SECTION IV MODERN RETAIL FORMATS IN INDIA · PDF filemarketing strategies with ... Big Bazaar of Pantaloon Retail ... 2252-259_4_Kajal Dhawan_Modern Retail Formats in India.indd 25452

MODERN RETAIL FORMATS IN INDIA

SECTION IV

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STORE MODELS IN INDIA By Kajal Dhawan

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INDIA RETAIL REPORT 2009 253

The store interiors and VM can be ●

coordinated and designed to reflect the image of the brand unlike in MBOs where the brand’s positioning cannot be controlled and can lead to disastrous mismatch and low salesThe brand can continuously ●

experiment with its sales and marketing strategies with complete freedom, devoid of any interference. EBOs mean no competition from multiple brands; hence conversion to sales is higher. The downside of this can be that footfalls in an EBO are considerably lower than in an MBOOne of the major advantages that an ●

EBO offers to a brand is that it can get direct feedback, accurately and promptly from its customers, leading to better product innovation and higher sales in the long run.Normally, the trend followed by

manufacturer brands is to get into the market through MBOs, and gradually set up their own EBO outlets as their brand acquires recognition and a large loyal customer base.

Last three years have seen a quick turnaround for this format as rising brand awareness and growing aspirations of the Indian customer have led to a preference for brands

Retail formats vary in terms of size, location, assortment, prices, types of merchandise and the level of customer service

offered and are thus classified.

Exclusive Brand Outlets (EBOs)EBOs are retail outlets that sell

merchandise exclusively of one brand, normally having the store name as the brand name itself (e.g. Bata, Sony, Lilliput etc). They are typically located either on high streets or within malls. Goods are priced at full-price except during the clearance sale period.

The key advantages for a brand in selling through its own EBOs vis-à-vis MBOs are:

Enhanced brand visibility leading to ●

a better market penetrationExtensive and complete range of the ●

brand can be offered creating clear branding

India, the land of a billion consumers, fed by 12 million plus retailers, is diverse in taste, needs and per capita income of its people; where street vendors coexist comfortably with fancy department stores and high-tech malls dot its landscape. Change is seen in every sphere today. New retail formats are being developed and old non-performing formats are being scrapped. Restructuring and innovation are at their peak. The biggest influencers in this change are the constant ups and downs of the economy, both local and global.

over non-branded local merchandise. People want the best value, quality and choice for their money, even if it is a tad more expensive; the satisfaction from purchase of a branded item far outweighs the higher price paid for it.

Some of the EBOs that are doing well in the Indian market are Tanishq, Hidesign, Reebok, Adidas, Sony, LG, Levi’s, Nakshatra, Freelook, Peter England to name just a few.

HypermarketsA hypermarket is a very large

retail store offering a massive range of products at low prices. It is a combination of a discount store and a supermarket. Internationally, hypermarkets can be upto 300,000 sq ft in size, but in India, the size varies between 50,000 to 1,50,000 sq ft.

Hypermarkets carry a wide variety of food as well as non-food items such as fresh produce, groceries, apparel, consumer durables, electrical equipment, home improvement etc., and generally, the store layout is designed like a warehouse; location-wise, outskirts of towns and cities are preferred due to large space requirements, plus the advantage it offers in terms of cheaper real estate costs.


INDIA RETAIL REPORT 2009254

In India, hypermarkets are built very much on the same lines as their international counterparts, carrying much the same assortment of merchandise, except that they are much smaller and located in the city interiors, in malls or as standalone.

Hypermarkets work on the principle of providing their customer:

a one-stop shopping experience ●

a wide range and depth of ●

merchandisestock availability ●

competitive pricing ●

every day schemes and offers ●

convenient self-service layout ●

spacious aisles for convenient ●

browsingcomfortable air-conditioned ●

shopping environmentlarge number of checkout counters ●

ample free parking ●

Carrefour (France), the world’s second largest retailer is a leader in the concept of hypermarkets, having 1,163 hypermarkets across the world. Wal-Mart and Tesco are the other famous international retailers having developed successful hypermarket formats. Restrictions in Indian FDI regulations has prevented these retailers from making an entry into India, although Wal-Mart and Tesco are setting up Cash & Carry operations in India very soon.

Currently, the hypermarkets in India are operated by four to five big retailers. Prominent among these are: Big Bazaar of Pantaloon Retail, Star Bazaar of Trent India, HyperCity of the K Raheja group and Vishal Megamart of the Vishal Group. Reliance Retail and Aditya Birla Retail too have entered the segment with Reliance Mart and More Hyper respectively.

Issues in hypermarket retailingHypermarkets work on low operating

margins; in order to be successful they need:

Large retail spaces – to ●

accommodate large volumes of stockExorbitant real estate rentals put a ●

strain on the retailer operating on low margins. Some retail chains have tied up with real estate companies for a profit sharing deal in order to reduce the burden of high rentals. Efficient supply chains/sourcing ●

systems – to replenish the merchandise stock periodically Quality Control – large volumes ●

mean the supply comes from a variety of sourcesMerchandise assortment – large ●

stores mean a big elephant that needs to be fed constantly. Just having a large store filled with a medley of merchandise assortment is not going to keep the cash registers ringing. The increasingly aware, restless and young, savvy and aspirational, affluent with money but short on time and temper, traditional yet modern, Indian customer is demanding more for less and unless retailers evolve to match his or her taste, profits will be hit by the maze of competition and it will be difficult to sustain formats of the hypermarket size.

SUPERMARKETSA conventional supermarket is

a self-service store of size 5,000 to 15,000 sq ft, offering mainly food items like groceries, fresh & frozen produce along with non-food items like toiletries, household articles, health & beauty products, stationery and gift items. They are generally located close to residential localities in local shopping centres where people can simply walk down or drive over for a quick purchase.

The advantages it offers the customer over a conventional general store are:

Larger in size – More the space, ●

more the assortment of merchandise that can be displayed; larger spaces for display of stock is one of the key advantages that a supermarket scores over a neighbourhood storeWide range and depth of ●

merchandise and brands Schemes and promotions – ●

supermarket chains offer in-store promotions and schemes that attract footfalls Cheaper prices – chains purchase ●

in bulk and are able to negotiate competitive prices from the manufacturers and traders, which in turn they are able to pass on to their customers Convenient self service – In a ●

modern supermarket, you have the advantage that you can browse around at leisure or speed, pick up and put in your trolley, any number of items from the rows and rows of merchandise on display in the aisles instead of depending on the sales person to attend to youQuick checkouts with computerised ●

billing – no tiny hand-written bills with the total scribbled on them, taxes be damned! Pleasant shopping environment – Air- ●

conditioned store, soft music, mouth-watering aroma (if there is a bakery), smartly attired, friendly sales staff.Smart in-store product displays – ●

Neat rows, displaying complete brand range of any merchandise In-store bakery/chakki – value- ●

added services that add to the everyday shopping experience – growing awareness to health from eating fresh foods makes this a huge attraction to every day shoppers.

