The business, which was badly affected due to decline in demand as a consequence of global economic downturn, resulted in closure of over 100 stores in the last 12 or so months across the country. Apart from draining resources, these under performing stores were incurring huge expenses on salaries and rentals, resulting in non-viable operations.

The days of closing down of store are now behind the company and it has again begun to expand its retail network, though cautiously.

“The period of shut downs is now over. We have opened five large format stores during past three months and all have reported sales more than double the normal sales rate. So we are optimistic about revival,”  said SanjivGoenk, Vice Chairman of the Company, while speaking to reporters in New Delhi.

Although, the sales are showing signs of revival, they are still not enough to take the company “out of woods,” said Goenka. While, the company has recorded growth of 18 per cent in the same-store-sales, in the last 3 months, however, there is still a need for them to grow further. The costs should also come down substantially to make the operations profitable.

“Rentals are still very high despite dropping by an average 20 per cent or so,” said Goenka (ET report). The company has so far been able to prune rental costs by 12 per cent, according to Goenka.

Spencer’s is looking at breaking even its operations at store level within the next 6 month, while the break even at the company level, according to the report, is expected within a period of the next 12 months.

Under the circumstances, the company is cautious on expanding its network. While, the retailer has opened 5 new stores in the last 3 months, it is planning to set up another 10 during the financial year, at an investment of Rs 100 crore.

In order to raise further resources, Spencer’s is looking at diluting 10 per cent of its equity in favour of private investors. It is believed to have already begun talking with a few investors in this regard. The company will look at raising equity through IPO only after it achieve break-even. Spencer’s is also exploring induction of a multi-national retail player partner to sore up its back-end operations. The tie-up could be lines of Bharti-Walmart joint venture.

“In India there is a propensity for good food. It may not be a volume market but would be a niche market, which is expected to grow with time. This store would cater to a target audience that has a penchant for experimental food,” said Sanjiv Goenka, vice chairman, RPG Enterprises, while speaking on the occasion of inauguration of the new format store. RPG Enterprises is a Rs 150 billion diversified industrial and business conglomerate RPG (R P Goenka) group.

The 1,500 sq ft speciality gourmet SIS store is located inside the retailer’s 72,000 sq ft large flagship store in South City Mall of the metropolis.

The new format store offers a wide array of around 4,000 products comprising gourmet biscuits, breads, confectioneries, fresh fruits, vegetables, fruit juices, cheese, baby cereals, tea, coffee, chocolates, pastas, and essential ingredients for exotic cuisines of Thailand, China, Indonesia, Srilanka, America, Chile, France and Italy, among others. A ‘deli’ counter also offers different types of chilled and frozen ham, salamis and bacon, among other specialities.

There is a live kitchen area in the new format store as well. This area has been set up with a view to promote exotic recipes of gourmet food created by professional chefs.

Spencer’s Retail is planning to open six more such gourmet stores, among others, at Gurgaon, Bangalore and Mumbai, Hyderabad, and Chennai. Spencer’s has earmarked an investment of Rs.3 crore on this format during this financial year. The company is expecting to earn a revenue of Rs.4 crore from this initiave as the new SIS format store is expected to generate a per sq ft revenue of Rs 1,500.

Spencer’s Retail, a retail arm of the diversified RPG (R P Goenka) group, is a wholly owned subsidiary of Kolkata-based CEC (Calcutta Electtric Supply Company).

Spencer’s Retail, according to a top company official, has witnessed a 15 to 16 per cent growth in revenues during the first quarter (ended June 30) of this financial year.

‘Sales per square feet are actually going up. We have seen a revenue growth of 15-16 percent in the 2009-10 first quarter as compared to the like period last year,’ said Sanjeev Goenka vice-chairman RPG Enterprises, while inaugurating a new format gourmet store in Kolkata.

According to Goenka, ‘The closing down part is now over.’

Spencer’s Retail is presently operating a retail network of 246 stores occupying a trading space of around 1 million sq ft. across the country. Spencer’s is planning to create an additional space of 225,000 sq ft during this fiscal.

