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Ringside is a report that provides an overview of happenings in categories of Airlines, Alcohol, Cars, Computers, Consumer Durables, Financial Services, Food and Beverages, Hotels, Real Estate, Retail, Telecom Service Providers, Two-wheelers, Skin Care and Athletic Shoes.

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This tracker has been compiled from external sources and does not necessarily reflect the views of the company. Links provided will take you to the full articles appended at the end of the file.

© 2008 Zenith Optimedia.

 

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Full Articles

 

 

35. Tatas Rope In Tesco For Indian Retail Venture

13 August, 2008

 

UK's largest retailer Tesco and India's leading business House, The Tata Group, are signing up a partnership agreement to launch retail business in India. Tesco and the Tata's will sign a joint venture for cash and carry and a franchisee agreement for the front-end. A formal announcement is expected in a few hours.

 

This is the most viable option for foreign retailers wanting to enter India as Indian government does not allow foreign direct investment in direct-to-consumer retail that sells many brands and products. The government, however, allows 100 per cent FDI in cash and carry wholesale business and upto 51% FDI in single brand retaling. The world's largest retailer Wal-Mart has signed a similar agreement with India's largest telecom company Bharti for its new retail business.

 

Those who know the culture of both Tesco and Wal-Mart says that they complement each other. Both are conservative companies who tread cautiously. They wouldn't make gigantic plans which would be difficult to follow later. Both would take one step at a time, given the low consumer sentiments and still-high real estate prices. One of the reasons why Tesco fell out with the Bharti Group in the last minute - Bharti was Tesco's first choice - was the fact the two didn't agree on the milestones. While Tesco wanted to follow a more conservative approach, Bharti wanted a rapid expansion of retail. The latter signed on Wal-Mart subsequently.

 

Tesco, like Wal-Mart, is a world famous retailer of food and grocery with over 3,200 stores in 12 countries. It had been wanting to expand its operations worldwide. It just started retailing in the US under the Fresh and Easy Neighborhood Market stores. It is yet to be determined if they will use the Tesco brand in India. India has been on its radar for long but resistance from anti-foreign and anti-large retail lobbies and the related campaign in India recently had dampened its spirits temporarily. With the Left parties now gone from the UPA coalition, foreign retailers are revising their plans.

 

Tesco PLC entered the United States through the development of a new convenience format, beginning on the West Coast in 2007.

 

The new format is designed for the American market, following extensive consumer research and modeled on Tesco's highly successful and innovative Express concept, which we now operate in five countries, with over 800 stores serving around eight million customers every week.

 

International growth forms a key element of Tesco's four part strategy and the business currently trades in 12 countries outside the UK, mainly in Asia and Central Europe. Over half of Tesco's selling space is now outside the UK. Entry into the US is a strategic move into another developed market, complementing Tesco's entry into the emerging Chinese market in July 2004.

 

 

 

36. Birla Plans Big Expansion Of Lifestyle Retail Chain

20 August, 2008

 

Kumar Mangalam Birla is putting his best foot forward almost 10 years after storming the fashion space with the acquisition of Madura Garments. In his most ambitious retail foray move, he is scripting India's high-street luxury retail play similar to Barneys or Harvey Nichols.

 

Madura Garments Lifestyle Retail Company, a 100% subsidiary of AV Birla Nuvo, is working on setting up 12-14 stores to meet the fashion needs of the urban Indian man. The new store chain - The Collective - will open doors in Bangalore, Mumbai and New Delhi initially.

 

The retail initiative will bring in some of the world's edge of the fashion, super-premium brands like 7 For All Mankind and True Religion to India for the first time. Then there is the enduring high-end names like Kenneth Cole, Ted Baker and Valentino entering the market through a distribution deal.

 

Going beyond apparel and accessories play, the company has roped in Paris-based Jean Claude Beguine to set up salon within the stores while Sonodea from the US will decide the music for the store. The retail chain is also enlisting the leading names on Saville Row for tailored suits, besides offering laundry and fabric-care services.

 

"There should be more than one reason to come to our stores," says The Collective CEO George Santacroce, who has in the past steered several international brands in the US market. Mr Birla's luxury foray is targeted at men in the 30-45 age bracket, with income ranging from $50,000 to $200,000. AV Birla Nuvo will invest around Rs 275 crore from internal accruals in the project over the next 3-4 years, adds company director Vikram Rao.

