The second rung of retail players is shaking things up. But in a highly competitive market, smaller retail chains have cracks in their business models. Can they take the next leap? (Feature article from Businessworld, 23 January 2010)

Large retailers are trying to make their small food and grocery stores viable by trying out new ideas. While some like Reliance Retail are converting most of these stores into a deep- discount value format, RPG Group’s Spencer’s is looking at the franchising route.

As the New Year celebrations wear out sooner or later, bringing to the fore the harsh realities, the first thing that is likely to hit hard are the sharply rising food prices.

Tie-ups with international retailers and brands, emphasis on profitable growth and increased focus on private labels are set to be key trends in the Indian retail sector in 2010, say retailers and consultants that Business Standard spoke to.

Parents continuously strive to do better for their children. They play an indelible role in shaping up the eating habits of their kids beginning at infancy. So when it comes the matter of feeding their toddlers, urban Indians (parents) typically are willing to go the extra mile in enhancing the nutrition quotient.

An unforeseen drop in global cotton output has seen prices flare, putting at risk the fragile recovery of India's textile industry that was battered by the global recession earlier in the year

"Rather than trying to fit the world to our business model, we need to fit the business model to the real world that exists," comments Devangshu Dutta, chief executive of Third Eyesight.

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They're egg-headed, have squeaky voices and formless pale bodies, but the viewers seemingly can't get enough of them. Vodafone's Zoozoos have now ventured into merchandise. The reason: public demand.

With retailers downsizing operations, many senior executives from fast-moving consumer goods (FMCG) and telecom who had jumped on the retail bandwagon a couple of years ago are making a quiet comeback

Sustainability is a great concept like liberty - In three sessions, the panel of speakers tackled three key issues: What is Sustainable Fashion? Is Sustainable Fashion Profitable? Who Wants Sustainable Fashion?

The Indian call centre has become an international cliché. Its employees are young, educated, English-speaking and compared with their compatriots, well-off – and their disposable income, along with that of the rest of India’s fast-growing middle class, is driving extraordinary growth in the country’s consumer goods market.

Indian shopping hotspots are sporting more and more golden arches these days. If McDonald’s is expanding like never before, KFC is not far behind.

Normally, the performance of the market leader is a fair indicator of which way the wind is blowing in a sector, data from various retailers suggest that sales picked up slightly, but urban consumption could still be worrying.

Real estate is the largest component of cost for a modern retailer in India. At an average of 15 per cent of sales being paid out as rentals – compared to 2-3 per cent of sales in developedmarkets – just the retail space cost is enough to seriously dent a low-margin retailer’s bottomline. However, is reductionin rent the proverbial Final Solution?

The fast growth of digital media has amplified the potential of modern retailers to gain momentum in pushing brand building and consumption of their respective products among younger consumers. Opportunities in online brand building are particularly important to understand, given the tremendous pressure Indian retailers face in generating revenues robust enough to counter high operating costs.

A decade ago getting a branded footwear or apparel at 50 per cent discount gave rise to doubts in the minds of consumers. The stock was often comprised of store rejects and seconds. But this phenomenon has taken a complete turn with the terminology also being changed to value retailing.

Managing business poses many challenges to a retailer. Gross margin is only the starting point. A higher gross margin allows the retailer much more scope in deciding the operating costs. However, there are businesses with a high gross margin on products but slow inventory turn and high markdowns as well.

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The consumer driven industry is feeling a dire need to streamline processes and optimise operational efficiencies. Industry experts are of the view that to fight back in this challenging environment, retail value chain can prove a handy tool for retailers to understand and identify performance improvements within the network while at the same time improving the customer experience in every store.

Gone are the days of basic satchels, canvas shoes and hand-me-down clothes from elder siblings. Retailers are finding new ways to create buying opportunities.

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Skyrocketing rentals in big cities also makes moving to tier 2 and tier 3 cities attractive for apparel retailers.

