawford Market in Mumbai and the price differential is huge between MRP and the actual price sold. For instance, according to a wholesaler, a hypermarket was offering Heinz Ketchup for Rs 49 for 1 kg bottle, whereas the MRP was Rs 85. The hypermarket shipped cases over to Masjid and sold them at exactly Rs 49 per bottle. Says a wholesaler who doesn’t wish to be identified, “I bought 150 cases of the ketchup. Local retailers bought these for Rs 52 per bottle, but they wouldn’t have got it for less than Rs 72 otherwise.” Another cause for this is the trade push involved, specially for stand-alone modern format stores. Companies often stuff the channel to show higher product sales. A Mumbai-based stand-alone retailer says, “Company salesmen often tell us to buy 20 cases of a certain product when we can at best sell only 10. I have to put the remaining 10 back into the retail channel, and retailers buy from me.” Eventually, encouraging such arbitrage will show up in the company’s bottomline. While sales volumes might continue to rise, the net revenues would actually be lower, since very few of the goods would sell at MRP. In fact, retailers do attest to the fact that a company, if diligent, could easily detect faults in sales volumes, specially if small retailers do not require fresh stock. But the stand-alone retailer says, “No company salesperson has even asked to see the monthly sales figures from my store.” There have been stray cases of companies actually transferring salespeople after they’ve stuffed the channel, but the retailers claim that these cases are few and far between, and sales targets are still most important, no matter how they’re met.


Courtesy: EconomicTimes
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Durable retailers target smaller formats , Tata’s Croma & Videocon’s Next In Talks With Outlets For Revenue, Stores Growth

IN A bid to ramp up revenue growth and stores growth, national durable retail chains like Croma, a Tata-Woolworth joint venture and Next, led by the Videocon group, are learnt to be in discussion to buy out several smaller retail outlets across the country. The large formats are in talks with players like Sumaria, Sony Mony and Kohinoor in Mumbai, Shubham in Bangalore and Shah’s and TMC in Hyderabad although expectations of high valuations may delay deals, sources said. However, relatively larger chains like the Vijay Sales in Mumbai and Vivek’s in Chennai are believed to be opting for private equity investments to expand and eventually tie up with international players like Dickson or a Best Buy. Organised retail chains like Next, Croma and Vijay Sales did far more brisk sales than the smaller players during Gudi Padwa this year (traditionally considered an auspicious time to buy). Industry experts say consumers now increasingly prefer to make purchases in larger specialised formats which have put the smaller players under tremendous pressure for volumes. According to industry estimates, organised durable retailing is expected to grow from 4% last year to over 10% this year while the overall industry growth is pegged at 8%. “Given that the business is about scale, we are looking at acquisition possibilities with like-minded chains. But at the same time we are equally focused on setting up new outlets across the country” said Croma CEO Ajit Doshi. National players are stepping up expansions at a time when heavy-weights like Reliance, Godrej and Pantaloon’s Home Solutions Retail are setting up specialised national durable retail formats with a focus on high-volume business models Being price-competitive in a technology-led market, understanding the Indian consumer’s requirements, handling the back-end supply chain and distribution systems is a complex process especially given the country’s geographical diversity. Currently smaller chains have realised they need to expand operations. Says Kohinoor proprietor Ram Mewani: “Unless we scale up and get competitive, it would be tough to be in business in the long run. We are open to tie-ups but we need to get the right price.” “We are in discussions with smaller chains for a complete buy-out. It is crucial to expand faster to keep growth rates high” said a senior official from Next. Spends in promotions and offers are shifting to retail formats, which are bargaining for higher margins from manufacturers.


NEW GAME BEGINS IN RETAIL
Target formats: Sumaria, Sony Mony and Kohinoor in Mumbai, Shubham in Bangalore and Shah’s & TMC in Hyderabad

Smaller players under pressure as consumers prefer to shop in larger formats

Larger chains like Vijay Sales in Mumbai and Vivek’s in Chennai may opt for pvt equity investments to expand and later go for tie up with international players

Courtesy: EconomicTimes
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Top 5 AD Duration on Television for Brands

Courtesy: EconomicTimes
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iLabs invests Rs 23 crore in pharma retail chain MedPlus

Private equity firm iLabs has invested Rs 23 crore in Hyderabad-based pharma retail chain MedPlus, formerly branded as Aushadhi. MedPlus will utilise the funds for expanding its operations and venturing into health care clinics and laboratories in residential areas.

