Spencer’s currently has 290 stores covering four retail formats, Hyper, Super, Daily and Express spread across six lakh square feet of area, which will get reduced to three formats eventually.

“We are merging two formats which are similar, to reduce the number to only three formats with one big box, small box and a range of stores in the middle range,” Spencer’s Retail Limited Vice-President (North) Satyaki Ghosh told media.

The company would invest up to Rs 2,500 crore on its retail expansion till March 2009 to cover an area of around 20-25 lakh square feet by September 2008. The total area across the formats will be close to 17 lakh by this year end. “We are already present in 32 cities across India and as expansion continues, we are aiming top 119 cities of the country,” Ghosh said.

Spencer’s Retail is one of India’s fastest growing retail stores with multiple formats, retailing food, apparel, fashion, electronics, lifestyle products and books.

“Presently, we have around 160 stores and we will double the number every year for the next three to four years,” Levi’s Strauss (India) Director (Marketing) Shyam Sukhramani told PTI on the sidelines of Lakme Fashion Week.

The company launched four collections for the show – Levi’s Collectibles, Blue, Vintage Clothing and Red. Sukhramani said Levi’s Collectibles hold a lot of inspiration from the time jeans came into existence around 150 years back.

Levi’s is also sponsoring a project called Gen next, “We will go to the best fashion schools in India and select around 12 designers, out of which the best will design for the company for the 2008 fashion show,” he said.

Presently, Levi’s has around 14 flagship stores in India and the plan is to add another 10 by next year, including one in Mumbai in December this year, Sukhramani said.

The company also plans to expand the Icon stores. “Presently we have one Icon store in Bangalore and we plan to have another four to five stores in metros by next year,” he said.

“The company, which currently has 620 stores across the country, is going for a substantial increase in its distribution, which will see its sales going up by 30 per cent per annum,” Reebok India Managing Director Suvhinder Singh told PTI.

“Besides consolidating our existing position in metros and tier I cities, we are also going for a major expansion in tier-II and tier-III and lower-tier cities”, he added.

However, he refused to divulge any investment details. “It is not the company’s policy to reveal investment and sales figures,” he said on the sidelines of the Pure & Play Retail Summit here on Monday.

The company has grown six-time in the last five years and controls 53 per cent of Indian footwear market, Singh said, adding that they would be also bringing in new products.

“We want to maintain the current position and bring new innovation and formats in various segments. We are bringing out 20 new footwear models every quarter, besides a new apparel in every 45 days,” he said.

Reebok is also planning to open specialised junior stores for its young customers. As many as seven such stores will come up in Hyderabad, Mumbai and Delhi among other cities.

The company would be aggressive on its marketing strategy as it plans to expand its business in the country.

“As part of our marketing strategy we have roped in Bollywood stars and cricketers as means of communication platform as Indian customers have a tendency to associate with them,” he said, adding that the company wants to utilise this for expanding into smaller cities.

Once the stores open the company’s portfolio will be extended to around 240 shops, after it opened 40 new sites this year.

Chief executive Jim McCarthy said: “Times are tough and customers know Poundland offers quality brands at the incredible £1 price point on all products every day.

“We are convinced that Poundland will continue to help shoppers through the tough times in even more locations next year.”

This year the discount firm revealed annual profits until the end of March were up by 122%.

McCarthy said at the time: “Poundland’s unique single price strategy is providing even greater value. We are perfectly positioned to take advantage of customers’ flight to value.”

By contrast, Woolworths will shed 27,000 jobs after its administrators Deloitte failed to find a buyer for the company.

India is an important market for us due to the opportunities it presents. We have plans to launch more than 32 new models here, of which six will be touch phones, while many other models will be 3G-enabled and some of these will also be entry level phones. At present, we have about three touch phones and six 3G-enabled handsets already in the market and we plan to have about 10 models each in both these segments by the year-end. We are betting big on the touch screen segment and we are targeting sales of up to six lakh units  and a 10% market share in this space alone within the next six months.

What will be your investments in India this fiscal?

We will double our investment this year and the company as a whole will spend about Rs 400 crore on advertising this year. Additionally, we will invest Rs 200 crore in R&D to study market dynamics and consumer behaviour here. We are looking at increasing our headcount in our sales vertical to enhance our presence.

How many of the products you sell here are made here? How have your sales been so far?

Currently, we manufacture mobile phones at two units located in Pune and Greater Noida and these plants have a production capacity of three million units per year. About 70% of the production is exported while the rest is for domestic consumption. We sold about 2.4 million GSM handsets in India last year and we expect a 50% increase in sales this year.

Our institutional sales account for just 10% our total mobile sales.
Currently the Indian mobile handset market is dominated by some of your competitors.

How are you looking at improving your brand visibility here?

LG is rapidly gaining market share in the GSM market, despite being a late entrant. We are already the fifth-largest player in the segment. I believe our distribution line was poor earlier, but now we are reworking our strategy here. Based on the analysis of our marketing team, we are deploying 1,000 additional shop sales executives and we will be launching about 1,000 additional shop-inshop formats in rural and tier II cities. On the organised retail front, the overall channel coverage is at 42%.

India is an important market for us due to the opportunities it presents. We have plans to launch more than 32 new models here… We are betting big on the touch screen segment
MOON B SHIN

MANAGING DIRECTOR, LG

The global economic downturn has had a significant impact on the retail sector – albeit to a lesser extent on the grocers, due to the fact that food remains a non-discretionary purchase.

