Supermarkets Make a Tryst with Record Sales on Independence Day

Top retail chains posted their highestever weekly sales in the six days to Independence Day, when heavy discount offers lured buyers to splurge on daily household products, apparels and consumer durables.

Retailers such as Future Group, Reliance Retail, Bharti Retail, RPG Group’s Spencer and K Raheja Corp’s HyperCITY — helped by active participation of several consumer product companies — offered deep discounts across product categories to push volumes at a time when consumer spending is slowing and there are fears of poor monsoon rains impacting demand.
“Consumers are looking at savings more than ever before,” said Rakesh Biyani, joint MD of the country’s largest retailer, Future Group, whose 164 Big Bazaar outlets across some 90 cities saw more than 8.1 million visitors during the week ended August 15. “We have been working to integrate our supply chain to bring down prices as far as possible.”
Several suppliers, including Coca-Cola, Britannia and Procter & Gamble, participated in special Independence week deals, helping retailers to offer higher discounts than before.
Darshana Shah, business head for marketing at HyperCITY, a hypermarket format run by Shoppers Stop, said increased vendor participation as well as entire malls going for sales helped pull in the crowds. “The sale was definitely better this year as we had stronger and bigger deals since market sentiment was soft,” she said. HyperCITY also increased its spend on marketing this year at around 2% of overall sales. During the week, Big Bazaar outlets sold more than 1.4 lakh packs of a combination of 5 kg of rice and sugar each with 5 litre of edible oil, and more than 1,500 tonnes of detergent. LED TVs, mixer-grinders and induction cookers were among the other top sellers at Big Bazaar, officials said.
Spencer’s Retail said its same-store sales increased 24% year-on-year during August 11-15, driven by beverages, health and beauty, bakery products and staples that saw over 30% sales growth. Sales of FMCG household products grew over 50% while liquor sales rose 30%, Sanjay Gupta, executive director (marketing & business development) at Spencer’s Retail, said.
Such discounting, however, reflects the escalating pressure on retailers, whose sales are slowing during non-discounted periods. “Because of the slowdown sentiment, consumers have been withholding purchases, so companies are trying to push volumes through discount seasons at retail chains,” said Mayank Shah, group product manager at Parle Products, the country’s largest biscuit maker.
But those volumes come at the cost of bottom lines, he added. Earlier this month, credit rating agency Fitch said same-store sales growth of retailers slipped across lifestyle and value-based formats in the quarter ended June, adding that it expects retailers to combat slowing sales by offering discounts.
“However, this may lead to an erosion of gross margins,” Fitch said, while revising the outlook for the Indian retail sector to negative from stable for the first half of this fiscal due to sustained decline in the discretionary spending ability. A slew of factors such as economic slowdown, deepening crisis in Europe, high food and fuel prices has impacted consumer sentiment in the country, slowing sales of everything from cars to carpets.
Some retailers use inflation as a marketing tool. A case in point is Bharti Retail’s “freedom from inflation” campaign at Easyday stores, which help people fight inflation by providing quality merchandise at low prices. Retailers such as Reliance Retail used the week to increase their customer base. Reliance introduced discount offers such as ‘double the difference’ price guarantees across various product categories.

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India Paves Way for Wal-Mart, Tesco to Enter Market

India approved allowing overseas companies to own as much as 51 percent of retailers selling more than one brand, paving the way for global companies such as Wal- Mart Stores Inc. (WMT) and Tesco Plc to own stores.

Overseas companies must invest at least $100 million, half of which has to be spent on developing back-end infrastructure, Commerce Minister Anand Sharma said in a statement presented to parliament today. India’s cabinet yesterday eased retail ownership rules, including permitting 100 percent foreign holding in single brand stores.

India’s decision to allow overseas ownership in retail will create up to 10 million jobs and give farmers better prices, Sharma said. Wal-Mart,Carrefour SA (CA) and Tesco (TSCO) seek to step up their presence in the world’s second-most populous nation to tap a market estimated by Business Monitor International to double to $785 billion by 2015 from $396 billion this year.

“This is possibly the most exciting thing that has happened in retail in India,” said Hemant Kalbag, who heads the consumer and retail practice for Asia at A.T. Kearney in Mumbai. “This is probably the next big wave of change in organized retail in India.”

Overseas retailers will be required to purchase at least 30 percent of goods sold in the ventures from small industries, Sharma said. Stores will be permitted only in 53 cities with a population of 1 million or more, and the government will retain the first right to buy farm products, he said.

‘Important First Step’

The government’s move is “an important first step,” Wal- Mart Asia President Scott Price said in a statement. The retailer looks forward to “playing a key role” in India.

Asia’s third-biggest economy permitted foreign retailers to own wholesale stores in 1997. Policy makers have been debating ownership rules in retail for at least seven years.