Courtesy: EconomicTimes
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Luxor to open 100 designer stores in four years

Writing instruments maker Luxor will open 100 retail outlets across the country in the next four years at a total outlay of Rs 100 crore. “The objective of opening such stores is to offer customers a complete range of the luxor products ranging from Rs 5 to Rs 50,000,” company’s executive director Pooja Jain said after launching second outlet under the brand name Luxor Signature. She said the company would reach out to customers of all age groups by offering them an interactive and global shopping experience through these outlets.

Courtesy: EconomicTimes
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Sony PS3’s India launch on April 27, to cost Rs 39,999

Consumer electronics major Sony on Thursday said it will launch its much-awaited gaming console Playstation 3 in India on April 27. The company has priced the 60 GB model of its gaming console at Rs 39,990, Sony said in a statement. Additional gaming titles from publishers including Electronic Arts, Namco Bandai and Sony online Entertainment would be available for users at a price of Rs 2,799 per game.

Courtesy: EconomicTimes
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Fieldfresh to supply to retailers next fiscal

Fieldfresh Foods, the Bharti group’s joint venture with UK’s EL Rothschild, would begin supplying to domestic retailers next fiscal, apart from upping the ante on exports. The company did some trial exports to UK, Europe and the Middle East this fiscal. FieldFresh has about 4,000 acres under cultivation in Punjab and Maharashtra where it grows wheat, rice, legumes, grapes and mangoes. “We did trial exports to Europe, UK and the Middle East this year. We would start sizeable exports next fiscal and also supply to domestic retailers,” said Bharti Enterprises vice-chairman Rakesh Bharti Mittal. Asked if the Bharti-Wal-Mart retail venture would get preference over other retailers, Mr Mittal said, “We would like to supply to all retailers and Bharti-Wal-Mart would be one of them.” FieldFresh plans to start trial farming of vegetables in Himachal Pradesh and European carrots in Rajasthan next fiscal.

Courtesy: EconomicTimes
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Gitanjali Group launches Sporteratti range

Integrated diamond jewellery manufacturer, Gitanjali Group, has launched a sports range, Sporteratti, to coincide with the ongoing cricket World Cup. The sports collection consists of a wide range of pendants, depicting popular sports played in India. The jewellery is created in gold and diamonds set in black and transparent polymer. The collection also features a diamond studded cricket ball, which would be presented to the best Indian player as well as the best international player of the ongoing cricket tournament.

Courtesy: EconomicTimes
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Reliance Retail to open 11 stores in Bangalore

Reliance Retail is all set to expand its operations in South India with the opening of 11 `Reliance Fresh’ pilot stores at one go across Bangalore on Friday. Company executives said more stores would be opened in the city in the near future. The company’s president, foods business, Gunender Kapur and chief executive, customer operations Sunil K Chandran said it’s looking at opening Reliance Fresh’ stores in the cities of Mysore, Hubli-Dharwad, Belgaum and Mangalore in Karnataka in the second phase later this year. “We are rolling out to all parts of the country as back-end infrastructure comes up,” Kapur told reporters here. “We are planning to be in all urban parts of the country”.

Courtesy: EconomicTimes
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Commodity trading gets a boost; no VAT on foodgrains, tea in Maharashtra Budget

MAHARASHTRA Budget for the year 2007-08 offers some good news for the commodity market players. From April 1 all commodity market transactions will attract no stamp duty. And what’s more, the duty concession has been offered with retrospective effect. Now, commodity market transactions would enjoy tax breaks that have already been offered to capital market deals. Last year, the state’s decision to levy stamp duty on capital market transactions being recorded in Bombay Stock Exchange (BSE) or the National Stock Exchange (NSE) irrespective of the geographical location of the participants had created quite a flutter in the market. After loud protests that exposed the irrationality behind the decision, the state government withdrew it. Mr Patil on Thursday acknowledged the difficulty the traders faced in the past. “The transactions in commodity markets and capital markets are now carried out on automated systems. In some instances both the broker and the purchaser are from outside the state,” he noted. Recalling his decision not to levy stamp duty in such instances, Mr Patil said: Exactly the same difficulty arises regarding transactions in the commodity markets. I have therefore decided that these types of transactions in the commodity market will be exempted with retrospective effect, from the same date as applicable to the capital market. Mr Patil also spared foodgrains, flour, tea and a few other essential commodities from VAT for another six months.