After making their debut on television ads during the Indian Premier League earlier this year, the lovable egg-headed Zoozoos quickly made their way onto comic strips, newspaper mastheads, birthday cakes, wedding cards, shoes, T-shirts, key chains and even rakhis.

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The primary challenge in food retail, is its supply chain, which is making things difficult for retailers and food processors to procure quality produce at competitive costs directly from farmers in India.

Convenience and low prices are spurring an increasing number of Indians to purchase goods and services through the Internet. The innovations in securing online transactions are also fuelling the trend .

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Cash-and-carry players are still betting big on India despite their poor show so far

Indications are that foreign investment in front-end retail will remain a distant dream

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Modern retail is here in India to stay and growing but the friendly neighborhood stores are fighting back - and how.

It has been suggested that investing in innovation during a downturn helps retailers counter depressed consumer sentiments but a downturn also creates opportunities in the market and it may be the best time to invest in value marketing.

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Speciality home ware retail chains have changed tack as home sales drop and shoppers defer buying big-ticket items like furniture and furnishing to save cash in the downturn. To counter the slowing sales, retailers have adopted strategies to prop sales and cut losses.

The sustainability of any business depends - to a large degree - on loyal customers who come back again and again. A loyalty scheme can enable a retailer to not only to be in touch with its customers more regularly, but also to distinguish between customers and service the individual customers much better.

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Being an entrepreneur, Kishore Biyani is not shy of burning his fingers. Biyani took on a huge debt to expand Pantaloon Retail very quickly. Now the slowdown is making him rethink the Future Group's business plans and structure.

When the recession started in the second half of 2008, luxury retailers predicted that high-end brands would be immune as their target group would neither tighten their Chanel belts nor compromise on their lifestyles. Six months on, terms like recessionista and chicko-nomics are in and the Richie Rich club is shying away from luxury.

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Statistics gathered from eBay India reveal that one of the top-selling categories are jewellery and watches. Other hot categories are clothing and accessories, sporting goods, collectibles, home furnishings and musical instruments. These online shopping trends throw two big myths out of the window. One that the lack of the "touch and feel" factor is the biggest constraint in the path of e-commerce growth in India. And second, that only low value items peddle on the net.

Raheja-owned department al store chain Shoppers Stop Limited (SSL) is pulling out of unviable new ventures and shutting loss-making stores to conserve cash for the company in the ongoing economic downturn.

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Rice, which has long held the reputation of being the food of the masses, is witnessing a silent transformation in India. Things have come a long way from the “touch and feel” approach to purchasing rice by the weight to the modern era in which the busy urban Indian consumer is beginning to place his or her trust in branded and packaged rice.

The jewellery trade and industry has taken a hit. The global economic meltdown, the winds of recession, the slump in diamond and jewellery exports, massive lay-offs, closure of factories (SEEPZ, Surat), the volatile prices of gold and, most importantly, the dampened sentiment of the consuming class (especially for non-essentials like jewellery) have adversely impacted this sector.

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Pantaloon Retail's same-store sales in January grew at the second slowest pace in five years as consumers curbed spending and the retailer struggled to survive the downturn by offering discounts.The slow growth comes after the retailer's value and lifestyle same-store sales registered a negative growth in December.

Indian textile manufacturers have sought a two-year moratorium on repayment of term loans, withdrawal of excise duties on man-made fibres and waiver of service taxes on exports as well as taxes on textile machinery. The embattled textile industry, reeling under a slowdown in demand and high input costs, also seek to bring domestic cotton prices at par with international prices.

Bangladesh Pips India in Garment Exports

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For the first time, Bangladesh has garnered more market share than India in garment exports to the US, the largest importer of garments. Bangladesh has now taken the fifth position, which was previously occupied by India, in the list of largest garment-exporting countries to the US, pushing India to the sixth position.

