On the rubble of failed retail experiments, a new breed of retailers is coming up. Not surprisingly, their appetite is limited to foods.

You've heard of Wal-Mart, but Tata-Mart? If industry rumours are to be believed that signboard may soon go up on a store next to you, since Tata Steel is supposed to be mulling over a retail foray (Tata Steel denies any such plans, though). If there's anything that the wannabe foods retailer, Tata-Mart, won't lack is company. Detergents major, Nirma; Vam Organics, and Adani Exports are some other companies planning to join the bandwagon.

Why the rush? Simple. The market potential is mind-boggling. According to Rabo Bank, food expenditure in India is about $77-billion (Rs 3,50,000 crore), of which organised retail accounts for a measly 0.17 per cent. At the global level, however, food spend is a staggering $4 trillion, and organised retailers have an astonishing 53 per cent share. Retail consultants, KSA Technopak, estimate that organised food retail is around Rs 600 crore per annum, but could well soar to Rs 6,000-crore by 2005. Says Raghu Pillai, CEO, FoodWorld: ''Food is the single-biggest opportunity in retail. And this is the right time to get into it, because there is growing middle class in urban India, and an increasing range of consumer products.''

FoodWorld is already raking in Rs 300-crore from the 60 stores it runs in cities such as Chennai, Bangalore, Hyderabad, and Pune. When the store count touches 100-likely by end next year-signalling the end of Phase One, FoodWorld will go national. Meanwhile, it is opening a cash-and-carry (wholesale) store in Hyderabad by the first week of June.

There's action in west, too. The Ahmedabad-based Adani group is setting up its third supermarket by the end of May. It plans to spend a total of Rs 180 crore on opening 20 supermarkets, 104 neighbourhood stores, and 20 warehouse clubs by 2005. Nirma with its Radhe store in Ahmedabad (apparently, footwear isn't allowed into the store), and Vam Organics with its boutique retail store ''Monday 2 Sunday'' in Bangalore are some others vying for the retail pie. Even the Pantaloon group, which until now was concentrating on apparel retail, is getting into non-perishable food items with its Big Bazaar hypermarkets. Says P.K. Roy, CEO of Arambagh Hatcheries, which is converting 10 of its 130 chicken outlets into food marts: ''We looked at the south and saw so many food retail chains doing well. And that is when we began our own experiment with retail.''

The entry of organised players could take the industry closer to the long-awaited inflexion point. Agrees Gautam Adani, Chairman, Adani Group: ''We expect the sector to grow at a faster rate, simply because there is so much of corporate interest in it.'' But given that foreign investment in retail is still restricted, global players like Wal-Mart will have to keep patience. Meanwhile, watch out for Tata-Mart.

-Seema Shukla

DEVICES
Sleight Of Hand

With leading PDA makers launching their products in the country, Indians move a step closer to wireless-heaven.

They're here. And about time too. After all, didn't the smart set in India take to personal digital assistants (abbreviated PDAs and pronounced peedeeayes) like, well, a printer to an USB port. May has already witnessed the launch of the Psion and the Palm. And with Compaq's bestselling hand-held, the IPAQ already here, potential customers have quite a lot to pick from.

The PDA price-spectrum ranges from Rs 8,000 for Palm's plebeian offering the m100, to Rs 32,000 for Psion's high-end 5MX, to Rs 35,000 for the IPAQ. That's a range that can accommodate your secretary and yourself. Typical of most new markets in India, there are no numerical estimates on size. Indeed, no one is even prepared to venture a guess on the number of Palms that have found their way into India (our take: almost every exec who matters in a tech company has one). Psion is the only manufacturer willing to articulate its intent in terms of numbers; it wishes to sell 100,000 units over the next year. But as Yash Jagdhari, Compaq's man in India, in-charge of products like the IPAQ puts it: ''The volumes may be insignificant, but the promise is huge.'' Jaghdhari's belief is echoed by Palm's marketing manager, Leslie McKnight: ''We have carried out several studies and are convinced that the market potential is huge.''

The entry of these companies bodes well for-if not anyone else-those who picked up a handheld on their last trip abroad and have been using it as a digital organiser in the absence of an e-mail service. That's right, you can always connect it to your cellular phone, but have you ever thought about how much that could cost? Palm and Psion, BT learns, have initiated talks with cellular service companies to provide e-mail and Internet connectivity to PDAs, but as a marketing executive from one of the companies explains, ''some regulatory issues need to be sorted out''.

Content and Apps too, need to be ''sorted out'', but about 1,000 developers are already working on developing India-specific applications for the Palm. Perhaps that PDA you picked up at Changi duty free may be more than a showpiece after all.

