ADVERTISING THIS WEEK BY RETAILERS

This festive season saw customers splurging and all retailers showed increased revenue incomes as well as growth in same store sales. There has been a lull both in retailer advertising activity as well as consumer buying for the last 2 weeks of Novmber. Retailers, realising that customers need to be pulled back into stores have once again eimbarked on an aggressive advertising blitz.

Big Bazaar has launched a full page ad campaign with ' Monthly Bachat Bazaar' as the theme and  prices and quality being the focus areas and special attention being given to prices, free offers on detergents and fmcg products.

Reliance too has launched an aggressive ad campaign with full page ads in the national dailies. The Theme - 'Winter Wonders' . Focus here too is on price and the difference between MRP and Reliance prices. Also highlighted are what they call the 'Stars of the week'. Let's see how customer's see these products and  their prices.

 Pantaloons this week launched their 50th store with ' The ultimate Fashion Experience'.

 SRS value bazaar has declared December as the Maha Bachat Month. The focus here too is on prices and the offers - price offs, combos, bulk discounts etc etc.

 Home Town is focusing on Bathrooms and ending their special offers this week with this closing ad.

 Reliance Digital in an effort to arrest the declining sales in electronics has declared an end of season sale with so called special prices and bargains.

 The Mahendra Group retail venture - Mom & Me have launched their hunt for child stars for their forthcoming camgaigs by inviting kids to be photographed and selected. 

Vishal continues with it's rationing theme. The focus - apparel, glass & crockery and other home products.

It would be interesting to watch how retailers perfom in the month of December. November was a hugely successful month for everyone and consumer sentiment indicates that December should auger well for everyone.

MONTHLY ECONOMIC REPORT – MINISTRY OF FINANCE

Issued by the Ministry of Finance, Goverment of India.

MONTHLY ECONOMIC REPORT - OCTOBER 2010

RETAIL SHRINKAGE STILL HIGHEST IN INDIA

In an annual survey conducted by the Centre for Retail Research in Nottingham, UK, the Indian retail sector lost Rs 9296 crores (USD 2065 Million) to theft and shoplifting. As per the Global Retail Theft Barometer Study, India has the dubious distinction of having the highest rate of retail shrinkage in the world. In India, 47.3% of retail shrinkage was due to shoplifting and 26.4% due to employee theft. The highest rate of shrinkage was seen in Apparels.
 
Globally, retail theft was estimated at US $ 107.3 Billion which translates into 1.36% of total retail sales for the period July 2009 – June 2010 which is reduction from the previous year’s 1.43 %. As per the study , the lowest rate of shrinkage was seen in Taiwan which stands at 0.87% of retail sales. The average rate in the Asia-Pacific region was 1.16%.
 The decrease in shrinkage over the previous year was primarily due to increased spending by retailiers on loss prevention and security which went up by 9.3% to US$ 26.8 Billion.
Source : PTI23112010

DHANTERAS & DIWALI RETAIL SALES HIT THE ROOF

This Diwali season saw unprecedented sales by retailers, consumer durables companies, apparel outlets and jewellers with consumers going on a buying frenzy across the country. The only exception was  Punjab and to some extent Haryana which were very recently affected by floods.
Retailers and companies have reported a healthy year-on-year growth ranging from 20 to 80% growth. And this growth is not restricted to urban India. Retailers in rural India have shown growths from 80 to 120% growth in sales during this period. In rural India, this growth has been majorly driven by CDIT - specially white goods and appliances though other household goods - particulary kitchen products, apparel and Food & Groceries have also shown very robust growth.
There is a growing belief and confidence  that this consumer confidence will remain high on the back of a good monsoon, rising incomes, positive economic forecasts and a booming stock market. 
Retailers reported about 25% jump in average bill size, as demand for premium products such as flat-panel televisions, double-door refrigerators, fully-automatic washing machines, home theatres, branded gold and diamond jewellery, fashion apparel, imported gifts and branded furniture soared with consumers upgrading their household items. The fear mindset of consumers has completely vanished.

Source : Economic Times, RM reseach team

FDI IN MULTI BRAND RETAIL

There are strong indications that Foreign Direct Investment ( FDI ) in multi brand retailing will soon be a reality. Indications are that there would be cap of 26% on investments allowed.  Sources say that a political consensus has been hammered out at the highest levels of UPA and influential wings of the government including the PMO, Finance Ministry, Agriculture Ministry and the Planning commission are backing this important economic reform.

FDI in retail could transform the way agriculture produce is procured, stored, conserved and marketed in the country.


