Every revolution comes at a price, and as a retail revolution sweeps across India, it is becoming increasingly clear that organized retailers are up against some pretty steep odds.

Reports from last week of a fresh attack on Reliance Fresh (a retail chain promoted by conglomerate Reliance Industries), this time in the central state of Madhya Pradesh, show that of all the challenges modern retailers face in India, the backlash from the so-called unorganized retailers is potentially their biggest yet.

The latest attack on a Reliance Fresh outlet follows similar acts of vandalism against the chain in northern Uttar Pradesh, along with opposition in the eastern states of West Bengal and Orissa. In each case, politicians either directly supported the agitation or voiced opposition to the spread of organized chains, citing the impact on the mom-and-pop shops in the area.

The violence against Reliance’s chain may look like freak incidents sponsored by politicians with their own personal agendas and hungry for headlines. But the fears surrounding millions of retailers and their employees, of losing jobs or being put out of business, are real.

The country’s retail industry was valued at $300 billion in 2006, according to IndiaRetailBiz.com, and employed 21 million people — mostly in retail outlets that occupied less than 500 square feet. As larger, modern retail storefronts open up — sometimes anchoring the malls that seem to be springing up everywhere — and sell wares cheaper, offer a wider selection and deliver a better shopping experience, the relatively inefficient and unorganized sector will struggle against the organized chains.

It is likely that there are more occasions for friction in future, not less, and while several jobs will be created, many others will inevitably be lost. While political will is going to be tested at one level, industry associations probably will have to take a lead in starting a wider debate on the whole issue of modern retailing.

The loss of a livelihood is never an easy issue to deal with, but it will be retrogressive to prevent the evolution of a modern retail network with vandalism and violence.

The timing of the backlash against modern retail couldn’t have been worse for the organized industry. Foreign investment into the sector is still restricted, but there is no shortage of local players eyeing a slice of the potential market.

Rentals are reportedly going through the roof as existing chains expand or new ones enter the fray, escalating costs. Ditto with staff expenses, with the industry working to meet the increasing demand for managerial talent.

Revenue growth for the listed retailers such as Pantaloon Retail and Shoppers’ Stop has been furious over the past several quarters, and analysts expect the growth to continue at a fast pace. But the industry already works with wafer-thin profit margins — less than 5% in fact, while their stocks enjoy premium valuations of more than 50 times forward price-to-earnings estimates.

The last thing either the companies or their investors need is to be targeted for crime.

By V. Phani Kumar

Varahabhotla Phani Kumar is a reporter in MarketWatch’s Hong Kong bureau.

For the first time, Hypercity Retail India Ltd, along with Shoppers’ Stop, has entered into a franchise agreement with the UK-based Home Retail Group, Argos, to offer multi-channel shopping experience to its customers.

Hypercity Retail India would offer this facility under the brand name of Hypercity Argos.

“This unique format of catalogue shopping is definitely suited for metros like Mumbai where retail space is expensive and has been a deterrent for retailers to reach out to a larger consumer base in a cost-effective manner,” Hypercity Retail’s CEO, Andrew Levermore, told media here.

Hypercity Argos’ integrated multi-channel capability encompassing stores, home shopping and the Internet, would provide consumers a new horizon to shopping, he said.

The firm has launched its business with five stores in Thane and would be opening more stores by the end of the first year, Levermore said.

“Convenience is a very important factor and if multi-channel shopping is being made available to a consumer, the initial response would come from the catalogue,” Shoppers’ Stop Managing Director, B S Nagesh, said.

Another retail chain, The Bombay Store, is also planning to provide this facility in the next few months.

“It is too early in India, although internationally it is a well-known concept. It will definitely take-off in the coming years,” Bombay Store Managing Director Asim Dalal said.

While he does not plan to launch catalogue-shopping immediately, he said, “We will be launching it in the next one year,” he said.

However, Mukesh Ambani-led Reliance Retail said it had no immediate plans to launch this offering.

“We at Reliance Retail are not planning catalogue- shopping in near future though it is a growing field. Major retailers should do well looking at the stupendous growth patterns,” Reliance Retail Head-Corporate Communications Manu Kapoor said.

Future Group CEO Kishore Biyani said, “We don’t believe in paper catalogues and have no plans to launch it in the near future.”

Though nascent in India, the catalogue shopping segment is huge overseas. The US market is estimated at around $180-billion while the European market is pegged at around Euro 50-billion.

