Retail chains adopt prepaid cards to retain customers

Prepaid cards have become the latest retail tool to keep consumers hooked to brands. They offer convenience and safety, because customers don’t have to carry cash, and they often come with a variety of offers, including discounts.

Brands like Café Coffee Day, Pizza Hut, Provogue, Kaya, Fastrack, Gili and a host of others have launched prepaid cards. A prepaid card works like a debit card with a PIN number that can be redeemed at the brands’ outlets. The cards in India are based on the closed loop model — that is, they can be redeemed only at the brand’s stores. “When I have money loaded on the card, the tendency to come to the same place is higher,” says K Ramakrishnan, marketing president at Cafe Coffee Day. The brand’s card Cafe Moments, launched this month, offers a 5% bonus on cards with a value of Rs 100 to Rs 499, 7% on Rs 500 to Rs 999 and 10% on Rs 1,000 and above.

A prepaid card obviates the need to pay cash every time, and it also enables faster accumulation of bonus points or other offers. Prepaid cards in India are currently being used more as gift cards. Some brands have used it to launch a promotion or a service. What the prepaid gift card did for Kaya was to generate incremental walk-ins,” says Suvodeep Das, marketing head at Kaya Skin Clinic. In Kaya prepaid cards, currency can be reloaded in multiples of Rs 500 to up to Rs 2 lakh. Kaya sells about 250-300 gift cards a month.

Global Prepaid Exchange recently estimated that the size of the organized prepaid gift card and gift voucher market in India is Rs 2,000 crore and would grow to Rs 8,000 crore by 2015. “The acceptance of gift cards in proportion to vouchers has increased significantly,” says Pratap T P, chief marketing officer at QwikCilver Solutions, a provider of prepaid card solutions.

However, Devangshu Dutta, CEO of retail consultancy Third Eyesight, says growth in prepaid cards would be restricted by the fact that they can be used only at a particular brand’s outlets. “Also, a customer cannot claim the minimum residual value in the card. He will have to top it up to redeem it,” he says.

Pick n Pay ups shareholding in TM Supermarkets

Johannesburg, Dec 9 (I-Net Bridge) – In a deal that will pump US$13 million into the Zimbabwean economy, SA’s second-largest grocer Pick n Pay (PIK) on Friday said the final government hurdle had been cleared for it to up its holdings in TM Supermarkets from 25% to 49%.

The TM Chain is controlled by Meikles Limited and is the largest chain of retail stores in Zimbabwe by number of stores, with 51 outlets.

“Yesterday the shareholders of TM Supermarkets voted unanimously to allow Pick n Pay to purchase the additional 24% of shares,” Pick n Pay said.

In November, the Competition and Tariff Commission of Zimbabwe declared that it had examined the competitive effects of the merger on the Zimbabwean market and established that the transaction did not reduce competition or create a monopoly situation, but rather strengthened the ailing TM Supermarkets.

The commission then agreed to Pick n Pay taking its shareholding of TM Supermarkets to 49% subject to certain conditions pertaining to labour and local procurement of goods.

“The acquisition of the additional shareholding in TM Stores has been a protracted one that has stretched over more than three years, and required the approval of the Zimbabwean Investment Authority, the Zimbabwean Reserve Bank, the Zimbabwean National Indigenisation and Economic Empowerment Board, and now finally the approval of the Competition and Tariff Commission of Zimbabwe,” Nick Badminton, Chief Executive Officer of Pick n Pay said.

Dallas Langman, head of group enterprises (Africa) at Pick n Pay said it was important to note that not a cent of the money coming into the TM Stores business would go towards shareholder dividends.

“All the money is earmarked for developing and strengthening TM stores in Zimbabwe. Some seven stores will be rebranded with the Pick n Pay brand, but we wish to express our confidence in the TM brand and respect its history in Zimbabwe,” he stressed.

“The investment will see money being spent on local procurement processes and will give employment to Zimbabweans during the refurbishment of stores and the staffing of them,” Langman added.

Family Dollar Expands Into California

The opening of four new stores in California marks the retailer’s growth into its 45th state. Family Dollar Stores Inc. yesterday announced that it has opened four new stores in California. The stores in Ontario, Rialto, Riverside and Fontana represent the company’s entry into its 45th state.
Family Dollar, one of the fastest-growing retailers, plans to open 450 to 500 new stores nationwide in 2012.
“We’re proud and excited to bring our value and convenience to more customers with our newest stores in California,” said Howard Levine, chairman and CEO of Family Dollar. “These stores offer an opportunity to introduce our new neighbors to a more compelling place to shop for everything they need for their families.”
To commemorate the openings, Family Dollar will host grand opening celebrations at all four locations beginning Thursday, November 17. The weekend-long festivities will include a special ribbon cutting, family activities and a canned food drive to benefit the Second Harvest Food Bank.

Milestone marks difficult times – Home Depot turns 30

Home Depot’s founding is corporate lore – a classic story of turning lemons into lemonade.