 

Mr Santacroce says the chain will essentially be a bridge between premium and luxury brands, with some degree of overlapping with luxury market. "There's a long list of brands entering India's pureplay luxury segment, and we leave that space to them," he adds. However, be sure to find the apparel pricing in the store in the range of Rs 4,000 to about Rs 1 lakh for a suit.

 

So the brand check list will include Armani Collezioni, Versace Collection, Z-Zegna, Cheap Monday, Rock & Republic and footwear and accessories brands like Puma Black, Mandarina Duck, Bally and Church's Footwear. It is believed that The Collective has inked agreements with 35 apparel and around 20 accessories brands.

 

"Accessories are the first acquisition in an emerging market as people change their bags, shoes and watches more readily," says Mr Santacroche.

 

 

 

37. Reliance Retail Ties Up With UK's Wincanton For Back-end Biz

15 August, 2008

 

After having signed up at least half-a-dozen partnerships for specialty formats, Reliance Retail is now entering into a joint venture with leading European supply chain specialist Wincanton for its food and grocery and hypermarket businesses.

 

The synergy would enable Reliance to efficiently run its critical back-end operations, which essentially include warehousing of goods and transporting them to stores on time.

 

The latest move by India's largest corporate house, which jumped on the retail bandwagon two years ago by promising to do everything on its own, seems to suggest that it now needs a partner for almost every retail initiative.

 

Industry observers believe that the company has expanded very fast and has managed to set up over 600 stores across various retail formats in less than two years, but its supply chain is in a mess. "How to get the right merchandise to the stores on time has been its biggest problem. You'd often not find the goods you want in Reliance's food and grocery outlets," said a source. 

 

Wincanton, the UK-based $4-billion supply chain solution provider, has been roped in precisely to tackle this problem. It is expected to completely take over the supply chain, find the right warehouses for goods and transport them in time and in the right quantity to Reliance Retail stores.

 

Supply chain solution providers, Wincanton, for example, have IT systems in place to update them with regular data on inventory level in stores.

 

So, even without a store manager calling up, the warehouse manager would know the stores' requirements. Wincanton serves several companies across industries, from FMCG to retail, automotive and oil. Its client list includes retail giants Tesco and Woolworths, auto companies Ford and DaimlerChrysler, and consumer goods firms P&G, Nestle, SAB Miller and GSK.

 

For Reliance, an alliance such as this means a major shift in its strategy. The season of alliances has begun at Reliance with specialty stores and is now fast extending to almost everything. Two years ago, when India's largest private telecom operator, the Bharti Group, announced a tie-up with the world's largest retailer, Wal-Mart, many thought it had got a headstart over other Indian corporate biggies foraying into retail.

 

But unlike Bharti, Reliance had decided to go solo. It made the ambitious announcement, not unusual from the house of the Ambanis, that Reliance Industries had earmarked Rs 25,000 crore for its retail business. Reliance had evaluated the options of partnering with a foreign retailer as well as buying out an existing Indian retailer, but had not found it very exciting.

 

True to its form, Reliance built scale fairly rapidly, spreading from one city to another. The growth was achieved through a team of professionals poached from existing Indian retailers, but the pace of execution dwarfed rivals' achievements.

 

Reliance, however, realised it needed to do a lot more on the back-end to continue the pace of expansion and return early profits, which its shareholders usually expect.

 

"It didn't take Reliance long to realise that retail was a different ballgame altogether. It's not just about some long-term government policy or certain business competency, which it's known to manage well. The variables in retail business are far too many. There could be a number of factors such as general economic downturn, terror scare, shorter wedding season, cricket season like an IPL or a political protest, which can affect store sales. You need to be able to manage that," said a source close to Reliance.

 

The company has entered into alliances with foreign companies for several specialty stores, including opticals (Pearle Europe), toys (Hamleys) and apparel (M&S).

 

In most cases, the foreign retailer has the majority stake. This model, however, can't be extended to front-end retail in food and grocery or hypermarkets as Indian laws don't allow FDI in multi-brand retail. But it could be done in the cash and carry segment or retail back-end, an area where Reliance is in urgent need of help.

 

 

 

38. Videocon’s Next Retail To Offer Brands Online

7 August, 2008

 

“We would be offering warranty across all products and brands and our branded after-sales services would be a new customer proposition.”

 

The Videocon Group-promoted Next Retail is planning to start an online venture for its consumer durables retailing business.

