IBM and Huawei hook up to start Chinese takeaway

MWC 2012 IBM’s enterprise consultancy, IBM Global Business Service, has joined up with Huawei to create enterprise solutions, initially for Chinese companies but with global aspirations.

Huawei wants its smartphones embedded into businesses, and to give those businesses a reason to buy its tablets too. IBM wants to push its Chinese presence and tap into the expediently expanding market, which it hopes to do with Huawei’s help, but to Huawei this is just another step on the road to global domination.

The jointly developed platform is called “Smart Workspace@Mobile” though at the moment it is little more than slideware and aspirational statements. It will involve Huawei’s device management systems, and apply IBM’s experience with enterprise resource planning, customer relationship management and supply chain management, to create a combined solution to be pushed heavily into the energy and retail industries.

Both companies reckon enterprises are posed to make greater use of mobile workers and want to be ready to exploit that market in China and beyond. Huawei pins its plans to a projection which sees a 80 per cent of businesses making their staff work on the move by the end of next year.

But this alliance with IBM is also important in painting Huawei as a full-service company, not just a manufacturer of networking kit and Android handsets. There are dozens of high-volume-low-price manufacturers in China and Huawei is desperate not to be lumped in with them. Launching a quad-core Android handset is one part of that – the Ascend D being anything but low-cost – but sitting on stage alongside IBM is equally important. ®

The small jam set to drive big sales

Premier Foods, the UK’s number one food manufacturer, is launching a new range of conveniently sized 250g Hartley’s jam that looks set to drive even more fruitful sales for the fastest growing jam brand.

As the market leader with 22% value share, growing 37% year-on-year, Hartley’s is driving category growth within the jam market and is the signpost brand for spreads.

The launch of the new 250g format in the convenience, impulse and cash and carry channels will help continue Hartley’s strong growth and drive incremental sales.

The distinct taste and new 250g format utilising Hartley’s unique tear drop shaped jar will create an opportunity for retailers to capitalise on an accessible price point and convenient size that will drive trial amongst new and occasional consumers.

David Atkinson, general manager for sweet spreads at Premier, comments “We believe the 250g jar is a logical step for Hartley’s in order to grow the brand. The new format is particularly relevant to occasional jam users and smaller households and we expect it will positively impact penetration and sales.

The jar also leaves us open to further product innovation as consumers will be more inclined to trial new flavours in a smaller jar”, said Atkinson.

The jam is available in stores from June, with an RRP of £1.09. The 250g jar will be available in Hartley’s best selling flavours; Strawberry, Seedless Raspberry, Apricot and Blackcurrant.

Giant Eagle’s beer requests worry Western Pennsylvania outlets Buzz up!

Giant Eagle is bringing the battle over supermarket beer sales to the Pittsburgh region, with a plan to sell six-packs from restaurants inside some of its stores.

As food chains nationwide boost brew sales, the O’Hara grocery chain is asking the state Liquor Control Board to transfer a restaurant liquor license to a Giant Eagle Market District store expected to open this fall at the new Settlers Ridge development in Robinson. Giant Eagle is pursuing other licenses, including one for a store in Pine.

Wegmans and other grocers in the state have opened cafe-style areas in some stores that sell six-packs of beer along with other beverages. The small, in-store restaurants allow them to take advantage of recent legal interpretations of Pennsylvania’s restrictive liquor code, which bars most sales from grocery stores.

Now it’s Giant Eagle’s turn.

Spokesman Dick Roberts said Giant Eagle has yet to work out some details, such as what brands of beer it might sell, but one thing’s certain: Pennsylvania’s licensed beer distributors will fight before the Robinson store or others ring up their first sales.

The Malt Beverage Distributors Association is challenging each license transfer to go before the LCB. A board hearing examiner will schedule a public hearing in the Pittsburgh area before a final vote on Giant Eagle’s license for the Robinson supermarket, said LCB spokeswoman Francesca Chapman.

Mary Lou Hogan, executive secretary and counsel for the Philadelphia-based distributors association, said grocery chains are stripping away beer sales from neighborhood businesses that only can sell it by the case or keg, without having to follow the same rules such as limits on hours.

Peggy Alston worries sales will fall at her family’s Pike Beverage Outlet, a distributorship about two miles from Giant Eagle’s Settlers Ridge site.

“I’m not allowed to sell flowers or groceries or baked goods for extra income, but Sheetz and then Wegmans and now Giant Eagle can get licenses to sell beer,” she said. “It’s another slap in the face for small businesses, and for the customers it will mean limited choice and service.”