Source : Financial Express: November 18, 2010

HAPPY DIWALI

WISH YOU ALL A HAPPY AND PROSPEROUS DIWALI

RURAL CONSUMER MARKET GROWTH STORY

It is now the turn of rural India to mirror the growth story of urban India. The rural consumer market, which grew 25 per cent in 2008, is expected to reach Rs 19125 Billion (US$ 425 billion)  in 2010-11 with 720-790 million customers, according to a white paper prepared by CII-Technopak . The figures are expected to double the 2004-05 market size of Rs 9900 Billion (US$ 220 billion).
FMCG
According to figures released by market researcher Nielsen, demand for personal care products grew faster in rural areas than urban areas during the period January-May 2010.
In shampoos, rural demand grew by 10.7 per cent in value terms, while in urban markets, it rose by 6.8 per cent. Similarly, toothpaste sales grew by 9.1 per cent in rural India and by 4.4 per cent in urban markets.
Retail
The rural retail market is currently estimated at Rs 5000 Billion (US$ 112 billion), or around 40 per cent of the Rs 12,500 Billion (US$ 280 billion) Indian retail market, according to a study paper, 'The Rise of Rural India', by an industry body.
Hindustan Unilever (HUL) is planning to significantly increase its rural reach. According to Harish Manwani, Chairman, HUL, the quality and quantity of rural coverage will go up to the extent that "what we have done in the last 25 years we want to do it in the next two years." Currently HUL products reach approximately 250,000 rural retail outlets and the company intends to scale it up to nearly 750,000 outlets in two years time.
Automobiles
Car sales in rural India have been on the increase in the last three years since the government announced various schemes such as farm loan waiver etc, for the rural population.
Maruti Suzuki's share of rural sales has increased from 3.5 per cent to 17 per cent in the last three years. Mahindra & Mahindra (M&M) is now selling more Scorpios in rural and semi-urban markets. Scorpio sales have increased from 35 per cent to 50 per cent in the last two years.
Exciting days ahead for Rural India !!

INDIA'S CONSUMER MARKET

According to a study by the McKinsey Global Institute (MGI) called 'Bird of Gold': The Rise of India's Consumer Market, total consumption in India is likely to quadruple by 2025, making India the fifth-largest consumer market in the world by 2025.

The BMI India Retail Report for the third-quarter of 2010released in May 2010 forecasts that the total retail sales will grow from US$ 353 billion in 2010 to US$ 543.2 billion by 2014.
Growing young population : Indian population in the age group of 15 to 59 forms the real consumer base for durable companies. This population is estimated to grow to 800 million by 2016.

According to recent estimates, household income in the top 20 boom cities in India is projected to grow at 10 per cent annually over the next eight years.

The Indian FMCG sector, with a market size of US$ 25 billion (2007-08 retail sales), constitutes 2.15 per cent of India's GDP. This is poised to grow between 10 - 12 percent annually.

There exists a well-established distribution network spread across six million retail outlets (including two million in 5,160 towns and four million in 627,000 villages)

NEW FDI RULES EXPECTED

There are indications from the Goverment of India that a new policy on foreign direct investment in the politically sensitive multi-brand retail sector will soon be announced. Currently FDI is not allowed in the lucrative retail sector  in India. The retail sector today employs 33 million people and is dominated by the Kirana Shops.

The Department of Industrial policy and Promotion (DIPP) has initiated a debate on this sensitive issue of allowing FDI in the multi-brand retail sector.

It received inputs from stakeholders, including business chambers, WalMart India and French retail major Carrefour, besides the wings of the government. The concept paper had favoured opening of the sector, subject to creation of back end logistics by the foreign retail stores. The committee comprises officials from ministries of Micro, Small and Medium Enterprises, Agriculture, Finance, Rural Development, Commerce and Industry and Consumer Affairs.

While multi-brand retail is closed for foreign investors, 51 per cent FDI is permitted in single brand retail while there are no restrictions on inflows in wholesale cash and carry format business. According to the discussion paper, India annually loses more than Rs 1 lakh crore (US$22.523 billion) in agri-products, including fruits and vegetables, due to lack of proper infrastructure like cold chain storage and warehousing. While there had been political resistance to the idea on the presumption that global players would swallow the small 'mom & pop' (kirana) stores, the industry has been pitching for allowing FDI in the retail sector.
Asia Pulse: October 12, 2010

AD SPLURGE

Navratra's started yesterday and with that came a splurge of ads from all urban retailers. From bringing in the New to an Exchange Offer to Sports Fitness - it's all there.  The first to break out was Big Bazaar with a double front page spread in the Times of India - the ad loudly welcoming the new with a wide range of products. Does the ad mean New Products or New Season ?? Anything new in the products being offered ? Couldn't find any  - wonder if customers that the ad is targeting would !

The Big Bazaar Ad

Home Town ( Another future group retail format) is focusing on an exchange programme on furniture. Could be a great success if the offers are good and exchange offer's value. The Value offered in exchange for old items - Rs 15000 for an old sofa set to Rs 75 per Kg of old plastics. The caveat is that the purchase values is to be 4 times the exchange voucher value.