Source : PTI

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.

While the likes of Future Group, Shoppers Stop, Westside and Reliance Retail are driving the focus on customer relationship management (CRM), restaurant chains like Speciality Restaurants (SRPL) are also gung-ho on the same. “The CRM programmes are important for any retail chain and they work, especially during a recessionary trend. They give customers some comfort and ensure that they keep coming back again and again,” SRPL chairman and MD Anjan Chatterjee told ET.

SRPL’s loyalty programme currently has 70,000-odd customers within its folds, who account for 30-35% of their sales. “We are now planning a marketing blitz to penetrate into 70% of our target audience by July-August,” said Mr Chatterjee.

Within six months, Future Group is planning to roll out a single loyalty programme that spans across formats. The group is currently investing heavily on the IT backbone. Currently, the group’s Green Card loyalty programme at Pantaloons accounts for 55% of sales.

“As the first step towards a uniform loyalty scheme, we have rolled out a prepaidcum-loyalty card in Pune and Kolkata. We’ve clocked nearly Rs 15 crore business out of this. Eventually, we expect 70% of our sales from lifestyle formats to be generated from loyalty scheme customers,” said Future Group president-customer strategies Sandip Tarkas.

Interestingly, Reliance Retail already operates its ‘RelianceOne’ loyalty programme across formats with four million customers. “We see a significant percentage of our sales coming from our loyalty card holders,” said a Reliance Retail spokesperson.

Shoppers Stop has just launched a new loyalty scheme for its hypermarket ‘Hypercity’. “The loyalty programme is a long-term strategic initiative, which drives repeated purchases. We add nearly three lakh customers under loyalty every year,” said Shoppers Stop MD BS Nagesh. As of end-2008, the retailer had more than 11.8 lakh loyalty members.

Westside has relaxed the entry norms for its loyalty programme ‘Clubwest’ to cash in on the large footfalls the store is witnessing due to Nano bookings. Earlier, to become a silver member, one had to shop for Rs 2,000 on one occasion and register. “Now, a customer can enrol for the programme even by shopping for Rs 500 and subsequently get upgraded, if he completes Rs 2,000 billing within three months,” said Westside marketing-head Smeeta Neogi. The chain currently has over eight lakh members, who generate over 50% of sales.

Retailers feel such an approach will also help them improve gross margin returns per sq ft in the present environment when same store sales growth is quite weak. A shop-inshop approach helps increase revenue per sq ft. It enables best utilisation of space and is a good way to do away with excess space and reduce space for categories which are not doing well, Future Group CEORetail Rakesh Biyani told ET.

Future Group plans to offer a wider choice in large-format stores like Big Bazaar by setting up speciality zones under the shop-in-shop model. This approach provides consumers with a wider choice. We have a similar model for the Pantaloons outlets in the East and may replicate it elsewhere, Mr Biyani said. Shoppers Stop recently tied up with Cafe Coffee Day to manage cafes within its stores. It is an ongoing process to maximise returns, said managing director BS Nagesh. The most common categories where retailers are looking for shop-inshop outlets include food and beverage, saris and areas which have more customerconnect requirement like cosmetics, personal care products, fine jewellery and salons, says Retailers Association of India CEO Kumar Rajagopalan.

Spencers Retail, which is presently rightsizing by cutting down on 20% of its retail space, also plans to focus on shopinshops. In a slowdown, shop-in-shops are the best way to leverage domain knowledge of speciality players and maximise returns. Such outlets will be set up through our groups speciality formats like Books & Beyond, Mera World, Music World as well as in collaboration with other players, Spencers Retail marketing head Samar S Sheikhawat.

Vishal Retail group president Ambeek Khemka said the retailer too is restructuring its 171 stores nationally. We have already completed the exercise for 35-odd stores and the results are encouraging. In fact, small and regional brands are lapping up the opportunity to follow the shop-in-shops model, he said.

Economic Times: Writankar Mukherjee & Sreeradha D Basu, KOLKATA

After several months of declining sales, value retailers such as Big Bazaar, Vishal Megamart and Pantaloon have witnessed a smart recovery, while mid-priced and premium lifestyle format stores such as Shoppers’ Stop, Provogue and Life Style are lagging behind with almost flat sales growth, according to industry estimates.