Nonetheless, grocery retailers have primarily responded to the downturn in two ways:

1. Promoting value through the expansion of discount stores, economy ranges, price investments and increased promotions.
2. Reducing costs and preserving cash by slowing growth plans and making staff redundant.

Over the next five years, Planet Retail forecasts the Top 30 to grow sales through grocery formats at a compounded annual growth rate (CAGR) of 5.2 per cent, compared with the 10.8 per cent recorded for the previous five years.

Store numbers, meanwhile, are expected to rise at a CAGR of 3.5 per cent, reflecting the fact that a slowdown in expansion will see retailers focusing on their most profitable existing stores.

Discount and small formats to the fore

One of the winning formats for the Top 30 will be the discount channel, which is expected to add $71bn in sales over the next five years. Driven by retailers such as Aldi and Schwarz Group, the no-frills format continues to attract cash-strapped consumers both in developed and emerging markets. By 2013, the Top 30 retailers operating in the discount segment are poised to open an additional 12,600 stores.

Discount stores are just one of the smaller store formats doing well. Retailers are increasingly likely to focus their efforts on small-box stores, given that they require less capital both to build and operate. In fact, stores less than 26,910 sq ft are poised to grow their store network by 4.1 per cent over the next five years compared with just 2.2 per cent for the large hypermarkets.

Also, in the long run, the outlook is positive for proximity retailing as demographic changes mean that there will be more single households combined with lower incomes (because of a higher share of pensioners) and less widespread car ownership.

This is especially the case in the US, where Tesco’s entry has sparked a series of reactive pilots, the most notable being Wal-Mart’s Marketside format, the retailer’s first new concept in the US in a decade. It is too early to say whether small-box will change the face of grocery retailing in the US, as this type of format caters to a very different shopping mode (high frequency/low spend), assortment (greater emphasis on fresh, private labels) and consequently calls for more frequent distribution.

As well as requiring relatively high investment, hypermarkets and superstores, despite being the backbone of many retailers’ strategies, are faced with a lack of available sites, increasingly prohibitive regulations, and a high degree of retail maturity in developed markets such as Western Europe and North America.

However, in the future, the channel will find more fertile grounds for growth in the developing markets of Asia and Latin America. Retail giants such as Auchan, Tesco, Carrefour and Wal-Mart still want to expand their hypermarket presence in markets such as China.

That said, the fact that such retailers are experimenting with smaller formats in these regions (eg, Tesco Express and Wal-Mart’s Smart Choice) suggests they are already planning for the increasing saturation in the large store sector in the emerging markets.

Indeed, internationalisation will continue to be a key trend, with the world’s largest grocers continuing (and in some cases increasing) their investment and commitment overseas. For many, such as Tesco and Carrefour, reducing their reliance on saturated home markets is part of a long-term strategy that will involve them looking beyond the present economic climate to years, if not decades, ahead.

With this in mind, markets such as India – where market entry by the world’s largest retailers is imminent – and Vietnam assume an even greater importance.

Multichannel, single-brand

Another key trend is the move towards multichannel/single brand. Carrefour’s conversion of its French store base to trade under the eponymous Carrefour name should help to strengthen the brand and create buying synergies across its supply chain and via its marketing campaigns. The retailer’s recent announcement that it is to replace its existing No. 1 economy private-label range with the new Carrefour Discount brand is all part of this approach. It is likely that future conversions will occur – particularly in Europe, where operating multiple formats is commonplace.

Private labels set for renewed focus

Against a background of tightening consumer spending, private labels are set for strong growth in almost all markets and for virtually all retailers.

Like discounters, the growth of private labels is nothing new. However, as economies weaken and consumer confidence dips, we are seeing accelerated growth in this arena. The trend is not just confined to the more mature markets either. While private label penetration is presently lower in emerging markets such as India, Brazil and Mexico, these countries are poised for the fastest growth in the coming years.

Also worth highlighting is the sophisticated positioning of own-label products emerging from some retailers, much to the dismay of many brand manufacturers. Retailers are cherry-picking consumers at both ends of the market by developing their economy ranges as well as premium lines.

One such example of a shift in strategy is Tesco’s new Discounter brand. Representing a shift away from the traditional three-tier strategy, Tesco is launching its first labels without the Tesco brand in order to fight German discounters Aldi and Lidl.

The growth of private labels represents a huge threat to the brands that have to compete, not just in terms of price but also for less shelf and promotional space.

With this in mind, Wal-Mart’s recently revamped, expanded and relaunched Great Value private label offering is sure to send a shiver down the backs of both major food and drink manufacturers and competing retailers in the US. With price differentials of up to 20 per cent over national brands and with a stylish new look, this might be the most significant makeover in the US retail sector in recent years, with significant long term impacts.

Is price here to stay?

The big question is what will the retail landscape look like when economic conditions improve? Certainly, some trends such as internationalisation will remain as important as ever as retailers are looking at the long-term picture in such cases.

But, what of the current popularity of discounters and private labels? In both cases, evidence suggests they will continue to grow – albeit at much lower levels than what we are seeing at present.

The past two decades have seen ongoing growth of discounting and private labels globally, even when economic conditions have improved. With many consumers stepping foot inside a discount store or switching from a brand to a cheaper private label for the first time, such recently formed shopping habits may prove to be difficult to break.

Robert Gregory is retail analyst at Planet Retail.