Issues in supermarket retailing Keeping the fresh produce fresh – ●

more than meat and fish, Indians are




basically vegetable eaters. Normally used to visiting the local mandis and weekly markets for their daily needs, the customer expects garden fresh produce from a supermarket, same as they get from the street vendor. Despite putting quality standards in place for purchase, distribution and storage of fresh produce, the supermarket retailers have failed to maintain the freshness of the produce in stores. The only reason for this section still running in a store is the attractive low prices of these products that the customer simply finds impossible to resist! Need for quick turnaround – food ●

items, whether packaged, fresh, frozen or otherwise, are perishable and have a limited shelf-life, hence they must move off the shelf quickly for better returns. Sufficient POS terminals – a customer ●

comes to a supermarket for his daily needs and must visit the store often to replenish, hence he prefers an outlet where there are sufficient tills and his work gets done faster. Easy to approach – sufficient ●

parking space, free parking, easy approach roads leading to the supermarket are some of the issues that must be addressed by the retailer prior to the selection of a location.Need for cheaper retail space – ●

sales of a supermarket come 60% from food and 40% from non-food categories. The operating margins of a supermarket are lowResistance from local kiranas and ●

vendors – millions of vendors and small retailers form a formidable vote bank for the government. Thus, the resistance from these traders has

to be taken seriously, and although change and growth is inevitable, it may take some time for acceptance to happen. Competition from new emerging ●

retail formats – hypermarkets, supermarkets, convenience stores etc all want a pie of the same market. Nilgiri’s was the first supermarket to

open in Bangalore in 1905, then came Foodworld, followed by Sabka Bazaar, Spencer’s, Subhiksha and Food Bazaar and so on. Today, Aditya Birla’s More and Reliance Fresh are some of the new supermarket chains operating in India with many more in the anvil.

DEPARTMENT STORESDepartment Stores are large stores

ranging from 15,000 to 1,00,000 sq ft that sell a wide variety and deep assortment of merchandise ranging from apparel, cosmetics, toys to footwear, jewellery, furniture and household goods. These stores are sectioned into separate departments such as kidswear, ladieswear, menswear and toys and so on, with each section attended to by a separate set of trained and knowledgeable sales staff. Well-known brands are sometimes given exclusive spaces in the store to display their merchandise separately.

Higher prices and quality, selective merchandise, higher levels of service, smart displays of merchandise draped elegantly on mannequins and store fronts represent the basic components of a department store.

Some features of a department store and their related issues:

Loyalty cards – started a couple of ●

years back these are credit card look alike that a retailer gives to any

of its customers either on purchase of a certain amount from the store or for an outright small price. They are meant to give a few benefits to the customer such as free parking in mall, first preview to sales, additional discounts during sales, a fixed discount (5 to 10%) all-year-round on any purchase from store or points on every purchase that add up (normally in years) and entitle the customer to a token gift or gift coupon in rupees. In return, the retailer hopes to gain a customer’s loyalty to his store! Private label merchandise – By ●

developing unique, private-label merchandise (like ‘Shop’ of Shoppers Stop and ‘Junior’ of Lifestyle), the retailer can generate a huge pull on the customer, and its competitive pricing can give the retailer better profit margins. It also works as a differentiator.Bi-annual sales – From sales that ●

used to be short, exclusive and of 2-3 days duration only – now we have sales that stretch to over a month. It is observed that a large number of people (60 to 70%) do their annual shopping at these sales. This has hit the profit margins of the department stores considerably, and they find it increasingly difficult to sell volumes during the normal, off-sale time. Some retailers counter this by purchasing less stock during season, buying separately for the sale from the manufacturer, at highly discounted prices.Shop in shop – most department ●

stores these days have separate sections such as photo studio, opticals, luggage, cosmetic brands, health & fitness, apparel brands & jewellery brands etc that are located in-store but are leased out to separate companies at fixed rentals or on profit-sharing basis called shop-in-shop. These give the retailer the advantages of: additional revenue, more variety for customer and saving in inventory cost.

By developing unique, private-label merchandise, the retailer can generate a

huge pull on the customer.



Alterations and returns – All ●

department stores offer these services these days, varying from each other only in the degree of efficiency and speed. Trial rooms and rest rooms – A ●

Trial Room is an important zone in department store – it is the place where the final purchase decision takes place. Stores such as Globus, Wills Lifestyle etc have taken great care in designing these areas – giving due consideration to space, lighting, mirrors, pegs, stools in their trial rooms. But much is left desired in many stores.Shoppers Stop, Pantaloons, Globus,

Lifestyle, Westside, Ritu Wears are the prominent chains of department stores in India that are doing very well today.

DISCOUNTERS / FACTORY OUTLETS

Discount StoresWal-Mart, the world’s largest

retailer is a famous example of a full-line discount store. Such stores sell a wide variety of merchandise with limited service and at low prices. A retailer achieves this by purchasing in bulk directly from manufacturer at big discounted rates and passing this benefit to his customer.

The main issue in this format is to minimise cost of operation and merchandise in order to remain discounter. Price being the main differentiator, if costs go up the essence of the enterprise is lost. Wal-Mart has used technology to achieve supply chain efficiencies, purchasing goods from across the globe, maintaining quality standards, and delivering to its customers, goods at ‘ELDP’.

In India, discount store chains such as The Loot, My Dollar Store and Max Retail are much smaller in size than their international counterparts.

The Loot sells mainly apparel and footwear. International brands such as Nike, Reebok, Wrangler are also sold in

the store at discounts ranging from 25 -70 per cent throughout the year.

In 2004, US- based fixed-price chain, My Dollarstore, entered India with master franchisee, ‘Sankalp Retail Value Stores’, setting up its first store in Mumbai with a unique concept of selling everything in the store for Rs.99 only. With products ranging from food to cosmetics, gift items and stationery, this concept has been successful with the bargain-loving Indian consumer, and today, 50 outlets have opened across major cities in India.

Max Retail has the unique concept of all its merchandise being priced less than Rs 599. Megamart from Arvind Mills with 85 outlets and Coupon Mall promoted by Prateek Lifestyle are other discount chains operating in India today.

The main issues with discounters are:

Quality of merchandise - ●

sometimes quality of merchandise is compromised at the hands of price. For a discounter to sustain, it must aim to keep large number of products, at quality and prices that attract the customer to purchase often and in bulk from the store. Competition: Competition to these ●

formats comes from hypermarkets, especially if located in the neighborhood, since they also offer goods at competitive pricing.Inconsistency of merchandise – Due ●

to their unusual buying pattern – based on bargain-purchase – the merchandise sold by a discounter keeps changing and the customer seldom gets the same product twice.

Factory OutletsOutlet stores run by the

manufacturers themselves or as their franchise are known as factory outlets. Unlike an EBO, these outlets are small, located on outskirts of towns where realty is cheaper or near their own factories. Here the manufacturer sells his brand products at a slightly

cheaper rate than in a normal store. The merchandise consists of mainly assorted lots of styles that could be production overruns, quality rejects, returned merchandise, slow moving styles, bygone fads, etc.

International brands such as Adidas, Nike, Reebok and domestic brands such as Woodland, Globus, Welspun, Louis Phillipe and Allen Solly all have factory outlets.

