Apparently, emerging retailers are increasingly adopting IT solutions for merchandising and supply chain needs, multi-channel requirements, store-level innovations and planning as well as for business intelligence solutions. Interestingly, even mom-and-pop stores are starting to invest in tech infrastructure.

So much so that IBM has identified the mid-to-small chains to drive its retail business vertical in India. The company has set up a business development team in India to deploy its own solutions as well as those developed by its ecosystem partners like SAP and Oracle.

During the event, about 60 retail jewelers from around the country discussed best practices in areas such as marketing, operations and training. In addition, 31 couture-level retailers were recognized as the first class of America’s Best Jewelers.

America’s Best Jewelers is a program launched by NJN this past spring. The program includes an online survey that asks retailers about their best practices in customer service, financial management, marketing, operations and staffing/human resources.

Shaker Heights, Ohio-based MPI Group conducts and analyzes the survey to determine whose business practices are the best and, thereby, a winner of the America’s Best Jewelers designation.

A total of 264 jewelers completed the survey, 93 percent of which are independent retailers.

In addition to the survey and America’s Best Jewelers designation, the program also contains a conference component, which brings these jewelers together with their peers to share best-practice tips.

Areas covered during Saturday’s conference included customer service, financial metrics, marketing, operations and staffing/human resources.

Some of the tips shared included:

—Write a weekly column or appear on a regularly broadcast radio show to get your store’s name out in the community.

—Use a mobile billboard or strategically place your billboard near a business where people are more likely to spend longer amounts of time, such as a car wash.

—Hire a firm to conduct “video mystery shopping” in your store to see how your salespeople stack up.

—Conduct some form of employee training on a daily basis.

—Add a handwriting-analysis segment to your hiring process.

For a complete list of the couture-level retailers chosen as America’s Best Jewelers, and for more information about the program, visit its Web site, NationalJewelerNetwork.com/NJN/Resources/ABJ.jsp.

Leading the way is Kishore Biyani-led Future Group that is opening unisex salons, gaming centres  and family entertainment centres at its nine Big Bazaar Supercentres. Similarly, Vishal Retail is  planning to start salons within the premises of its 120-odd outlets.

Shoppers Stop has introduced its brand of cafes, bookstores and spas within its stores to make  consumers spend more time and entice them to buy more.

Shoppers Stop vice-president (marketing) Vinay Bhatia feels such options are important to retain  customers. “A customer now looks for more than just shopping. We realise that convergence of retail  and entertainment is the way to enhance a shopper’s experience. We are constantly trying to get  things that are ‘shopping plus’. So we have Crossword, our bookstore, Cafe Brio & DesiCafe and  other such specialty stores within Shoppers Stop stores to enrich consumer experience.”

The Raheja Group-promoted Shoppers Stop is putting its best foot forward to attract shoppers. The  company has added small spa centres, allowing consumers a quick foot massage. Then there are  bookstores and cafes along with several other initiatives to attract customers and make them spend  more time inside the store. It has also introduced a ‘Monsoon Makeover’ offering that promises free  makeover for people who walk in.

Following suit is Vishal Retail that will begin by opening salons within the premises of its stores. Says  Vishal Retail chairman RC Agarwal, “The initiative is in the planning stage. There is a definite market  for these services.”

Spencer’s Retail is also going the extra mile to ensure visitors stay longer and are entertained well.  Across the stores, there are live kitchens on weekends that have Japanese, Thai and Italian chefs.

Then there is Books & Beyond, Spencer’s brand of bookstores that has periodic book reading  sessions and launches. Stores are also lined with interactive LCD screens that have both original  and borrowed content entertaining people.

“We do a business of Rs 100 crore every month. This is 5% of our revenues. Today, consumers  expect to feel relaxed and entertained. This is important for a chain like ours that wants to be  differentiated. This concept, however, may not have much potential with discount chains,” says  Spencer’s Retail marketing V-P Samar Singh Sheikhawat.

There are still others like Subhiksha Retail MD R Subramaniam who think it wise to continue retailing  what they currently do. “We are staying focused on what we sell, groceries, mobile phones and  medicines. There will be a foray into consumer durables and IT products soon.”