Courtesy: EconomicTimes

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Eat, trade, but no dancing in the bar ,Cigarettes, liquor to cost more

THERE’S bad news for smokers, tipplers and tobacco chewers in the state. The Maharashtra Budget tabled on Thursday has levied a 12.5% value added tax on tobacco. However, bidis have been spared the tax. From April 1 this year, prices of all tobacco products, except bidis, will go up by 12.5%. “To enable states levy VAT on tobacco and tobacco products, a bill proposing amendments to the Additional Duties Excise Act as well as Central Sales Tax Act has been passed by Parliament,” state finance minister Jayant Patil said before announcing the Budget. The move to keep the bidi out of the tax net may have been driven by the fact that a senior NCP leader — the party Mr Patil belongs to — is one of the country’s big bidi players. Mr Patil rejected the insinuation that bidi was left out of the tax net because of political compulsions. “Normally poor people smoke bidi, and hence the tax concession,” he justified. However, a similar concession has not been granted to country liquor, largely consumed by the poor. Mr Patil’s budget has changed the ratio of manufacturing cost to MRP levied on all alcoholic beverages. The rate of minimum excise duty on country liquor is Rs 55/proof litre, and will rise to Rs 60/proof litre from April 1. In the case of IMFL, the MRP is related to manufacturing cost. At present, if the manufacturing cost is Rs 88 or less per litre, the MRP has been capped at four times the manufacturing cost. Mr Patil has raised the limit to Rs 92/litre or less. For fermented beer, the excise duty is equal to the manufacturing cost while the MRP is 3.5 times the manufacturing cost. Mr Patil has left the MRP for beer untouched, while raising the excise duty to 1.25 times the manufacturing cost.


Courtesy: EconomicTimes
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Dabur India set to buy 60% in Singapore co for Rs 675 cr

IN ONE of the largest overseas acquisition deals in the FMCG space, Dabur India is close to acquiring more than 60% in Singapore-based consumer goods company Unza Holdings for Rs 600-675 crore. If the deal is signed and sealed, it will boost Dabur’s consolidated sales by 22% and make it the third largest FMCG company after HLL and ITC. Dabur India group director PD Narang declined comment on the deal. Unza has 48 brands in its portfolio and a presence in five markets — China, Singapore, Malaysia, Hong Kong and Indo China. The $150-million company is owned by private equity funds Actis, Standard Chartered and the company management with a 30% stake each. While the deal will give the two PE funds an opportunity to exit, it will give Dabur access to 58,000 retail outlets and five manufacturing locations in the Asean countries, including one in China, all of which can serve as low-cost hubs for making Dabur products. At the same time, Dabur will be able to launch its ayurvedic range in the Asia Pacific, which includes the high growth markets of China and Vietnam. The takeover will give the ayurvedic company entry into categories such as laundry detergents, skin care, fragrance, toiletry, splash colognes and hair colour, beefing up Dabur’s domestic portfolio as well.


Unza is among top 3 consumer goods cos in Malaysia
SOMEof Unza’s prominent brands are Enchanteur (toiletry), Eversoft (skincare), Romano (personal care for men) and MaxKleen (detergent). Unza set up shop 27 years ago as a marketing company with one brand. With a workforce of 4,100, it’s now among the top three consumer goods company in Malaysia and among the top 10 in Vietnam with 9% and 6% market shares respectively in the personal care category. Dabur’s consolidated sales are in the region of Rs 2,300 crore and if Unza’s Rs 650 crore ($150 million) are added, it will boost Dabur’s consolidated topline to nearly Rs 3,000 crore. The appetite for overseas acquisitions is growing larger among Indian companies striving to make it big globally. Even those who have seldom attempted an acquisition in the past, such as Godrej Consumer or Marico, have bought brands abroad. Godrej Consumer bought UK’s Keyline Brands, an FMCG company with the Erasmic and Cuticura brands in its portfolio. Last year, Marico acquired haircare brand Fiancée in Egypt from the Ready Group which gave it easy entry in Egypt’s Rs 170-crore hair care market.
Courtesy: EconomicTimes
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Thursday, March 22, 2007