Exchange Offer of Home Town

Vishal too has released a half page ad with a somewhat Bizarre message - 'Sports and Fitness Rationing' and then talks about a flat 40% off. Products offered range from food to Kurtis to LCD TVs to Mobile phones. The connection to Heath and fitness was difficult to spot.

The Sports & Fitness Rationing ad of Vishal

Reliance retail with it's Reliance Fresh, Super & Mart formats is focusing on 'Lowest Prices on Fruits & Vegetables' in it's full page ad. The lowermost portion of the ad talks about '1000's of products below MRP at our stores'. Does this statement really carry any weight with customers ? All stores today sell these products below MRP.

 Reliance & Lowest Prices

With the onset of the festive season, this frenzy is bound to increase  as the countdown to Diwali begins. It would be interesting to see the approaches and the offerings of the main players in Indian Retail during this season.

RETAIL ROUNDUP

RELIANCE RETAIL PLANS 4,000  NEW STORES IN 4 YEARS
Reliance Retail has mega plans for the next 4 years. The Mukesh Ambani promoted retail chain plans to open 3,000-4,000 stores across its 19 formats, in addition to the existing 1,000 stores. Reliance Retail currently operates 19 formats, some of which are Reliance Fresh, Timeout, Trendz, Jewels and Digital.  The company also aims at a growth rate of not less than 100% for the financial year 2010-11.
FE290910
BHARTI RETAIL GOES WEST
According to sources, Bharti retail is planning its first hypermarket in Mumbai. The 60,000 sq,ft store is planned at the Neptune Magnet mall in Bhandup and is expected to open in the 1st quarter of 2011. It is additionally planning another 20  stores in Mumbai, Pune and Nanded. To service these stores, a Distribution Centre is planned on the Mumbai-Pune highway.
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RELIANCE RETAIL TO ENTER CASH-AND-CARRY BUSINESS
Cash and Carry in retail is the flavour of the day. Reliance too plans to jump on the bandwagon with 3 new stores in the next 6 to 8 months. Reliance is going solo on this - no foreign partner of joint venture. The stores are planned to be in 1.5 lakh sq ft in size.
AP230910
MOBILESTORE TO ADD 700 OUTLETS
Mobilestore today is 1200 stores strong spread across 200 cities with a 45% market share in organised telecom retail. It is now planning to add another 700 outlets in the next 6 months. 200 stores are in process and another 100 in the pipeline. In tier 2 and tier 3 towns, the company is adopting the franchise model which will help add around 500 stores. Mobilestore will also be financially involved in these franchised outlets.Mobilestores are owned by the Essar Group.
BS260910
METRO NOW EYES PUNJAB
Metro Cash & Carry is now extending its reach into Punjab after operations in Karnataka, AP, Maharashtra and West Bengal. Metro opened it's 2nd outlet in Hydrabad on 23rd September.  The Punjab operations of the wholesale retailer are expected to be operational in 2011 with an investment of Rs 2400 Million.
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URBAN INDIA CONSUMERS UPGRADE CONSUMER DURABLES

Consumers in Urban India are busy upgrading their TVs, Airconditioners and Washing Machines. . The last 7 months till July have shown a robust growth in these segments . This growth has been led by LCD TVs, Split Airconditioners and Fully Automatic Washing Machines. In a year of major sports action, high end TVs growth is expected to grow even more spilling over to rural India too.
The last seven months have also seen robust growth of entry level products in rural India. Industry leaders expect the growth in rural India in these entry products to be as high as 40% during the coming festive season. (Category Managers/Buyers in retail pl note and stock accordingly)
GROWTH THIS YEAR (7 months till July'10) :
Televisions
LCD TVS    :    70%        Overall   :  4.8%
Air Conditioners
Split ACs    :    58%         Window ACs   :   18.6%        Overall   :  41%
Refrigerators
Direct Cool :    14.7%      Frost Free     :    13.7%        Overall   :  14.5%
Washing Machines
Fully Automatic   :   16.5%     Overall  :  9.7%
(Source GfK-Nielson)
The overall outlook in consumer durables for the year 2010 is positive. Industry leaders expect TV sales to double in units this year besides a very healthy growth in refrigerators.

Exciting times ahead in this industry.