Gaining Share

▪ Future Group is opening unisex salons, gaming centres and family entertainment centres at its nine  Big Bazaar Supercentres.

▪ Vishal Retail is planning to start salons within premises of its 120-odd outlets.

▪ Shoppers Stop has introduced its own brand of cafes, bookstores and spas within its stores to  make consumers spend more time at the store and entice them to buy more.

▪ Spencer’s Retail has set up live kitchens and book stores to ensure customers spend more time.

▪ Smaller players like Subhiksha Retail think it wise to continue retailing what they presently do.

“During inflation, customers always prefer to shop in a value retail outlet,” says KE  Venkatachalapathy, business head of Megamart. The increased footfall is reflecting in the sales  figure of Megamart as well. While he refuses to divulge exact numbers, Venkatachalapathy says  there has been a 20% increase in sales compared to the corresponding period last year. Discounts  here vary from 10% to 30%.

“Inflation and discount retailing are directly proportional. Customers normally tend to flock to value  retail stores where they are assured of good quality at reasonable prices,” says Raghunath  Narayanan, MD of Chennai discount retailer Europa.

Discount retailing, a post World War II phenomenon, is an established market practice in countries  like the US. This concept is now picking in India, which is a price sensitive market. Discounts have  always worked well with apparel and factory outlets in the suburbs of many Indian cities and shopping  hubs like Fashion Street in Mumbai and Marathalli in Bangalore which acquired sobriquets as an  export market bear testimony to this. Now inflation has come to the aid of retail majors.

The Loot, a discount chain, has seen footfalls increase by at least 10% in the last few weeks across  its 35 stores in 15 cities. “In Mumbai alone, our footfalls are up by 17% in the last three weeks. In the  first quarter, we had sales of Rs 15 crore. In the next quarter , we expect this to climb upto Rs 25  crore,” says Jay Gupta, MD of The Loot.

In apparel, children’s wear seem to be the biggest beneficiary. “As children, especially toddlers.  Normally outgrow their clothes pretty fast, parents are flocking to discount stores such as ours more  than ever before,” says Narayanan. While the discount offered by the apparel and luggage chain is  between 25 and 30%, in kids wear it’s 30%- 40%.

The consumer base is also widening. “From a largely middle class audience, I now see people  getting out of cars like Honda Accord and Mercedes Benz outside our stores,” says Gupta.

The rush to such outlets is also due to the fact that regular apparel retailers and multi-brand outlets  mostly offer off season sale only twice in a year. “But in times of inflation and continued price rise, the  consumer is looking to cut spends across categories on a daily basis,” says Venkatachalapathy.

Brand Factory too has seen a 5%-7 % increase in our sales over the past few months. “While we  cannot say that entirely due to inflation, we cannot rule out that it has played a role,” says Vishnu  Prasad, CEO of Brand Factory. 

Cafe Coffee Day (CCD), ethnic apparel wear Biba and Samsonite, are some of the players looking to expand in Tier-I cities. High rentals were a stumbling block in most locations. That has changed now. “On an average, we have managed to bring down rents by about 15-20%. There have been instances where the reduction has been as much as 50%,” says Samsonite director (global) Ramesh Tainwala.

The correction in some locations in Delhi has been as much as 80%. Though, Samsonite opened only three new stores in 2008, it plans to add 35 stores by 2009 end. Biba is also using the slowdown as an opportunity to expand. “We have renegotiated our rentals for 10 properties in the last one week alone,” says Biba Apparel director Sanjay Bindra.

In one of the existing stores in Navi Mumbai, it managed to negotiate its rental and brought it down by 50%. Lower rentals are now helping it expand to prime areas in New Delhi, where it has just one store. Today, Biba has 64-standalone stores across the country and plans are on to add 30 more over the next year. A property broker, on the condition of anonymity, cites the case of a Hyderabad mall where the rent was at Rs 300 per square foot, a year ago. That is now down to just over Rs 100 per square foot. Likewise, rates in a prominent mall in south Mumbai have reduced from Rs 600 per square foot to a third at Rs 200 per square foot. Like a host of other players, CCD, too, plans to use the fall in rentals to expand in Tier-I locations.