Click before you buy

Social Retailing’s In; Buyers Share In-Store Trial Pictures

MOVE over social networking — it’s time for some social retailing. A new in-store experience that combines social networking and shopping, social retailing is the latest fad among the world’s top-end retailers. Social retailing technology uses an in-store intelligent mirror that can send photos and videos of shoppers in outfit options to their family or friend’s e-mails and mobile phones for some real time feedback. So, even if your significant other couldn’t join you for the shopping, she can see what you are buying, or well, trying. Social retailing will allow customers to see what others have purchased. Retail chain Bloomingdale started using this last week in its stores in the US. While retailers in India are keen to adopt new technology, something like interactive mirrors is too futuristic for them. “Competition will drive them to adopt new technologies both in the back end and the front end, but it’s still early days,” says Technopak chairman Arvind Singhal. Social retailing has been developed and trademarked by US-based IconNicholson and was first demonstrated at the ‘Store of the Future’ conference in the US a few months back. It allows an interactive mirror placed outside trial rooms that streams high-definition videos of shoppers modelling clothes to mobile phones or computers.

Social retailing may take time to catch up in India
ABOUT the use of social retailing in India, Pantaloon Retail MD Kishore Biyani told ET, “We have seen the social retailing product. It is interesting, but in India, shoppers tend to come with their families. It may not be very relevant immediately in India. However, we are looking at other technologies like predictive analysis, mobiles as ecommerce tools, and using artificial intelligence to understand customer behaviour.” Indian retailers will first tackle the back end before getting to the front end. Also, retailers don’t spend too much on technology. Says Mr Singhal, “India is still not that tech-savvy. For technology applications in retail, there has to be a certain scale. Many retailers do not have even the basic ERP and supply chain systems. Most investments will go in the back end before they target the front end. Some retailers are experimenting with cell phone-based coupons that can be redeemed at retail outlets.” Technology spends are typically less than 2-3% of the turnover for Indian retailers. Says Balaji Jagannathan, country director, Sybase India (a software integration company), “Technology adoption by retailers still has a long way to go, particularly at the front end. Airlines have, however, been at the forefront of change. Some airlines such as Jet Airways and Kingfisher are using hand-held terminals for quick issue of boarding passes to travellers who don’t have check-in baggage with them.” Hopefully, social retailing will also get there soon.
Courtesy: EconomicTimes
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India Has Been Unable To Create Youth Brands