ECT250910

EXPANSION PLANS OF RETAILERS IN INDIA

Retailers are back on an expansion spree. With the economy opening up again and consumer spend on the rise, retailers in India are once again looking to expand operations. Some headlines :
M & S PLANS 32 MORE STORES
Mark and Spencer  is planning to set up 32 more stores in India by 2013. The company is a joint venture between Mark and Spencer Plc of the UK and the Reliance Group. MSRI has 18 large format stores in major cities in India.
BI 04092010
MAX OF LANDMARK GROUP TO ADD STORES 
Max, the retail chain from the Landmark Group of Dubai, plans to have a chain of 60 stores in India by 2010-2011. It has inaugurated its first store at Bhopal and the third in Madhya Pradesh taking the total count in India to 33 outlets. The company intends to expand to metros, tier II and III cities across India. Max operates more than 115 stores across West Asia, Egypt, India, Turkey, Yemen and Palestine.
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CARREFOUR TO OPEN ITS FIRS STORE BY YEAR-END Retailer Carrefour of France plans to open its first Cash & Carry ( wholesale) store in India by the end of 2010. This store will be opened in New Delhi .
ET04092010

SHARE OF WALLET

Rural India is showing dramatic shift in share of wallet and is fast catching up with urban India in spend trends.

Share of Wallet – Rural India

 

Rural India spends the maximum share of wallet on Food – a whopping 55% followed by 10% on travel. The lowest share of wallet goes to housing and health – a mere 4 and 5% respectively.

Share of Wallet – Urban India

The Urban Indian consumer however spends only 45% of his wallet on Food and Beverages. This is also a reflection of the higher incomes of the urban consumer. There is also a significant  difference in spend on education between the urban and rural consumers – the urban Indian spending 9% of his wallet on education while the rural consumers spends only 6% on education.

Source: Max-NCAER,2007      ET072010

Changing Landscape of Rural India

The rural landscape in India has shown a major change in the last 10 years. Opportunities of creating wealth and progressing economically have never been so great. There is now improved infrastructure, road connectivity has gone up substantially, there are more electrified houses and more permanent homes.

This represents a huge opportunity for retailers and other consumer good companies to expand markets and enter almost virgin markets.

Source : ET072010

FUTURE GROUP EYES VISHAL RETAIL

Reports are afloat that Kishore Biyani is in the race to take over the troubled Vishal Retail Ltd.

TGP Capital has already bid to acquire Vishal Retail. TPG has already obtained the approval of a consortium of lenders to purchase Vishal in March. The Indian retailer’s board had last month approved a non-binding, non-exclusive memorandum of understanding for talks with TPG.

Biyani on being asked declined to confirm or deny the report. . “I am not saying anything on that (topic). I am not commenting,” he said.
 Amol Jain, director of TPG, declined to comment while Vishal’s managing director Ram Chandra Agarwal denied that there was any proposal from the Future Group.
 Vishal’s bankers, including State Bank of India, HDFC Bank Ltd and ING Vysya Bank Ltd among others, are currently engaged in the restructuring of debt amounting to Rs730 crore.

Mint220710

INDIAN RUPEE GETS A SYMBOL

The Indian rupee has is now in elite company. It is one of the 5 currencies of the world that have a unique symbol.

The Indian Rupee Symbol

Other currencies with a symbol of thier own are the US Dollar, Euro, Japanese Yen and the British Pound.

“The symbol will standardize the expression for Indian rupee in different languages, both within and outside the country,” a government statement said about the symbol, which was conceived by D. Udaya Kumar, a research scholar at the Indian Institute of Technology in Mumbai.

According to a government statement, the symbol will also be included in Indian standards, or Indian Script Code for Information Interchange (ISCII).The ISCII specifies various codes for Indian languages processing on computers along with keyboard layouts.

The government statement added that the industry lobbies for Indian software and hardware companies, Nasscom and Manufacturers Association for Information Technology, or Mait, would ask their members to make changes needed to allow the rupee’s symbol to be used in texts.

LG BETS BIG ON RURAL AND SEMI-URBAN INDIA

LG Electronics India, the South Korean consumer durables giant is heading towards rural India to ramp up it’s sales. It plans to increase deliverly centres and after sales service points. It also plans to introduce customized products in rural and semi urban markets to attract customers.

The company expects LCD (liquid-crystal display) televisions and mobile handsets to be its major sales drivers. At present, both products contribute close to 25 per cent to the company's sales. The figure is expected to double by 2015. On the company's strategy on mobile handsets, sources said that though handsets are available, lack of after-sale-service is driving away rural consumers from cheaper brands. LG India expects to earn a total revenue of Rs 19,000 crore during calendar year 2010 and has set a target to of $9 billion (Rs 41,400 crore) by 2015.
HT270610

RELIANCE RETAIL PLANS BIG

The retail business of Reliance Industries is looking at big growth in the coming years. From the existing Rs 4500 crores ($957 Million) to Rs 45,000 crores ( $9570 Million) in the next 5 years.
The multi-format Reliance Retail currently operates over 1000 outlets under 14 formats , some of which are
Reliance Fresh ( Neighbourhood stores)
Reliance Super ( Supermarkets)
Reliance Delight (Meats etc)
Reliance Mart ( Hypermarkets)
Reliance Ranger Farms ( Cash & Carry)
Reliance Digital ( Consumer Durables & IT)
Reliance Trends ( Apparel)
Reliance Footprint (Footwear)
Reliance Timeout
Reliance Wellness
Reliance Living Homeware
The company has currently nearly 1150 stores in 86 cities across 14 states.