Bernie Marcus and Arthur Blank, fired from hardware chain Handy Dan, got their revenge by creating Home Depot, a warehouse hardware concept. The first two stores opened in Atlanta on June 22, 1979. Over the next three decades the company grew into the nation’s second-biggest retailer behind Walmart.

How we got the story
The AJC reviewed past articles and books about Home Depot, and interviewed two former CEOs, the current CEO, former and current executives and retail experts to get their thoughts on the company at 30.

As the chain turns 30 on Monday, Marcus is not bashful about burnishing the legacy.

“When you look at what Arthur and I have accomplished, today over 300,000 people are working at the Home Depot,” he said last week. “We probably lowered costs to homeowners by about 25 to 30 percent. We had more of an impact on the economy than any Congress since.”

But the milestone comes at a humbling time for Home Depot. In recent years the stock price has tumbled and expansion has ground to a halt. Internal reorganizations have forced layoffs, and the company known for its “You can do it. We can help.” ad tagline is scrambling to regain its customer service edge.

None of the founders is still on the board of directors, and in conversations last week they were frank about how the company has evolved with different leadership.

“I would say for a period of about four to five years, we lost our way through the last CEO,” said Marcus. He was referring to the December 2000-January 2007 reign of Bob Nardelli as chief executive. Recruited from General Electric, he was the first CEO brought in from outside.

Nardelli, hired to give Home Depot discipline and structure, was criticized for changing a culture that had been working. He tried to build new revenue streams by creating a wholesale division, HD Supply, intended to become the leading supplier to big infrastructure projects such as sewer lines and bridges.

“I think Nardelli came in because Arthur and I felt we had grown the business and the systems were very antiquated,” said Marcus. “We were very entrepreneurial and we needed some discipline. Nardelli provided that. But unfortunately, he had his own culture he tried to infuse into the Home Depot, and that culture didn’t work well.”

Blank, who left Home Depot shortly after Nardelli’s hiring, said, “I think the board’s decision about Nardelli clearly was not the right one.”

Pat Farrah, another co-founder who now runs garden retailer Smith & Hawken, was more emphatic.

“None of the three of us should ever have handed over the reins of the company,” said Farrah. “We knew how to do everything, and do it well and people loved us. We should still be running the company today.”

Nardelli, who left Home Depot to run now-bankrupt Chrysler, declined to be interviewed for this story.

Wall Street analyst David Schick, however, said blaming Nardelli is too easy.

“I don’t think it’s fair at all to throw Bob under the bus,” said Schick, of Stifel Nicolaus Equity Research, a firm that does business with Home Depot.

“I think the growing pains Home Depot ran into are pretty interesting glimpses into the history of American retail,” he said. Nardelli’s effort to update internal systems and diversify revenue were not mistakes, he said, but part of the company’s “life cycle.”

It’s easy in hindsight, Schick said, to say building HD Supply or Expo, a store dedicated to high-end designer items that actually pre-dated Nardelli’s arrival, was wrong.

“But when you’re 20 years old and pretty built out, it’s easy to think, ‘Lets look at other businesses,’” he said. Wall Street also wouldn’t have embraced slowing growth, he added. “It’s Wall Street’s fault too.”

If debate about Nardelli’s tenure persists, Marcus said he thinks the current CEO, Frank Blake, is headed in the right direction. He shed HD Supply, although Home Depot still owns a 12.5 percent stake, and shut down Expo. He’s emphasizing the core retailing that was the company’s original calling card.

“Frank Blake has done a yeoman’s job in two and a half years in turning that around,” said Marcus.

“Frank is not wedded to everything in the past,” agreed Blank, “but he understands the value of culture and those fundamentals.”

In the face of a housing-led recession, however, sales, profits and stock price have all been under pressure during Blake’s still-young tenure.

Excluding the HD Supply division, revenues dropped nearly 10 percent over the last two years to $71.3 billion. The company’s market cap, or the value of all outstanding shares, is about $40 billion, down from $70 billion in January 2006.

Archrival Lowe’s has wrestled with similar downdrafts, though the North Carolina-based chain is still growing its U.S. store base and has started expanding to Canada.

Home Depot plotted overseas growth many years ago, hoping to emulate No. 1 U.S. retailer Walmart and its expansion into South America, Asia and Europe.

Home Depot’s progress has been limited to 176 stores in Canada, 74 in Mexico, and 12 outposts in China. An attempt to gain footholds Chile and Argentina last decade fizzled.

“We did expand at one point,” said Marcus. “We went South to Chile and Argentina, but we didn’t do well. We were not ready for it. Frankly, we didn’t have systems to control those businesses and we pulled out.”

Now, retail expert Howard Davidowitz sees international growth as Home Depot’s next frontier.

“Home Depot is very small internationally, and that may mean a lot of potential for them to grow,” said the New York retail consultant and investment banker.

But analyst Schick doesn’t think the chain should be looking abroad.

“No, absolutely no,” he said. Home Depot “is very housing-related” and has a “different equation” than Walmart. The latter has a self-service model, while Home Depot’s calling card is helping homeowners solve problems.