CONVENIENCE & FORECOURTA modern version of the kirana,

Convenience stores are smaller than supermarkets, ranging from 500 to 3,000 square feet. They stock limited merchandise, mostly essentials such as groceries, personal care products, OTC drugs, food items, milk and eggs, dairy products etc of day to day use.

As the name implies, these are conveniently located, mostly near residential areas, in neighborhood markets, at petrol pumps or in community centres, facilitating their customers to walk in anytime. This is the format that is in direct competition to the neighbouhood kirana stores and fruit & vegetable vendors.

KB’s Fair Price shop, Spencer’s Daily, Easy Day, Big Apple, Spinach local, S-Mart, Indiabulls Mart are all convenience store format chains operating successfully in India today.

Forecourt Retail These are small format stores that

are located in the front of a building, e.g. a petrol pump. The focus being on convenience for the customer, these stores are usually open seven days a week for extended periods during the day, opening early and closing late. This concept has not been too successful in the past, but now in this era of multi-tasking when time is of essence, these have started gaining popularity. The prominent players emerging in this sector are In & Out, Café Coffee Day, Crossword and more recently, Vishal Corner Mart.




Issues related to this format:Long hours – Issues of safety are ●

a concern. Due to the late hours that the stores remain open for. Also getting trained manpower that is willing to work odd hours is a problem.Limited variety and assortment of ●

merchandise – limited shelf space does not allow all the brands of any product to be displayed, hence it is difficult to satisfy all the customers. Need for daily replenishment – ●

limited storage and shelf space in the small store make it impossible to keep buffer stocks. And since the store is dealing mainly in high turnaround merchandise, it becomes imperative for the convenience/forecourt store retailer to ensure that stocks are replenished quickly.

KIOSKS, FOOD COURTS & EXPRESS FORMATS

Kiosks With the opening of a large number of

malls and multiplexes in India, this retail format is increasingly gaining popularity with both retailers and customers. Kiosks are generally 100 sq ft in size or smaller, tent-like structures, positioned strategically in mall pathways or located centrally in the mall atriums. They are square in shape and open on all sides or covered with glass on one side or two. With colourful and attractive displays, these formats provide character and interest to a mall’s design and layout.

For the real estate developer, kiosks mean additional revenue, as they provide the developer with an opportunity to utilise every inch of available space in the mall, to gain some additional revenue:

kiosks give the retailers a cost- ●

effective opportunity to retail in a world-class environment with ready footfalls — an option that is cheaper in rental and one that allows flexibility – since a kiosk space can be rented for a limited period, sometimes even

a day or two going up to a year For brands such as Swatch and Hot ●

Spot, kiosks set up at entrances of malls mean brand visibility and brand promotionFor food vendors such as Baskin ●

Robbins and Corn Man, selling in kiosks located strategically in the paths of customers means tempting the customer for a quick biteAccessories for youth like trendy ●

scarves, bags and jewellery, it means attracting the customer towards an impulse purchaseNo mall is complete without food

courts. Normally positioned at the top most floor in a mall or on the floor close to the multiplexes, these are mini-food counters of food chains such as Pizza Hut, McDonald’s, Dosa Express, Sagar etc clustered in a chain-like structure with common sitting area in the centre for the customers.

A mall/multiplex attracts huge footfalls, especially on weekends, giving ample business opportunity to the food court. How much any individual counter is able to succeed depends entirely on its product appeal. The main disadvantage that any counter may face is the competition that exists through its neighbouring counters.

The advantages a food court offers to the customer:

Rest after shopping fatigue – after ●

walking around endlessly in the mall, these courts offer a welcome respite from the shopathon!

Convenience to choose from any of ●

different counters in one place.Complete entertainment package – ●

shopping, watching a movie, eating your favourite pizza or chola bhatura – it completes the family outing under air-conditioned roof.Cheaper than eating a full meal at ●

a restaurant – as most food court stalls are fast food or snack-type, the meals are considerably cheaper than in a restaurant.Express Formats are mostly extensions/ smaller versions of large retail formats such as hypermarkets and supermarkets or restaurant chains. For example, Pizza Hut Express is the home delivery format of the Pizza Hut chain. Café Coffee Day has express counters that it has set up in hypermarkets like Big Bazaar or department stores like Lifestyle that cater to the store’s customers. Nirula’s, the fast food Delhi chain, has also opened smaller express counters in malls and high streets that cater to the fast young crowds on the move.Express formats leverage the

brand’s pull to reach a larger customer base. The issue that may arise in these formats would be maintaining the consistency/quality of their product or service in keeping with the brand image.

SPECIALITY STORES/ CATEGORY KILLERS

Speciality stores are retail formats that offer a wide range in a single category such as apparel, shoes, furniture, auto parts, music, jewellery or opticals etc. Some of the prominent names in this category are: Adidas (sportswear), Croma (electronic goods), Bon-Ton (opticals), Titan (watches), Metro (shoes), Nakshatra (diamond jewellery) and Planet M for music and movies; all excellent specialist stores in their respective categories. Some specialty stores offer complementary merchandise categories around a single theme, e.g. Woodland (theme-



adventure), Reebok (sports), Archies (cards and gifts), Home Centre and Home Town (furniture and home fittings).

Specialty stores have been very successful in India from many years even before the department stores gained popularity and took some of the customer base away.

Success of these formats lies in doing what they are best at – and that is specialising in a certain category. In the face of growing competition, they need to restructure and redesign their stores to make them more exciting and interesting to their customers. Innovative promotions and loyalty programs need to be defined in keeping with the times and growing youth population.

Category killersCategory killers are specialist

stores with a difference. They can be referred to as the discount version of a specialist store. In other words, they offer the biggest assortment in a certain category, at lower prices than a specialist store.

Stores such as Staples and Ikea are well known category killers. Staples has only just entered India in a smaller format, and is yet to evolve into a full-fledged category killer. Organised retailing is evolving rapidly in India and it is a matter of time before they will be evident in all categories ranging from toys, consumer electronics, books to home and apparel.

NON-STORE FORMATS & E-TAILING

Catalogue and direct mail retailing, direct door-to-door selling, TV home shopping, telemarketing, internet retailing are all different formats of non-store retailing. The three formats that are dominating the non-store retail market scene in India today are: TV home shopping, internet retailing and mobile/telemarketing.

With internet usage growing at the rate of 40 per cent, there are an

estimated 46 million internet users in India today, up from 32.2 million in 2006 (source: IAMA). Be it booking a ticket at a favourite multiplex, or an airline ticket from Mumbai to Delhi, online buying is today becoming the preferred format for shopping, especially in some categories.

E-TailingLast few years have seen a positive

shift in attitude of consumers towards usage of mobile phones, credit cards and the internet. People are comfortable doing their travel bookings of airline or railways via the net; net banking is the norm these days; most of us feel thrilled booking our choice of seat in a multiplex sitting at home; sending gifts to relatives in India or abroad is no longer a tedious task – just a few clicks and its done! Major players dominating the Indian e-commerce market are: eBay India, Indiatimes, rediff, futurebazaar, makemytrip, ezeego, IndiaPlaza, chennaibazaar, Jobstreet, Naukri to name a few.