“Rentals in malls would have fallen by 20-30%, while on high streets it would have fallen by 15-30%. Falling rentals are definitely helping our expansion plans and helping us enter locations where we were not present earlier,” says CCD director Alok Gupta. He adds that it takes less time to negotiate with developers. The plan is to establish a stronger presence in south Mumbai and Delhi where developers were unwilling to negotiate on rents. CCD, which currently has 800 outlets, plans to ramp it up to 1,000 in the next financial year. A large part of it is scheduled to come up in the 115 cities where it already has a presence.

BUILDING BLOCKS

Correction in some locations in Delhi has been as much as 80% Samsonite plans to add 35 stores by 2009 end Biba, too, plans to add 30 stores over the next year Biba has managed to negotiate its rentals and bring it down by 50% CCD, which currently has 800 outlets, plans to ramp it up to 1,000 in the next fiscal.

The UK continues to lead the world as the most international retail market, as Europe maintains its ability to attract the world’s top retailers, according to new research.

The 2009 edition of the How Global is the Business of Retail? report from CB Richard Ellis mapped the footprint of 280 top global retailers across 67 countries, exploring the globalisation of the retail industry at national and city levels to highlight differences between sectors and regions, identifying trends in the patterns of global retail expansion.

The UK outperformed other major European economies such as Spain, France, Germany and Italy to take the number one position within the top 15 most international retail markets, with 58% of all retailers surveyed present.

Europe continues to dominate, containing eight out of the top 15 most international retail locations, although emerging economies such as China, Russia and the United Arab Emirates have gained significant ground in the past 12 months. China, Russia and Japan performed particularly strongly in the 2008 global retail ranking, achieving sixth, seventh and 14th positions respectively. Middle Eastern countries have also seen a marked increase in retailers entering the region. The UAE jumped two places in the ranking, from sixth in 2007 to fourth in 2008, with 45% of international retailers present compared to 39% in 2007. Saudi Arabia also made a notable leap up the rankings from 28th position in 2007 to 15th position in 2008, with 37% of international brands present.

The US registered in 10th position globally, with 39% of international retailers present. This can be attributed, at least in part, to the size, maturity and strength of its domestic market. US retailers tend to penetrate their vast national market extensively before considering international expansion. Canada made the strongest rise up the global ranking of any country in the Americas in 2008, moving into 13th position from 18th, with 37% of international retailers present, a 6% increase from 2007.

Peter Gold, Head of EMEA Cross Border Retail at CB Richard Ellis, says, “Despite the global economic slowdown, many retailers, especially cash-rich private companies, have continued their expansion plans throughout the past 12 months. Our survey of 280 retailers saw them expand their international presence by an average of 12% in the past year, being represented in a further two more countries than in the previous year. This was primarily driven by clothing, footwear and accessories retailers from Europe. Interestingly, retailers have continued not just to internationalise, but to globalise – 40% of all new store openings in 2008 were outside the retailer’s home region.

“It remains to be seen whether this pace of expansion into emerging markets will be sustained through 2009 and 2010. Yet the globalisation of the retail industry is undoubtedly an ongoing long-term trend which is not going away,” adds Gold.

The report analysed which types or categories of retailers have the strongest international presence, and found that luxury retailers dominate global retail in terms of their footprint around the world. Some 90% of luxury retailers have a presence in more than 10 markets and 40% are present in more than 30 countries.

The company says that as well as being environmentally friendly, the system allows customers to keep track of their expenses and retailers have the option of placing additional advertising on the online receipts.

Shoeboxx says that it is in negotiations with several major retailers to set up pilot programmes of the service. The basic business model would involve it being free for both retailers and consumers to use; with the company behind the site making money by charging only for enhanced services, such as corporate customers who want to use it as an expenses tool.

The free application, available to any Sortprice.com enhanced merchant with an existing Facebook account, works hand-in-hand with their product listing on Sortprice itself and allows them to build a virtual store right on Facebook. Merchants can have their full inventory available to Facebook users for shoppers to peruse and compare prices on, complete with photos and direct links to their own Web sites, according to Sortprice.