The company has earmarked Rs 300 crore for investment to open 8 new large format stores this fiscal (up to 31st March, 2010).

Paying heed to long standing demand of opening retail sector to foreign capital (FDI), the Survey has sought to allow FDI in retailing (multi-brand, front-end), beginning with the food segment.

According to the Survey, while this will address the concerns of small traders (mom-and-pop stores), it will also help the country’s farmers to gain from ‘farm-to-fork linkages.

Although, the implementation of recommendations made in the Survey are not binding on the government, they do provide direction to the governmenment’s thinking on the subject.

Most modern (organised) retailers, who have been asking for removal of ban on FDI in retail, were excited with the recommendation made by the Survey in its report.

“It is a welcome suggestion and will help the Indian retail sector grow, by leading to inflow of money from overseas brands,” said Kishore Biyani, Chief Executive Officer, Future Group, to PTI.

According to Biyani, Foreign Direct Investment (FDI) will ensure a bigger playing field and sustained competition, resulting in reduction of prices for the consumer. He, however, recommended fixing a certain threshold investment for entering into the sector.

“The government should also fix a certain minimum threshold for FDI in the multi-brand segment,” Biyani said.

In India, while no FDI is allowed in multi-brand retail, it is allowed up to 51 per cent in single brand retail. Many single brand MNC retailers are unhappy with this condition. Only a few weeks ago, the iconic Swedish furniture and home improvement retailer IKEA, pulled out from the country, saying it would wait until the full FDI is allowed in the sector. IKEA had planned to invest $1 billion in India.

According to Ramanathan, “If large Indian organised retail players can exist, then why not foreign brands. The sector will become more competitive.”

Spencer’s Retail, the retail arm of RPG Group, a wholly owned subsidiary of group company Calcutta Electric Supply Company, also welcomed the Survey’s recommendation.

“We view it in favourable light. There is enough room in the Indian retail sector for everybody to grow and FDI will bring about competitiveness between Indian and foreign players,” a Spencer’s Retail spokesperson said.

According to KPMG, a global management consultancy firm, to facilitate FDI in food multi-brand retailing, the government should take steps to strengthen the structure of APMC (Agriculture Produce Marketing Committee).

“APMC has not being rolled out in all the states. There are currently many intermediaries between the producers and the consumers in the food market and APMCs could prove valuable for international food retailers and Indian farmers,” said Anand Ramanathan, Manager of KPMG Advisory Services.

Indian Council of Research in International Economic Relations (ICRIER), a premier economic think tank of the country, which was appointed to look into the impact of BIG capital in the retail sector, had come to conclusion that investment of ‘big’ money (large corporates and FDI) in the retail sector would in the long run not harm interests of small, traditional, retailers. ICRIER has estimated the worth of Indian retail sector at $309 billion dollars (2006-07). According to ICRIER, the sector is projected to reach $496 billion by 2011-12.

Interestingly, recommendations of The Economic Survey have come close on the heels of tabling of another report on retail (prepared by Parliamentary Standing Committee on Commerce) in the parliament, which fearing job losses, has recommended a “blanket ban” on entry of domestic and foreign corporates into the retail sector. Incidentally, the retail sector, after agriculture sector, is the country’s second largest employment providing sector.

Spencer’s Retail, the retail arm of RPG group, known mainly for food & grocery retail, is foraying into lifestyle retail. The company is planning to set up five standalone stores of Beverly Hills Polo Club (BHPC)– a well-known global fashion brand from the US– in the NCR (National Capital Region) in the next three months, by June, 2009. The company plans to expand standalone retail chain beyond NCR in a phased manner later.

“Once the standalone BHPC stores become operational, we plan to expand BHPC’s product portfolio in India. While currently menswear, women wear, accessories, watches and the sunglass range is available here, we will expand into other products like perfume, shoe, belt and wallet,” said a Spencer’s Retail official (via).

