Retail Industry4

Retail Industry Snapshot

FRPT Research 1

Flipkart Reports Loss Of ~INR 282 cr In 2012-13, Revenues Increase Five-

Fold To INR 1180 cr

The deeper losses as well as soaring sales are in keeping with Flipkart's winner-

takes-all strategy, which involves pursuing revenue growth and market share at

any cost, the same model followed by Amazon.com Inc. in the US.

After Tesco-Tata Deal, Anand Sharma hopes more retail majors to set up in

India

"We do hope that the other majors in this sector will also come, looking at the

potential of the Indian market - the fact that they are coming to a country of 1.25

billion, and a country which is the largest producer of food grains, fruits and

vegetables," Sharma said.

Marks and Spencer seeing double-digit growth across categories: Venu Nair

"The very reason that we have been on an expansion spree is the fact that we are

seeing good sales across our stores in the country, so this calendar year, we would

have opened 15 stores and what we have found across all the business units we

trade in is that we are seeing a double-digit growth," says the MD.

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Nike exploring options of setting up concept based stores

Nike India is exploring options of setting up concept based stores in the country as

part of garnering more share in the domestic sportswear industry valued at Rs

3,500 crore.

Tesco-Trent deal: New format stores will not be bigger than Star Bazaar

The new format will be a mid-sized hypermarket between the neighbourhood

format Star Daily and the hypermarket chain of stores Star Bazaar with the stores

ranging between 20,000 square feet and 30,000 square feet and the Star Market

will not be bigger than Star Bazaar.

Goverment looking to push forward single-brand retail proposals

In single-brand retail - there have been more than a dozen investment proposals

submitted, with the government keen on pushing them through quickly as a way of

signalling how investor friendly it has become.

Food Delivery Retail Outpaces Restaurant Sales




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According to a survey conducted by Foodpanda, the growth of the food delivery

industry at 40% p.a., is highest among the retail food industry and quick service

restaurant (QSR) segment.

Cafes push coffee demand by 15%

Rising popularity of caf chains like Cafe Coffee Day, Barista Lavazza and Costa

Coffee coupled with gadgetising coffee-making process through specialised coffee

makers and ready-to-brew capsules has made coffee-drinking fashionable.

Gourmet restaurants to serve high-value fishes via cage culture

"These fishes fetch high price in the local market and most exporters have the

requisite distribution network to sell it here,'' said Anwar Hashim, managing

director of Abad Fisheries, a leading exporter.

All you need to know about the Tesco-Tata Trent deal

Tesco will become the first foreign chain to invest in supermarkets in India since

FDI was allowed in the retail space last year and it would even steal a march over

global rival Walmart which split up with Bharti Enterprises two months ago.




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Govt. To Fast-Track Tesco Proposal

The Department of Industrial Policy & Promotion (DIPP), the nodal department for

FDI policy, is expected to send the proposal to FIPB shortly, a senior government

official said, adding that the Tesco plan is in line with the terms of the policy.

Walmart to be probed if US inquiries reveal new violations

In an Action Taken Report on a probe into Walmart's lobbying activities, the

government has also said it was "continuously monitoring" developments in the US

with regard to such lobbying activities and an ongoing investigation into bribery

charges against the company.

Titan Plans To Double Jewellery Market Share From 5% To 10% Within 3-5

Years

The owner of Tanishq and Goldplus chains plans to open 15-20 jewellery stores

every year over then next 3-5 years. It had some 180 stores of Tanishq and

Goldplus at the end of March 2013.

Flipkart's customer-facing PayZippy allows users to store card details for

online shopping




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This service will allow online consumers to store their card information and use it

for making online payments on merchant sites and consumers will then not have

to enter card information across sites each time they make an online purchase.

Retail FDI may take a backseat if 2014 poll mandate favours BJP

While international retailers are optimistic about their growth plans in India, they

are cautious about opening new stores and are carrying out due diligence to

understand the market before making any commitment due to the political

uncertainty looming large till general elections are held.

Tesco needs to invest $ 55 mn in back-end if proposal okayed

Tesco, which has sought the government's permission to buy 50 per cent stake in

Tatas-owned Trent Hypermarket Ltd, will have to invest atleast $ 55 million in

creation of fresh back-end infrastructure.

Carrefour opens wholesale cash & carry store in Bangalore

The store, located in the western part of the city in the Binny Mills neighbourhood,

is spread across 6,400 sq m and will offer more than 10,000 SKUs in food and non-

food to business and professional customers, institutions, restaurants and local

retailers and traders.




