July 16, 2008
Did I have it on the title of the post? Well, the news had me as well when I read that Ahmadabad based Arvind group is planning to launch a retail outfit around the idea of fastfood stores selling Pani-puris and other indigenous fast food items like Chat etc.
According to plans, the group will initially roll out 500 small format “NRI panipuri” retail shops. These shops entailing an investment of Rs Six crore will be based on franchisee model. Initially, the shops will be set up in Ahmedabad followed by other cities like Vadodara, Rajkot, Mehsana and Bhavnagar in Gujarat. (Source: IndiaRetailBiz)
What next, Mithai shops, Hot fries shops? To me, this trend to foray into small vending segment spells a wrong strategy. No, not from financial perspetive. I’m sure India is at such a inflexion point where any kind of organization around any kind of segment will generate profit due to gain in efficiency and economy of scale. However, from a socio-economic perspective, it’ll mean competing with small thelawalas who are definitely not going to be be happy with this development. God forbid, but chancecs are very high that it may trigger a revolt leading to recreation of Reliance Fresh fiasco.
What you folks think about this development? Do you think it to be a good, bad or a mix kind of event. Please share your thoughts.
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February 7, 2008
If you have happened to watch Shrek 2 lately, you must remember the irritating donkey saying time and again ‘Are we there yet?’ Well, nowadays when I’m reading the media and analyst reports, I’m having the deja vu feeling with news text screaming ‘ Has depression arrived yet?’Not to undervalue the gravity of the situation, but the soundbites in the media has really started to bother me. other problem is the heightened noise to signal ratio in news, making it twice as difficult to figure out the whole situation.
I decided to do a little research of my own with primary focus on retail industry since it is one of the first sector that gets affected by depression. Yes, situation is definitely challenging with sales not picking up but to term it depression will be an overstretch. Most of media comparisons that are being cited as examples are saying sales are x% lower than last year. However that may also mean that last year was a great year and this year is perhaps not that great. Another factor to consider is that the media report itself may also be acting as a cause to dampen the sales and more people who will hear about impending depression will perhaps try to keep a tab on their expeenses.
I’m not saying that there is no depression but I’m also not saying that we are absolutely, positively sure that there is. Yes, the situation is challenging but thats about it. It perhaps is an introspective time for retailers to become realistic and understand that year on year growth is not always a reality and a dip in the profitability doesn’t really mean the same as a loss in business.
so much for my 2 cents. Please share your thoughts.
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January 27, 2008
Lately the entry of foreign retail giants in India has become so common that it may not come as surprise that Carrefour has planned to join the bandwagon as well. It has decided to enter in the Cash and Carry format following the footsteps of Walmart. Bessides Walmart, currently, Metro AG of Germany and Shoprite Holdings of South Africa are already engaged in wholly owned cash and carry business in India.
It has been learned that Carrefour is in the final round of negotiation to select an Indian franchisee partner for all other retail stores. The announcement came through the French embassy during the visit of French President Nicolas Sarkozy to India.
It kind of strengthens the opinion that I have already mentioned previously that Indian retail is quickly getting into the positive accelerating spiral of growth with more and more participants coming on board thus making the entire landscape even more lucrative for the fringe watchers.
It will be interesting to watch who is going to be the next to join the party. Any guesses?
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January 3, 2008
As we are ushering in the new year, I thought to share certain key statistics about the Indian retail industry with you all. Some of the numbers are really eye poppers whereas others are a reflection of how different a ballgame Indian retail is, compared to its western counterparts.
All in all an interesting read. Hopefully it’ll paint a realistic picture of the business opportunity that is so hyped up.(or is it?)
1. Total business size of Indian Retail business is going to touch $365 Billion in year 2008
2. Retailing in India accounts for 35% of GDP
3. The organized retail market is growing at 35 percent annually while growth of unorganized retail sector is pegged at 6 percent
4. India has highest number of outlets per person (7 per thousand)
5. Indian retail space per capita at 2 sq ft (0.19 m²)/ person is lowest in the world
6. Indian retail density of 6 percent is highest in the world
7. 1.8 million households in India have an annual income of over 45 Lakh
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January 2, 2008
Here is a quick quiz to test your Indian retailing acumen. A retail firm in India is planning to open a chain of 200 restaurants with an estimated capital outlay of Rs 50 crore that will serve vegetarian food with emphasis on South Indian delicacies. Guess the retailer.
The company in point is Vishal Retail which recently had highly successful IPO. What is noteworthy is the fact that even second and third rung firms are thinking big when it comes to retail landscape in India. What is noteworthy is the fact that news like these are trickling over at consistently accelerating rate for last couple of months thus showcasing another proof of the promise that Indian market holds today.
There is another subtle message that I am seeing in all these newsreels. The confidence, the ‘Think Big’ and ‘Can Do’ attitude, the optimism etc. are all a reflection of the erstwhile generation of United States which went on to shape up the economy as we know it today. (barring weakening dollar and sub-prime loan crisis which are recent phenomena).
Let’s hope that all this energy, enthusiasm (and money) doesn’t go in vain but act as the driver to push the economic growth. Hereby wishing all the readers a very happy and promising new year!
