in the year, when the government gave the go-ahead for up to 51
per cent foreign direct investment in single-brand retailing,
the stage was set for global brands to open up their specialty
stores in the country. The action is just about beginning to hot
up, with a host of brands, ranging from the luxury variety to
more humble (not by much in some cases) mass-market ones, readying
to launch flagship stores in the country. Some of the world's
biggest and best-known names-Disney, Calvin Klein, Gucci, FCUK,
Armani and Ermenegildo Zegna-are giving the final touches to their
Indian game plans. A few, like Tommy Hilfiger, Versace, Marks
& Spencer, Gucci and Giordano, have already put up their first
own stores here. "After the multiple-brand retail format
store, the next growth is from specialty retail. This format is
already popular abroad, but it is catching up in India now,"
says Harminder Sahni, CEO, KSA Technopak, a Delhi-based retail
Last month, the Disney group announced plans
to set up a chain of exclusive stores in India to sell its branded
stationery products. Disney Consumer Products will set up some
150 'Disney Artist' stores across India over the next five years,
offering greeting cards, stationery, arts, crafts and party products.
Disney also has plans for exclusive 'Disney Home' stores as well
as 'Disney Princess' and 'Disney Teen' stores in India as a part
of its global strategy. "In India, as in many of the emerging
markets, we are moving to concept stores that are more utility-driven
and aimed at satisfying the consumer's need in one category. Our
objective is to have the consumer make these stores the first
stop and the only shop for satisfying needs in a particular category,"
says Rajat Jain, Managing Director, Walt Disney India.
Calvin Klein is entering India by Spring
2007 with an exclusive retail store licence to launch 40 Calvin
Klein stores over five years. Products under various Calvin Klein
brands include apparel, accessories, shoes, underwear, sleepwear,
hosiery, socks, swimwear, eyewear, watches, jewellery, coats,
fragrances as well as products for the home. "In my view,
there is enough space for the global as well as Indian retailers
to co-exist, be it via multi-branded retail outlets, single-brand
stores or luxury department stores," says Vijay Murjani,
Managing Director of the Murjani Group, a Mumbai-based apparels
maker. The Murjanis will also be setting up exclusive retail stores
for Calvin Klein, Gucci, FCUK and Jimmy Choo.
Giorgio Armani is another luxury brand that
plans to have its own shops here-four of them in Mumbai and Delhi
by mid-2007-to sell, in addition to the clothing brand, Emporio
Armani accessories (sunglasses, watches, perfumes, aftershave).
Another company that will be foraying into India in 2007 is Gucci,
which will set up boutiques in Mumbai and New Delhi. Cadini and
Ermenegildo Zegna are some of the brands finalising plans to enter
India through their own stores instead of multi-brand retail stores.
The brands aren't restricted to clothing. UK's leading retailer
in babycare and maternity products, Mothercare, will also launch
stand-alone stores in India (the brand also has shelf-space in
Shoppers' Stop). Luxor Parker is looking to set up a stationery
retail chain. And if you include the stores coming up in the five-star
hotels, almost every global luxury brand is booking or has booked
its space, right from Louis Vuitton, Fendi, Canali and Mont Blanc
to Bally, Hugo Boss, Guess and Daks.
According to an A.C. Nielsen study as many
as 31 per cent of Indians in Sec A category buy designer clothes
to "uplift one's social status." The study reveals that
the upper-middle class in India is getting more brand conscious.
Calvin Klein & company will approve.
Retailing food sounds easy, procuring is a
reams that have been written on the organised food retailing sector-and
in particular one Indian conglomerate's plans for it-could make
you reach two conclusions: One, there's a huge opportunity waiting
to be tapped; and, two, tapping that opportunity will be as easy
as pie. You would be right about the opportunity-food is estimated
to make up 40 per cent of the country's organised retail pie-not
quite about the ease with which it can be exploited. To be sure,
there are pitfalls, especially for the big players. The biggest
of those has to do with securing agri-produce and grading it.
"Procurement of agri-produce would be a huge challenge for
players who aim to be in the volumes business," avers Kalyan
Chakrabarty, Country Head, Food and Agri-business, yes Bank.
Though corporate farming may seem an easy
and practical solution to procurement woes, political realties
make it a no-go in India, not all Indian corporates have been
able to benefit from the alternative-contract farming. Says Rajeev
Sinha, Deputy Managing Director, DCM Shriram Consolidated: "There
are difficulties in fulfillment of contract obligations."
DSCL, which runs 30-odd Hariyali Kisan Bazaars for procurement
of produce such as tomatoes and coriander, supplies to modern
retailers and to terminal markets. What is more, there is no legal
recourse for breach of contract with farmers. Such infringements
are aplenty, particularly so in commodities such as wheat, rice,
pulses and other regularly-consumed vegetables, all of which have
a domestic market. When the prices of such commodities shoot up,
the farmers like to sell their produce outside the contract; when
prices are plunging they fear the corporates are unnecessarily
raising quality issues. "Successful contracts are the ones
that create reciprocal dependency between the company and the
farmers," says S. Sivakumar, Agri-business Head at ITC.
Against such a backdrop ensuring a regular
supply of fresh food is going to be a huge challenge for domestic
retailers, especially those planning large-scale operations. Aware
of this, companies are assiduously building fruitful farmer relationships.
Some like Tata Chemicals are deepening their existing relationships
of providing farm inputs such as fertilisers through branded outlets
such as Tata Kisan Vikas Kendras. ITC's e-choupal initiative is
by far better known than most since it has been around for six
years. With demand from retail chains increasing, ITC has little
choice but to further loosen the purse-strings; it will invest
Rs 5,000 crore over the next seven years. With payback periods
of 7-10 years, it is a long haul for the new agri-warriors. "Comprehensive
engagement with the farmer is critical," says ITC's Sivakumar.
That's one reason why the Tatas, Reliance, Larsen & Toubro,
Sunil Mittal's FieldFresh, Voltas and even DLF Universal are vying
to set up eight modern terminal markets for perishables across
the country. The government received over 100-odd initial expressions
of interest for these markets which will be set up on a public-private
partnership model. A much-needed link between the farming community
and retail chains, these terminal markets constitute just one
piece of the massive infrastructure that's needs to be created
in the food retailing business.
Bazaar in the South
Mukesh Ambani's grand retail rollout will
begin in Hyderabad.
|Mukesh Ambani: Harvest time
much-anticipated foray into fruit and vegetable retail is likely
to kick off in the days ahead in Hyderabad. In the first phase
of Reliance's Rs 25,000-crore retail rollout, multiple stores
are expected to be flagged off in the city. The group expects
to have a number of stores up and running in Hyderabad in a few
months, which will sell fresh fruits and vegetables. The produce,
all priced to market, will be sourced from all over the country,
as well as the hinterland of Andhra Pradesh where the group has
tied up with farmers. The stores will span between 2,500 and 4,000
sq. ft., and will sell consumer goods apart from vegetables. Hyderabad
was chosen as the launch base as it is amongst the cheapest cities
for rentals, and properties are easily available. Reliance, according
to watchers, is investing substantially at the back end and in
the supply chain, especially in a cold chain. The group has tied
up with fmcg manufacturers and, while negotiating for higher margins,
is looking to pick up stocks directly from the companies themselves.