The market size of the consumer e-Commerce segment is pegged at Rs.9,210 crore for the FY 2007-08, a 30 per cent increase over Rs.7,080 crores in 2006-07, according to Internet and Mobile Association of India (IAMA) and IMRB.

As observed, the online travel industry has led the growth in this segment, followed by e-tailing, estimated to grow to Rs 1,105 crore in FY 2007-08. Online broking,

matchmaking services (Shaadi.com, Bharat Matrimony, Jeevansathi etc) and job sites (Naukri.com, Monster.com, Shine.com, Timesjob.com) have all emerged as popular online services.

Factors that have influenced the growth of e-tailing to Rs 1,105 crore industry today:

Growing purchasing power of the ●

middle classIncrease in number of broadband ●

internet connections across IndiaIncrease in awareness and rising ●

aspirations of the upwardly mobile in tier II and tier III towns and citiesConvenience and easy to use mode ●

of the internetIncrease in number of e-tailers and ●

their promotionsSaves time and precious fuel ●

Increase in usage of credit/debit ●

cardsYoung & old spending large ●

amounts of time online on the netBetter deals and bargains available ●

online vis-à-vis bricks & mortarGrowing consumer confidence ●

towards the medium from satisfactory transactions first-timeEase of doing comparison shopping ●

onlineAnother factor that has fuelled this

sector’s growth is the brands and retail chains that have begun to sell online. Brands create a nationwide awareness of their products through advertising, but are unable to reach the customer geographically. Online shopping through their websites, gives people an immediate access to lifestyle products that are not available in their vicinity.

Advantage of e-tailing format over the bricks & mortar format for the retailer:

Extensive reach - The internet with its wide global reach provides any seller an excellent low-cost advertising medium to promote his products.

Low investment required in real estate/manpower - It is also the cheapest mode of retailing, considering




the saving in start-up costs such as real estate, manpower, infrastructure and working capital. It is also easy to scale unlike a physical setup.

No need to stock up – There is no need for an e-tailer to physically stock up all the products that he is offering. Instead, he may tie up with manufacturers, distributors and logistics companies for delivery directly to customers.

Interactive - With a well-designed interactive website, the seller can interface one-to-one with a potential buyer, conveying the minutest of product details accurately to the buyer.

Global market – Once the seller has worked out his supply chain, any customer from any part of the world is a potential customer, unlike a store retailer who can only cater to customers that visit his stores

24x7 format - No restrictions of store timings/ holidays/ staff absenteeism to bother about.

Issues in E –TailingSecurity in payments – payments in ●

e-transactions are made via credit cards mostly. The other modes of payment being bank transfer, cash on delivery, PayPal and debit card. Customers are risk-averse when it comes to making payments on the net with their credit cards, fearing fraud. And although most established e-tailers are using sophisticated technologies to ensure minimum or no risk for their customers making online payments, it will take some time for majority to become comfortable with this medium No touch & feel – customers like to ●

use their senses of touch, feel, smell while making a purchase, especially in categories like apparel, perfumes, home furnishings, jewellery etc. This medium allows the customer to see but not feel the product which can be a major drawback in selling some products over the net

Broadband connectivity – high- ●

speed broadband connectivity at reasonable costs is a must for this format to grow. Although, every year the number of broadband subscribers is increasing phenomenally, the costs are still high, and the reach is still limited to major towns and cities.Lack of emotional connect – ●

seeing a product up-close, holding it, examining it from all angles leads to an emotional connect with the product that creates a pull on the customer to buy that product and make it his own, something that the internet medium does not allow.Lack of entertainment quotient – ●

shopping these days has evolved into a major entertainment activity for the whole family. In such a scenario, the quick, dry, efficient system of e-tailing deprives the shopper of entertainment that a trip to a mall on a hot Sunday afternoon might provide!No instant delivery/ gratification ●

– once a choice is made, the customer wants to have the product immediately. Unfortunately, in online shopping, most deliveries take a minimum of ten days if not more to be made.Additional shipping costs – the cost ●

of transporting, mostly single items, are high and since the retailer has to remain competitive he has to keep his prices low. Supply chain management – ●

managing the supply chain and logistics efficiently is of utmost importance in this format as transactions are across geographies and timely delivery in good condition is critical for the retailer’s reputation and success.Reverse logistics – the return or ●

exchange of goods or reverse logistics is another major expense that can lead to losses for the e-tailer.

Information security – since all ●

information related to products, pricing and promotions is freely available on the electronic retailer’s website, it is difficult for him to remain exclusive and competitive in any way. Double taxation – taxation laws of ●

the country are still not very clear related to this format, inviting double taxation – at central and state level, leading to a rise in prices of products in some casesPrices - people expect goods to ●

be cheaper over the net than when buying from a store – hence e-tailers have to meet these expectations by keeping their prices competitive,Building credibility and customer ●

confidence – customer is buying a product on trust that he has neither held nor seen upclose — one mistake in product quality or authenticity may cost the e-tailer his customer - he will in all probability not return if he has one bad experienceIncreasing customer traffic – the ●

internet retailer has to invest considerably in promotion and advertising in order to build his customer base.Customer loyalty - competition is ●

just a click away; the internet retailer must constantly innovate and differ with competitors in product and value offerings in order to retain the loyalty and interest of his net customers This format has the potential to grow

manifold in India. Retail chains can look at e-tailing as an extension of their bricks & mortar formats for communicating with their existing customers and for reaching customers in areas where they do not have stores. The youth population, hooked to the internet and the mobile phone, can become a major opportunity for e-tailers in India along with the large number of Indians settled abroad, representing another potential market to be tapped. ■


FUEL AND FORECOURT RETAILING

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services, motels and entertainment. Such stations become destination points and soon open up avenues for residential and commercial development.

An emerging trend in the global retail petroleum industry is the growing entry of retail formats such as supermarkets, large discount stores and mass merchandisers who are placing fuel dispensers in their parking lots to provide added value and convenience to consumers. Hypermarkets that have ventured into the retail petroleum business have met with considerable success due to competitive fuel pricing, discounted prices linked to loyalty programmes and cross-merchandising.

India’s oil majors can certainly take the lead to fuel the retail growth collaborating with real estate developers, auto companies, consumer brands, retailers and service providers. This will also facilitate travel & tourism in no small measure. This has happened across the globe and is now happening in India.

Travel and tourism are two other sectors that will immensely

Fuel forecourts with 24x7 convenience retail concepts (merchandise & service retailing) within cities and on the highways offer

huge scope for expansion of retail. The concept has the potential to create excitement and initiate activities in small towns and cities as well. Modern retailing in India will no more be restricted to the metros and major cities. Oil stations scattered through out the country’s landscape can ensure that smaller towns are also exposed to modern retailing formats.

