Wal-Mart India lauches Cash and Carrry

'Best Price ' launched in Amritsar

Wal-Mart India finally launched its first Cash & Carry format named ‘BEST PRICE MODERN WHOLESALE ' in Amritsar on Saturday. In an interview on NDTV Profit, a bullish Raj Jain, President of Wal-Mart India outlined future plans and expects to open 10-15 such outlets in the next 3 years instead of the 7 years originally planned. The company had so far been focusing on the back end and is now ready to look at the front end.

The 'Best Price' outlet carries an assortment of over 6000 SKU's displayed over 50,000 sq ft. The store carries basic commodities, food and FMCG products to electronics and shoppers can shop and choose in air conditioned comfort. These products are sourced from over 750 suppliers consisting of MNC corporations, large manufacturers as well as numerous small manufacturers who were assisted by the company to come up to international levels. The company has also started sourcing directly from farmers to an extent of 15-20%.

The company has already registered 30,000 members who can shop at the outlet. Only authorised retailers and Kirana stores with a valid registration can register to become members and buy in bulk at attractive prices that the outlet offers. It is not open to retail customers Only bonafide businesses can become members. The company has also enrolled 70,000 secondary members - add on to the primary members.

Mr Raj Jain emphasised that retailing is a marathon race and there is a big opportunity in retail. He also talked of the importance of a robust back end for a successful retail operation. In the case of Wal-mart India, it has taken over 18 months to put the back end in place.
The company , along with the Government of Punjab has started a training institute for Retail where scholarships are also offered. 600 students have already graduated from this institute of which 60 have been employed by the company.

The next 3 years will see similar stores coming up in Punjab, Haryana, Delhi and Uttar Pradesh. Lots of action on the Cash and Carry front to watch !!

Annual Budgets

Financial Budgets of any retail organisation are prepared at the beginning of a financial year and cover the full financial year. This financial budget defines the following for the coming year

• Sales Planned for the year
• Gross and Net Margins ( Profits)
• Stock Levels
• Costs (HR costs, travelling etc)

While planning the annual budget, several factors are taken into account , some of which are

• Market Growth
• Initiatives planned in merchandise
• Increase in outlets
• Planned growth in Like to Like store sales
• Planned increase in footfalls
• Marketing Activities
• Improvement in Supply Chain
• Private Label Initiatives

Once the annual budget is finalised and approved by the Top Management, it cannot be changed. What follows from the Annual Budget is the Buying Plan and the Range Plan. These plans are normally seasonal and prepared at the beginning of the season. The winter season in India starts from October and it is now time to prepare the Winter Range Plan. Will take this up in the next post.

Retail Ads - The Week that was

The most active retailer this week has again been Big Bazaar
Wednesday saw a half page ad ' WEDNESDAY BAZAAR - Hafte ka sabsa Sasta Din' . Special prices on food and clothing is the offering.
WESTSIDE has the 'Summer Shopping Blast' campaign till the end of May. Offers include Buy 2 get 1 free on girl's wear, special discounts on towels, tops and trousers, footwear and Luggage.
VISHAL Mega Mart - Ads in the Delhi Times with the headling ' Iss Garmi mein kuch Thanda hai to sirf Vishal ka Price ' ( if there is anything cool this summer, it is Vishal's price) Focus on food items and Buy 2 get 1 Free schemes
MARKS & SPENCERS - Mid Season sale on with upto 60% off. Ads in the Delhi Times
HOME TOWN - Flat 40% off on a wide range of kitchen items. Special kitchen week from 16th to 24th May. Half page ad in Delhi Times
E ZONE - Focus on price and energy saving . Mixed message of price, space, service, energy and time. Tries to break away from the regular advertising with the headline ' Save more than just the Price'. Ads in the Delhi Times
EVOK - Celebrates its first anniversary with 'Lowest Prices of the Year' Their products include furniture, modular kitchens, furnishings and decorative lighting. This is an initiative of Hindware.
BIG BAZAAR - 2 Campaigns . Weekend savers on electronics - AC for Rs 13990, Digital Cameras and DVD players with special prices for 2 days.
A focused campaign on steel almirahs - prices ranging from Rs 5199 to 13,999.
To reverse the trend of falling footfalls in malls, the DLF Grand Mall has initiated a flyer campaign highlighting the various brands and products available at the mall along with complementary parking.

Subhiksha Bailout

Subhiksha's Travails
Subhiksha is nowhere near resolving its financial problems and getting back into operation.
The Chennai based Subhikhsa with 1600 stores till last year has still not been able to put a bailout plan into place with it's 13 major creditors. Whereas the company had expected to put the corporate debt restructuring plan ( through its main lenders) by April of this year, lack of clarity on the exact financial position of the company has prevented this from happening.
The major lenders of Subhiksha include HSBC, ICICI Bank, ABN AMRO, HDFC Bank & Bank of Baroda. ICICI owns 25% of the company and Premji Investments own 10%.
Subhiksha's operations currently have come to total halt with most stores either having been taken over by the landlords or without any supplies. Most major suppliers like HUL and P&G and others have stopped supplies to the retailer.