Wholesale Markets of Yiwu

Yiwu is probably one sourcing hub that no retailer from India can avoid. With over 75,000 booths offering a wide range of products ranging from household goods to imitation jewellery, this wide range of  merchandise on offer at one place is a buyers paradise. The advantage of buying from Yiwu is that you can buy in small lots and fill up a container with as many as a 100 or more SKUs.

Inside view of the Futian Market

The main market in Yiwu called the Futian market is a series of buildings, 4 floors of air conditioned shopping area and over 4 kms in length from end to end. Each block or building is interconnected enabling one to move from point to point with ease.

Entrance to the new Block of Plastics & Hosiery 

The system of booking goods is simple. To begin with, the services of an exporter/consolidator/agent is needed who will act as your interpreter as well as handle the consolidation and forwarding of your goods. Keep in mind that prices need to be negotiated and your best negotiating skills will be put to test. A good consolidator is essential to ensure that you get the goods that you ordered. Ensure that the consolidator has the necessary resources for inspection of goods . Normal payment terms are either 30% advance and balance TT on dispatch or through irrevocable LC at sight.

Some of the merchandise categories available in Yiwu are

1. Kitchen Products
2. Appliances
3. Hardware
4. Toys, Gifts and Artificial Flowers
5. Imitation jewellery
6. Luggage and Casual bags
7. Cosmetics
8. Hosiery
9. Footwear
10. Plastics

Restaurant in the market

You need to start your day early - the market starts functioning at 8.30 in the morning and shuts at 4.30 . If you do not have conveyance, leave by 4.15 - getting a cab after that is not easy. The market has an interesting restaurant named Picassa serving Western Cuisine (quite good by Chinese standards) that you would need to visit to rest your tired legs after a few hours of walking around and a hot cup of coffee or some chilled beer. 

Getting There :

There is no direct international flight to Yiwu. The options are

• Fly to Hong Kong . Take a connecting flight to Hangzhou ( 2 Hrs) and by road to Yiwu (2 hrs and 400 RMB by taxi)
• Fly directly to Guangzhou or through Hong Kong and take a connecting flight to Yiwu.
• Fly to Shanghai and take a train ( 3 Hrs) or taxi (4.5hrs)

Places to Stay

Yiwu has a plethora of places to stay starting from 150 RMB ( $25). However if your work is mainly in the Futian Market, the Best Western Hotel is the place to stay. Just next to the market, it is very conveniently located and offers all that a good 4 star hotel should have.

The Best Western Hotel in Yiwu

The markets of Yiwu

30% GROWTH IN CONSUMER DURABLES

Good News for retailers. According to a statement released by the Consumer Electronics and Appliances Manufacturers Association ( CEAMA), the Indian consumer durable industry is showing a growth of 30%. The sales of refrigerators and AC’s have shown an even higher growth of 50%.

 The industry also witnessed a 40 % growth in home appliances sales. Higher disposable income coupled with changing lifestyles is primarily responsible for this surge in demand. The demand for LCD televisions is showing a major increase as consumers are replacing CTVs with LCD . Rural markets and small towns are showing promising demand for durables. There are pockets of prosperity in rural India that are drivers of rural growth.
 
BS140610

EASY DAY PLANS TO DOUBLE STORES

Bharti Retail , owners of the Easy Day stores have big plans for this year. Operating in 2 formats, the smaller Easy Day Supermarkets and the Larger Easy Day Market hypermarkets are present in the states of Punjab, Haryana, Rajasthan, Uttar Pradesh and Delhi.

From the current 60 Easy Day stores and 6 Easy Day Hypermarkets, the company plans to have 125 and 13 stores respectively. All these new stores have been planned for North India in cities with a population of over 1 million.

TOI010610

PER CAPITA INCOME OF INDIANS

The per capita income of Indians has grown by 10.5% in 2009-10 against 2008-09. The average income of Indians now stands at Rs 44,749 ($972) as against Rs 40,141 ( $ 873) of the previous year at current prices.

Per capita income at fixed price however grew by 5.6% in 2009-10 and factors in inflation also.

Per capital income means income of each Indian, assuming national income is evenly divided among the country's population of 117 Cr (1.17 Billion). At market price, size of the economy rose to Rs 62, 31,171 Cr ($ 1355 Billion) in 2009-10, up 11.8% from Rs 55, 74,449 Cr ($ 1212 Billion) in 2009-09. At 2004-05 prices. the size of GDP stood at Rs 44, 64,081 Cr ($ 970 Billion) in 2009-10 as against Rs 41, 54,973 Cr (903 Billion) in 2008-09.