Balm for the soul

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Growth in the smaller towns and rural markets can still be driven by penetration and improved availability levels of stock-keeping units. There are still vast swathes of consumers in India whose consumption of packaged skin and personal care products is negligible

Retail Kiosk – Plug and Profit

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The Indian retail scenario has been witnessing significant advancement with traditional retail formats making way for more innovative and technologically evolved formats. One of the innovations to watch out for is the 'retail kiosk', which truly makes business sense for retailers because of its cost benefit structure at the ‘point of sale’ establishment process and ease and convenience for the customers too.

Textile firms battle global slump despite rupee fall
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Textile companies may not benefit much from the rupee's weakness as a slump in global demand and prior currency hedges trim bottomlines in an industry dominated by exports. However, the global credit crisis, which triggered the rupee's fall in the first place, is also leading to slump in global textile demand.

The Indian Retail Market

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A perspective on the Indian retail market, the growth path followed in the past, views on the evolution path it could take, the opportunities as well as the challenges that need to be address. (Chapter 1 from the India Retail Report 2009)

In a departure from popular retail philosophy, the author calls for a new model of food supply based on multiplicity and diversity. Modern retail must take into account the changing environment and be sensitive to evolving consumer preferences. (By Devangshu Dutta)

Food and grocery retailers are leaving no stone unturned to gain the loyalty of the spoilt-for-choice consumers. One bad experience and poof! The loyal shopper is gone for good. Not only does this imply assuring good shopping experience every time a consumer enters a store, but also retain them by ensuring an impressive visual treat for them. You get only one chance to create the first impression. This impression would either create a happy loyal shopper or would eliminate their chance of ever stepping into the store again. A store that projects a differentiated image and branding definitely gains in the long term.

Indian fashion has true potential to grow exponentially in the next decade. But before that, there are many issues that the creators and producers of fashion need to address.

In 2004, Oswal group forayed into innerwear business under the brand of 'Sensa' with a view to cater to the growing ready-to-wear fashion apparel market. Thereafter, the company renamed its retail innerwear business as 'Straps', offering lingerie, nightwear and maternity wear in 2006. And finally in 2008; Oswal Retail decided to wind up its innerwear business and close down its 22 exclusive outlets of 'Straps'.

Since India bars overseas investments in a retail venture selling multi-branded products to consumers, the two foreign funds have invested in MedPlus’ wholesale arm.

As costs rise and economic growth slows, Indian retailers are looking at ways to trim expenses and protect their profits. “Unlike mom-and-pop stores, large retail formats have much higher cost obligations,” said Devangshu Dutta, chief executive of retail consultancy firm Third Eyesight. “Organizations with larger cost heads will be first to get hit in case of a slowdown.”

Many retailers, saddled with excessive inventory and caught flat-footed by optimistic sales forecasts, have had to launch early "end-of-season" sales this year and the more innovative ones are trying to stand out in that deep discount clutter. The midnight-sale by Spykar has become one of the many retail innovations that stores are using to get more shoppers into their stores. And, much like a "happy hour" in a bar, retailers are offering steep discounts during such "off" hours or on certain days when foot traffic is normally slow.

The apparel and textile industry has grown and matured a lot over the last few years - from an unorganized to an organized sector. However, this in turn has increased the need for constant improvement and upgradation of knowledge and skills. An update on a workshop conducted by Third Eyesight.

Many people l know treat shopping centres or malls as a new phenomenon, a progressive development of recent times, or a modern blot on the traditional cityscape (depending on your point of view). Lest one forgets, Grand Bazaar (lstanbul, Turkey) is the earliest known mall, with the original structures built in 1464,with additions and embellishments later.

India has 267 million mobile phones. And the market is growing at the rate of five million phones per month. As a result, companies are quite busy leveraging the medium.

Quite a few companies have realized the importance of developing distinct supply chain strategies that are aligned with business strategies. This helps them capture cross-enterprise opportunities that not only generate cost and capital efficiencies, but also help drive top-line opportunities. However, in India the idea of letting the supply chain enter the corporate boardroom still seems somewhat alien to many.