Another nearby Giant Eagle supermarket sends customers from other states who are used to buying beer in grocery stores to her business, Alston said.

Nationwide beer sales last year weakened in bars, restaurants and other businesses where customers typically drink on-site, while they increased 1.2 percent in grocery and convenience stores, the Beer Institute said.

“Beer and wine sales are critically important to supermarket sales,” said retail analyst Burt P. Flickinger III. While the profit margin on most groceries might be 1 or 2 cents on the dollar, he said, it averages 3 to 4 cents on beer sales.

Pennsylvania’s liquor laws hurt consumers, regional brewers such as Lawrenceville’s Iron City Brewing Co. and grocers, he said.

“When you have one of the most inefficient distribution systems in America, it adds tremendous costs for consumers and it penalizes the sales and operating profits of food retailers who, were they able to sell beer, could compete more effectively with the Wal-Marts and Sam’s and other big players,” he said.

Consumers, too, have differing opinions.

“Buying beer and wine (at the supermarket) is like getting milk and bread,” said Rob Hornison of Hempfield.

Colleen Friedline, 55, of Export opposes loosening liquor restrictions.

“There’s enough temptation for people to go out and get drunk, to ruin their lives and the lives of their families … and kill other people,” she said.

Pennsylvania’s restrictions on beer sales are thought to be the second-tightest in the nation, behind Utah, said Cris Hoel, a Pittsburgh attorney who has represented alcohol trade associations and grocery chains, but isn’t involved in the cases here.

The state’s tough stance on liquor, including its controlled beer-distribution system, dates to the repeal of Prohibition in 1933, when states were told to set their own laws.

Then-Gov. Gifford Pinchot, an ardent alcohol foe, reluctantly accepted its legalization.

“He did his best to make sure the laws were as harshly worded as they could be,” Hoel said. “We’re still living with the remnants of that today.”

Subsequent attempts to loosen controls went nowhere. Gov. Dick Thornburgh ran into opposition from religious and other groups in 1981, when he tried to sell off state liquor stores. Later privatization attempts by Gov. Tom Ridge in 1997 and, most recently, state Sen. Rob Wonderling, R-Montgomery County, failed.

Hoel noted one reason for maintaining the status quo: Pennsylvania’s wine and liquor sales generated $1.76 billion last year, putting $433 million into the state Treasury.

With the licenses it’s seeking, Giant Eagle couldn’t sell alcoholic beverages on shelves, as it does in Ohio. The Pennsylvania stores would partition off areas with at least 400 square feet that seat 30 or more people, serve food prepared on site and ring up their own sales.

Customers could buy the equivalent of up to two six-packs to carry out or order a beer or glass of wine to drink at the restaurant.

Wegmans was the first supermarket chain to open restaurants and sell beer in Eastern Pennsylvania, and Commonwealth Court in February upheld the licenses. The beer distributors association is waiting for the state Supreme Court to decide whether it will consider a further appeal.

Wegmans has obtained or is applying for licenses for 14 stores, according to the Liquor Control Board’s Web site. In addition to Giant Eagle’s applications, Weis Markets and Whole Foods Markets are moving toward beer sales in Pennsylvania.

The license for Giant Eagle’s Robinson store is the first to go before the LCB for approval. Supervisors in Pine, where a large, new-concept Giant Eagle opened in February, have scheduled a May 4 public hearing on a license transfer.

Rural India: Glitter in times of gloom.

No company can afford to ignore two third of the consumer population pie. However inaccessible they may be and whatever changes may be required in the company’s strategy to attract them. No wonder, the growing power of the rural consumer (accounting for 64 per cent of country’s total consumer base) is forcing Indian blue chips and MNCs to flock to rural markets. Not only FMCG companies but even banks, auto, telecom and retail companies are finding it difficult to keep themselves away from the lure.

Fathom this. Seventy per cent of India’s and 12 per cent of global population lives in rural India and contributes 50 per cent of the country’s GDP. Their population of 75 crore (750 million) is more than that of US, UK, France, Japan, Italy and Germany put together. In fact, as per Mckinsey, despite rising urbanisation, 63 per cent of India’s population will continue to live in the rural areas even in 2025.

Surging ahead in terms of growth

As per National Council of Applied Economic Research, rural market accounts for 55 per cent of LIC [Get Quote] policies, 70 per cent of toilet soap consumption, and 50 per cent of TV, fans, bicycles, tea and wrist watch consumption. So as a target market, it is attractive not only because of the size, but also because of impressive growth potential.

Rural GDP has been witnessing strong growth in the last four years (avg of 4 per cent) not only on the back of increase in minimum support prices for the agri-products but also due to availability of alternative employment opportunities.

