Compared to the boom year of 2007, which had seen a large number of serious and non-serious players entering the sector, the year 2008 turned out to be quite tough. Global financial meltdown, which also resulted in loss of jobs and evaporation of retail credit in India, many retailers were forced to shut down a few or all of the shops in the face of falling footfalls and declining purchases.

The retailers were, therefore, cautious this festive season in projecting growth. While, they would have been happy achieving growth of around 15 to 20 per cent, were pleasantly surprised to see the growth of over 30 per cent, sometimes even going beyond 100 per cent.

Most interestingly, festive season, which began two months ago from early September with Onam festival in Kerala, according to media reports, has seen consumers buying not only apparel and fashion items but consumer durables and home improvement products, as well. These categories were incidentally most affected last year as there was a decline of business in home retail category.

While, Samsung saw the growth of 40 per cent growth, the growth for LG– another Korean consumer electronics and home appliance rival– was equally happy with over 40 per cent increase in home appliances business.

Both LG and Samsung, who between them control large part of durables pie, saw nearly one-third of their overall annual sales coming from festive season. For Samsung it meant $700 million (or 35 per cent) of targeted $ 2 billion sales during the year. LG, on the other hand, while not revealing exact figures, was quite happy with most of its products like washing machines, micro ovens, and LCD TVs doing very well in the market place.

Kishore Biyani-led Future group, which has been facing the spectre for over a year of declining same-store-sales in the home retail segment, the turnaround has been most satisfactory. The retailer, which operates retail chains like Home Town and e-Zone in this segment, saw quite happy registering a growth of 5 to 7 per cent in home products like furniture and 20 to 30 per cent in consumer electronics.

“The home segment recovered in this festive season. It showed a positive growth of 5-7 per cent. In electronics, we saw a 20-30 per cent jump in sales,” said Kishore Biyani, CEO, Future Group.

The group, which had targeted Rs 500 crore worth of sales during the week beginning 15th October, has already crossed targeted growth of 24 per cent. According to Rakesh Biyani, Chief Executive (Retail) of Future Group, “Consumer sentiment looks very positive and there is good traction in sales.”

Reliance Retail too has witnessed month-on-month growth of around 35 per cent in consumer electronics, home appliances and IT related gadget categories, among others.

Shopper’s Stop’s Vice Chairman B S Nagesh is also satisfied with positive consumer sentiment and is positive on the next two quarters. While, the retailer has seen increased spending on non-apparel, jewellery and cosmetics, it is also satisfied with stable business for apparel category.

Pantaloon Retail, part of Future group, and Reliance Retail have also seen improved business in apparel business this festive season. While, Pantaloon has witnessed 20 per cent growth in its fashion segment, Reliance is happy with growth in this category.

Vishal Retail, which for past few months has been facing lot of financial stress, is happy with 20 per cent growth in festive sales. It is confident of touching growth number of up to 35 per cent before the end of the season.

We hope to further cover festive performance of other important — large and small– retailers in the coming days.

The Dussehra day is turning out to be a bonanza time for retailers as Gujaratis, who prefer to buy vehicles, houses, and other expensive durables on this auspicious day, are thronging to luxury show rooms in large numbers.

Benchmark Cars- a Mercedes Benz dealer outlet in Ahmedabad– according to its Vice President Paras Somani, has already sold 45 units of Mercedes luxury cars this month. This year’s selling season began after completion of inauspicious Shraddha (Pitra Paksha) period, ten days ago.

“We delivered 12 models of Mercedes Benz including E-Class and Special Edition C-Class on Dussehra today,” said Somani. “So far, 45 Mercedes Benz have been sold from our outlet, this month,” he added.

Audi, another brand of luxury car which accounts for 48 per cent of market share in luxury car segment of Gujarat, also registered robust business on the Dussehra day.

For Landmark, a car retail franchise, which sells expensive cars of Honda brand and which has car showrooms in all major cities of Gujarat, this has been the best month ever for sales. According to Sanjay Thakkar, its Managing Director, the dealership is close to touching the magic number of selling 100 cars this month.