Spencer’s Retail, which entered into an exclusive brand licence agreement with the US company last year, is already operating nine ’shop-in-shop’ outlets of BHPC inside its hypermarket format stores. The plan now is to make the iconic fashion brand available via stand-alone stores. The standalone stores will be occupying 1,000 to 2,000 sq ft of space.

Consequent to adverse impact on sales due to economic slowdown, Spencer’s Retail has been trying hard to grow, however, it ended up the FY 2009 with a turnover of Rs 1,050 crore. Spencer’s not only closed all its stores (6) in Ahmedabad, but was forced to close nearly 56 stores non-performing stores last year. The company, according to the report, has ended the year with no growth for ’same store sales’ during the year.

The introduction of private labels in general and for products under value segment in particular has now become the main mantra of changing retail strategy. While, on the one hand, this reduces their dependence on national brands, on the other it helps to improve profit margins.

According to KPMG, the global research and consultancy firm, which released its ‘Indian Retail: Times to Change Lanes’ report on Tuesday, “Private labels are likely to continue to grow in the current financial environment as cash-strapped consumers’ perception of the products as a ‘cheaper option’ changes. Part of private label growth in a recession is permanently sustainable.”

According to Ramesh Srinivas, National Head (consumer markets) at KPMG Advisory Services, “Many retailers are increasingly focusing on their private label offerings now. They are realising the importance of the value segment. Even though profitability, footfalls and conversions have fallen, there is enough scope for retailers to develop newer product categories.”

Private labels now offer a respectable share of around 10-12 per cent in the overall product mix of organised retail.

While, private labels business is quite popular among fashion retailers like Shoppers Stop, Pantaloon, and Westside, among others, all major food and grocery retailers like Future’s Big Bazaar, Reliance’s Fresh, Birla’s More, RPG’s Spencer’s, and Bharti’s Easyday, among others, have in recent times unveiled strategies for increasing the share of ‘private label’ business.

Birlas are looking at increasing the share of their ‘private label’ business from 3 per cent at present to 15 per cent of their revenues in the next three years.

Kishore Biyani of Future Group has even decided to take his private labels, particularly under FMCG category, beyond the confines of his own chains by making them available at other retail chains. In fact, according to a strategy recently unveiled by him, he is planning to achieve a turnover of Rs 10,000 crore from private labels under different categories in the next four years.

Kishore Biyani’s private label ‘Tasty Treat’ for ready to eat snacks already contributes 20 per cent of the potato chip sales across the chains. “We are now going to launch our own toothpaste. Even if it gains a 15% market share among the top-selling toothpastes in the country, I will be happy,” says Biyani.

Even lifestyle retailers like Tata’s Croma and Ruia (Essar)’s The Mobile Store, according to a DNA report, are looking at introducing private labels for consumer durables. While Croma has already introduced products like laptops, air-conditioners and microwaves, The Mobile Store is preparing for launching low cost mobile phones. Croma is expecting its private label to contribute 20 per cent of its business, as it has already tasted success with sale of microwave ovens selling over 3,500 pieces of the same since its launch.

Coca-Cola Golden Spoon Awards, given in recognition of excellence in food retailing in India, are the most eagerly awaited awards of the food industry. The awards for 2009 were announced at the recently concluded annual conference of Food Forum India 2009.

The Coca-Cola Golden Spoon Awards 2009 winners are decided on the basis of a comprehensive analysis of votes cast by consumers in a pan-India survey held across seven leading metros as well as by industry experts in the field of food and beverage and food and grocery retailing.

While, Haldiram’s won the award for most admired food & beverages retailer (Indian origin) of the year in the Quick Service Restaurant (QSR) category, the same award for foreign origin category was won by Pizza Hut.

Similarly, while Food Bazaar was adjudged as the most admired F&G retailer (large format) of the year, Spencers won the award of most admired F&G retailer of the year under (convenience / express format) category.

Gourmet City and Q Mart won the the most admired retailers for the year awards under “innovative retail concept” and ”progressive food retailer” categories for the year.