Income_Distribution

Income_Distribution

Source: Business Today

In 2008, the rural areas grew at a robust rate of 25 per cent as compared to 10 per cent growth in urban retail market According to a McKinsey, rural India, would become bigger than the total consumer market in countries such as South Korea or Canada in another twenty years. It would grow almost four times from estimated size of $577 bn in 2007. While the per capita income is lower than urban areas, the customer base is thrice that of urban areas.

Resilient to slowdown

On account of negligible tax liability and little or no burden of loan repayments, the Indian rural population has a higher propensity to save. The rural areas account for 33 per cent India’s total savings. Being more conservative than their urban counterparts, the rural populace has not burnt their fingers in the real estate or stock market bust. Further, the rural income distribution pattern is also changing and the bottom is getting narrower.

While 18 per cent of rural India has earnings in the range Rs 45,000 to Rs 215,000 per annum, 58 per cent of urban population earns in this range. However, 27 m individuals form a part of this income bracket in rural areas while in urban areas it is about 29 m; of which large base is already tapped.

No of households (m)

Demographic classification

Urban

Rural

Total

Rich ( income greater than Rs 1 m
per annum)

4.8

1.3

6.1

Well off (income greater than Rs 0.5
m per annum)

29.5

27.4

56.9

Total

34.3

28.7

63.0

% of total

54.4%

45.6%

Source : Ministry of Communications & Information Technology , India

As per the Associated Chambers of Commerce and Industry of India, the rural market is becoming increasingly attractive for FMCG, automobiles and organised retail businesses. Rural India accounts for more than 40 per cent consumption in major FMCG categories such as personal care, fabric care, and hot beverages.

FMCG sector in rural areas is expected to grow by 40 per cent as against 25 per cent in urban areas in the coming quarters. The size of retail market in India is estimated at US$ 280 bn of which the rural retail market works out to be $112 bn. This is expected to double in next 4 to 5 years because of the huge potential. Even auto companies in recent times are witnessing shift in trend as they are gearing to explore the huge market potential lying in the rural areas.

Top 20 cities

Other cities

Rural

Car

23

5

3

Bicycle

37

61

69

Colour Tv

68

47

17

AC

5

3

0

Refrigerator

63

34

8

Computer

8

3

1

Source: Mint

As rural India becomes more lucrative and the government becomes more committed to its development, schemes like the rural employment guarantee, Bharat Nirman, focus on rural education, debt waiver plan and higher support prices will aid the rural demand. Although the penetration levels are still very low, the scope is huge. And India Inc. is not letting go of this opportunity.

Aditya Birla Nuvo plans more Linen Club outlets

Aditya Birla group retail subsidiary Aditya Birla Nuvo is planning to open 20 more showrooms of its premium fabric brand ‘Linen Club’. The company has currently 26 Linen Club showrooms across the country and is looking at the metros and tier I cities as the main areas for expansion. “We have have currently 26 showrooms across the country and have on Sunday inaugurated our latest one in Delhi. Our plan is to add 20 more exclusive showrooms during 2009-10,” Aditya Birla Nuvo senior vice-president Abhey Nair said.

E-tailing for Success.

WITH the economy performing below normal, many retailers who preferred having a physical presence are looking to go online at minimal costs and keep the cash registers ringing. Compared to a traditional brick and mortar storefront, an e-commerce store is a relatively small, convenient and lowcost startup. The only costs involved in the e-commerce platform include the monthly hosting and ISP bills. With a website, an e-tailer has the capability to gauge the market condition and make alterations accordingly. Taking into account all its benefits, e-commerce can be considered ideal during a recession as it helps retailers to stay globally competitive.

Serving retailers and consumers
Today leading global e-commerce retailers earn more than 10 billion in revenue on every portal they own, and this shows the shifting trend towards e-tailing. Affirming this, Pawan Gadia, VP, Ferns ‘N’ Petals (FnP), says, “We are achieving 60 percent growth year-on-year, thanks to e-commerce. In fact, 10 percent of the total turnover of the FnP Group comes from online sales.”

Videocon is also aiming big on e-biz. “In 2009, our target is to earn online sales of Rs 10 crore, and our current sales are very much in line with our targets,” adds Arindam Bose, VP–IT, E-biz and Exports, Videocon.

Consumers today are more open to the online medium. This trend is further catalysed by various product and price comparison websites that enable users to perform research on products that they intend to purchase. Moreover, increasing fuel costs, large mall crowds and low disposable incomes are motivating buyers to shop online. Mr Gadia says, “Contrary to a physical store that has issues of timeline, visibility, etc, an online store is more flexible. An FnP store closes at 8 pm every day, but the online store runs 24×7, thereby giving us more customers. We serve more than 2000 clients everyday on our online site.”