India has literally millions of individuals who would prefer to be their own boss and run a business, rather than being an employee. There are joint families, where resources may be available in the form of some real estate and family members who can be part of the business. Personal loans are available from family and friends, in the close social fabric of our communities. This is ideal ground for franchising,” says Devangshu Dutta, chief executive, Third Eyesight, a consulting firm focused on the retail and consumer products sector.

Shopper's Stop Ltd, the 24-store retail chain, got a new look at a glitzy function featuring actor Shah Rukh Khan, nightclub lighting and hundreds of saplings that will be planted as part of the stores' Rs. 20 crore (Rs. 200 million) rebranding exercise. The chain, which started in a defunct suburban Mumbai movie theatre in 1991, got itself a new black-and-white logo, uniforms, print and television campaigns, carry bags and even an anthem and an in-store radio channel. It will also launch an Internet shopping platform along with a Think Green campaign.

Indian retailers are a worried lot these days. There has been a decline in margins and it's one of the lowest ever, according to some retailers. As inflation touched a 41-month high, chains across the country, especially the smaller players, have been trying every trick in the book to attract consumers, and keep them coming in, even as they struggle to grow profitably. (From The Economic Times)

We are surely not the first to wonder why, after millennia of physiological evolution, societies around the world are still stuck in the same, predictable response: where disagreement (on an issue) translates into disapproval (of a person), more often than not leading to conflict that is frequently violent. The need to accept differences and the use of democratic dialogue as a process to close the gap is the basis of Arun Maira’s Discordant Democrats. (Book Review)

Just a decade ago, it might have been hard to imagine that the take-out food of choice for millions of Indians would be a baked good of Italian origin. But since then, calling for a pizza has become quite the urban ritual. Like most consumer brand successes, pizza has been customised for the Indian market, from its toppings to its delivery models.

Weekend temping is the new passport for retailers to tide over footfall pressure during the weekends. As families make a beeline for high streets and malls during the weekends, the normal workforce looks helpless. Heavyweight retailers who see a sudden spike in footfalls over the weekends, are roping in agencies for outsourcing manpower for that short one-to-two-day duration.

Bharti Enterprises, the parent of India's best selling wireless service provider Airtel, confirmed that it will invest up to $2.5 billion (Rs. 11,026 crores) in the next eight years to roll out convenience stores and hypermarkets nationwide, joining a raft of companies looking to profit from an expected boom in organised retailing.

Since the most recent "mall boom" that began in 1999, with the launch of Ansal's Plaza in Delhi and Crossroads in Mumbai, much has been written and said about organised retail, the growth of the middle class, and virtually every alternate person you meet professes to be an expert in retail. What is not acknowledged is the fact that fashion retail began to get modernised many decades ago.

Gut instincts and home-grown wisdom can often seem more successful than planning through facts and figures. This is partly a function of India's complexity as a country and as a market. As markets worldwide become more blurred, the artifical construct of segmentation becomes difficult to work with. The Indian market just takes this complexity to a new plane.

Indian philosophy, thousands of years ago, presented a balanced view of human life. While this was distorted post-independence until the 1990s, in recent years it seems to be swinging to the other extreme. An opinion piece based on a presentation made at the CII National Retail Summit, November 2006.

Research by retailers, research organisations and consulting firms highlights the demographic changes taking place in India, and the need for retailers and brands to draw up appropriate strategies.

About 450 million individuals in India are estimated to be below 20 years of age. 105 million individuals are in the age group of 15-19 years, already in their early years of discretionary consumption. About 112 million individuals are in the 10-14 years segment – within 5 years many of these will be making career choices, and in another 5 years most would have already begun earning and spending. Imagine the power of the tweens and the teens. Devangshu Dutta's column from The Economic Times.