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Twists and turns in the McD-Bakshi case- CLB to re-examine McDonald's plea

McDonald's wants to take its standoff with its former Indian partner Vikram

Bakshi to London Court of Arbitration, for a speedy resolution of the dispute, but

Bakshi's lawyers said McDonald's has violated the CLB's interim order by referring

the case for arbitration.

Lower Costing Oranges Become Favourite Fruit For Indians This Winter

With apple and grape prices ruling high coupled with a loss of banana crop in

Kerala, there is a distinct preference for oranges among south Indian households

this season.

Finally, Multi-brand FDI has a taker: Tesco applies to open supermarkets in

India in JV with Tatas, to invest USD 110 million, start with Maharashtra and

Karnataka

The world's third-largest retailer proposes to buy a 50 per cent stake in Tatas-

owned Trent Hypermarket Ltd and plans to open three to five stores every

financial year to sell 14 categories of products.




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Sequoia Capital invests Rs 70cr in Wildcraft

Sequoia's investment, gives the makers of backpacks and rucksacks an enterprise

valuation of approximately $50 million (over Rs 300 crore) and the company has

grown its topline in the last six years at a scorching pace from just Rs 1 crore in

2006-07 to over Rs 100 crore in the current fiscal.

Senco Jewellery Plans 50 Stores Across E. India In 3 Years

Meanwhile, the company has over the last three months forayed into silver

jewellery through a new retail entity called "Zaywar" which targets youth and is

available via tie-ups with with other stores for a shop-in-shop format with

promotional activities being carried out through select CCD outlets and through

the e-portalzaywar.in.

Future Retail sells 22.5% stake in Future Generali

Future Retail today said it has sold 22.5 per cent stake in Future Generali India Life

Insurance Co to Industrial Investment Trust Ltd and post completion of the

transaction, Future Group continues to hold 52 per cent shares in Future Generali

India Life Insurance Co (FGLICL).

Fresh supply of mall space up 39% in 2013; no addition in NCR




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National Capital Region (NCR), Bengaluru and Ahmedabad did not see any new

addition of mall spaces for the entire year in 2013, Cushman and Wakefield said,

adding that Chennai saw the highest supply of 2 million sq ft, followed by Mumbai

(9 lakh sq ft), Pune (7 lakh sq ft) and Kolkata (5 lakh sq ft).

IKEA stores in India closer to reality, Walmart still a far cry

In a year marked by economic downturn, the estimated USD 500 billion retail

sector in India saw growth slowing down to 10-11 per cent from high double digits

growth earlier, according to Boston Consulting Group.

McDonald's, CPRL Issue Conflicting Statements Re Management As Former

Appoints Top Honcho To Lead NE Ops

Aysel Melbye, senior regional finance director at McDonald's Corporation, has

recently sent out emails seeking visits to McDonald's outlets and meetings with

departments such as training, HR, IT, operations and office administration.

Reliance Retail Denies Overseas Tie-Up Reports For QRS Chain, Meat

Processing Biz

Two weeks ago, Reliance Retail issued termination notices to around 50 mid and

lower managerial level employees associated with Delight stores, and a question




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mark exists over the future of the 150 store workers who manned its around 100

outlets.

RP Goenka's 'Au Bon Pain' Cafe & Bakery Chain To Expand To Kolkata, NCR;

Plans 22 New Outlets By March '14

Au Bon Pain Cafe India chief executive Sanjay Gupta said the group would first set

up a chain of stores in a city for economies of scale before expanding into another

city and the Group planned to set up at least 30 stores in a year.

SAIF India Hikes Stake In Speciality Restaurant; GLIX Securities Part Exits

SAIF India IV FII Holdings has bought 15 lac shares of Speciality Restaurants for a

total of INR 18.74 Cr from the open market. The seller was GLIX Securities who

made a part exit at INR 124.99 a scrip.

Farm-to-fork concept must be implemented extensively

Amit Wadhawan, Executive chef of The Oberoi Hotel, Bangalore says that all

restaurants need to start emphasizing on traceability of food and incorporate the

principle of farm to fork on a larger scale which will benefit the consumer, India's

agricultural sector as well as the chefs in the kitchen.




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McDonald's breached CLB's interim order, says Vikram Bakshi lawyer

The lawyer argued the company had been trying to oust Bakshi from the venture in

various ways since 2008, adding this was part of the company's strategy to force

Bakshi to sell equity at low valuation.