The temporary neighbourhood extension counters (stalls), which began opening a couple of years ago, have become quite popular as besides offering conventional, neighbourhood subziwala ambience, they offer products of good quality and variety. Customers are also happy because these counters display price lists and use electronic weighing machines thereby assuring them of uniform price and proper weight. Considering their popularity the number of such counters should easily cross 200 by the end of this fiscal against present number of over 100 counters operating within the region.

“People are asking us to open shops in their areas,” said Sunil Bansal, Mother Dairy’s chief executive (fruit and vegetables). “We provide extension counters at locations where the volume may not be of the level (that) we can operate a shop.” (Source )

These counters, apart from creating brand awareness in a developing locality, also serve as pilots for preparing ground for opening new Safal stores in the area.

“We are preparing for the future. When particular localities develop, people will have Safal in their minds and possibly we can create full-fledged outlets there,” added Bansal.

Safal, owned by Mother Dairy Fruit and Vegetable, is a unit of Mother Dairy, which is a leading supplier of milk in the region. Mother Dairy, operating within the cooperative sector, in turn, is part of NDDB (National Dairy Development Board).

The restructured programme, while offering individual loyalty programmes for different retail chains, will also integrate them across different retail chains being operated by Kishore Biyani-led Future group.

While, “Pantaloons” — the department store format, lifestyle, flagship, fashion, retail chain of the group is already offering “Green Card” loyalty to programme for several years to its customers, the group is looking at offering loyalty programme for its ‘value’ segment customers who account for bulk (over 60 per cent) of the retailer’s revenues. During the FY 2008-09, value products accounted for Rs 4,656 crore sales against the gross business of Rs 7,603 crore (61.23 per cent).

An integrated loyalty programme for the group’s biggest ‘value’ format Big Bazaar — a hypermarket format retail chain– is already in the works and may be unveiled soon for its customers. Big Bazaar, apart from contributing largest share of retail revenues also accounts for almost one-third of the total retail space of 12 million sq ft across 71 cities, occupied by the retailer.

In the past 8 years, since launch of the 1st Big Bazaar store in Kolkata (then Calcutta), the retailer has so far set up 120 Big Bazaar stores, which while offering a wide range of 160,000 products, serve two million customers every week.

While, the response may be slightly affected due to spread of swine flu in the Western region, particularly Pune, Mumbai, and their surrounding areas, the retailer is confident of good business from other areas of the country.

Although, Pantaloon Retail, according to group CEO Kishore Biyani, has experienced a sales decline of 20 per cent in Pune and 6 to 8 per cent in Mumbai in recent days, it is expecting to garner an overall business of around Rs 250 crore during the five days promotion period. Biyani disclosed this while speaking to CNBC TV 18.

While the crowds will not be as big as the retailer attracts during its Republic Day promotion on the 26th January, it will still result in decent business for the company, said Biyani.

Barring a closure of one store in Pimpri (Pune) due to H1N1 scare, most of other stores of the company in the Eastern, Northern, and Southern regions are doing quite well, added Biyani.

In reply to a question on growth during the fiscal 2010 which began on the 1st July, 2009, the company is aiming for a growth of 30 per cent in business during the year. This will translate into addition of 3.5 to 4 million sq ft of floor space this fiscal.

Aadhaar Retailing after takeover of management control from Godrej by Future group has now become a division of Pantaloon Retail. Earlier, it was known as Godrej Aadhaar.

Presently, Aadhaar is operating a total of 62 outlets in as many small towns across the country. The rural retailing format, which earlier under Godrej management, was focusing on agri-inputs and products required by rural customers, has begun to also offer merchandise from Future’s own stable like Fashion@Big Bazaar, Big Bazaar Best Deals, and Koryo, according to Saurabh Chadha, CEO, Aadhaar Retailing Ltd.

The retailer is also working on expansion plan that will take tally of its stores from 62 at present to 100 in the next nine months by March, 2010.

As a part of image makeover and brand repositioning exercise, the group, according to Chadha, has already completed conversion of one of its stores at Shrirampur town in Ahmednagar district of Maharashtra into a new mall like format.

The revamped store, which reopened in June, 2009, renamed as “Aadhaar Shopping Mall,” after the changeover, appears to be doing well as the sales after makeover have doubled than before, according to Chaddha.