Though the mall mania of the last few years indicates a change in shopping patterns, the wild exuberance in retail expectations may be misplaced and the real revolution is still waiting to happen. Devangshu Dutta narrows the lens.

With many battle-scars earned over many brands and several years, and around $40m in annual sales, American apparel giant VF Corporation seems like a veteran in the Indian market. Its story so far - including a newly announced joint venture with Arvind_brands - gives credence to the Indian philosophy of reincarnation.

Goa, once a haven for holidaymakers looking for a break, is now set to zoom up top retailers' charts. The union territory will soon see an influx of major brands, with real estate giants. (From Times News Network)

Consulting companies are supporting the growth of Indian corporate houses in growing organised retail businesses in the country. (From The Economic Times)

For a man from Dehradun who ran a family-owned bookstore called English Book Depot, it's been quite a journey to the point where his Book Café chain now has tie-ups with retailers like Café Coffee Day, Nirula's, Barista and Subway. Sandeep Dutt, who's effectively used co-branding and co-location strategic tie-ups to set up a 20-store book retail chain, says, "We are in the business of brewing knowledge." (From The Economic Times)

Surely, with FDI opening up gradually, foreign retailers would want to set up joint ventures in which they have control, rather than go through the franchise route, where their brand is "at the mercy of another company". So does FDI sounds the death knell for franchising in India? In a Guest Column in the Financial Express, Devangshu Dutta says that jumping to that conclusion would be to ignore the fundamentals of franchising as a business.

Most consumer, product-supply chains have evolved into fairly complex chains for two main reasons. Firstly, despite all the talk about removing intermediaries, there are still many people involved in the entire supply chain at different levels — for no reason but that they do add some value in the steps they are handling. Whether this is breaking of bulk, or handling of disparate products, shipping or storing goods, or providing bridge finance, each intermediary is in the chain because he has a role to play.

Discounts are the bane of brands. Achieving as much as 40-70% of the total annual sales turnover in one or two discount sales is not a recipe for long-term business success. We seem to be caught in a vicious cycle of low sales in season and mad traffic during end-of-season discount events. So what is the way out? Devangshu Dutta discusses in his column in the Financial Express.

The presence of Tier-II cities on the growth map of leading retailers has been on the rise in recent months. While sales are growing by 50-60%, albeit on a lower base, leading retailers say that volumes have been significant enough to encourage them to pan out quickly to other similar markets.

When the World Trade Organisation (WTO) brought about the abolishment of quota restrictions on textile and clothing exporting countries, Indian garment companies were swept aside by Chinese competitors who had already built huge factories with a view to capture the global market. For the relatively smaller Indian companies, playing catch-up seemed a distant possibility. However, with global buyers now looking to de-risk their sourcing, Indian textile majors are aiming to caputure lost ground and are investing in large garment units. This will give them a fair chance against larger Chinese rivals, says T. Surendar.

From The Times of India (Mumbai Edition) (November 8, 2005)

The suburbs go shopping on weekends and the trend is set to grow. However, this skew is highlighting serious planning and infrastructure constraints. Malls must learn how to handle the crowds, find Namrata Singh and Aradhana Takhtani.

From The Times of India (Mumbai Edition) (November 5, 2005)

India is one of the fastest growing economies in the world and one of the largest in terms of Purchasing Power Parity. Global brands are re-starting the hype of a decade ago, as they envisage how to take advantage of the massive population and rapidly growing income and consumption to create new business streams, sales and profits. But several challenges remain before companies can grab the big prize in India – fragmented chains, poor infrastructure plus policy and regulation issues make it difficult for retailers to make their move. However, things are improving as the Indian government start to make effective and coherent efforts to bring about change in the perishables supply chain. So can such strong potential progress to significant business opportunities? This briefing, by Devangshu Dutta, looks at consumer opportunity, the retail structure, emerging developments, and addressing the risks and challenges involved in the Indian market.