As more and more highways come up, linking small and big towns with villages, swank new fuel stations are innovating with retail stores, highway

Oil companies in India – unable to raise prices of transportation fuels in line with rising global crude oil prices – are now looking at alternate revenue streams; a major reason for added emphasis being placed on forecourt retailing.

benefit connecting with retail. Railways worldwide offer a plethora of opportunities for the consumer products, brands, retailers, services, leisure and entertainment majors to connect with a large number of passengers – both locals and tourists. Not only the stations, platforms and subways that railways own and operate but also 1000s of trains – passenger or goods – offer huge scope as the largest moving media for brand and public messages, in-rail retailing besides of course providing the logistics & real estate support to the retail industry.

MAJOR PLAYERS

Indian Oil Corporation (IOC)The Indian Oil Corporation is India’s

flagship downstream company. Along with its subsidiaries, IOC accounts for 47 per cent of the petroleum market share among public sector oil companies, and 56 per cent of the industry’s retail infrastructure. IOCL, a commercial enterprise, posted a turnover of Rs 2,47,479 crore (US$ 61.70 billion) for 2007-08.



IOC has been steadily increasing its retail reach within the country. In 2005-06, it had a total of 508 retail outlets, which shot up to 1567 by 2006-07. The company plans to close the FY 2008-09 with 3,355 retail outlets. The increase in total retail space has been from 1,67,000 sq ft in 2006-07 to 5,03, 000 sq ft in 2007- 08. Projections for total retail space for the current 2008-09 fiscal stands at 11,81,000 sq.ft.

Several alliances have already been forged with leading brands like Hindustan Unilever Ltd, Dabur, ICICI Bank, Ferns & Petals, MTR Foods, PVR Cinema, UAE Exchange, Reliance Capital and DHL.

IOC’s retail sales figures have steadily risen from Rs.2500 lacs in 2006-07 to Rs.10380 lacs in 2007-08. The company plans to reach a retail sales turnover of Rs.16,230 lacs in the current fiscal.

Retail sales in MS (petrol) and HSD (diesel) registered a robust growth of 12.2 per cent and 12.7 per cent respectively, with expansion of the network to 17,642 petrol/diesel stations (retail outlets). This includes commissioning of special-format Kisan Seva Kendra (KSK) outlets in rural markets during the year, taking their total to 913 IN THE March 31, 2008. The Corporation’s branded fuels, XTRAPREMIUM petrol and XTRAMILE diesel, maintained their leadership status, with a market share of 48 percent and 58.7 percent respectively among branded fuels in the market. XTRAPREMIUM and XTRAMILE are now available from 7,071 and 10,477 retail outlets of IndianOil respectively.

More IndianOil outlets were upgraded to XTRACARE standards during the year, taking their total to nearly 2,000. The process of third-party certification was also extended to more outlets and now covers about 6,500 outlets. About 1,000 outlets were fully automated during the year.

IndianOil is investing over Rs 12,000 crore in upgrading its seven refineries to produce Euro-III and Euro-IV grade petrol and diesel from April 2010.

Indian Oil is increasingly tying-up with major retail chains to open co-branded petrol pumps-cum-retail plazas to enhance non-fuel revenues. Indian Oil’s over 1,600 KSK across the country would stock and sell Dabur’s range of healthcare, oral care, personal wash, skin care and home care products.

Bharat Petroleum Corporation Ltd (BPCL)

BPCL, a Fortune 500 Company with an equity base of Rs.361.54 crore, is a leading player in the Petroleum Sector in the country. BPCL currently have Refineries at Mumbai and Kochi with a capacity of 12 Million Metric Tonnes (MMT) and 7.5 MMTPA respectively for refining crude oil. BPC’s subsidiary at Numaligarh has a capacity of 3 MMT. Currently BPCL holds 69.2 per cent

stake in KRL and 61.65 per cent in NRL. BPCL retails petrol, diesel and

kerosene, besides other non-fuel products and value-added services through its total network of over 7,000 retail outlets. It offers added value to customers at its retail outlets, both in fuel and non-fuel areas.

Initiatives include the ‘Pure for Sure’ petrol pumps for better quality and correct quantity of fuel for customers. BPCL offers its branded petrol, Speed, and its branded diesel, Hi Speed Diesel, at its outlets. On the forecourt retailing front BPCL operates its ‘In & Out’ and ‘Bazaar’ convenience store formats at select petrol pumps. As on date, the ‘In & Out’ has a network strength of about 400 stores across more than 160 cities in the country, bringing in unmatched convenience at the petrol station. The 2010-11 year Business outlook for the proposition is to expand to 1000 stores with a turnover of Rs. 750 crores. A launderette proposition is being piloted




adding to the list of services available to the consumer. Taking advantage of the growth of the travel industry and continuing the process of strengthening the basket of service offerings in the In&Out convenience store proposition, BPCL has introduced a complete travel solution from the stores that would offer consumers the convenience of purchasing tickets for all modes of transport - air, road, rail along with hotel / motel bookings.

BPCL’s retail outlets also offer ATMs (BPCL now has ATMs of nearly 13 banks at its forecourt outlets), cyber cafes, courier services, fast food, essential bill payment points, etc. As part of its customer loyalty programme, BPCL offers the ‘Petro Card™’ for individual customers and the ‘Smart Fleet Card’ for fleet owners. Apart from soft drinks and other grocery items, BPCL has tie-ups with Café Coffee Day and Coffee Day Express to serve snacks at its highway outlets. BPCL’s select highway retail outlets for truckers and highway commuters/travelers with multi-facility services are called ‘Ghar’. With

16 outlets in 2007-08, BPCL Ghar are located on all major highways across the country, plans to launch 250 outlets by 2009.

Facilities at BPCL’s Ghars include dhaba services, secure and free parking space, bathing and refreshment services, convenience shops, emergency assistance, medical assistance for minor problems, ‘Smart Route’ assistance etc.

Hindustan Petroleum Corporation Ltd (HPCL)

Hindustan Petroleum is another mega public sector company that focuses on refining and marketing petroleum products. HPCL is one of the largest integrated oil companies in India.

It has two refineries at Mumbai (West Coast) and Vishakhapatnam (East Coast) producing a wide variety of petroleum products, such as fuels, lubricants and speciality products. HPCL has a network of 7,909 retail outlets spread across the country with the refining capacity steadily increasing from 5.5 million tonnes in 1984-85 to 13.70 million metric tonnes (MMT) in 2006-07.

HPCL operates through a three-pronged retail format for highways,

urban areas and rural India. Its highway formats include HP Junction (outlets to refuel, refresh and relax travellers and truckers), HP Model (small format outlet to refuel and refresh travellers and truckers) and HP Highway (simple refueling outlet); urban formats include HP Express (modern outlets offering quick fill and convenience), HP Class (outlets with non-fuel offerings), and HP Apna (a no added frills, low cost fuel outlet with basic facilities). HPCL’s sole rural format is the HP Hamara Pump, a simple outlet with a small store.

There were 318 HP Express outlets across 180 cities in 2006-07; this increased to 630 outlets in 212 cities by 2007-07 with the current score of 850 outlets in 240 cities as on August 30, 2008. The company plans to operate 1,200 HP Express outlets in 240 cities by 2010. HP Junction ended 2006-07 with 47 outlets in 17 cities; it currently operates 94 outlets in 64 cities, and plans to have 130 outlets across 100 cities by 2010.