“The customers were treating us like a mall, but the store was not positioned that way. So, we have positioned this in line with the small town customers’ expectations of a shopping mall. Changes have already been made in terms of the looks of the store, communication line, offerings and interiors of the store,” said Chadha.

While, changes have been made in looks, the company has also undertaken to change its communication strategy and product offerings for the new format, says Chaddha. It would now reach out to customers more directly using communication tools such as rallies, auto advertising and banners.

The retailer is expected to convert all its existing stores to new format in the next six months.

The world’s largest retailer and largest employer, which garners annual revenues of $404 billion and employee strength of 2.1 million persons worldwide, has set up a retail joint venture in India.

The Wal-mart’s  joint venture with Sunil Mittal-led Bharti Enterprises has already begun its operations in India. “Best Price Modern Wholesale” -the first ‘cash and carry’ (C&C) store of 50:50 jv– was unveiled at Amritsar in Punjab on the 30th May, 2009.

Wal-mart has been forced to begin its retail business with back-end cash and carry store as present policy guidelines do not allow foreign companies to invest (FDI) money in front-end, multi-brand stores in India.

Doug McMillon, who interestingly began his career with Wal-Mart as a truck loader, met several media organisations. Following are the main take-aways from his interviews with media persons in India.

• Wal-Mart continues to remain bullish on India. It is ready to accelerate investment plans in India depending on the number of projects, and the speed with which they can be set up by our company’s team in India. There is no dollar constraint for our business in India as it can draw as much funds as it wants out from around $5 billion set aside by the company for our international business.

• The Indian government want us to strengthen the supply and cold chains and work with small businesses. While, FDI in retail would be positive for this country, the government here alone knows what is best for the country. We are patient and are ready to wait for the sector to open for the foreign investment (FDI). It is not our timeline to determine.

• We are long-term thinkers. We like to start slowly and learn the business and make our mistakes and fix them and once it is time, the government, customers and society is ready, we can do things faster if that is the case. But if not, we will just continue to go along as we are and have a long-term view.

• The wholesale opportunity in India is big. I believe there is a role for us to play here serving kiranas and hotels and restaurants and other people and we’ll work on those things.

• We are trying to create the retail infrastructure as we serve the Bharti stores with cold chain, with a relationship with farmers, and others, so that we are ready to open stores directly, if and when the opportunity is available to us.

• Asia appears to be offering tremendous growth opportunity. I expect India and China to be at the top of the list. We would like to see China and India in particularly to be long-term drivers of growth and hopefully that’s the way things will play out.

• Post economic downturn, consumption of food and beverage has gone up, while it has gone down for apparel or car. As a consequence, we have hit a plateau in our sourcing from India.

• We have now begun to directly procure from farmers in India, whom we encourage to do new things. We also share their risks.
• We could face the challenge of economic downturn, because the way in which we manage our cost. Sam Walton (founder of the company) built Wal-Mart for a time like this, when consumers would benefit greatly.
• Wal-Mart creates elaborate training opportunities for its Associates (employees) to grow in the organisation fast. I began my career as a truck loader, while the current CEO of Sam’s club (cash & carry business) started as a cashier at Wal-Mart.

“We are not excluding non-vegetarians, we are including all those vegetarians who would not come to our outlet because we served non-vegetarian food. Besides, we believe in going with the sentiments of the place and our dip stick survey showed that this is what people wanted,” said Sanjay Countinho, Chief Operating Officer, while giving details of the change.In Ahmedabad, a large number of high-end customers, particularly those following the tenets of Jain religion, are extremely sensitive to taking the food prepared in mixed (Veg+ Non Veg) kitchens. Even, McDonald, another global retail chain of QSRs, has opened a restaurant outlet in the city that has two separate kitchen; one each for preparing veg and non-veg food items.

Barista Lavazza appears to be aggressive on expanding its chain in Gujarat. It plans to open 12 new company-owned restaurants at an average cost of Rs 50 lakhs each. Apart from the happening S G Highway of Ahmedabad, the retailer has identified Surat and Vapi among the possible locations for opening new cafe restaurants. Barista Lavazza is also planning to launch soft alcoholic drinks in its select Crème outlets, though it is not very keen on increasing its presence in malls, where there is uncertainty on footfalls. The retailer may also set up retail outlets in metro stations, airports and places where the human traffic is assured.