-Ashutosh Sinha

START-UPs
Now, Bio-tech Consultants

Biotech wannabes are turning to consultants for start-up help.

When an entrepreneur comes sneaking up on the heels of an opportunity, chances are there's a consultant following him two steps behind. In the case of biotech, however, it is the entrepreneur who's seeking out the suits. Ernst & Young (E&Y), for example, has been receiving at least 10 enquiries every week from biotech aspirants. Says Utkarsh Palnitkar, Director, E&Y: ''From almost no awareness six months ago to a virtual flood of enquiries. The interest in biotech is amazing.'' Rival consultants are keenly aware of the opportunity, too. PricewaterhouseCoopers has already identified India as a key market for biotech. What makes the field so amenable to outside help is the complexity of business, and legal issues. For one, there's a range of segments-bioinformatics, proteomics, genomics, to name a few-to choose from. Then, there are complex intellectual property rights, and patent issues to grapple with. The consultants, with their international knowledge base on tap, are then expected to do the handholding. Says G.V. Sanjay Reddy, 36, CEO, GVK Bio Sciences: ''We think the consultants' global experience makes them of critical importance to those entering a new business, like biotech.'' Just the words consultants so love to hear.

-E. Kumar Sharma

ADVERTISING
Fifteen No More

Reports that Unilever is looking to move to a fee-based payment system for its agencies reopens the debate on alternatives to the traditional 15 per cent commission.

SAM BALSARA: not too worried

Holmes had his 7 per cent solution. Advertising has its 15 per cent commission. The first was an addiction (cocaine), highlighted in Nick Meyer's A Seven Per Cent Solution, where Watson drags Holmes along to Vienna to be cured by Sigmund Freud. The second is more than an addiction. It is a fixation, one that earnest rookies encounter during Day 1 in advertising agencies. Everything, they are told, falls into one of two categories, gross and net, the former just being the latter plus 15 per cent.

Just how sacrosanct this commission is can be gauged from the reluctance of agencies not averse to other forms of recompense-like the fee-based system Unilever was widely reported to be considering-to come out in the open and say so. The Advertising Agencies Association of India (AAAI) fear may not react too kindly to someone messing with as holy a cow as the 15 per cent commission.

That said, there is pressing logic for the shift: the commission is a legacy of a long-forgotten past when advertising agencies actually went out and secured ads for newspapers; and clients, especially the better companies, have sought, for some time now, to measure the impact of advertising on sales, and reward agencies accordingly. ''Sure it'll squeeze profits,'' concedes Madison's Managing Director Sam Balsara, ''but in the long run it is a good thing.''

Some of Balsara's peers don't think so. ''The Indian market is just not mature enough to move to a performance-lined system,'' says Rajiv Agarwal, MD, Enterprise Nexus. Adds Anisha Motwani, a Vice-President at Leo Burnett: ''There is no scientific method to evaluate performance and output, a prerequisite if we are to move to a performance-linked system.'' Tell that to a marketing maven called John Philip Jones who's spent the better part of the last decade and half working on ways to quantify the impact of advertising on sales.

And market-dynamics could bring about the move to a fee-based structure. ''As markets have fragmented, the effective cost of reaching customers has increased,'' explains Leo Burnett's CEO Arvind Sharma. ''Clients need effective advertising, and there is no way they will pay (a commission) just to keep us in business.'' If Unilever decides on the details of how it wishes to move to an alternative payment system, and if its Indian subsidiary Hindustan Lever Limited, the country's largest advertiser, follows suit, we could well witness the emergence of a new type of agency-client relationship. Agencies, then, will work like consulting firms do now-on retainer fees, performance bonuses, and media buying commissions if they boast specialised media divisions.

Indian agencies have already made a beginning of sorts. Most accept fee based payments for that part of their work that doesn't involve dealing with a media vehicle (read that as promos, posters, Point of Purchase merchandise, and the like). Typically, this constitutes around 20 per cent of the gross income of an agency. Some agencies have also got used to working with less than 15 per cent: large advertisers usually appoint a specialist media buying unit that takes 2.5 per cent; the agency servicing the account, thus, ends up with a 12.5 per cent commission. If HLL takes the plunge, fear some advertising execs, and if other advertisers follow suit, this figure could come down further to 10.5 per cent. That could be disastrous in an industry like advertising where net margins are already abysmally low. Still, hope springs eternal. ''If our performance is exceptional we may actually end up earning more than we do with a fixed commission,'' says Grey India's CEO, Nirvik Singh. That we'd like to see.

-Abir Pal and Debojyoti Chatterjee

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