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India is one of the world’s oldest major textile exporters and was once by far the largest. However, when quota-restrictions slammed shut the gates to free trade, the country’s exports were accordingly channelled and fragmented. Preferential trade arrangements placed further constraints, as both the US and the EU provided duty-free and quota-free access to selected countries. As a result, India now has just over 3% of the global trade in apparel – but despite its low share, it still remains among the Top 10 exporters of textiles and clothing in the world. This briefing aims to present a general guide to the industry in India, including its scope, skills and recent developments. The study also looks at investments by the industry and government support whilst discussing any potential pitfalls that buyers should watch out for. After the removal of quotas, India is now expected to grow its share of the global marketplace but does it have the stamina to catch up with China?

A perspective on the opportunities, presented by Devangshu Dutta.

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India has the youngest population profile among the numerically significant countries, with a lot of young people in different income segments and locations who are influencing their parents' money, or spending their own. On the other hand, many farmers have unquestionably grown beyond being "rural" in the traditional sense. Are we even comprehending, let alone capitalising, on these changes?

Durables retailers are dreaming bigger than ever before. With size comes power. And higher costs. Durables manufacturers are finding this out as they negotiate with the new durables retail chains. Will these chains go the American way or the European? Aarti Kothari explores.

In 2005 pay packets of Indians increased more than workers in the rest of Asia. What does it mean for consumer spending, what is the implication for the retail sector, and how should we view the developing boom in shopping malls in India?

With just months to go before MFA quotas are phased out, the industry in India is buzzing with activity. However, amidst this development, challenges and fears also remain. Devangshu Dutta provides a ring-side view of the opportunities - and problems - facing the industry. (Article written in April 2004)

The two most aspirational brands, both examples of efficiency and growth, Zara of Spain and Giordano of Hong Kong made a special appearance at the Images Fashion Forum in discussions on their brand values and supply chains.

Walk into high-fashion clothing chain Bijenkorf's outlet in Krasnapolski Square in Amsterdam's main shopping district and tick off the shirt brands on display. Armani, Hugo Boss, Calvin Klein, Zodiac,... Zodiac? Doesn't quite gel here, does it? Bijenkorf does not think so. Read about how Indian garment maker Zodiac broke into the world of high fashion in Europe

The story of rise and fall could well be playing out across India's major high streets, which have dominated the retail sector for several decades.With each of their annual turnovers anywhere between Rs 500 crore and Rs 2,500 crore, these bustling high streets determine the fortunes of several Indian enterprises

In the throes of two wars - Conflict in Iraq and the fight against SARS - Interstoff Asia went without a hitch although, understandably, attendance was affected , with a 25 per cent drop against last spring's show.

In their frantic efforts to reduce cost to attract and retain customers, retailers / buyers have now adopted a new way to source - through reverse auction. Reverse auctions involve bidding for orders - such as for a new type of product that a retailer needs produced to its specifications. Apparel Online discussed this new phenomenon on the future of this alternative.

Companies spend more time and money in fine-tuning their forward supply chains while ignoring their backward supply chains. However, in today's competitive business environment, companies can no longer ignore reverse supply chains.

Supply chain management in the ultra-competitive textiles and apparel markets is the theme for the 'Strongest Link' conference at Belfast's W5.

Linda Cahan researches and reports on how renovations impact retail businesses.

Do loyalty programs work or don't they? The answer is that some programs work and some don't. The difference is in how core operations are fine-tuned from the information collected from the loyalty program.

Three forces, also called the 'trinity' of the blur -speed, connectivity and intangibles- are setting the new rules of doing business! What could they mean for the garment sector and especially for the sourcing activity?

Opening up the garments sector in India will revive the textile industry but only if some laws change.

In recent years, sourcing and supply management has emerged as one of the greatest opportunity areas for retail business as well as for suppliers to leading retailers. At the same time, it is possibly also the one most prone to risk. One must ensure that sourcing is well and truly integrated within their overall business strategy.