The tools give retailers complete control over the ‘look and feel’ of their stores, with dozens of choices for color schemes, an option to upload category images, and the ability to add a slogan to their page as well. Sortprice also included an extensive FAQ section to guide merchants through the process of configuring their stores while offering tips for promoting the application to internal and external audiences.

On the user side, Sortprice’s unique Drag & Drop feature for the merchant pages is now compatible across all web browsers, facilitating each user’s visit. Shoppers can now quickly and easily compile a “wish list” of desired items from a particular merchant’s store. These lists are viewable to all users and are the foundation for a truly interactive shopping experience. Visitors can comment on other users’ wish lists, indicate particular items that they “like”, and even invite friends and family to check out wish lists or specific products.

To learn more about the Facebook store application, visit http://www.sortprice.com/facebook_store

According to a study by The Nielsen Company, modern retail dropped prices by more, or increased them by less, for more product categories than traditional retailers, or kiranas, between the last quarter of 2009 (Oct-Dec) and the first quarter of 2010 (Jan-Mar).

“The power of modern retail lies in the scale and efficiencies which we have built over the years,” says Kishore Biyani, CEO of Future Group that operates retail formats such as Food Bazaar, Big Bazaar, Pantaloon and KB’s Fairprice stores.

The Nielsen Shop Census study compared prices of 47 commonly used items including toothpastes, washing powder and confectionery. Modern retail dropped prices by more, or increased them by less, than traditional retailers for 29 product categories while traditional retailers did better in 18 categories.

It collected data from 16,000 stores (11,000 urban and 5,000 rural, in both modern and traditional retail) in 462 towns and 1,427 villages.

During this period, the rate of inflation, as measured by the Wholesale Price index, was hovering around 10% and food inflation was more than 12%.
In the past two years, modern retail has been able to significantly cut operational costs related to real estate rentals, energy costs and increase persquare-feet productivity of employees leading to savings in people costs.
They also launched private labels to get a better grip on selling prices and profit margins, and some savings were passed onto customers.

Higher collaboration with small and medium suppliers as well as distributors of large FMCG companies helped them cut costs in transportation and logistics.

Efficiencies of scale helps one source the goods closer to the manufacturer says Mr Biyani. In 2009, Big Bazaar sourced 26,000 tonnes of rice, 4 crore pieces of clothing, 20 lakh suitcases, 36 lakh mixer-grinders, 45,000 manufactured beds, 20 lakh bedsheets and 19,000 LCD TVs. Each of these figures will be higher by a minimum of 30% for the year 2010, he says. “Such large sourcing allows us to get better prices directly from manufacturers and producers.”

Big Bazaar is the largest player in the segment contributing over 33% of modern retail sales. Other top retail formats competing with traditional kirana for essential purchases include Reliance Retail, Aditya Birla Retail’s More and Spencer’s Retail.

Kumar Rajagopalan, CEO, Retail Association of India, says strong sourcing power helps modern formats offer better prices. “They have done away with the extra level of intermediaries,” he says.

Meanwhile, grocers too are working on protecting their turf by leveraging on their strengths such as customer relationships, home delivery, credit facilities and expanding their product portfolio.

Top FMCG companies such as Hindustan Unilever, Procter & Gamble Marico and Godrej have begun adopting kiranas, teaching them category management and effective merchandising to counter big retailers and their private labels.

Bharatiya Udyog Vyapar Mandal (BUVM), the biggest national-level association of mom-and-pop stores, has formed city-centric associations that negotiate directly with manufacturers such as Unilever and P&G and do away with any middlemen.

This helped kiranas offer 5-20% discounts on MRP of branded products like detergents, shampoos soaps, oil and atta.

“When prices rose due to inflation some kirana stores offered customers the option of paying in instalments apart from extending them credit for a month,” says Vijay Prakash Jain, secretary general of BUVM that comprises 17,000 state and district-level associations across 27 states.

Interestingly, kiranas managed the prices of items such as detergent bars toilet soaps, shampoo, packaged tea and iodised salt better than modern retail, according to the Nielsen study.

Currently, traditional retail, both grocers & chemists, constitute over 95% of total sales in the country.

Modern trade at just 3-5% of the total national industry sales, had grown aggressively at over 35-40% contributing to over 15-25% sales for most consumer goods companies last year.