TOI010610

Creating Visual Displays

Visual merchandising plays an extremely important role in enhancing the appeal of a product. It sets the context of the merchandise in an aesthetically pleasing fashion thereby converting footfalls into actual buys.

Retailers use this creative method to infuse life into a store. A tastefully done display of merchandise can result in substantial increase in footfalls and conversions.

The image above is a fine example of an aesthetically appealing and well designed display of products. It is also important to note that the display should be in line with the image that is associated with it . The product above is high end crockery and the conventional racks have been replaced with well designed wooden props to appeal to the high end customers that it is targetting.

INDIAN ECONOMY GROWS BY 7.4%

The Ministry of Statistics and Program Implementation has estimated that the Indian Economy has registered a 7.4 % growth in the financial year 2009 -10. Driven by a healthy manufacturing sector performance and strong consumer spending, GDP growth of 7.4 % has exceeded the forecast of 7.2% for the year.

PACKAGED WATER SEGMENT IN INDIA

Bottled water in India is growing at a furious space. Industry players estimate the domestic bottled water market in India at around Rs 2,000 crore ( $ 445 Million). This is growing at at an annual rate of 40 per cent. The major players in this segment are Coke's Kinley, Pepsico's Aquafina and Parle Agro's Bailley amongst others.  The lemon drinks market too is showing a healthy annual  growth of around 35% and today stands at Rs 100 crores ( $ 90 Million).
HT20052010

CONSOLIDATION OF HARIYALI KISAAN BAZARS

DCM Shiram Consolidated Ltd (DSCL) has decided to consolidate its rural retail chain business, Hariyali Kissan Bazar (HKB), by offering more economical fast moving consumer goods products to the rural consumers apart from a range of agricultural inputs rather than focusing on expansion. DSCL has around 300 rural HKB stores across eight states in the country. DSCL is planning to consolidate HKB following losses since its launch four years back. HKB incurred a loss of Rs81 crore in 2009-2010 attributed to deficient monsoon rains in 2009. However, revenue of HKB grew by 50 percent to Rs630 crore from Rs419 crore in 2008-2009.
Financial Express: May 07, 2010

Rural Households earn More

There is an increase in earnings per household in Rural India. From Rs 2795 in 2006-07 to Rs 3150 in 2007-08 to Rs 4060 in Rs 2009-10. This is an increase of 45% in 2 years.
 The Rural Development Ministry claims that this is primarily due to the job guarantee schemes that have been launched by them.
 This would certainly have an impact of the purchasing power and quality of life of the rural poor.


Seems good news for retailers in rural India.



M090510

HEALTH AND WELLNESS FOOD MARKET ON UPSWING

The Health and Wellness Food sector in India is in for exciting times. With change of lifestyles in India, the Indian consumer’s awareness of lifestyle diseases in India is also growing . Indian consumers are therefore now favorably inclined to the benefits of health and wellness foods.
 In a report launched by Tata Strategic Management Group, the Health and Wellness Foods market in India is today pegged at Rs 10,150 crores ( $ 2250 Million) which is expected to grow at a CAGR of 33% to Rs 35,700 crores ($ 7.93 Bn) . The global Health and Wellness Foods market is estimated at $ 460 Bn in 2008.
The split between Foods and Beverages is
 Health and Wellness Foods :
Current Size Rs 5050 Crores ( $ 1125 Million)Market Size in 2015
( 24% p.a. estimated growth) : Rs 18,350 crores ( $ 4078 Million)
Health & Wellness Beverages :
Current Size Rs 5150 Crores ( $ 1145 Million)
Market Size in 2015
(22% p.a. estimated growth) : Rs 17350 Crores ( $ 3855 Million)

Some of the fast growing categories in food are Curd/Yoghurt, flour and savoury snacks while in beverages it is yoghurt drinks, fruit juice and energy and sports drinks.

Source : Tata Strategic Management Group

NEXT PLANS BIG

NEXT, the electronics and consumer durables retail chain of the $ 5 billion Videocon Group is planning to double the number of stores it has in India from the current 540 to 1000 stores in the next 3 years. The current turnover ( 2009 -10) of Next is $ 311 Million ( Rs 1400 crores) which is also planned to be doubled in the next 3 years. NEXT has consistently been showing a 50% growth on a year-on-year basis.

NEXT is a multi-brand multi-product showroom and stocks an entire range of consumer durables from Air-conditioners, LCD and Plasma TVs, Home Theater systems, Washing Machines, refrigerators, microwaves to small home appliances. NEXT retails some of the popular brands such as LG, Samsung, Sony, Electrolux, Kelvinator, Whirlpool, Onida, Philips, Kenstar, Videocon, Sansui, including its own brand under its stable. NEXT also stocks Xbox of Microsoft, computers & laptops of Acer, HCL, Lenova, HP.

