Dunkin’ to Give Donuts a Desi Dressing.

American chain to roll out donuts such as coconut rasgulla, gulab jamun & motichoor laddoo as part of its localisation drive

This festive season, Haldiram’s and Bikanervala have a completely unexpected competitor. Taking localisation of its menu to a new micro-level, American donuts and coffee chain Dunkin’ Donuts is in the process of rolling out variants of donuts like coconut rasgulla, gulab jamun and motichoor laddoo.

With its franchise owner Jubliant FoodWorks looking to drive volumes and replicate the performance of its other brand Domino’s Pizza in India, the localisation drive is a first for Dunkin’ Donuts in India.

For Dunkin’ Donuts, the world’s largest donut brand which forayed into the country early last year, the move is ambitious to say the least. Dunkin’ Donuts India president and COO Dev Amritesh says the product’s ‘flexibility’ lends itself to a high degree of customisation. “There’s a significant opportunity to customise donuts for consumers — both for those who are used to the product and those who aren’t yet familiar with donuts.” There have been examples of countries customising donut toppings in other markets from time-to-time, but Amritesh says the extent of localisation is probably the highest in India. The donuts are being rolled out in time for the Diwali season, but the fastest-moving ones will become a permanent feature on the Dunkin’ menu.

The idea may also be exported to other markets if they find acceptance, says Amritesh. Abneesh Roy from securities firm Edelweiss Securities wrote in a report last month: “We expect Jubilant FoodWorks’ valuations to remain expensive given efficient execution, sharp expansion and innovation.”

Early last year, Jubilant had inked a master franchisee alliance with Dunkin’ Donuts, an alliance that diversified its portfolio and reduced its dependence on a single brand – Domino’s. Dunkin’ Brands is the world’s fastest largest coffee and baked goods chain with a global sales of $6 billion.

Localisation is critical to MNCs operating in India especially in foods and is a rule rather than an exception. And, everyone from burger and fries chain McDonald’s to cereal maker Kellogg’s to chips firm PepsiCo Foods has been forced to localise.

The American baked foods and coffee chain currently operates five stores in India and it plans to set up 100 over the next five years, encashing the country’s rapidly growing eatingout segment.

Retail consultancy Technopak Advisors estimates the country’s eating-out market to be close to . 33,000 crore, with organised restaurant chains clocking a growth of 20-25%. The organised segment is valued at about . 8,000 crore.
But, in the April-June quarter, Jubilant FoodWorks reported same-store sales growth of 22.3%, down from 36.7% in the year-ago quarter, as consumers cut back on discretionary spends in a subdued economic environment. Jubilant FoodWorks’ other brand in India, Domino’s, is the category-leader in the pizza segment.

Coinstar looks for the next big thing in automated retail.

Coinstar’s Redbox business began 2010 by renting out more movie DVDs and Blu-ray discs in the first three months than Blockbuster — a major milestone cast as David toppling Goliath.

Nine months later, Blockbuster had gone belly up, and Redbox was second only to Netflix as a source of inexpensive movie rentals, solidifying its place as a dominant player in the U.S. home-entertainment market.

At the end of 2010, Redbox operated 30,200 self-service machines dispensing movie DVDs for a dollar a day at supermarkets, drugstores, fast-food restaurants and other places shoppers regularly visit. Redbox took in nearly $1.2 billion last year, accounting for 80 percent of Coinstar’s total revenue.

Bellevue-based Coinstar began buying into Redbox in 2005, when it was a fledgling McDonald’s venture, and took full ownership in 2009.

Although Coinstar has since sold businesses unrelated to Redbox and its namesake coin-counting machines, it continues to look for the next big thing in automated retail.

Redbox, for example, will add video-game rentals costing $2 a day to more than 21,000 locations nationwide by July 1.

Also, Coinstar has injected an undisclosed amount of money into ecoATM, a new venture that seeks to provide a convenient way for people to get cash for their old electronic devices, such as cellphones and iPods.

Still, whether 2011 has a happy ending for Coinstar could depend on what Redbox does next.

Some on Wall Street have grown impatient with Redbox’s indeterminate plans to introduce a video-streaming service on top of physical disc rentals.

In February, Redbox President Mitch Lowe told analysts the company was getting closer to finding an online partner for an unlimited streaming offer to take on Netflix. But the company has said only that full details will be released this year.

Inspired by McDonalds, Wal-Mart Creates Its Own Dollar Menu.

McDonald’s (MCD) did so well with its dollar menu that Wal-Mart (WMT) decided it will create one, too. The difference is that the Wal-Mart version will be merchandise and not food. McDonald’s philosophy of selling very inexpensive food in a clean, well-lit environment served by consistently friendly people has helped it expand its operations to 36,000 stores worldwide. Wal-Mart’s approach to retail stores is not terribly different. It may not be entirely coincidental that Wal-Mart was started in 1962 and McDonald’s began in 1955. Millions of relatively young people, most of them parents, were only a decade removed from serving their country and not being paid a great deal for that service. It was a perfect environment for consumers to believe that something could be inexpensive and a good value at the same time.