Concerned with alarming drop in sales of Gold in India- the world’s largest consumer market– the World Gold Council (WGC) has now drawn plans to bring the precious metal within the easy reach of even small consumers. The Council is planning to sale gold even at Call Centres and Saree Shops, among others, in addition to Post Offices. In fact, WGC has already begun an experiment of selling gold at saree shops with Nalini saree shop in Chennai. The response is said to be encouraging.

The idea for expanding the network for retailing gold, according to WGC’s India MD, Ajay Mitra, is to make it available in every nook and corner of this vast country. WGC has identified 4,000 such shops which can spare space for small jewellery stores through a profit-sharing arrangement.

The import of gold in India, which used to import an average of 60 tonnes a month, according to a BS report, has come down to zero in the past two months.

WGC is even identifying new festivals to promote sales of Gold in India. Currently, nine occasions like Dhan Teras (two days prior to Diwali) are considered auspicious for buying the yellow metal. WGC has come out with a list of 86 such national and regional festivals/ occasions that may be considered “gold buying occasions.” This would mean that the Council would be able to promote purchase of Gold almost every fourth day. Would this not be a case of ‘overkill’ is a matter of debate among marketing experts.

According to Mitra, estimated 800 million people in India have a desire to buy gold in small quantities, but are unable to do so due to the perception that it was beyond their means. “Our aim is to reach out to this section of potential buyers and correct that perception,” said Mitra.

Organised retail in India, which grew just 11 per cent in December 2008 compared to 34 per cent in December 2007, may continue to show a truncated rate of growth in sales of a mere 8 to 12 per cent through 2009 and beyond (middle of 2010). This would mean that the organised retail penetration, currently at 5 percent, may now be able to reach around 10.4 per cent against earlier expectation of 16 per cent by 2012.

This has also led to slowing down of investment flow in the organised retail sector. An estimated investment of $25-billion was expected in the sector over the next 4-5 years.

These are some of the findings of a new research study entitled ‘Indian Retail: Time to Change Lanes,’ prepared by global consulting firm, KPMG. The report was released by KPMG on Tuesday, the 31st March, 2009.

Falling footfalls and poor conversion ratio are identified as factors responsible for severe decline in rate of growth.

In the current context, store rationalisation, working capital management, regionalisation, cost optimisation and manpower resizing are some of the other key “top of the mind” issues for the retailers, says KPMG.

“We believe that players which take immediate strategic measures will be the dark horses. Be it store rationalisation, change of supply chain, consolidation of operations, improvement in IT infrastructure, retailers need to think quick to protect their margins,” KPMG global head of markets Neil Austin said.

The retail sector is also bearing the brunt of the liquidity crunch, according to Ramesh Srinivas, Consumer Markets National Industry Director of KPMG.

“Slowing sales resulting in lower inventory turnover and increasing working capital requirements to fuel growth have resulted in liquidity pressures for many domestic retailers,” says the study.

The slowdown, which is dependent on the government policies, is likely to last for 12 to 18 months, and the government should, therefore, increase spending on infrastructure and other development initiatives, says the study.

Talwalkar Pantaloon Fitness Pvt Ltd, a JV between Pantaloon Retail and Talwalkars Better Value Pvt Ltd, launched their fifth ‘Talwalkars Fit & Active’ gymnasium at the Great India Place Mall, Noida, last Thursday. Spread across spacious 7,000 sq ft of space the gymanasium, together with ‘Talwalkars Sparsh’ — a spa brand, offer facilities for both ‘active’ and ’passive’ fitness regimes for their customers in NCR.

The inauguration of gymkhana was part of the joint venture’s plan of establishing 11 such fitness facilities across the country, in the next two years.

“We have projected 11 gyms in two-year period and we are on track,” said Kishore Biyani, CEO of Future group, on the occassion. In the next few weeks, the joint venture is getting ready to launch its sixth gymkhana at Siliguri in West Bengal.