Wal-Mart has set up 14 such stores through a joint venture with billionaire Sunil Bharti Mittal’s Bharti Enterprises to gain a foothold in India, while Metro AG operates six wholesale stores. Carrefour opened its first outlet in December.

“This legal evolution should contribute to modernize Indian food supply chain and to fight against food inflation for the benefit of Indian customers,” Carrefour said in an e-mailed statement. The Boulogne-Billancourt, France-based retailer will wait for final regulations, it said.

India’s decision may prompt expansion of existing joint ventures and trigger acquisitions, said Bryan Roberts, director of retail research at Kantar Retail in London. Still, the size of the opportunity may be “overstated,” he said.

“A lot of retailers have already expanded and found that there’s not enough middle-class shoppers around at the moment,” said Roberts.

‘Win for Consumers’

India’s retail industry will get $8 billion to $10 billion in fresh investments over the next five to 10 years, Kishore Biyani, managing director ofPantaloon Retail India Ltd. (PF), said in an e-mailed statement yesterday. Pantaloon, which operates more than 150 Big Bazaar supermarketsacross 90 cities and towns, also has apparel and consumer-electronics outlets.

“It is a big win for consumers as they will have more choices,” said Biyani. “It’s a win for small industries as they will have more retailers creating markets for their products” and farmers will benefit from better prices, he said.

Pantaloon climbed 16 percent, the biggest gain since May 2009, to 233.95 rupees at the close in Mumbai trading. Shoppers Stop Ltd. (SHOP)rose 6.2 percent, and Trent Ltd. (TRENT), Tesco’s India partner, advanced 8.6 percent, the most since August 2010.

The decision to permit foreign retailers came as Prime Minister Manmohan Singh’s parliamentary ally the Trinamool Congress opposed the proposal. The main federal opposition Bharatiya Janata Party was also against the move.

Political Opposition

“Small and medium retailers, which employ a large number of people, will be affected,” Arun Jaitley, a BJP leader, said in New Delhi yesterday. “We oppose it completely.”

Overseas investment in the retail industry may help slow the pace of price gains, Reserve Bank of India Governor Duvvuri Subbarao said in the northern city of Chandigarh today. “Its important not only for raising overall growth but also important for containing inflation,” said Subbarao.

India’s food inflation accelerated 9.01 percent in the week ended Nov. 12 from a year earlier, the commerce ministry said yesterday. The rate has stayed above 9 percent for 16 weeks.

‘Licking Their Lips’

Raj Jain, president of Wal-Mart India, said in April 2010 the company can help reduce prices by improving supply chain and infrastructure to cut waste. About 40 percent of fruit and vegetables in the country rot before they are sold because of a lack of cold-storage facilities and poor transport infrastructure, according to government estimates.

Bharti-Walmart, the local venture, buys fresh produce directly from about 1,200 farmers in Punjab, in northern India, Jain said in May.

“Foreign retailers must be licking their lips at this opportunity,” said Narayanan Ramaswamy, executive director at KPMG India, which advises retail companies. “It has to be one of the biggest opportunities in the world right now.”

To contact the reporters on this story: Bibhudatta Pradhan in New Delhi at bpradhan@bloomberg.net; Malavika Sharma in New Delhi atmsharma52@bloomberg.net

To contact the editor responsible for this story: Frank Longid at flongid@bloomberg.net

Global Brands Rake in Moolah.

Indian Stores Among Best in generating revenue per square feet per year.

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

Vivacity Mall to host “Shopper’s Stop” and “Hyper City” as its Anchor tenants

Mumbai, June 30, 2010: Vivacity Mall, a wholly owned subsidiary of Sheth Developers, has signed with K Raheja Group— to set up Shoppers Stop; a family store, with value merchandise and Hyper City, the hypermarket chain stores within the upcoming Vivacity Mall at Thane.

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

Retail majors in rightsizing mode

IN A bid to maximise sales per square feet, Indias frontline retailers are increasingly looking at ways to restructure their stores. Leading players like Future Group, Spencers Retail, Shoppers Stop and Vishal Retail plan to rightsize their stores and replace slow-moving categories with speciality formats under the shop-in-shop model.

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

Retailers pitch for loyalty in tough times.

LOYALTY pays, even during a slowdown. At a time when consumer spending is on a decline, leading retail chains are either expanding or restructuring their loyalty programmes. The retailers expect such a strategy will help them increase footfalls, conversion level and ultimately drive their topline growth.

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 bet on entertainment activities to lure customers.

 NEW DELHI: As spiralling inflation dents buyer sentiment, leisure and entertainment forays seem to  be big retailers’ weapons to fight flagging sales.

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.

 

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