Among the awards for individual performances, while, Amit Burman, Vice Chairman, Dabur India and Chairman Lite Bite Foods (leading F&B retail chain of restaurants and food courts) was adjudged the most admired food professional of the year (F&B Services), Sadashiv Nayak, President, Food Bazaar (Future Group) was adjudged the most admired food professional of the year for F&G retail.

Café Coffee Day (cafes & parlours), Mainland China (dine-in, Indian origin), Sagar Ratna (value), Olive Bar and Kitchen (restaurant– premium), Blue Foods (restaurant group), Spoon (food court), also won the Coca-Cola Golden Spoon 2009 Awards for the most admired retailers under their respective categories.

The retailer, it may be recalled, had closed 56 of its non-performing small format stores across the country last year. This included shut down of all the six stores operating in Ahmedabad.

The company is now looking at adding 15 Hyper stores to the existing 35 stores, in the next two years. This increase the number of Hyper stores from 35 to 50, says a DNA report. The expansion will entail an investment of Rs 1,500 crore at an average Rs 100 crore per store. The retailer is also planning to add about 20-30 small format stores this year.

Spencer’s has identified Chennai, Chandigarh, Bangalore, Hyderabad and Trichy, among others, as the cities for setting up new Hyper stores.

“We have shut all unviable stores and will not shut any more. We are now solely focusing towards our large format stores and expanding our offerings in the apparel, home, food and bakery and general merchandising segments,” said Samar Singh Shekhawat, Marketing Head, Spencer’s Retail.

Spencer’s, according to the cited news report, is also taking interest in increasing the business of its international brands. While, adding two more brands, the company is expecting the share of international brands to go up from 5 per cent at present to 10 per cent in the next two years.

The company has also has set up a fashion studio in Delhi. It will also increase its spend on visual merchandising, marketing and hiring of people for sales.

Spencer’s, which had earlier brought down sales target for 2009 to Ts 1,200 crore, is now expecting a turnover of Rs 1,050 crore during the year. It had sold merchandise worth 729 crore last year.

Shoppers’ Stop, the country’s India’s largest department store format lifestyle retailer owned by construction major K Raheja group, like its larger counterpart Future group, has also reported declining same-store sales for the quarter ended 31st December, 2008.

Like multi-format, multi-segment, Future group, reported year on year, same store decline of 9 per cent, Shoppers’ Stop has lost 3 per cent in sales during the quarter. While Future group had reported 9 per cent year on year, same store, increase of sales for the preceding quarter, for Shoppers’ Stop the increase was 7 per cent for the July-September, 2008 quarter.

While the numbers are strictly not comparable as Future group garners over 60 per cent of its sales from value segment (Big Bazaar), Shoppers’ Stop is mostly into high end lifestyle segment mainly comprising fashion apparel, accessories, and home enhancement products.

The adverse impact of economic slowdown is not only visible but has been confirmed by industry leaders. This is reflected in terms of downward revision of annual sales targets by other big retail players like Spencer’s and Vishal Retail.

The impact of slowdown, however, is most visible in fashion segment. Almost all local, regional, national, and global brand players are still offering hefty discounts and deals on clothes and accessories in the name of year end sales. Analysts expect the trend to continue until the end of February, 2009.

B S Nagesh, CEO and chief customer care associate, Shoppers Stop, has also cautioned about difficult times ahead for the sector. He expects actual recovery in the retail sector to happen only around the next festive season. The festive season in India begins around end-September, every year.

Looking at the trend, while most big ticket retailers like Spencer’s, Next, Vishal, etc, have already closed, relocated, right sized, or down sized, a few of their under-performing stores, other like Reliance and Future group are restructuring their operations to bring about operational efficiencies. While, some of the retail chains have shut shop, many others like Indiabulls, Etam, Subhiksha, etc have either substantially cut down on their operations, or are in the process of even closing down a major part of their operations.

Republic Day (26th January) is fast becoming the “Deals Day” for retail sector of the country.