“Broadly, value retail segment has regained an average sales growth of around 7-8% in the past two months, while lifestyle formats are growing at around 0- 4%,” said Rahul Mehta, president of Clothing and Manufacturing Association of India (CMAI). Consumers are clearly not in a mood to shell out a premium, and apparel retailers are now working around the current consumer sentiment, said Mr Mehta. “Lifestyle formats are recording flat growth rates and, in fact, growth was (-)3% in January,” said BS Nagesh, managing director & CEO of Shoppers’ Stop.

Retailers are hoping for an upswing in the lifestyle segment by September 2009 on account of festive buying. Analysts believe that economic turnaround will first benefit the value retail, which would propel the future growth in organised retail sector. In April, Pantaloon, with value and lifestyle sales ratio of 60:40, has marked a sales growth of 23% and 18% in the respective segments. It was 5% and 4% in March, and there was a negative growth in December. Provogue recorded (-)9% sales growth in December. However, in April and May it rebounded to 10-12%, based on same store sales, said Nikhil Chaturvedi, MD, Provogue India.

Roughly, value and lifestyle segments share the organised apparel retail market in a proportion of 3:2 in tier-I and tier-II cities, and recorded an year-on-year growth of 10-12% in the corresponding months of last year. Organised retail has been under pressure since September last year. Apparel retail was worst hit during the period. With consumers starting to cut back on spends, most of the retail outfits suffered negative growth in the second half of the last year. However, with the start of new financial year the organised retail sector has seen a gradual improvement.

GOING SLOW

Value retailers like Big Bazaar, Vishal Megamart and Pantaloon witnessed a smart recovery
Mid-priced & premium lifestyle format stores such as Shoppers’ Stop, Provogue and Life Style are lagging behind with almost flat sales growth Retailers hoping for upswing in lifestyle segment by Sept ’09

Vivacity will be housing, ‘Hyper City’ and ‘Shoppers’ Stop,’ as its anchor tenants. The two format retailers belonging to K Raheja group have leased an area of 85,000 sq.ft and 65, 000 sq ft respectively spread across the ground floor and the first floor. In one of its earlier developments, Sheth developers also announced its tie up with Cinepolis to set up fourteen screen megaplex with a facility to showcase over 70 shows on a single day with a seating capacity of 2,400 people.

Speaking about the 2 large anchors coming on board with Vivacity Mall, Mr.JP.Biswas, VP Leasing & Marketing, Sheth Developers said, “Our tie-up with Shopper’s Stop and Hypercity is in line with our promise of getting top brands in to Vivacity. We look forward to give a world class shopping experience to our customers all under one roof. With all these brands pitching in at Vivacity, we feel our customers will rediscover the way they shop.”

Commenting on its strategic tie-up with Vivacity, Govind Shrikhande, Customer Care Associate & President & CEO, Shopper’s Stop Ltd, said, “We always wanted to have a large Shoppers Stop store in Thane. Vivacity has filled in the gap perfectly for us. In our opinion Vivacity will be a dominant retail property in the Central suburbs. The size and expanse of the mall combined with our ability to pull customers will be key to the success of both Shoppers Stop as well as Vivacity.”

Speaking further on being the anchor tenant of Vivacity, B.S.Nagesh, Customer Care Associate & Vice-Chairman, Hyper City Retail Pvt, Ltd said, “We feel that Thane and its adjacent catchment area has a lot of present potential, and when we take into account the upcoming projects, the outlook becomes one of the brightest in the country. In view of this we have signed up for our second Hypercity in Thane at Vivacity. The strategic location of Vivacity and its ease of access is ideal for a hypermarket.”

Vivacity will be located on the Eastern Express Highway, spread over an area on 1 million sq.ft. Vivacity is first retail venture of the Sheth Developers and happens to be one of the largest malls in the state, with one-of-its kind experience for its consumers. The mall has currently has 37% occupancy by retailers from the country and are hoping for a 100% occupancy by the end of the year. The Mall is slated to open its doors for its consumer in the mid of FY 2011 – 12

About Sheth Developers:

Sheth Developers is one of the trusted Real Estate and Property Company with major presence in Western India and UAE with over 20 years of experience in building large residential and commercial complexes and townships in Mumbai and the suburbs. Sheth Developers is one of the few real estate developers to have won the prestigious awards like Best Interior Design for Iris Bay Dubai, Best High Rise Development for Vasant Lawns Thane; Best Residential Building for BeauMonde , Mumbai and many more. Also, it is one of the few distinguished developers to have won the Best Developer Retail Project (Future) for designing Vivacity Mall, Thane; one of the largest Malls in India. Sheth Developers Pvt Ltd has earned consistent accolades for its notable projects in India and abroad.