Earlier this week, Wal-Mart, the world’s largest retailer, said that it planned to improve its second quarter sales by offering shoppers irresistible bargains. For the last quarter, Wal-Mart reported flat earnings of $.77 and said it expected to deliver a range of $.83 to $.88 in the current period. Same-store sales for this quarter are expected to be between flat and up 3%. Wal-Mart may have an uphill fight to post strong second quarter earnings. Recent employment numbers and shrinking access to credit will hurt retail sales, although Wal-Mart probably has its share of people who pay cash.

According to Reuters, “Treasurer Charles Holley said Wal-Mart has planned a number of merchandising initiatives to appeal to cash-strapped shoppers, including its dollar program.” The theory behind the promotion is sound. Most stores could not bring in a lot of revenue selling items at $1 a piece, nor could most restaurants, but Wal-Mart and McDonald’s have such significant scale and customer bases that getting an even slight increase in discretionary spending from tens of millions of people could make the difference between a mediocre quarter and a good one.

Wal-Mart and McDonald’s are often criticized for selling “cheap” food and merchandise and treating their employees poorly by paying them very modest sums. There may be some truth in both charges but that true comes with another side to it. Many people who eat at McDonald’s and shop at Wal-Mart are from the lower economic classes. McDonald’s and Wal-Mart do not exploit that by selling these people junk. George Soros may not want to wear shoes from Wal-Mart and eat McDonald’s hamburgers but that does not mean that both establishments have not helped feed and clothe people who might otherwise struggle.

Workers at McDonald’s and Wal-Mart are not paid well. Waiting on people in a big-box retail outfit or cooking and serving fast food will never pay well. The jobs don’t require any special skills and so they do not come with a premium wage. Wal-Mart does employ 2 million people, which is a lot of individuals to keep on a payroll during a recession. McDonald’s has 400,000. Neither place has announced significant layoffs and neither is likely to. (Read: “The Burger That Conquered the Country.”)

Charging people a dollar for a meal or for some modest item off a retail shelf may seem like a gimmick to pick up a penny a share for the next quarter. It is a good deal more than that. When a dollar is all that someone can spend, that person doesn’t care if his purchase increases the company’s earnings.

Hardcastle Restaurants to enter apparels business.

Hardcastle Restaurants to enter apparels through tie-up with city mill promoter Preethi Chamikutty MUMBAI HARDCASTLE Restaurants, the JV partner of McDonald’s India, is now venturing into the apparels business. The company will be bringing in two Disney brands — Disney Baby and Disney Jeans — into the country, in partnership with the Jalan family, the promoters of Mumbai-based Prakash Cotton Mills. The apparel business will be handled through the JV company, Global Trendz Retail (GTR).

GTR will set up ‘Bungee’ stores across the country that will house the two brands. Disney Baby is targeted at 0-4 years while Disney Jeans will target the 4-14-year olds. The company will bring in characters such as baby Mickey Mouse, baby Donald Duck, Pooh and Tigger among others. Speaking exclusively to ET, Hardcastle Restaurants MDAmit Jatia said: “After having dealt with the Indian consumer so closely through McDonald’s for the past 10-12 years, we feel, we have a good sense of their requirements.”

Kids apparel market in India is worth around Rs 13,000 crore, of which, branded retail is nearly Rs 3,000 crore and has been growing at 15-20% YoY. Gini & Jony, Weekender Kids, Ruff and Zapp! are some of the other brands in the kids-wear space.

Mr Jatia said GTR’s USP will be its price point proposition, ie, to offer value-formoney products. “The Indian consumer is price-sensitive and if you do not price your products right, then market penetration will be a challenge,” he said. GTR has opened its first Bungee store in Kalyan, a suburb beyond Mumbai. “Kalyan is a mid-segment market and is a representative of India in many sense. We shall be able to judge consumer reaction much better here,” Mr Jatia said. GTR plans to open 50 stores across 20 towns in 2009-10. Besides Mumbai, the company also plans to look at Hyderabad, Nagpur, Bangalore and Mysore.

Apart from standalone stores, Disney Baby and Disney Jeans will also be available in multi-brand outlets (MBOs) such as Shoppers Stop, Lifestyle and more. While stores in big towns would be owned by GTR, small town presence would be through the franchise route. “We will be looking at a mixture of both, as in outstation stores, a franchise can bring in local expertise which is handy,” Mr Jatia said. GTR will be investing over Rs 50 crore in store launches and market expansion over the next two years.

Arvind Verma, will be the CEO of GTR and will be responsible for the day-to-day running of the business. Mr Verma was head of Levi’s western India business and has over 15 years of experience in the garments industry. While Mr Jatia was very cryptic about what role the Jalan family will play, he said: “To keep our products competitively priced, we will be sourcing a lot of products locally. The Jalans have a lot of experience in the textile and manufacturing business, which will be useful.” What is not clear is whether GTR will be producing goods locally or importing them. But keeping Mr Jatia’s emphasis on price in mind, the Jalan family’s role could be more than just that of a promoter.

The Disney Baby brand internationally includes all kids-care products including food, toys and accessories, but at this stage GTR will only be looking at bringing in apparel products into the country.

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