Jack & Jones and Vero Moda parent Bestseller to snap four-year ties with

Indian partner Prashant Aggarwal

Bestseller, owned by Danish billionaire Anders Povlsen and family, is in talks with

other Indian companies for a tieup for all three of its brands, and Povlsen was in

India last week to formally initiate the process.

Retail Giant: 150M Customers Later, Titan Unveils 1,000th Store In Bangalore

"Titan," declares MD Bhaskar Bhat," is the first Indian company to have a 1,000

stores across so many brands." If one takes into account the multi-brand watch

stores that Titan sells through, it would add up to at least 13,000 outlets across the

country, said Bhat.

Carrefour In USD 2.8B Deal To Acquire 127 European Malls




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Carrefour is teaming up with investors to buy 127 shopping malls in which it runs

stores, in a $2.8 billion deal that marks the French retailer's latest attempt to

revive its struggling European hypermarkets.

Textile Industry Competes For Labor; HR Costs, Attrition Spike

"It is the unskilled labour which has seen a bigger attrition rate, as they now find

job opportunities closer home, due to the growing rural economy," said Rahul

Mehta, president, The Clothing Manufacturers Association.

CCI allows Walmart to buy Bharti's stake in Indian JV

In an order released today, the Competition Commission of India (CCI) said the

proposed buyout of Bharti group's stake in the JV by Walmart "is not likely to have

appreciable adverse effect on competition in India and therefore, the Commission

hereby approves the proposed" deal.

Big retailers accept haggling as a price of doing business

Armed with increasingly sophisticated price-tracking tools on their smartphones

and other devices, consumers know that they often have the upper hand during a

tough season for retailers, so recognising the new reality, some retailers, desperate




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for sales and customer loyalty, have begun training their employees in the art of

bargaining with customers.

Domestic Tea Companies Look To Engage Directly With Consumers, Capture

Youth Segment

Aditya Khaitan, MD, McLeod Russell India, said: "To begin with, tea producers will

oragnise seminars at 10 destinations." A committee has been set up comprising

members from Tata Global Beverages, HUL, Girnar and Wagh Bakri which are

working on rural strategy.

McDonald's: Coffee In Grocery Will Help Sell McCafe in Restaurants, May

Enter Tea Biz

U.S. Chief Brand and Strategy Officer Kevin Newell said that more than 70% of

coffee consumption in the U.S. happens at home, and that the retail test will allow

McDonald's to tap into the demand that exists and "highlights how serious we are

about elevating McCafe brand potential."

Krispy Kreme wastes no time to Indianise

Krispy Kreme's new line of localised marketing follows the footsteps of

international fast-food chains who have had to Indianise their menus to suit local




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palates with food such as beef- and pork-free burgers from McDonald's, pizzas

with vegetarian toppings from Pizza Hut and coriander-flavoured English muffins

at Starbucks.

Mukesh Ambani's Reliance Retail Chickens Out, Turns Vegetarian

Ambani took this decision to go vegetarian after caving in to demands from a

section of shareholders who claimed Reliance's 'non-veg' business hurt their

religious sentiments.

Wal-Mart India To Lay-Off 100-150 Mid-Level Employees As It Puts

Expansion Plans On Hold

The break-up of its JV with Bharti Enterprises and a halt in its expansion plans in

India till 2015 have led Walmart India to cut down on its workforce and despite

the opening up of the multi-brand retail sector in India, the company is still

undecided whether it would venture into the front-end retail segment with a new

Indian partner.

The Route Of An Onion Shows Why India Needs Walmart, Carrefour, And

Tesco




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High inflation is caused in large part by food prices: wholesale onion prices soared

by 278% in the year to October and the retail price of all vegetables shot up by

46% with the food supply chain decades out of date and cannot keep up with

booming demand.

Google's Great Online Shopping Festival: India's Cyber Monday

Nitin Bawankule, industry director, e-commerce, Google India, said, "As new

internet users come aboard, we continue to see a healthy growth in searches for

online shopping, with over 40% queries coming from mobile phones. This year, we

first extended the festival to three days and then, seeing increasing interest, we

had to extend it by another day."

Snapdeal Seeks Listing On US Bourses Within 1-2 Years

"We are talking to our lawyers on how to go about this (overseas listing). We are

looking at the US market as it is better exposed to investors and technology driven

firms have received a good response there," said Snapdeal co-founder and CEO

Kunal Bahl.

After Flipkart, now Snapdeal to launch own payment gateway




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Apart from saving credit card information, billing and shipping details of the

customer, Snapdeal's yet-to-be-named payment gateway will also incorporate

analytics relating to the buyers' specific choices, allowing them to complete

transactions in a few quick steps.