About Vivacity

Sheth Developers has extended its real estate presence with its colossal retail development – Vivacity. One of the largest malls in the country with a GLA close to 1 million sq ft, Vivacity is set to raise the bar in the industry. With a team of best in the class professionals on the projects, marketing and leasing fronts, Vivacity will ensure that both the retailers’ and the consumers’ interests are well taken care of.

For further information please visit: www.shethdevelopers.com

Media Contact for Vivacity:

Leon De Souza / Deepshri Iyer

leon@corvoshandwick.co.in / deepshri@corvoshandwick.co.in

+91 9833581376 / +91 9987266410

What is M.A.C?” The question, posed by Govind Shrikhande of Shoppers Stop, must have taken the top brass at Estee Lauder Companies by surprise. 

To the top managers of the New York cosmetics group, the question may even have come across as a case of rare ignorance about Make-up Art Cosmetics or M.A.C, especially surprising from the boss of India’s largest department store chain who had been pitching for a partnership with Estee Lauder in India.
But just four years later, two of the 20-odd stores that Estee Lauder runs in partnership with Shoppers Stop in India rank among their top 10 worldwide in terms of revenues.

And Estee Lauder is not alone.
Scores of leading international brands – Swarovski, Accessorize, US Polo, Aldo and Promod, to name a few – are realising that some of their stores in still third world India are among their most successful across the world, helped by a constantly expanding army of consumers with increasing disposable incomes and high brand awareness.

Such is the level of awareness that it has even taken retail industry veterans by surprise. Shrikhande drew a blank then about M. A.C, but consumers in India knew about the Canadian brand that Estee Lauder had acquired in 1994. “Many consumers knew about the brand and were using the products even before it entered the country officially,” he says.

And now M.A.C stores at Select City Walk shopping mall in south Delhi and at Dynamix Mall in Mumbai’s Juhu are generating revenues in excess of $1,000 per square feet per year, executives who did not wish to be named said.
High-end crystal products maker Swarovski’s stores at Bandra in Mumbai and at the T3 terminal at Delhi airport rank among its top stores by sales, says Sukanya Dutta Roy, director of the company’s consumer goods business.

Similarly, British fashion accessories retailer Accessorize’s store at Ambience Mall in Gurgaon is the company’s second biggest revenue earner, clocking sales of about $600 per square ft per year.

Two of apparel brand US Polo stores also rank among the top ten globally. The 1,000 sq ft stores in Delhi and Bangalore generate sales of around $700 per sq ft a year, says J Suresh, managing director of Arvind Lifestyle Brands, which launched US Polo in India barely two years ago. Sales at the company’s other stores across the world usually vary between $200 and $500 sq ft a year.
Women’s fashion brand Promod’s store in Delhi reports the highest sales per sq ft in Asia, while Canadian shoe and accessories brand Aldo has two of its top 50 stores in India.

While some analysts believe that the performance at Indian stores may reflect the declining offtake in the more developed markets, others argue that several brands generate above average sales for short periods because they have a few stores servicing a large catchment.

“The reason could be initial attraction of the brand and fewer points of sale compared to the size of the overall consuming population,” says Ramesh Tainwala, CEO, Planet Retail.

At German sportswear brand Puma, executives do not look at sales figures alone but also factor in the exchange rate fluctuations. “We compare performance of Puma stores on a percentage profitability basis as opposed to sales per square feet,” says Rajeev Mehta, managing director of the company which counts three of its stores among the top ten globally.

Even as some analysts view the strong sales at Indian stores of global brands with caution, Raghav Gupta, principal at management consulting firm Booz & Co, points to the emerging big picture. “It links back to the overall position that India is starting to take in the global economy,” says Gupta.

Global India Stores

M.A.C
Juhu in Mumbai and Select Citywalk in Delhi

Swarovski
Bandra and Delhi Airport Terminal 3

Accessorize
Ambience Mall, Gurgaon

Puma
Bangalore’s Garuda Mall, West Gate Mall in Delhi, and Church Road in Pune

US POLO
Select Citywalk Mall at Saket in Delhi, and The Forum, Bangalore

Promod
Select Citywalk Mall in Delhi

Aldo
Select Citywalk Mall and Palladium