What began in 2006 as an innocuous reason to offer promotional discounts to customers by the undisputed Rajah of Retail Kishore Biyani, has now turned into a frenzy of sorts for retailers, big and small, who all want to use the occasion to woo the customers by offering stupendous deals and discounts on their merchandise. Interestingly, 26th January was never considered as an occasion to shop in India.

The herd effect, which has now caught on like a wildfire, has virtually turned 26th January into an important day in Indian retailers’ calender. The day is now as import as the Black Friday, Valentine’s Day, or Thanksgiving Day are for retailers in the West.

Of course, India’s “Deals Day” has been slightly tweaked to add a couple of days around the date (depending on adjoining holidays) to convert it into a three day long shopping festival. This year, it is even more special because two days prior to the 26th, are public holidays on account of weekend.

Kishore Biyani-led Big Bazaar should rightly get credit for starting the trend in 2006, when a few shoppers injured as a consequence of stempede at its store at Phoenix Mill Compound in Parel, Mumbai, had to be shifted to hospitals and Police had to be requisitioned to control the law and order situation.

Like last year, it’s again a three day long shopping feast at Big Bazaar, size, scale, and reach are all much bigger and grander, this year though. All value, lifestyle, and home retail formats of its parent company Pantaloon Retail, part of Future Group, have one way or the other, have been roped in this year offer extensive deals and discounts under one promotional scheme or the other.

Not to be left behind, almost all retailers, who matter, including Reliance Retail (all retail value formats: Reliance Fresh, Reliance Super, and Reliance Mart); Aditya Birla Retail (More for you), Tata group (Croma and Star Bazaar, Titan), RPG (Spencer’s Retail), Raheja (Shoppers’ Stop), Vishal Retail, Koutons, Lifestyle, Durian Furniture, Globus, Promart, Woodlands, Timbor Cuicine, Satya Paul, Allen Cooper, Clor Plus, Bombay Dyeing, The Mobile Store, and even Tommy Hilfigar, among others, have jumped in the fray to offer, some kind or other of deals under various forms including discounts, offers, savings, prizes, gifts, and lotteries.

Take a look at some of the brandings done by retailers for Republic Day promotions to get an idea of flavour of the offers being made during the period: Big Bazaar and other group chains (Sab Kuch Sabse Sasta- Sabse Saste),  Reliance Value formats (Sabse Sasta hai ye! Cost 2 Cost), Aditya Birla Retail’s More (26 pe 26 Zabardast Offer), Tata’s Star Bazaar (Mega Offers to help you save), e-Zone (The Blindfold Sale), Home Town (Mano Ya Na Mano), Durian (Every Thing on Sale), Promart (Unbelievable RD Offer).

While, several explanations including stock market crash and Mumbai terror attacks have been put forward as possible explanations for the downturn, the single most plausible reason though undoubtedly is the subdued consumer sentiment resulting from economic slowdown and uncertain future.

What has perplexed analysts most, however, is the fact that there has been a decline in the sales of products falling under ’value’ segment. Perplexing, because during economic downturn, consumers at the expense of lifestyle products try to buy more of value products.

While, financially stressed shoppers during such times on the one hand try to cut down on discretionary spending, on the other, they are also ready to downtrade, i.e., buy lower priced products of either lesser known brands (including private labels) or products that have limited features.

While, India’s largest listed retailer Pantaloon Retail (Future group) has reported 3.5 percent dip in ’same store’ sales of ‘value’ products for December, 2008, other value retailers like Vishal Retail have also confirmed the trend, though without revealing the quantum of such decline.

“Our same store growth has certainly been hit, ” said Ambeek Khemka, President Vishal Retail. In order to arrest the trend, Vishal has come out with a 10 days long “New Year Shopping Festival.” The shopping bonanza will be applicable between 17th and 26th January, 2009. The shopping festival of Vishal comes soon after the conclusion on the 11th January, 2009, of 30 days long ”The Great Indian Shopping Festival” of Future Group. Future’s promotional offer was applicable across the segments, formats, and chains of the group.