Celebrity Trainer Kris Gethin Plans 80 Premium Gyms Across 20-25 Indian

Cities

Kris Gethin - celebrity personal trainer of Bollywood stars Hrithik Roshan, John

Abraham, Ranveer Singh, Imran Khan and director-producer-TV host Karan Johar -

is planning a chain of fitness centres.

Joy Alukkas to reach 100 outlets across world by '14

"For the next five years we plan to open 10 outlets every year and opening new

outlets is my only entertainment," says Alukkas, who was in Kolkata to open his

91st shop and the Kerala-based retailer is now focusing on increasing its presence

in northern, western and eastern India.

Vimal's 'Unformals' seeks co-branding opportunities with rival brands

Considering that almost 20 per cent of the Unformals range is currently sold to

rival companies such as Raymonds and Madura Garments for their ready-made




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brands, the textile division of Reliance is now looking at an opportunity to tag

along its newly created sub-brand.

Cash-and-Carry Chain Savemax: Attracting Retail Customers Through

Wholesale Rates

Based on a 'wholesale club' model, the chain is looking at investing close to Rs 300

crore, through a mix of own funds and borrowings, to open 17 stores by 2015.

Consumer Spending Slowdown Most Severe In S. India & Modern Trade

Significantly, India's volume-based growth, which hovered around 10%

throughout 2012, has fallen. Whatever value growth the FMCG industry

experiences in 2013 is largely due to unit value change - a combination of price

hike, reduction in unit pack size and consumers shifting to premium brands.

Reliance Shelves Plans To Enter QRS Segment With 'Chicken Came First', To

Exit Non-Veg Biz Entirely

The non-vegetarian foods business, said to be growing at a CAGR of 25-30%, is

estimated to comprise 10% of the company's total retail business and is also a

profit-making venture. RIL had earlier picked up a 45% equity stake in Two Sisters




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Foods India (TSFI) and was also planning to enter the QSR business named

'Chicken Came First'.

Krispy Kreme opens first doughnut retail outlet in Delhi

Priced in the range of Rs 50-65 for a pair of doughnuts, the store in south Delhi will

sell 16 varieties of it including its signature 'Original Glazed Doughnut', besides

beverages such as coffee, tea and iced beverages.

With no takers for liquor licences in Hyderabad, Govt enters retail liquor

business

"There are discussions at the high-level that if the government itself runs all

outlets, then the department can easily earn nearly Rs 6,000 crore, which is Rs

2,500 crore more than its present revenue," sources said.

Future Consumer Enterprise to launch Sunkist Brand in India

Future Consumer Enterprise Limited has entered into a long term agreement with

California-based Sunkist Growers, Inc., a leading international licensor and the

most widely recognized name in the citrus category, to manufacture, market and

sell fruit juice, fruit juice drinks, sparkling beverages and a range of other food

products under the world-famous Sunkist brand in India.




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How Urban Ladder Is Climbing The Ranks In The USD 15-20B Furniture

Category

Urban Ladder's ticket size is Rs 15,000-16,000, against Rs 1,000-1,200 for many

horizontals. "There has to be strong profitability story at the sub-scale. You can't

say 'I will be profitable when I am $1-billion'. You have to be profitable at one-

twentieth the scale," says Ashish Goel, Co-Founder.

Walmart's Krish Iyer: No rookie to retail

Kumar Rajgopalan, CEO, Retailers Association of India, noted: "Iyer is a retail

industry veteran and understands the sector well. He knows what will work in

India and it is this insight which Walmart can cash in on."

Now, diamonds are jewellers' best friend

Gold retailers such as PC Jewellers, Tanishq, Kalyan, among others, are shifting

focus to diamond-studded wedding jewellery to drive volumes as well as margins

as demand for gold jewellery has fallen corroborating a report by Edelweiss which

says that margins in jewellery comprising diamonds, platinum and semi-precious

stones are as high as 35% compared to9-10% in pure gold jewellery.




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Is Arvind a smart play in the textile space?

An increased focus on selling private brands through its Megamart stores

compared to selling discounted branded merchandise also helped, said Kulin

Lalbhai, executive director of new initiatives at Arvind. Arvind is planning to end

this fiscal year with around 200-230 Megamart stores.

Packaging: A key element to understand consumer behaviour

Like all design, packaging is constantly getting cast into new forms dictated by the

larger trends in society and the good old ideas of putting happy faces on puffed

potato chips packs and pastel shades with golden lines on shampoo bottles will be

considered highly uncreative in no time.

How Sustainable Is The Online Discount Model?

