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.

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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.
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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.
 
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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.

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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.

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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).
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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.



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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

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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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