The e-commerce option caters to customers in the current economy because it offers products at lower costs. “E-biz reduces the logistics cost as the goods go directly to the end consumer. Any business model that removes layers and brings the consumer nearer to the manufacturer benefits all,” agrees Mr Bose.

Choose intelligently
Despite its potential, many people don’t know how to get started with e-commerce and are often confused about the numerous options available. Several solutions allow retailers to sell items online, but it is always advisable to approach retail-specific vendors who can customise solutions according to customers’ business needs. “Each customer has a different requirement. Some want a pure Web shop, while some want integration with CRM or ERP, and yet others seek telephonic booking. Each requirement should be considered individually before offering a solution,” says Manu Agarwal, CEO, ANMsoft and Naaptol.com.

Though most solutions may differ, some are fundamental for every online business enterprise, and these are listed below:

Design customisation solutions: Setting up a business involves considerable time, energy and money. It is necessary to create a brand that customers find familiar. Many ecommerce solutions force retailers into a particular site layout, template or theme, making them just another cookie-cutter, faceless, online store. An e-commerce service provider must understand the objectives of an e-tailer to equip the latter’s website with aesthetic solutions.

Scalability solutions: Retailers do not want solutions that limit the number of products on display or the amount of traffic that the site can generate. Therefore, e-commerce solutions must equip retailers to add dynamic features to his existing site.

Payment solutions: Many e-commerce solutions force customers to register before making a purchase. Forcing customers to leave a site when they are ready to purchase products is not a smart business practice. If a customer finds the payment options in the website too cumbersome, he/she may switch to another shopping site. Therefore, a retailer must ensure that customers are hooked on to the website until they have completed their transaction.

Order processing solutions: These solutions are specifically designed to save operating costs. In the absence of these automated solutions, a retailer has to maintain the inventory and keep a track of orders and process them.

Search engine optimisation (SEO) and Search engine marketing (SEM) solutions:
To drive traffic to the website, a retailer must employ an SEO or SEM. SEO is more popular because of its low costs and better results. However, a retailer must ensure that the SEO uses the right keywords to improve his website’s page rank. The website must contain the right keywords so that when a user searches for a particular product, the retailer’s website appears at the top.
According to Mr Agarwal, “A majority of the people who go online end up buying nothing or may not even visit a particular website. This is because the retailer and the service provider may have not set up means to direct traffic to the site.”
Coupon solutions: In the face of rising prices, consumers have once again begun clipping coupons. Giving away gift coupons serves to increase sales. People are always looking for discounts and freebies, and a site that offers similar incentives often sees repeated visits. E-tailers can send coupons as an SMS with unique promotional codes that shoppers can use on their e-commerce website, and receive discounts on online purchases.

Shopping Cart and Delivery Solutions: A customer should be given a free hand to add products to his/her shopping list, remove products, change their quantity, recalculate the order before processing and even come back to the same after logging out. On the delivery front, most clients prefer websites that offer free home delivery and, therefore, e-retailers must have a user-friendly delivery solution in place.

Innovations to help you save
In lieu of the ongoing recession, retailers have started exploring innovative ways to cut costs. Many e-tailers are outsourcing their retail operations to specialised retail vendors for reducing labour costs. One of the affected areas during this slowdown is advertising, and very few retailers seek to manage advertising costs. Retailers should ideally adopt online advertising tools like e-mailers, newsletters, etc. “Retailers can send e-mailers, promotions, gift coupons to their existing customers at a very low cost, and still enjoy sales benefits,” admits Mr Gadia.

In order to grow in the existing scenario, a retailer should place his merchandise where his potential customers are most likely to be. Going by this, the retailer should view e-tailing as a cost-effective channel to lure sales.

Intel launches Xeon Processor 5500 series

Intel has introduced 17 enterprise-class processors led by the Intel Xeon processor 5500 series.

Previously codenamed Nehalem-EP, the processor 5500 improves system speed and includes the Intel Turbo Boost Technology, Intel Hyper-Threading Technology, integrated power gates and Next-Generation Intel Virtualisation Technology (VT).

Software vendors currently supporting the series-based platform, include Citrix, IBM, Microsoft, Novell, Oracle, Red Hat, SAP AG, Sun Microsystems and VMware.

Corey Loehr, group manager A/NZ Enterprise and Solution Sales for Intel said the series offers 70 percent more performance, 40 percent lower system cost and 50 percent fewer cores.

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