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December 7, 2007
I have a thing for conspiracy theory, so the idea of US economy slump impacting Indian retail interested me from a purely academic point of view. I believe that it will. Here is my hypothesis.
At this point in time, Indian retail market is not mature enough to sustain fluctuations in consumer spending power. If one look closely, most of the retail development has surfaced in the tier 1 cities like Bangalore, Mumbai, Delhi etc. Target consumer is primarily upper middle class. A significant chunk of this consumer base are employed by is IT & ITeS firms.
A slump in US economy will mean a conservative spending from US companies meaning cost cutting on the IT offerings. This might impact the outsourcing IT firms whose major market is still USA. Thus there will be a dip in revenue which will lead to drop in employee remunerations. It’ll be further affected by the increase in supply of skilled resources in the market. A lower earning will mean more emphasis on savings and less expenditure thus impacting the retail houses.
So in my view, till the time, retail market matures and reaches to the tier 2 & 3 cities and starts serving a more diverse diaspora of Indian population, the challenge of exogenous factors like US Economy slump will always be a threat.
Note – However there is also an alternative view of this whole theory where to reduce the cost of IT operations, US firms will outsource more work to Indian firms thus increasing the revenue rather than depleting it. It will be interesting to observe which way it tilts?
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November 21, 2007
For a change IT companies are becoming serious about the retail boom in India and planning their offering to suit the local market. Lately there has been a lot of buzz from all corners about how technology will enable the leapfrogging of retailing in Indian subcontinent. But it is only recently that some action has started following the sound bytes.
Latest on this trend is the news reported by IBM about the development of Store Integration Framework (SIF), a comprehensive innovation-suite built specifically for the Indian retail sector. SIF is a middleware developed specifically for retail that integrates retailer’s devices, applications and solutions to create intelligent and responsive stores.
Of course the rational behind these happenings is the opportunity that retail boom has presented. Every one wants a piece of the pie and sooner the better. It’ll be interesting to see how other IT vendors respond. If IBM’s unveiling is a sign of things to come, very soon we’ll see competing frameworks being offered by Infosys and Accentures of the world.
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November 18, 2007
The name may not sound that familiar to Indian readers and to be honest even I was unaware of it until a few days ago when I came across the name of the company while browsing through the details of one of my new linked-in connection.
Why it is relevant, you may ask? For starters, it is a UK based departmental store (http://www.debenhams.com) who mostly deal in clothing, cosmetics and housewares generating annual revenue to the tune of £2.19 billion per 2006 reports. And guess what, they are aspiring for a piece of Indian retail pie. Yes, you read that right. They have partnered with Planet Retail to open 10 stores by 2010.
This is where it gets even more interesting. Who is planet retail? Planet retail is the master franchisee for Debenhams. Btw, planet retail is also the master franchisee for Mark & Spencer who is planning to get into high volume food and kids wear retailing business in India. Did you know that Marks & Spencer already has 12 outlets in India and is planning to open another 10 within the next five years.
So just out of curiosity, I digged deeper and based on my analysis, Planet Retail seems like a company which is set out to play a big role in shaping india retail industry. If you want to read more about planet retail, check out their website http://www.planetretail.in/live/index.asp
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May 30, 2007
It is not everyday that we hear about merger of biggies in the Retail industry. Still rarer is the news of three such mergers happening around the same time. Guess what. it is exactly what is happening and hence I thought it might be something that will influence the direction of the Retail industry in coming time.
So who are the players, you may ask. Well, first on the chart is Leading natural and organic foods retailer Whole Foods Market, Inc. which will acquire its biggest direct competitor, Wild Oats Markets, Inc. Next is the merger of Mid-Atlantic grocery stalwarts Great Atlantic & Pacific Tea Company, Inc. (A & P) and Pathmark Stores, Inc. And last and by no means least is acquisition of U.S. Brooks and Eckerd stores by by Rite Aid Corporation.
At this point, it is speculative to say in what exact tangible terms, will these mergers and acquisitions impact the industry. However one thing is certain. If it catalyses the M&A activities in the industry, retail as we know will change forever. And hopefully for the better!
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May 9, 2007
Some people call it the business of green. Others call it the business with a conscience. Whatever camp you might belong to, one thing is certain; Dealing with environmental issues has finally arrived in the business boardroom and how!
An apt case in point is the recent decision by Walmart to become packaging neutral by 2025. Wal-Mart has told its buyers that, starting next year, they should consider the packaging scores when choosing among various products for its Wal-Mart and Sam’s Club stores. Packaging score will consist of metrics like the ratio of package size to product, whether the package uses recycled material and whether the package can be recycled or otherwise reused etc.
Of course it means huge pressure on vendors to change their existing processes. However i. e. only the short term effect. In the long run, it is going to be beneficial as it will result in significant cost savings for all the concerned parties. Of course the wonderful side product will be a greener environment!
Surprising thing is most of the suppliers have welcomed the decision rather than showing frustration. That definitely is a good sign of a mature market, one which is ready to experiment for the greater good and save some money in the process.
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Did I have it on the title of the post? Well, the news had me as well when I read that Ahmadabad based Arvind group is planning to launch a retail outfit around the idea of fastfood stores selling Pani-puris and other indigenous fast food items like Chat etc.