HP Model in 2006-07 had 85 outlets in 40 cities. Currently there are 208 outlets in 163 cities, with plans of increasing its presence with 295 outlets in 250 cities by 2010.

The forecourt facilities at the retail outlets include ATM, Fed Ex, Western Union Money Transfer, ‘C’ Store, vehicle accessories etc. This business is managed through tie-ups such as Cafe Coffee Day, Diary Den, Western Union, leading banks, US Pizza, Coca Cola India. HPCL is also forging service specific alliances with several automobile companies and OEMs like Tata Motors to jointly identify “Club HP” outlets, which could qualify as ‘Authorised Service Centers’ for leading automobile brands.

As mentioned earlier, in rural India HPCL operates Hamara Pumps which also provide value-added services through Kisan Vikas Kendras. Plans are on for launching 2,000 Hamara Pumps



by 2010 as against the current number of 920.

HPCL recently announced that it will be using IBM’s Radio Frequency Identification (RFID)-based solution to deploy an end-to-end tracking solution at its Nashik plant. Under the agreement signed in March 2008, the US$ 2.2 million deal will let IBM design, deploy and integrate the RFID solution for tracking LPG cylinders from plant to the end-consumer and is expected to cover 500,000 cylinders in the initial phase. HPCL intends to evaluate the technology and deploy the same in a phased manner.

Oil and Natural Gas Corp. (ONGC)

India’s flagship E&P Company, ONGC posted a net profit of Rs 156.429 million in 2006-07 as compared to Rs 144.308 million in 2005-06. ONGC is venturing into downstream refining and retailing of petroleum products. It currently operates one fuel retail station. ONGC, basically an oil exploration company, has been granted marketing rights for transportation fuels with approval to set up 1,100 petrol pumps at select locations.

As for OVaL, ONGC’s fuel retail brand, at present the company intends to go slow on the retail front. Only four five OVaL outlets are likely to come up, and that too in areas where ONGC has already got sites. At present, only one OVaL outlet is operational, while only one

from MRPL has been set up yet. ONGC owns 71.62 per cent stake in MRPL.

Mangalore Refinery and Petrochemicals Ltd (MRPL) completed five years under ONGC’s management on March 29, 2008, during which, the turnover of the Company increased from Rs. 8,581 crore to Rs. 37,339 crore. In January 2008, MRPL entered forecourt retailing with HiQ in Maddur, Karnataka. MRPL plans to open 500 outlets across the country, out of which 10 to 12 would be in Karnataka. MRPL is targeting to set up two more retail outlets in 2008-09. The company has already tied up with Café Coffee Day, Baskin Robins and various banks, such as Corporation Bank, to set up their ATM’s. Also being proposed are value-added financial products including co-branded credit cards and fleet cards, cashless transactions using smart cards for agricultural community.

ONGC and its subsidiary MRPL were considering ways and means to establish a Greenfield refinery in the SEZ at Kakinada. There have been various issues affecting the steering of Projects of Kakinada Refinery & Petrochemicals Ltd. (KRPL) and Kakinada Special Economic Zone (KSEZ). In June 2008, ONGC and MRPL decided against continue as equity partners in these two projects. ONGC’s proposed equity participation, through its subsidiary

MRPL, was 46 per cent in KRPL and 26 per cent in KSEZ.

INDRAPRASTHA GAS LTDIndraprastha Gas Ltd, the company

that sells CNG in the national capital, would invest Rs five billion ($113.2 million) over the next two years to expand its retail network with the addition of 50 new outlets before the 2010 Commomwealth Games.

IGL, a joint venture of gas utility Gail India and Bharat Petroleum, is in the process of land acquisition for the new outlets. IGL will invest a total of Rs 2,500 million this fiscal, with an investment of Rs 100 million earmarked per station. IGL is yet to get possession of the land for seven sites in Delhi, for which they have received approval, while sixteen other sites are still under consideration.

GLOBAL OIL MAJORS PRESENT IN INDIA, INCLUDE:

British PetroleumA 71 per cent stakeholder in Castrol,

BP is India’s major lubricant company. It is one of the bidders for the strategic sale of HPCL.

BG GroupThe Group has interests in city gas

distribution through participation in

MRPL plans to open 500 outlets across the country out of which 10 to 12 would be in

Karnataka. MRPL is targeting to set up two more outlets in ‘08-’09.

NAME Retail Outlets Retail Presence Retail Space (,000 sq ft) Retail Sales

2006-07 2007-08 2008-09Projections

20102006-07 2007-08 2008-09

Projections 2010

2006-07 2007-08 2008-09Projections

20102006-07 2007-08 2008-09

Projections 2010

HPCL 768 1305 2072 3625 555 812 1387 2590 747 1031 1754 2950 6414 9344 14298 22080

HP Express 318 630 850 1200 180 212 240 240 440 530 750 1050 4,394 6,529 9,371 13,759

HP Hamara 318 500 920 2000 318 500 920 2000 191 300 552 1200 631 992 1,826 3,969

HP Junction 47 59 94 130 17 29 64 100 68 116 256 400 666 836 1,332 1,843

HP Model 85 116 208 295 40 71 163 250 48 85 196 300 723 987 1,769 2,509

IOCL 508 15673355

(projection)150 384

400 (projection)

167 5031181

(projection)2500 lacs

10380 lacs

16230 lacs (projection)

BPCL In&out 300 324 400 1,000 108 122 160 280 172.756 187.631 300 800




Gujarat Gas Ltd and Mahanagar Gas Ltd. leverages its distribution assets to operate the broadband service, Iqara.

ShellShell has a licence to open

2,000 outlets in India with no specific timeframe. The company has opened 50 outlets in the last three years in south (35) and west (15).

Gaz de FranceThe company owns 10 per cent

stakes in Petronet LNG Ltd, a joint venture promoted by Indian public sector companies to set up LNG terminals to import LNG.

ChevronChevron is a promoter as a five per

cent stakeholder in Reliance Petroleum Ltd. Chevron is also evaluating

opportunities for investment in India’s exploration and production sector.

Elf Gas LtdElf Gas India Limited, fully owned

subsidiary of Elf Aquitaine of France, has been renamed Total LPG India Limited, following the merger of Elf Aquitaine with Paris based Total SA. Elf Gas has taken a brand transition to Totalgaz, the brand under which LPG is marked by Total across the globe. Total, which currently enjoys a one per cent market share of the eight per cent commercial and industrial gas segment, is also setting up a refinery plant at Vizag in a joint venture with HPCL, Oil India and LN Mittal group.

FORECOURT RETAILINGWith government’s persistent refusal

to grant subsidy to private companies

on a par with public sector retail oil companies Shell India and MRPL are going slow with their expansion plans. Shell has already announced the closure of 15 fuel retail outlets.