According to Kisore Biyani, apart from fulfilling their tradional role as “shopping” centres, malls are now also emerging as preferred “leisure” destinations for customers. The JV will endeavour to enhance the customers’ mall experience by offering them a fully functional gymnasium and a spa at competitive prices. All this, according to Biyani, will not only be available in a superior ambience of a mall but will also have the convenience of security, proper parking facility, etc., of a mall.

Pantaloon Retail (India), the country’s largest listed retailer, part of the Kishore Biyani-led Future Group, in January 2009, has come out of the depressing same store sales (SSS) performance that it had witnessed during December, 2008.

To some extent, good performance of January, 2009 could be attributed to aggressive discount offers across segments being made by the retailer to dithering customers affected by adverse impact of global slowdown.

Pantaloon, which is present in consumption space across all retail segment (value, lifestyle, home retail) through several large and small formats, despite having achieved an overall growth in December 2008, over December 2007, of 15.15 percent, had faltered on parameter of same store sales (SSS).

SSS is a better indicator of performance in retail sector as it compares consumer spending trends (combining the effect of both quantitative (footfalls) and qualitative (average ticket size) aspects of consumer spending.

While overall nett sales in January 2009 increased to Rs 690.21 (against Rs 558.98 crore in January 2008) thereby registering a growth of 23.48 per cent over the same period last year, the same store sales growth for the period was 11.75 per cent (Rs 575.63 crore vs Rs 547.02 crore).

While the most significant SSS growth of 12.05 per cent was registered in lifestyle retail segment (Rs 151.11 crore vs Rs 134.86 crore), the growth for value segment was 4.02 per cent (Rs 380.01 crore vs. Rs 365.64 crore). Home retail segment, though, was still lagging behind with SSS degrowth of 4.32 per cent (Rs 44.51 crore vs Rs 46.52 crore).

This performance of January 2009 is much better than the SSS performance in the month of December 2008 when all the three segments had registered declines. As reported earlier, the declines in growth during December 2008, were of the order of 3.56 per cent for value segment, 13.97 per cent for lifestyle segment, and of 10 per cent for home retail segment.

Aditya Birla Retail, which operates 670 supermarket and two hypermarket format food and grocery stores, across several states of the country, under the brand name of “More for you,” like most of its big ticket food and grocery counterparts, is looking at enriching its portfolio of private labels, in the coming months.

“We are focussing on private labels in a big way. We want to take the share of private labels to 30 to 40 per cent of our total business in the next 4-5 years,” said Thomas Varghese, the chief executive of Aditya Birla Retail.

The retail chain, as reported earlier, is expanding its retail network by setting up 12 more hypermaket and 200 more supermarket stores in the next financial year (2009-10).

To begin with, Aditya Birla Retail will be enhancing its existing portfolio of personal care products like shampoos and soaps under private label of ‘Enriche’ by adding new products like hair oil, hair styling gel, shaving creams, gels, and toothpaste, among others, says a BS report. These products are expected to be launched by March, this year.

Apart from personal care products under ‘Enriche’ brand, the company is also selling products in private labels in several other categories like processed foods (ketchups, jams, honey, carbonated drinks, chips, cookies, etc.) under ’Feasters’ brand; and washing products (detergents, dishwash bars, etc) under ‘110%’ brand. In fact, there are currently 320 products being sold by ’More for you’ retail chain under private labels.

ABRL is also looking at entering into the private labels business in consumer electronics and durables business after it has complted its proposed expansion in FY 2009-10.

The success or otherwise of private labels business depends largely on the chain’s pricing strategy and extent as well as reach of its retail network. In times of economic slowdown, it is easier to push private labels as consumers wanting to conserve resources are prepared to “downtrade.” Downtrading refers to a practice in which customers in order to save on money are prepared compromise either on the brand name, i e buy products of relatively unknown brands (in this case private label), or are ready to compromise on quality or quantity of features (specifications) in a product they are buying. For example, one may settle for a CRT TV instead of LCD TV or buy a 32″ TV instead of 37″ TV.

Always on the lookout for new ideas in the consumption space, Kishore Biyani-led Future Group is exploring the possibility of entering the business of giving clothes on rent.

The new inititiative of the group will allow people to borrow expensive clothes for special occasions like marriages, festivals, and parties on rent, thereby, saving a fortune on making them just for an occasion or two.