Retail Ads - The week that was

Big Bazaar - Full Page Ad Campaign

Big Bazaar continues its advertising campaign into this week with large size full page ads in the national dailies in Delhi with focus on consumer durables and luggage

Focus is once again on the huge buying in appliances to give customers better prices. I wonder if this really convinces customers about the price ?? A comparison of prices of most products highlighted in the ad show that these are currently available in the market at similar prices . So what is the benefit to consumers ?

With summer holidays around, the focus on this ad is travel and travel goods. Goodies thrown in include a free travel bag and a chance to win a trip to Malaysia. Overall aggressive discounts should get the retailer good volumes.

Spencers Retail - 'Kool Mela' offer through newspaper inserts. Focus on food, appliances and the major brands available at their outlets.

'MORE' plans more

Aditya Birla Group to have 2200 stores

The Aditya Birla Group promoted 'More' chain of supermarkets and 'More Mega' hypermarkets has plans to have 2200 stores by 2015 There are currently 640 supermarket stores in operation which is expected to rise to 720 by end of 2010. The hypermarket count too will go up to 8 to 10 during this time.

The group had rapidly expanded to 710 since the last 3 years of operation but shut down 70 enviable stores recently. In 2006, the group had acquired 'Trinethra' with its 176 stores and is now present in 12 states and around 75 cities.

The group has also been aggressive on its private label policy and over 350 SKU's in food and home products. Some of the store's own brands are 'Kitchen's Promise' and 'Best of India' in food and contribute to 4 - 5 % of revenue.

The retail venture is expected to turn profitable in 5 to 6 years

Products for rural India

New Products for retailers in Rural India
Envirofit India Pvt Ltd has introduced a new fuel efficient stove in the Indian market. These stoves allow fuller combustion , use 65% less fuel and cut cooking time by half and are currently available in the Southern States of India – Tamil Nadu, Karnataka and Andhra Pradesh. Prices range from Rs 700 to Rs 2700. These stoves use biomass ( wood, crop waste and animal dung) as the fuel. Biomass being the traditional fuel for cooking in rural India makes these stoves a highly acceptable product to the rural female population . The aggressive pricing is a major plus. 50,000 pcs have already been sold in these states and the company plans to launch the stoves Pan India.
More information on these products and the company can be had at
http://www.envirofitcookstoves.org/
An excellent product for Indian rural retailers to market

This Weeks Promotions

The aggressive advertising campaign that Big Bazaar launched last week continues with double spread ads in national dailies. The message - ' LOWEST PRICES ON 1600 PRODUCTS ' . Pricing certainly seems aggressive - Pressure Cookers at Rs 499, TV's at Rs 4750 and discounts on a huge range of products.

Reliance too has launched their ' SABSE OFFER HOT, SHOPPING SABSE COOL' campaign in mainline dailies. TV ( 21" ) at Rs 4990.00 is their main offering.

Mauling of Malls

Glitzy and fashionable malls have been a highy visibile and inviting sight in India since the last 10 years . In the NCR area of Delhi, malls were being constructed at a hectic space where ever land was available. Gurgaon's famous MG Road , also known as Mall Road has 18 malls coming up of which 6 are already functional. However, with the downturn of the economy, there has been a reversal of fortunes of mall owners. Footfalls have fallen and the rush of customers of a year back is now missing.
Lack of demand for space has forced malls to drastically reduce rentals. Malls today are facing problems of empty spaces. Ambi Mall - the huge over 1 KM of shopping space mall has an occupancy of only 30 percent while the upmarket MGF Saket has a 40% occupancy.
Rentals in almost all malls across the country have come down by 10 -30 percent . In Noida, Great India Place has seen rentals down by 15 to 20 percent.
Major retailers are taking advantage of this fall in rentals and are renegotiating terms of lease with the developers. Many retailers are also now looking at a revenue sharing model with mall owners. The Economic Times has quoted Vikas Gupta, CEO and MD, Lacoste India - " Best practices are coming out now. Revenue share model, zoning, clarity on super carpet and nature of contracts with both sides being equal partners are now gaining popularity."
At this point, all major development in mall space has come to a halt. Of the 400 malls that were to be operational by this year, only 150 have come up. The rest have either halted work or deferred plans and the result is that over 25 million sq ft of retail space across cities is currently on hold under various stages of construction .
Retail in India and malls in particular are going through a tough learning phase. Hopefully, in time success stories will again be the flavour of the day.