“American retailers and companies often think we know how to do things here, so we can do it there,” said Schick. “You have to be very careful about assuming your model is exportable.”

What does the current CEO think? Blake said international growth is “absolutely an opportunity for us,” and that he will probably look to Latin America first – but only “when the time is right.”

Meanwhile, Home Depot’s biggest growth opportunities now are stealing market share back from Lowe’s, and in making its U.S. stores more efficient and profitable, he said.

Blake believes he can “drive” up revenues by improving U.S. stores and increasing Internet sales.

He’s working to create “advantages” for Home Depot over Lowe’s by improving inventory and merchandising systems. The company is spending hundreds of millions of dollars building new product distribution centers. Blake said company research shows Home Depot’s brand is still “incredibly strong.”

“Thirty years is still pretty young,” said Blake. “There are more opportunities to play offense here than overseas. You have to remember where you’re going to create more of your value.”

As consumers cut spending, Home Depot lowered prices last year on more than 1,000 items. This year it launched the price-conscious tagline, “More Saving. More Doing.”

Davidowitz thinks Home Depot should have capitalized more on being a “warehouse” brand during the “biggest trade down” in retail history. He said stores should have areas “where everything is $10 or less, to drive footsteps. Why don’t they have that?”

As for the next 30 years, Home Depot’s future will remain pegged to the consumer, and the economy.

“What’s tarnished is our economy,” said Davidowitz. “Home Depot will come back if we can get all this stuff back and the economy improves a little.”

Said Schick: “I do think housing will still age, paint will still crack and faucets will still leak 30 years from now. I don’t think we’ll all be levitating, so we’ll still be wearing out carpets.”

India: UniverCell to expand despite slowdown

India:  Chennai-based large-format mobile retail chain                                 univercell  UniverCell will pursue its expansion plans aggressively. Talking to IndiaRetailing, Satish Babu, founder, UniverCell said, “The ongoing economic slowdown has not affected the company’s plans at all. In fact, we feel that it has helped in our strategy of expanding at a lower cost. We are currently pursuing our expansion plans aggressively.”

“The present real estate scenario has offered us the opportunity to expand at a lower cost. It has also provided us the scope to reduce our average rental cost which will help us improve our bottom line,” Babu further added.

Into the business of mobile handset sales for over 11 years, UniverCell currently has over 200 touch points.

When asked about diversifying the portfolio of UniverCell to beat the slowdown, Babu reacted, “We feel that there are enough growth opportunities within the telecom sector to grow and hence would like to focus sharply only on telecom in the medium term.”

Elaborating the company’s plan to foray strongly outside south India, Babu disclosed, “We would like to maintain the focus on the South in the short-term before cautiously foraying into other regions. There are definite plans to expand outside south India during 2009-2010.”

Meanwhile Babu stressed that the company has adopted enough measures to ensure maximum footfalls at its outlets. “As opposed to the conventional mobile retailing, we provide the ‘live demo experience’ to customers, where we show them dummy phones or leaflets. Therefore, customers get to experience the handsets before buying them,” he said.

“Besides targeting the youth segment, we have continuously focused on improving our customer services to attract footfalls and despite the slow down, we continue to invest in marketing the ‘Univercell brand’ as the most preferred destination for buying mobile handsets,” concluded Babu.

Source : By Shailesh Shah, indiaretailing.com

Morrison’s won “Retailer of the Year” at the Oracle Retail Week Awards

Morrison’s won “Retailer of the Year” last week at the prestigious Oracle Retail Week Awards for 2009. Panel judges felt that Morrison’s had made a real turnaround in their commercial performance, combining a traditional agenda as grocer with marketing and operational practice.

The event was hosted by comedian Jimmy Carr, and guests numbered at around 1300 – among them some of retail’s biggest hitters.

After out-performing its rivals, the UK’s fourth-largest retailer received the award partly due to improved fresh offer, and a push on value-for-money initiatives which naturally proved popular with customers.

Tim Danaher, who presented the prize, commented “To be once again handing this award to Chief Executive Marc Bolland is testament to the way Morrison’s has adapted during this time to not only meet market challenges head on, but to continue to grow the business by attracting new customers and gaining market share. Morrison’s has combined its reputation for excellent fresh produce and great value with the best in modern retail and marketing practice”.

Patrick Bohannon, Vice President, EMEA, Oracle Retail added that their taste for innovation and originality in food retail has set them apart in the market. “Morrison’s has a strongly differentiated approach to food retailing through its in-house management of almost every aspect of its commercial business, including its people, sourcing and supply chain”.

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Vishal Retail’s new format

Diversified retail player Vishal Retail is planning to venture into the shopin-shop format, with a target to have around 40 such corners in its large format stores within the next three months. The company has tied up with laundry retail chain White Tiger as the first part of the strategy and is talking with another 4-5 companies for allotting space in Vishal Retail’s hypermarkets for the Vishal shop-in-shop corners.

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