In India, a large sum of monies are spent (should we say wasted?) on making designer clothes for special events like marriages. Members of families in which weddings are to take place, for example, splurge money on stitching clothes for different ceremonies, while an obscene amount of money is spent on making that exclusive Serwani/ Achkan/ Bandhgala (for the groom) and Saari/ Suit (for the bride), which would be worn just for a single occasion.

Big Bazaar, the largest hypermarket chain of the group, according to an HBL report, is working out plans to rent clothes for occasion wear, as well as to also sell second-hand clothes.

According to Kishore Biyani, who was recently speaking at the India Fashion Forum, buying needs of Indian consumers relate to festivities and occasions.

“Nothing is concrete as of now. We are just exploring this idea further,” said Kishore Biyani, while speaking to the newspaper.

There should be a lot potential for this business, except for initial social taboo attached to using used clothes in India. It should not take long to overcome reservations on this account as it would make immense economic sense to adopt the concept that is quite prevalent even in the west, particularly in the US and UK, where consumers hire everything from dresses to tuxedoes.

Renting clothes would not only allow people to experience something that they otherwise can not afford and at the same time keep pace with changing fashion trends.

The idea, if successful, could even be extended to other expensive items like fashion accessories  and jewellery.

NRF, an umbrella group of retail industry in the U.S., represents interests of more than 1.6 million U.S. retail companies, more than 25 million employees – about one in five American workers – and 2007 sales of $4.5 trillion.

Lee Scott offered his views on a variety of topics that are of direct interest and concern to people associated with retail industry across the world.

We carry a few excerpts of Scott’s comments for the benefit of our readers. We have selected only those opinions that in our opinion are relevant and, hopefully, of interest to our readers:

On worsening economy: “We all hope that by next Christmas it certainly isn’t any worse. I don’t see anything that tells me it’s going to turn around quickly.”

On changing buyer behaviour: Scott, who every month meets with a group of 50-odd young shoppers, found that every one of these shoppers had given up something or the other (like dining out, going to the movies, or shopping) and ”who felt good about doing that.”

On buyer Behaviour in future : “Even when the economy revives, consumers are not going to have the same immediate desire to go back to consumption and debt. A lot of young people have learned what it’s like when you’re living on the edge and the bad times come. Their appetite is now towards more about living things differently.”

On debt-led consumption: “While it’s tough for us as retailers, I’m not sure if it’s all that bad from a societal standpoint. I’ve been worried for a long time that someone in 2007 is selling furniture and your first payment is 2011. Is that healthy? I worry about those things.”

On What can retailers do?: “You had better understand your customer right now. And you had better understand your inventory.”

On Relationships with suppliers: “Sam Walton (founder of Wal-Mart)always liked suppliers. He liked talking to them about what’s selling, what they’re doing. He wanted the best deal and wanted to drive costs down. [With suppliers], you need a real partnership or you’re going to have problems.”

On becoming a successful global retailer: “When it comes to globalization, getting there was a long road. We’ve had a lot of horror stories. Most of them are public.” As most of you would know, Wal-Mart had to withdraw from German and South Korean markets. It is also struggling hard for several years to succeed in both Japan and China. In fact, Wal-Mart has yet to make money in both the markets.

On making biggest error: “The belief that the seed of all retail knowledge was Bentonville, Arkansas. We learned our lesson. You really have to manage locally.” Wal-Mart, as you know, has its global head quarter in Bentonville, Arkansas (USA).

On operations overseas: “Until we were able to let go and let them (local managements) operate based on their customer needs and the competitive set in those countries, we could not make it work.” Interestingly, Wal-Mart has roped in Bharti Enterprises as its equal partner in India, even for “cash and carry” wholesale business for which under current government policy  guidelines, it did not require a local partner.

On learning the most important lesson: “In a big organisation you have to hire people better than you are and you have to give them the credit.”

On Biggest career successes: “I’m proud of the team we put together. I’ve learned to do some pushback, but when they tell me it’s what we need to do, I listen.”

On his legacy: “I want to be able to walk out of my office on the 31st of January, turn out the light, and believe that Sam Walton would be proud of me. If I can do that, I feel good about it.” Lee Scott, incidentally, had begun his career with Wal-Mart as