It is not out of context to mention here that despite 24 per cent growth in sales during the October-December quarter, which was mostly on account of sales through new stores, Vishal has reported a whopping drop of 86 per cent in nett profit during the quarter.

According to Khemka, Vishal will offer seven per cent discount on FMCG products.

Even other big retailers like RPG group’s Spencer’s Retail and Aditya Birla Retail’s More for you are showing signs of weariness.

Spencer’s has also begun to offer promotions to arrest the declining trend. “We have been giving discount offers on our FMCG and other products to not let our same store growth fall,” says Samar Shekhawat, Vice President, Spencer Retail.

Talking about grim  post Diwali market situation, a senior official of Aditya Birla Retail is reported to have said, “After Diwali, the market has not improved but is seeing a steady decline. We are in the middle of economic slowdown and retail cannot remain insulated from that.”

The situation in lifestyle segment is even worse. Future group has reported 14 per cent decline in same store December sales. The group has launched yet another discount offer at its lifestyle and home retail chains, without a breather, soon after conclusion of the shopping festival.

Dubai-based Lifestyle group’s Max retail chain is also finding it difficult to maintain the numbers. According to Vasanth Kumar, Executive Director, Max Retail, “Same store growth in our Mumbai and Ahmedabad stores during December was zero. We barely achieved last year’s sales numbers.”

The company, according to a PTI report, is planning to scale up its hypermarts chain to 400 stores. It is targeting over 50 per cent growth in its turnover from Rs 820 crore last fiscal to Rs 1,250 crore this fiscal.

“We are on track to have 400 hypermarts and achieve a turnover of Rs 1,250 crore by end-march,” a company spokesperson. “We are focusing on setting up more hypermarts across the country,” he added.

Spencer’s Retail is currently operating 32 large-format stores in 66 cities across the country, occupying the trading space of around 1.5 million square feet.

The retail chain has set aside Rs 1,500 crore for investment on expansion over a period of the next two-years.

The global economic meltdown is unlikely to adversely impact the company significantly as consumer spending is likely to shift from luxury goods to essentials with a slowdown in the economic cycle impacting demand negatively.

Accoprding to the company spokesman, upmarket stores such as Spencer’s would not be affected due to the present global scenario. “Upmarket stores such as Spencer’s, which are not price-driven as much as others, will not be impacted by inflation and the global meltdown,” he said.

“The ones most likely to be affected are retail chains such as discount stores, catering to the low-income group,” added the spokesman.

Even Subhiksha, the country’s largest food and grocery discount chain (in terms of number of stores) has also closed a couple of its stores in Bopal and Bodakdev areas of the city.While, Spencer’s has announced closure of 56 stores across the country (we are not sure if Ahmedabad’s six stores being closed are part of the same tally or not), Subhiksha’s founder R Subramanian has, in the past, been bravely brushing aside all talks of ’slowdown’ in the retail sector, particularly in value segment of the business.

Subhiksha has decribed closure of its stores in the city as part of the company’s ‘national restructuring exercise.’

“When a company opens 1,650 stores in two years all over the country, 50-80 stores may not perform as per expectations,” says Subramanian.”We may have to take some sane decisions without being affected by hubris,” adds Subramanian. He was replying to a question put up by the newspaper. There is ‘no change’ in his company’s business model, adds Subramanian.

The policy of focussing on middle class (aam aadmi) customers and making available to them, at the lowest prices possible, things of daily needs, has been the cornerstone of their business, says Subramanian. “The policy remains unchanged,” confirms Subramanian.

Spencer’s Retail, according to its officials quoted in the DNA report, has decided to close the operations in Ahmedabad, because the retailer’s stores in the city were not generating enough revenue and profit.

Industry sources in the city have confirmed to us about landlords of floor space occupied by Spencer’s stores in the city offering the vacated space to prospective tenants.

Spencer’s Retail officials have, however, added that they will continue to operate their stores in Vadodara and Surat, other big cities of the state.