We have had Thums Up, Titan, Karizma
NO. India has seen the creation of some great brands for the youth over the past few decades. Those of us who were in our teens in the late 70s and early 80s could hardly think of being ‘cool’ without a Thums Up in hand. The list is long and exciting: Lakme and Elle 18, launched by the Tatas for the teenybopper crowd; Titan Fast Track; Hero Honda’s Karizma and Bajaj Pulsar in two-wheelers, Limca, launched by the Parle Group and subsequently acquired by Coca Cola. Kingfisher from the UB Group stable has of course, acquired iconic proportions among youth within, and beyond, India. Another brand which is in the making is Café Coffee Day, signifying a great gathering place for youth. And why not? India is a young country with over 60% of the population being below 30 years of age. It is critical for companies to talk to the young. They are after all, very early adopters and must have their own brands. Brands like Thumps Up, Limca and Lakme — all of which were born in the 1970s as a result of visionary thinking of their founders — were created specifically to reflect the ‘Can-do’ attitude of young Indians. Each of them provided a wellrounded experience and transcended geographical borders in their appeal. The fact that some of them have been acquired by MNCs to bolster their portfolios is testimony to their enduring nature. The two-wheeler segment is arena that abounds with examples — be it TVS with its Scooty, Hero Honda with Karizma or Bajaj with Pulsar. All of them have created distinct positions in the youth’s mind. What each of them play up are styling and maneuverability. Catering to young college-going students — for whom this was often their first bike — they are also fuel efficient with easy financing options, keeping in mind limited budgets of their Target Audience. Karizma and Pulsar are for youngsters wanting to make a lifestyle statement — sleek and stylish with huge ‘flaunt’ value. Finally, there is no dearth of youth brands in the telecom sector, a sector that itself is relatively young. It is the country’s young who are the first adopters of telephony. Airtel keeps introducing for its young audiences offerings like its MTV Card and Magic. To sum up, the commonality in all youth brands is that they have delved into the mindset of the youth, gained distinct insights and tailor-made their offerings around them. This was then supplemented by great advertising, reaching out to the youth through youth channels. In addition, they were backed by 360 degree activation around youth agglomerations – college fests, multiplexes, concerts, and in recent times, reaching out using the new media like the internet. I therefore, rest my case that India and Indians have been very successful at creating youth brands.
The writer is director marketing, Nokia India
Maggi, Heinz, Puma are surely not local brands
Shailesh Chaturvedi , YES. The “Don’t ever use what Dad is using,” theme has always been at the heart of aspiration of the youth segment. In my college days in the late 80’s, we wore Proline Tshirts, Flying Machine Jeans (FU’s jeans were cooler still), Woodland rugged shoes and looked into Titan watches while waiting for girlfriends. Most of these Indian brands have, unfortunately, not kept pace with the times and have become papa’s brands while Nike/Tommy/Diesel continue to retain parts of their young appeal. Let’s cut to another age. My six-year-old son’s favourite brands are Maggi Noodles, Heinz ketchup, Puma shoes. There are hardly any Indian brands in his preference set (other than Haldiram Bhujia and Kaju Katli). In a decade from now, he will enter the youth segment with hardly any Indian brands in his preference set. When one analyses the trends of the last two decades, one realises that India has not been able to create or sustain youth brands. In my industry (apparel and lifestyle products), jeans and sneakers are two very important categories for the youth. Unfortunately, there are hardly any Indian brands in both these key categories. While Nike/Adidas/Reebok remain leading shoe brands with youth, Levi’s/Pepe/Giordano may be strong brands with youth in ‘popular priced jeans’ segment, while Diesel, CK or Tommy Jeans are the important jeans brands in the ‘aspirational’ jeans segment. There are no important Indian brands to talk about here. Reasons for inability of local brands to connect with youth segment, especially in India, may include the following:
The issue of sustainability:
Youth segment demands constant innovation. Many Indian brands like Proline, Titan, Woodlands, Flying Machine, Liberty shoes started with energy and unique ideas but most of them could not sustain the tempo and the youth brigade migrated to the latest brand on the horizon with the cooler attitude.

The fear of loss of existing core consumers:
As the existing core users of a brand start to age (‘Papa-isation’), their tastes start to change gradually. At the same time, the youth of the time may demand a complete new makeover.

The common language:
Tech-savvy youth endorse a common language in this information age. They follow the same role models, watch the same TV programmes and play with the same games on their wireless game consoles.

Older youth Icons in India:
In most polls on youth icons, one sees the names like Amitabh, SRK, and Sachin. They have already grown old. These idols favour more mature brands.

The writer is CEO, Tommy Hilfiger Apparel, India. These are the writer’s personal views and do not reflect the views of his organisation.

Courtesy: EconomicTimes
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Wal-Mart going for employer branding