Experts say that being a new medium, online retailers are looking for more traffic

and new customers. Also, a spate of consolidations is expected in the sector in the

next few years.

Electronics Retailing Goes Futuristic As Stores Become As Important As The

Device




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Behind all the investments in retailing is one of the technology industry's favourite

buzzwords: "user experience". It reflects a belief that companies need to obsess not

only over details of product design but also on the environment in which the

products are presented to the public. Apple learned this years ago, creating retail

outlets--now totalling more than 400--that are meant to be high-traffic emporiums

of cool.

How Vini Cosmetics Disrupted The Indian Deo Market With Fogg

Launched only 2 years ago, Fogg has garnered an all-India (Nielsen) value share of

about 13% as of October this year while Axe's market share, which was the leader

so far, is ~8% now. down from ~18-19% in this INR 2,100 cr market.

Why cross industry talent at CEO level is better

Across the vast corporate landscape, cross-industry moves at the CEO level are

rare but in a small pocket that is the agglomeration of industries that are aimed at

the individual consumer, such moves, though not the norm, don't raise eyebrows.

Amazon May Get Its First Labor Union in the U.S.




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Amazon has successfully fought such efforts in the U.S. for years. In 2000, workers

at a customer service call center in Seattle lobbied to form a union and met with

stiff resistance from the company.

The 'Umami' Burger Chain: An Underserved Taste Taps An Underserved

Customer Segment

Like other food-industry entrepreneurs, Fleishman appreciated that young diners

of limited means craved distinctive restaurant experiences every bit as much as

older, wealthier people did. But he pulled off an even more precise mind meld with

his potential audience, realizing that they also wanted to feel adventurous, erudite.

US Retailers To Thank Indian IT For A Smooth Check-Out

Indian technology outsourcers such as Cognizant, Wipro, Infosys and Mindtree are

helping retailers in the United States cope with the peak holiday season shopping

rush and ensure their shopping portals and systems stay robust, three months

after surging traffic crashed the US federal healthcare insurance website leaving

many unable to log on.

Tesco-Tata joint venture a test case for retail FDI: How Will Tesco's

Investment Be Deployed?




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The government has mandated that foreign companies invest a minimum of $100

million and half the total FDI go in back-end infrastructure within three years of

the first tranche. Yet, Tesco is taking a 50% stake in the Tata-owned Trent, which

already runs hypermarkets under the Star Bazaar brand.

How Will The Lokpal Bill Affect The Indian Luxury Market?

The general consensus is that if the drive against graft and black money

strengthens, then India may mirror what has happened in the Chinese luxury

market. According to global consultancy Bain & Co, the luxury market in Mainland

China grew only 2% between January and November, partly because the

government came down heavily on corruption.

Amazon Reportedly Buys Mobile Payments Startup Gopago, Working On An

'Ambitious' New Project

Italian newspapers are reporting that the e-commerce giant has acquired Gopago,

a startup that offers consumers an iOS or Android mobile app to pre-pay for goods

before picking them up at a store, and retailers a point-of-sale system to process

those orders.

Now H&M Pushes Premium Too With LE Designer Lines - Reuters




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H&M needs that buzz to help gross margins, which have fallen below 59 % from

almost 63% in 2010, while mid-market rival Inditex has improved theirs to about

60% from 57%.

Aim to encourage leaders to improve the lives of retail workers: BS Nagesh

"Most of the employees think they're working in the retail sector because they're

not educated and that's why they don't get any recognition, we told them the best

way to do it is to ask the employees to tell stories of how they helped their

customers and thus we got the retail awards conceptualized and the first award

function was in Mumbai," says the non-executive Vice-Chairman.

The digital revolutionary road: How technology is blurring boundaries

between consumers, stores and brands

Product manufacturers are becoming retailers, distributors and media operators.

Consumers are no longer just passive shoppers, they are critics, product co-

creators, and, in some instances, even digital storeowners.

Luxury brands step up battle for travelling shoppers

Perfume and cosmetics represent the biggest product category for travel retail

with 28% of the market, according to Generation Research, ahead of wines and




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spirits with an 18% market share, fashion and accessories with 13.5% and watches

and jewellery with 12.2%.

Gurgaon's garment industry losing workers to Rajasthan

Chand Anand, president of All India Garment Exporters Guild says, "Running a unit

in Gurgaon has become too difficult, owing to the expensive infrastructure

maintenance and the arrogant government authorities....In such a scenario,

majority of the units are facing closure, sending a wrong signal to the workers, due

to which they are shifting towards other industrial regions."




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