'MORE' CLOSES 39 OUTLETS

As part of its strategy to shut down unviable store, Aditya Birla Retail has closed 39 of its ‘More’ supermarkets. This includes two thirds of its outlets in Gujarat. Aditya Birla presently operates over 600 ‘More’ supermarkets.

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HAIR COLOUR MARKET IN INDIA

The hair colour market in India has shown a robust growth of 21% in the year 2009 over the previous year. It is important to note that the main growth has come from the mid-level powder brands that have from Rs 118 crores in 2008 to Rs 202 crores in 209. This is a whopping 71% growth.

Size of Hair Colour market in India(2009) : Rs 1200 crores ( $ 267 Million)Growth of the total market over last year   : 21%
Size of the mid-level powder brands         : Rs 202 crores ( $ 45 Million)

Leading Players

Godrej Comsumer : 33 % of the hair dye market
L’Oreal & Garnier : 60% of the hair cream market
Color Mate : 38% of the hair poweder market

BL030410

NEW FDI NORMS DISRUPTS RETAILER'S INDIA PLANS

New guidelines have been issued by the Government of India in respect of FDI ( Foreign Direct Investment) in Wholesale or Cash and Carry trade. These would impact global giants like Wal-Mart, Tesco and Carrefour who would now need to relook at their agreements with their Indian partners as well as their strategy for entering the Indian retail space.
 Under the current policy, 100% FDI is permitted in wholesale trading and 51% in single brand retail. No foreign investment is allowed in multi-brand retail.
 The Dept of Industrial Policy and Promotion of the Govt of India has defined wholesale business as sale of merchandise to other retailers, commercial, institutions or other wholesalers for the purpose of trade and business and not for personal consumption.

To plug loopholes that existed in the present norms and to prevent retailers from making a back door entry into the growing retail space in India, new guidelines have been issued. These come into effect from 1st April 2010. It is important to note that a transaction would now be defined as wholesale or retail on the basis of the type of customer to whom the sale is made and not on the basis of volume of sales.

Some of the important guidelines are :

1. To undertake wholesale trade, required licenses, permits as per State Governments Legislations need to be obtained.
 2. Sales would be considered as wholesale only when made to establishment holding a) VAT/Sales Tax/Service Tax/Excise Duty Registration b) holding trade licence issued by a Govt authority c) holding permit for holding retail trade d) institutions have certificate of incorporation.
3. Establishments in Wholesale Trade have to maintain complete records of registration, licence, amount of sale etc on a daily basis.
 4. Wholesale trade would be permitted amongst companies of the same group but such trade is not to exceed 25% of the total turnover of the wholesale activity. Further the wholesale made to the group companies should be for their internal use only. This is to prevent front end retail from coming in the garb of wholesale or Cash and Carry business.
5. The wholesale trader cannot open retail shops to sell to the consumer directly.

It would be interesting to see how the large global players now react to these new set of rules which seems to have majorly altered the playing field.

RURAL INDIA BOOMS

Rural India is booming like never before. At an estimated 720 - 790 million consumers, the Indian rural market has begun to attain size and growth rates to make it very attractive to companies. According to a report by CII and Tecnopak 'Rural markets are growing at double the rate of urban markets for many product categories'. Rural India accounts for more than 45% of total market in most consumer products including FMCG, consumer durables, two wheelers and 4 wheelers.

The FMCG Market last year has grown by 23% in rural India ( 18% in Urban India)

Consumer Durables are growing by 15% in rural India

Telecom is showing a growth of 31%

Growth and Penetration of some key FMCG categories in rural India

(Source IMRB, Period Dec 2008 to November 2009)

Rural India contributes to 43% of national income. There has been a consistent increase in incomes in rural India. Rural Income stood at $ 220 Billion ( Rs 9.9 lac crores) in 2004-05 which is expected to grow to $ 424 Billion ( Rs 19.12 lac crores) by 2010-11, a CAGR of 12 %. ( Source CII-Tecnopak).

There is no doubt that the aspirations and lifestyle of consumers in rural India is growing and are fast approaching the urban consumers lifestyle. The result - rural consumer now want's products and services that enhance his lifestyle - even though he is still very price conscious and demands value for money.