Vishal Retail Ltd, which operates its 100 stores retail chains spread across 62 cities in India, has recently tied up with Hindustan Petroleum Corporation Ltd (HPCL) to start forecourt retailing at the HPCL outlets. It’s keeping its investment in the retail foray low by franchising the space to organized retailers and also allowing dealers who have the wherewithal to invest in this business on their own to do so. IOC has also inked a deal with Future Group and Ansal Properties & Infrastructure Ltd to set up fuel retail outlets at malls being built by them.

BPCL, on its part, has tied up with Cinemata, a film distribution unit of Sony Entertainment Television, to set up cinema halls at its 300 fuel outlets on highways across the country by 2010. The movie ticketing facility has started at In & Out outlets with an alliance with INOX LEISURE in Kolkata and will soon be extended to other parts of the country. In 2007-08, BPCL also signed pacts with Nirulas Corner House for setting up Nirulas restaurants in the network. ■

With The Government’s persistent refusal to grant subsidy to private companies on

par with public sector retail oil companies, Shell India and MRPL are going slow with

their expansion plans.


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By S Shriram

AN INDUSTRY OVERVIEW

TRAVEL RETAIL

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suggest more than one-third of all passengers every year in LCCs are first time air travellers! Wow, that’s a stunning figure, isn’t it. Now, imagine the wallet power of these passengers! Show them an offer that they just can’t resist and the result is they would certainly end up shopping. Well, I am not propagating some sort of rocket science, but that’s what we have been seeing for over 60 years across airports.

The first airport outlet (A Tax Free shop) opened in the year 1947 at Shannon International Airport, Ireland. And the rest, as they say, is history. Today, people actually pass through certain airports in the world (such as Zurich, Singapore, Kuala Lumpur, Dubai, Bangkok, etc.) because they prefer to shop at these destinations. The international airports worldwide provide an array of offerings, ranging from fashion, apparel, accessories such as watches, jewellery, writing instruments, neck ties, etc., electronics, toys and of course, not to mention high quality food and beverages. One would never miss the local delicacies of the city / country at the airport.

NEED AND AVAILABILITY

How many times does one find not carrying something or the other while travelling! From personal products to

apparel, from bottled water to additional travel bags. There is a huge opportunity to tap while people are on transit. Especially at airports. The LCCs have made flying affordable even to the “common man” and Industry guidelines

As Organised retail is growing in India at over 35% year on year (with less than 10% of the total retail Industry being organised), the latest and most promising avenue in India for Growth is for Travel Retail (Retail Opportunities at transit points such as Airports, Bus Stands, Railway/Metro stations, etc.). It could be debated that these are places of transit, which primarily function for the purpose of transporting people in a safe, efficient and convenient manner. But the vast commercial opportunities that they provide cannot be ignored. They also add considerable revenues – “Non-core Revenues” for the Operators, thereby adding value with their existence.

WHY THEY BUY Pricing is a key factor, no doubt, but

that’s not the deciding factor anymore. For a busy travelling executive, convenience precedes anything else. For example, a Swatch wrist watch or a Mont Blanc pen is costlier by a few dollars at the Changi airport compared to the one in the downtown department store, Mustafa. But, people would still prefer to purchase it at the airport. A Nokia mobile phone is cheaper in India than at the Dubai airport, but passengers prefer to buy it there. The Apple iPod is still largely sold at the airports as is sold at city outlets. Fashion products, luggage, accessories, and toys are some of the categories that are purchased at the airports mainly on



impulse. But there are categories that shoppers prefer to buy at the airports based on their plans. Liquor, Tobacco, cosmetics and confectionery are glaring examples of such Core Categories. An international trip is almost incomplete without buying any or all of the above. In fact, these days, passengers can check prices on the internet across the various airport retailers’ websites and then may decide where to buy their stocks from and in certain cases, may even pre-order their purchases online!

EXTENSION OF CITY SHOPPING Airport Retail is not only about last

minute shopping of basic needs alone. People plan in advance and reach the airports a couple of hours before their flight departures and spend their time, money, and effort on shopping for themselves and for others. People who travel on business may not have

had the time to shop at the city and hence end up buying a lot of things at the Airport. Also, some airports provide their products on price guarantees that compete with other airports in the same region. Some cities like Sydney and Abu-Dhabi have Downtown Duty Free outlets where one can still buy their purchases within 2-3 days even after completing their international sojourn.

DUTY FREE VS. DUTY PAID Liquor and Tobacco are the

main categories that receive duty exemptions from local governments across countries worldwide. Most other categories are benefited by Tax exemptions (such as GST /CST). That’s why one will find certain categories of products cheaper at the airports compared to downtown. Of course, an Armani suit or an Omega wrist watch or a Bulgari accessory doesn’t come

necessarily with exemptions and people still buy them at Airports. The “Turler” outlet at Zurich airport sells some of the most expensive watches in the world, and yes, in large quantities, every year. Footwear and Sun glasses (without tax/duty cuts) are hot on their shopping lists for passengers. Add to this, the needs and wants of family and friends... the shopping activity at the airports may even run for hours together and is so much of fun!

SECURITY REGULATIONS The growing insecurity among

passengers due to the dangers of air-travel posed by terrorists has placed many a restriction to carry LAGs - Liquids, Aerosols and Gels on board as part of their hand luggage. This either de-motivates passengers to shop at the airports or they prefer to shop on arrival. One would be surprised that there exist no arrival Duty Free Shops at certain International airports (e.g. Zurich). At Singapore, you cannot carry cigarettes into the city upon arrival from the airport and hence you wouldn’t find it at the airport’s arrival duty free outlets! Passengers transiting via most European airports would be confiscated of all their LAG purchases as they don’t recognise the security arrangements at airports other than in the European

Airport Retail is not only about last

minute shopping. People plan in

advance, reach airports a couple

of hours before departures and to on shop for

themselves and for others.




Union itself. All this, would force passengers to postpone their purchases till they reach their destination and then, they would shop at the Arrival Duty Free outlet.

SOUVENIRS AND GIFTS This is another major category of

shopping at the international airports. They would be purchased by the passengers for themselves or for gifting to their families, friends, colleagues, etc. The remembrance of the destination could be captured in very small miniature collections. There is a huge industry behind producing such artifacts and souvenirs and yes, it’s a very profitable and thriving industry across the world.

FOOD AND BEVERAGESA journey is incomplete without

satisfying one’s taste buds. And this is what sells the most at airports too. The world famous F&B “Brands” such as Starbucks, McDonald’s, Burger King, etc. are all there at many airports worldwide to delight their customers once again. According to most passengers, their experience at the many eateries in the airports is directly related to their experiences at the Airport itself. That’s why many airports try to get both international and local flavour

at their locations. While international brands attract the global customer, thereby boosting confidence to have their favourite cuisine, the regional or local operators bring the best from their regions, and show a glimpse of their variety.

