| From the Editor's Desk |  | |
Is Food Retailing the toughest?
Food retail spends being 55-60% of overall consumer retail spends in India, food and grocery retailing seems like an attractive market for organized retail. Food is also a high frequency purchase that brings in footfalls, which can be leveraged to cross-sell and up-sell other products. So why are most of the organized food retailers in the country struggling? Here's why. Globally, food retailing is a notoriously low margin business. Many retailers make negative margin on product, but survive because of the positive cash flow (customers pay for product immediately, but retailers pay their vendors only after 30 or 60 days). Add to this the extremely competitive kirana store in India which is ubiquitous, convenient, provides credit, home delivery and other forms of customer service and is well-supported by the FMCG majors. Add in factors like high dump rates and wastage and food retailing becomes extremely difficult to turn profitable. Private labels offer a silver lining in the potential to tap an under-branded market and make higher profit margins. Food retailers should also focus on differentiated product and factors like hygiene and deploy well-targeted promotional strategies to lure customers.
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| News: Apparel, Specialty, CDIT ... | | |
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Trent Ltd, the Tata subsidiary which operates the Westside chain, has seen its second-quarter net profit more than double, even as it registered strong sales growth. For the three months to 30 September, net profit was up to Rs.120m ($2.7m), from Rs.52.6m last year, while sales surged up 26.4% to Rs.1.73bn ($39m). For the first half, net profit was up 92.9% to Rs.200m, while sales grew by 27.6% to Rs.3.26bn ($74m). During the second quarter, Trent opened one Westside store, one Fashion Yatra store and one Sisley store. It now operates 47 Westside stores, as well as nine outlets under the Sisley and Fashion Yatra formats. |
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Retail major Future Group is expecting to clock revenues of Rs 55 crore from Holii, a joint venture with luxury leather goods maker HiDesign, in the next two years, according to Ashni Biyani, Director of Future Ideas. "The brand is a little over a year-old in the Rs 580-crore organised ladies' handbag market in the country, and is only a small part of the Future Group now. We imagine Holii as a Rs 55-crore brand in the next two years," Biyani said. Currently offering handbags, mobile pouches and wallets for Indian women, Holii will shortly move on to coin pouches, vanity cases and belts, even as it looking at options like adding watches and sunglasses, way forward. |
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Retailer Shoppers Stop ( SHOP.BO) expects to open 4-5 Hypercity stores in FY12, Govind Shrikhande, Managing Director said. The firm had posted a 44 percent in September quarter net profit to 174 million rupees while its gross retail turnover stood at 5.09 billion rupees. The company's board has approved splitting each share into two. |
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Italian luxury sportswear brand Paul & Shark, renowned for their designer yachting and golf wear, is ready to take on Chennai in December 2010 and Mumbai in March 2011. After these, a second outlet in Delhi is on the cards. The company feels that with a growing youth population and higher disposable incomes, India promises to be an attractive market. |
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Electrical components maker, Havells India is eyeing a 25% growth in its revenue in FY11, the company President, Sunil Sikka said. Havells India plans to raise the number of franchisee retail stores to 100 by March 2011 and 200 by December 2011, from the current 64, he said. The company plans to launch the 'Sylvania' brand in new and emerging markets in Asia and Africa, and cut exposure to European markets. Havells India has reported an eight percent rise in July-September net profit to Rs. 58.57 crore on net sales of Rs. 690 crore. |
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The $3.5 billion conglomerate Aditya Birla Nuvo Ltd is in the midst of leveraging its brick-and-mortar operations of Madura Garments, its garments business, to an online shopping format, engaging with competitors like the Kishore Biyani-led Future Group, which recently rolled out its net operations. With online apparel shopping gaining momentum in the country, the diversified conglomerate has decided to personally cater to its customers. "We are looking at rolling out our online shopping format in the next couple of quarters," said Rakesh Jain, Managing Director, Aditya Birla Nuvo. |
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| News: Food & Grocery, QSR ... | | |
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KFC, one of the biggest restaurant chain in the world, expects to open 500 outlets by 2015 in India. KFC India (Director Marketing) Unnat Varma said that KFC will be present in 75 cities by 2015 and that it will explore bigger cities first before going to smaller markets. Varma also said that the company will increase its presence in states like Maharashtra, Tamil Nadu, Orissa, Uttar Pradesh and Rajasthan. |
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With the aim of offering a unique, convenient and interesting way for people to give gifts to their loved ones, Pizza Hut has recently introduced gift cards. Preloaded with cash, the Pizza Hut Celebrations gift cards are plastic cards which can be bought for any denomination, from Rs 250 to Rs 5,000, at any participating Pizza Hut restaurant. The recipients of these gift cards can redeem the value loaded on the card over multiple visits at Pizza Hut outlets. The gift cards can be purchased online. |
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In a bid to reflect its strategic positioning, Sodexo has changed the names of its two main activities. The food and facilities management services has been renamed 'On-site Service Solutions' and service vouchers and cards will be known as 'Motivation Solutions'. Sodexo aims to double its revenue globally by 2015. |
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| Retail Trends | | |
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India's moves to open up its multi-brand retail sector to foreign investors is a headline issue for U.S. President Barack Obama's visit to India, closely watched by retail giant Wal-Mart Stores Inc. India allows 51 percent in single-brand retail. Overseas investment in multi-brand retail - modern supermarkets - is only allowed in wholesale. Some questions and answers on opening up India's retail sector: |
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Between the dozen or so big chains, including Pantaloon, Reliance Retail and all outlets that do a VAT billing, organised retail is estimated to be around $22 billion, a figure that's around 5-6% of the total retail market of close to $400 billion in the country today. In August 2008, McKinsey had estimated that by 2015, India would become a $450 billion retail market, comparable in size to Italy ($462 billion). The total retail market is estimated to be growing at 7-8% and the share of organised retail is projected to touch 15% by 2015, from 2% in 2006 when the market was estimated at $250 billion. |
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 | With gold prices remaining steadfastly at their peak, Dubai's jewellery retailers are giving one last promotional push to get buyers into the shops. This coincides with next week's Diwali celebrations. "Demand usually peaks on Dhanteras, the first day of the festival -- this year is not going to be an exception," said Firoz Merchant, Chairman of Pure Gold. Another retailer, Damas, has brought out collections for Diwali priced from Dh1,990 to Dh19,990 and backed up by gifts with each purchase of starting from Dh500. The campaign, which runs until Sunday, is also offering buyers payment plans through banks at zero per cent interest over six months. |
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Social commerce is the online equivalent of hanging out with one's friends in a mall. It encompasses the whole gamut of online collaborative shopping activities such as shared lists, ratings, user reviews, advice and recommendations, and shared coupons. Someone, somewhere, has already bought what you are about to buy and is willing to talk about it. It benefits retailers because they will have increased and more engaged traffic and higher conversions. It benefits users because a friend who has tested and tried something is a much more authentic and reliable source of information than a billboard. |
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| Retail Insight | | |
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| Mobile Retail is a Reality: The Increasing Mobility of Consumers Has Retailers Engaged |
| Aberdeen Group |
Mobile Retailing or mobile channel initiatives are defined as processes and tools that enable brand/product marketing, search, order, and payment functions on the consumer's mobile phone or similar devices at retail locations or otherwise. One of the reasons for the continued acceptance of mobile as a retailing medium or channel is ensuing retail environment which must respond to the customer need for differentiated digital shopping experience and convenient point-of-purchase decisions. |
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