 

The company is in the process of working out a name for its online entity, which it would be launching along with a newly branded after-sales service under the name Blue.

 

Mr K.S. Raman, Director, Next Retail, told Business Line, “We would be targeting at least 18 per cent of our turnover from our online sales venture. In fact, today we would be the first consumer durable retailer to go online and intend launching our services within the next 60 days. Our online sales would be coupled with our after-sales services, which would also be offered online. By offering branded after-sales service under the Blue brand, we believe in being perceived as a trusted retailer.”

 

Service offer
Offering to sell all its consumer durable brands online, the Rs 1,500-crore Next Retail would take charge of demonstration, installation and even offer warranty for its products. “We would be offering warranty across all products and brands and our branded after-sales services would be a new customer proposition,” Mr Raman said.

 

However, logistics would be a key issue for the Videocon Group and there is a possibility of announcing a new joint venture company in the near future. Currently, there is a central delivery system to mitigate the cost factor in its retailing operations.

 

“We already have warehouses which supply to the outlets and from there it would be delivered to the customers. There is a logistics joint venture company being formed for our cash & carry operations under Bolld and depending on its performance we might consider extending the logistics functions to the online venture as well,” said Mr Raman.

 

The Videocon Group is on the threshold of announcing a three-way logistics joint venture with Mitsui and Hitachi. Mr Sunil Mehta, Vice-President (Sales & Marketing), Videocon Industries, added, “We would be announcing a three-party logistics joint venture which would be for our cash & carry operations. There is possibility of it being extended to the other retail verticals within the group.”

 

Mitsui and Hitachi already have their respective logistics verticals and currently the Videocon group is in the process of fine-tuning its new joint venture company. As Mr Mehta says, “We are still working on the micro details of the company which will be called 3PL, standing for third party logistics. It would be an independent company and its operations could be extended to any of the Videocon Group companies.”

 

 

 

39. Pantaloon’s Brand Factory Ropes In Planet M, Globus Into Retail Format

26 July, 2008

 

Pantaloon Retail’s fashion value retail format, which opened its seventh outlet in the country and the second in Bangalore on Thursday, expects to touch revenues of Rs 500 crore by June 2009.

 

Plans for the year include six more outlets by June 2009, according to Mr Rajesh Seth, Vice-President, Marketing, Central and Brand Factory, Pantaloon Retail (India) Ltd. The company has budgeted investments of around Rs 6-10 crore a store, he said. Brand Factory will now offer products from Planet M, Globus, Staples and Dollar stores.

 

“We want to make this a lifestyle store and all out future Brand Factory outlets will be similarly designed,” Mr Seth said.

 

Spread across 55,000 sq ft of space, the new outlet offers over 200 brands at 20-50 per cent discount 365 days a year. Products offered are across various categories including apparel, footwear, eyewear, watches, home and kitchen accessories, travel and cell phones.

 

“This will be bigger and better than other Brand Factory stores, not only in terms of size, but also in our brand offerings,” said Mr Seth. Bangalore’s first Brand Factory outlet located at Marathahalli, the heartland of discount and value retail stores in the city, experiences footfalls of around 150,000 a month.

 

Value retailing in India, estimated at Rs 45,000 crore, is growing at 20 per cent every year. Brand Factory reported revenues of Rs 200 crore in June 2008, out of which Rs 60 crore came from the Bangalore store alone, Mr Seth told Business Line.

 

The average billing ticket size of a customer in Brand Factory is around Rs 1,500 and is expected to go up to Rs 1,700 in the new format, with the introduction of segments other than apparel and footwear.

 

About 80 per cent of the billing comes from the apparel sections, Mr Seth said.

 

 

 

40. Max To Open 27 Stores By ‘09

30 August, 2008

 

Dubai-based Landmark Group’s Max Retail plans to open 27 stores across India by March 2009 in tier I and II cities, said Mr Shekar C.S., Vice-President, Retail Operations. “Each store needs an initial investment of Rs 5 crore and we intend opening stores in Bangalore, Hyderabad, Mumbai, Delhi, Indore and Bhopal,” he said. Each store will be of 8,500-10,000 sq ft in tier II cities and of 10,000-15,000 sq ft in tier I cities, he added. Most of the stores wi ll come up in malls as owning a good high street outlet is not viable at the high rentals, he said. The store focuses on apparel, besides offering footwear and home furnishings. Currently, Max has 15 operational stores.

 

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