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Shoprite changes hands - now with Future Group

South Africa's largest grocery retail chain, Shoprite Holding's sole outlet in India located at Mumbai has been taken over by the Future Group. The 55,000 sq ft 'Shoprite Store' sold multibrand products in India. This was till now operated in India by Nirmal Lifestyle through a franchisee agreement with Shoprite Holdings Ltd.
Future Group plans to launch a new brand of stores and the Shoprite outlet will be first in this format. These stores will consist of 85% food and grocery merchandise and would also have a instore bakery. Whereas Future Group has a food supermarket chain called 'Food Bazaar', these outlets are much smaller in size ranging from 10,000 to 15,000 sq ft. Shoprite would be the first large format food outlet of the Future Group. The new store is expected to be launches on the 28th of this month.
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Malls of India

The last few years have seen a substantial growth in the no of malls in India. Some of the largest malls in India are detailed below

Malls of India

The malls in India however pale in comparison to malls present around the world. Some of the world's larges malls are

World's Largest Malls

The largest Indian mall is just about one fourth the size of Dubai Mall - an indication of where India stands today and the huge potential for more malls to come up. This is more so if one takes into account the handsome growth that India is witnessing and huge increase in disposable incomes now with the Indian Consumer.

Aditya Birla Retail's Future Plans for 'More Hypermarkets'

Aditya Birla Retail is planning to invest aggressively in the coming years. It plans to invest Rs 1800 crores ( $ 400 million) over the next 8 years to add substantial no of it’s ‘More’ Hypermarkets pan India. The company is planning addition of one store per month at an investment of Rs 20 crores ( $ 4.5 Million).

Aditya Birla Retail has currently
I. Supermarkets 632 Nos
II. Hypermarkets 6 Nos

Plans to increase ‘More’ Hypermarkets to 100
The minimum size of the Hypermarkets is 50,000 sq.ft whereas the supermarkets are around 2500 sq. ft in size.

The current Indian Retail sector is estimated to be $ 350 Billion and growing at 15% per annum.

Retail in India - Some Facts

Population of India
1.1 Billion
Middle Class : 300 million
Size of the Sector
Annual sales in The Retail Sector in India is estimated at Rs 24,300 Billion ( $ 540 Billion) . 80% of this in the unorganised sector - mainly small Mom & Pop stores. ( Source ATKearney).
Organised Retail
Currently at Rs 1500 Billion ( $ 32 Billion) or 6% of the total retail sector. This segment is growing at 2% ( Source NCAER)
Consumption
People living in small towns and villages account for 59% of Consumer Durables such as refrigerators and Washing Machine sales. These towns and villages also account for 53% of Consumer Goods like soaps, detergents and shampoos.(Source NCAER).
Rural India
Rural India has shown consistent and robust growth for the last 4 years . It was only the last season that saw a slight downturn because of the poor monsoon. A Rs 1755 Billion ( $39 Billion) stimulus package was specially introduced for development of rural infrastructure. An added stimulus is the $16 Billion (Rs 716 Billion) loan waiver scheme for farmers along with the $ 7 Billion ( Rs 300 Billion) job scheme introduced by the Government of India for rural India.

Carbonated Drinks Market in India

Some facts about the Carbonated Drinks Market in India
Size of the Market : Rs 7000 crores

Market Shares of Major Brands
Thums Up 15.8%
Sprite 14.2%
Pepsi 13.7%
Coca Cola 8%
Thums Up , the leading brand in the carbonated drinks market is specially strong in West Bengal and Andhra Pradesh. Coca-Cola India with Sprite, Thums Up and Coca-Cola in it's basket is the clear leader in India.
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Consumer Electronics - High Growth

The period January to November 2009 has seen a robust growth in consumer electronics in India as per data released by ORG-GFK. This was particularly so in the case of high value products.
The figures for the period Jan to Nov09 are

LCD TVs sales grew 93% to 10 Lac Units
Washing Machines sales grew 14% to 24 lac units
Refrigerators sales grew 16.5% to 50 Lac units.

70% sales of consumer electronics came from large cities.
Leading players have shown handsome growth - Samsung at 25% and LG at 30%.

Withing refrigerators, the Direct Cool Refrigerators showed a whopping growth of 21% and sales to 36 Lac units . The premium frost free refrigerators however grew 7.4% to 14.5 lac units.
On an overall basis however the growth in Televisions was only 5% to 1.17 crore units

Carrefour set to enter India

Carrefour is on the verge of finalizing a deal with Kishore Biyani of Pantaloon Retail to enter the Indian Market. Carrefour is Europe's largest retailer and has been scouting around in India looking for a suitable partner for the last 6 years. With Walmart and Tesco already having made a foray into the $350 billion Indian retail market, it was important for Carrefour to gain presence in India.

The 87 Billion Euro retailer plans to set up franchisee stores which will be a part of Future Value Retail, a 100% unit of Pantaloon Retail.

The Carrefour franchisee stores will be targeting the higher income segment of customers and will be pitted against retailers like Hypercity which has 4 stores and operates in 3 cities including Mumbai.

The deal is expected to be signed in March signalling a new all round thrust on retail activity in India.