INCREDIBLE, INDIA! You see this caption all over the

place these days. – from Mysore to Manhattan, Ahmadabad to Amsterdam, Trivandrum to Tokyo ... The list goes on. But the one mentioned above by me, has a comma after the first word, which is intentional. The word is not just an adjective but also an appreciation. In the period April’07 - March’08, over 120 million people in India travelled by Air. This may be one-third of the total market size of air travel in China, but the results are impressive. Whilst the world average in passenger growth ranges from 8-9% a year, we have been witnessing a stupendous 30% growth in the past

few years. When I speak of this to my Industry colleagues abroad, they are in for a shock. But that’s the best thing about India, Incredible India! Even with rising fuel costs resulting in higher air fares, the growth phase is to continue atleast for the next 4-5 years, after which it is expected to settle down, but would still be a two digit growth compared to the single-digit across other parts of the world.

OPPORTUNITY IS NOW, DON’T MISS IT

Over the past few years, I have had many discussions with major brands in India – international, domestic, regional, etc., for various Retail and F&B formats at our airport. Somehow, most of them are still not yet fully convinced about the promise of this industry. Many international travel retail companies such as The Nuance Group, DFS, Autogrill, etc. have set foot in India, and are looking for a larger share of this market as early entrants. This country is full of opportunities and there is a lot of it waiting at our new airports. The ones who are already in would reap benefits and those who prefer to wait and watch, would keep watching.

The time is NOW and Travel Retail is poised for a non-stop growth at our airports.

SECTOR WATCH

AirportsAirports are the first and the last

places that a visitor to the country sees. In the past, airports were largely seen as mere places of transit, but with modernisation growing in this sector, there is immense interest to create an “experience” for discerning travelers, well wishers and greeters who visit the airports. India’s two large airports by



passenger volumes, Mumbai and Delhi, were handed over to private players a few years ago for modernisation. Two greenfield private airports in Hyderabad and in Bangalore were constructed in record time and were inaugurated in March and May 2008 respectively. Chennai and Kolkata Airports will be modernised by the Airports Authority of India. The Ministry of Civil Aviation plans to utilise over 300 air-strips across the country for operating commercial flights. These airports will be the face of India in the years to come. With over INR 20,000 crores being pumped into development of existing and new airport infrastructure, there is a huge opportunity at these locations.

Case Study 1Bengaluru International Airport,

which commenced operations on 24 May 2008, has over 50,000 sft of the Terminal Building space dedicated to Travel Retail. Shoppers Stop-Nuance Group consortium and HMSHost are the two Master Concessionaires holding Retail and F&B portfolios, respectively. The Retail concessionaire operates a large department store in Domestic Departures along with a Fashion island, aptly named La Moda, Life’Spirit housing Electronics, Jewellery, Souvenirs and Gifts and the Crossword book store. On the International side, they operate the Departure and Arrival Duty Free Outlets, together among the largest in India at the moment, apart from new concepts such as Sound and Vision – Electronics, Souvenirs, Gifts, etc., Cocoon – the Fashion Island and a Crossword book store.

At Domestic Departures, HMSHost

operates “Taste of India”, which caters to the varied culinary delights of passengers from Mysore to Manhattan who pass by the airport, a Barista-Lavazza Coffee and Cookieman Cookies. At International Departures, they launched and operate Illy Café for the first time in India, an import from Italy, a Pizza Hut for the entire family which is travelling on vacation or leisure and a spacious Kingfisher Sports Bar catering to the male international traveler who may be travelling alone, and who likes sports and beer – one for the runway, as he quips it down! Also available are local and international cuisine. What’s interesting is many passengers like to carry the food on board too!

There are other Mono Brand operators such as Odyssey Leisure, Ethos Watches, Carbon Jewellery

and Deepika Govind, the first fashion designer in India to have her collections at any airport. Located at the International Departures, her collections are sold not just for their utility, but also as classic souvenirs from the Region. In Food, there are many exciting offerings – Café Coffee Day, Subway, Baskin Robbins, RKHS, Kaatizone and Gangotree. Forex Services are managed by TT Forex and Thomas Cook while your valuable luggage is managed by Secure Wrap. There are eight ATMs operated by Seven Banks across four different locations, catering to various sets of users.




Case Study 2Rajiv Gandhi International Airport,

Hyderabad, commenced operations on 23 March 2008. The Nuance Group and HMSHost are the master concessionaires at this airport, apart from many other domestic and regional brands. The airport has many innovations to its credit. The Nuance Group operates large Duty Free outlets in the International Departures and Arrivals. Landmark and Odyssey have created airport centric concepts that are spread across the Terminal Building. A new concept store created by the airport operator aptly named “The Spirit of India” opened in Aug. 2008. The outlet, which mainly focuses on the gifting categories houses major brands such as The Bombay Store, Monalisa

Pearls, Fabindia, Le Pakshi, Neeru’s ensembles, Landmark Spiritual, and most importantly, Empower – a CSR initiative of the operators, GMR Group.

HMSHost operated F&B outlets include Coffee Bean and Tea Leaf, Coffee Club, Indian Paradise and an IIFA Bar. Hard Rock Café at the Airport is a first in the country. Blue Foods operates many concepts for the benefit of passengers and visitors to the airport.

SECTOR DEVELOPMENTS

Railway StationsAmong the largest rail networks

in Asia, the Indian Railways has been there for many decades now. Whilst the gloomy pictures of people travelling on top of trains during the partition are familiar to many, the Shatabdis, the Rajdhanis, the Deccan Odyssey and the Palace on Wheels are unforgettable experiences, if one has travelled by them. Whilst there has been a lot of focus on developing the journey itself, little was focused on the ground infrastructure till a few years ago. But all this has been changing since the recent past. With the Common Wealth Games 2010 a few months ahead, New Delhi Railway Station would be the first to be developed and modernised by the Railway Ministry through a private operator. Spread over 86 acres and expected to cost about INR 5,000

crores, the station would have state-of-the-art facilities for passengers. Also on the cards, at Mumbai CST, Bangalore Majestic, Chennai Central, are new blocks and stations, passenger facilities, commercial activities, etc., both inside and outside the railways stations. Delhi Metro is a glaring example of how the once terrifying city traffic can be made into a memorable experience and the retail operators at these stations are witness to the booming industry there.

Bus StandsIndia’s road network is among the

longest in the world. From Kanyakumari to Kashmir – Ladakh, to be precise, the highest motorable road in the country, we all love travelling on roads. More for the common man, buses and bus stations are readily recognised with their network and their round-the-clock service. A decade ago, the former Chief Minister of Tamil Nadu built the then largest Bus Station in Asia at Koyambedu near Chennai. Three years ago in Bangalore, India’s leading retailer, The Future Group set up its hypermarket at two important bus stations. Mohali, in Punjab, will have a swank new bus station. With a ten-storey and fully air-conditioned tower, passengers will have a similar experience to that of an international airport, promises Punjab Infrastructure Development Board, which has leased the land to a private builder and operator for 90 years on a PPP model. Needless to say, there would be a dearth of retail opportunities. All these are but a tip of the iceberg. The real opportunity is to be created in the years to come and the first movers will reap the benefits. ■

I humbly dedicate this article to all my

mentors and teachers, including my first and

most important teacher, my Mother

With the Common Wealth Games 2010 a few months ahead, New Delhi Railway

Station would be the first to be developed and modernised by the Railway Ministry

through a private operator.


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