Spencer’s Hypermarket store at 145 Ras Behari Avenue in Gariahat area of Kolkata was again the scene of siege when over a hundred members of Hawkers Sangram Committee stormed the store and forced shoppers to keep off the premises. They were protesting against breach of a tripartite agreement between the retailer, hawkers, and Mayor of Kolkata signed five months ago in July, 2008 before opening of the store.

“The RPG group had promised to abide by the agreement but it has violated it. We condemn the breach and we will not let them operate,” said Murado Sen, Secretary, Hawkers Sangram Committee.

Shaktiman Ghosh, General Secretary of the National Hawkers’ Federation, has threatened to launch a violent agitation, if Spencer’s fails to abide by the terms of the agreement already agreed upon in July, this year.

“We have warned the company and ask them to comply by the regulations. If they do not, then we will launch a fresh agitation and this time it will not be a peaceful one,” said Ghosh. The stir will begin from 25th November.

The genesis of the problem goes back to July, 2008, when Sanjeev Goenka, Vice Chairman, RPG group, was made to abandon the opening of his store by the union leaders, as they were protesting against loss of livelihood security of their members.

The opening of the 36,000 sq ft store could take place only after the intervention of Bikash Ranjan Bhattacharya, Mayor of Kolkata. Bhattacharya could broker peace between the warring parties only after Spencer’s having agreed to sign a tripartite agreement. The agreement had stipulated certain restrictions on sale of several items of daily consumption and use.

According to the agreement, Spencer’s agreed among others to not sell (a) any branded apparel with price of less than Rs 300 per piece (nett of free offers), (b) less than 3 kg quantity of vegetables and fruits, and (c) less than 5 kg quantity of potato and onion. Spencer’s had also agreed to not sell rice, flour or any other agricultural product in loose below 5 kg. Even spices and oils were also not allowed to be sold in less than 500 gm  and 1 litre packs respectively.

The hawkers are also against the issue of trade licences to MNC and corporate retailers. “On November 24, we will organise a rally from Wellington to the KMC to demand identity cards for hawkers, not to give trade licence to foreign and corporate retail giants and to scrap the Urban Renewal Mission Scheme,” said Ghosh.

Worsening economic situation is forcing retailing companies to revisit their growth strategies.

The new mantra of growth, tried and successfully tested by many retailers worldwide, appears to be increasing the share of private labels in overall sales. While, on the one hand, one is able to offer these goods at 10 to 20 per cent lower price than their branded counterparts, on the other, one is also able to increase the profit margins by 10 to 25 per cent on such products.

Why is then this not applied universally by all retailers?

Well, for this model to yield dividends, two basic requirements must be satisfied. While, it requires large volumes to save on manufacturing oveheads, it also requires large number of distribution points to save on distribution costs.

Among the large private label players one can think of UK’s Marks & Spencer, which offers almost all of its products, barring a few food and grocery items, under its own labels. In India, Westside, the Tata group’s department format store, has been able to apply this strategy successfully for a range of lifestyle fashion products.

Even, Pantaloons, Reliance, Spencer’s, and Shoppers’ Stop have also dabbled in retailing of products under their own labels. While, most retailers have dabbled into private labels in fashion category, notably apparel and accessories, Future group has gone ahead with private labels for durables and ready to eat snack foods. Future has introduced durables under Koryo and  snack foods under Tasty Treat brands.

Future group has even set up a separate company under the leadership of Santosh Desai called Future Brands’ to professionally manage the business of in-house brand and to look out for avenues to extend their reach beyond the confines of group owned retail chains.

While, we will separately carry the story of Future group riding high on the back of private labels, which it expects to generate revenue of 10,000 crore (or, $2 billion) in the next four years, we understand that Vishal Retail too wants to explore a new distribution model that will take its private labels to outside its chain by outsourcing distribution activities to a third party.

It will be interesting watch the evolution of private lable business in India as Indian consumers while being very brand conscious are at the same time equally savvy for their ‘value-for-money’ shopping approach.