MIRED in several employee-related controversies in its home country, USbased Wal-Mart is in search of an able hand which can help build its image amidst Indian employees. The world’s largest retailer is in talks with advertising firms for an employer branding exercise pointing to the fact that Wal-Mart wants to wants to position itself as an employee friendly organisation in India. According to industry experts, employer-branding as a concept has caught up in sectors that need to recruit in large numbers and at the same time facing a huge talent crunch. In a bid to woo and retain talent, companies in the attrition-hit IT sector are aggressively doing employer branding. Retail is expected to be the next sector to join the bandwagon, as it needs to recruit a large workforce. The cash & carry business, where Wal-Mart will invest in a JV with Bharti Enterprises, is human capital intensive. Sources say that to set up the entire pan-India operations which includes sourcing, logistics and supply-chain, the company would need over 2500 people at various levels. According to sources, some representatives of the company have already met 2-3 well-known creative agencies in India. Employer branding would be particularly important for the company in India, as organised retail, as well as the cash & carry business, is in its infancy and there’s a major talent shortage at entry and mid-management levels. The company is learnt to be particularly apprehensive about the high attrition level that the Indian retail sector is currently facing. The company perhaps fears that its global repute may cast a shadow once it goes into full-fledged recruitment drive in India. Internationally, on many occasions, Wal-Mart has been in the line of fire for violating labour laws in the US, Canada and some European countries. In January 2006, the company had to pay $135,540 to settle federal charges that it violated child labor laws in Connecticut, Arkansas and New Hampshire. Still earlier, in March 2000, the company was fined $205,650 for violations of labour laws in one out of every 20 stores in the state of Maine, US. The company is also accused of lobbying with the Canadian government to introduce favourable changes in the country’s labour laws. Sources in the recruitment business in India, however, point out that this has not dampened the spirit of wannabe Indian Wal-Mart execs. “We have been getting enquiries about openings in Wal-Mart on a daily basis. The young Indian executives wants to get associated with the Wal-Mart name,” said an official in a Delhi-based recruitment firm.’’

Courtesy: EconomicTimes
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Reliance Retail loses 2 top execs to Wal-Mart

Reliance Retail (RRL) has lost two senior executives to Wal-Mart signalling another round of hectic movements in India’s emerging retail sector. S Ramesh, head of buying operations at RRL is learnt to have put in his papers and joining Wal-Mart as head of sourcing operations. Another executive Abhinandan Shukla, looking after confectionery, is also learnt to have quit and headed for Wal-Mart. Sources said Wal-Mart is scouring the country for retail talent with attractive terms. Those who’ve got offers said that apart from the 30% flat hike over existing remuneration packages, the world’s largest retailer is also throwing its five-day-work schedule as a bait to lure talent. Many executives are finding it hard to resist as domestic retailers don’t offer such a condition. While Reliance Retail has a six-day work schedule, the Pantaloon group has six-day work schedule twice a month. While the Reliance Retail spokesperson declined comment, the Wal-Mart spokesperson said as a matter of policy, it does not comment on speculations about its recruitment plans. Sources said the war for retail talent would only intensify as Wal-Mart progresses on its business plans in India. “Though the US retailer is not known to be a good employer, even then Indians would like to work with it, for sometime at least, just to get the exposure.” However, S Ramesh who is learnt to be joining Wal-Mart (some say he would be a supplier to Wal-Mart through his own company) was initially heading Wal-Mart’s sourcing office in Bangalore and played a role in increasing Wal-Mart’s sourcing from India which currently stands at around $650 million. Another top executive slated to join Wal-Mart is the former chief marketing officer of Yum! India Arvind Mediratta. He would join the retail major as senior VP of Wal-Mart’s cash and carry business in April. Mr Mediratta would be reporting to Raj Jain who has been designated as president & CEO of Wal-Mart India.

Courtesy: EconomicTimes
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UK retail major keen to invest in Rajasthan

In a bid to increase its presence in India, British property and retail major Liberty International plc Wednesday announced its plans to invest about Rs.10-20 billion in Rajasthan.
Liberty International, which has a joint venture in the country with apparel manufacturer Provogue, is a major FTSE-100 ranking UK-listed property business with investments of over eight billion pounds. The company focuses on premier property assets, particularly shopping centres and other retail, which have high potential, scarcity value and require active management and creativity. David Fischel, chief executive officer of Liberty International, met Chief Minister Vasundhara Raje here Wednesday and announced his investment plans.
The British firm had set up a joint venture with Provogue to develop and manage prime regional shopping centres for the 'growing organised retail sector'. Prozone-Liberty, as the joint venture is known, plans to initially build six shopping centres in India.


Courtesy: EconomicTimes
For more detail on Retail India visit: www.retailindia.tv