Until recently, Reliance Retail was handling retailing of milk products mostly through Reliance Fresh outlets across the North (Punjab, Haryana, Himachal, Rajasthan, and NCR) and the South India (Andhra and Tamilnadu). ‘Dairy Pure’ could register three-fold increase in its sales from Rs Rs 65.77 crore (2007-08) to Rs 178.05 crore (2008-09) largely on account of the efforts put in by Reliance Retail.

Reliance has been popularising dairy products by offering 10 per cent more quantity of products to consumers at the same price as that offered by its competitors. While, welcoming entry of large player like Reliance into the sector, the competitors are not unduly worried about the price advantage offered by Reliance to its customers.

According to R S Sodhi Chief General Manager of Amul, “Reliance Retail’s milk brand has not got much presence in the market as yet. But it is good for the market to have more players and entry of a large corporate house would be beneficial for farmers as well as customers.”

Although tight lipped about future investment and sales targets, Reliance Dairy officials are quite bullish on its future growth and its presence as a major dairy products player in the market.

“Internationally, we’re focusing on larger markets. China is a big opportunity for us. We’re just getting started in India, where we see great opportunity over the long term,” said Watson, while participating in a Forbes Global CEO Conference at Kuala Lumpur (Malaysia). According to Walton, Asia is expected to lead the global economic recovery.

Walmart, which derives close to one quarter of its global revenues (over $400 billion) from outside the USA, is currently operating over 600 stores in China and Japan, though company was forced a couple of years or so ago to withdraw its operations from South Korea- another growing Asian economy in the far Eastern region.

Bharti Wal-Mart Pvt Ltd– Walmart’s Indian JV with Bharti Retail, has launched its first ‘cash and carry’ wholesale store in Amritsar from May, 2009. The store is operating under the brand name of “Best Price Modern Wholesale.” The JV company is planning to open 10 to 15 such stores, which are expected to provide employment to around 5,000 persons. Walmart had to reconcile with launching its operations through ‘cash and carry’ route as no foreign direct investment (FDI) is allowed in multi-brand, front-end retail under current policy framework of India.

Walmart’s Indian partner, though, is quite hopeful of change in the policy soon. According to Rajan Mittal, vice chairman of the group, who supervises the group’s retail initiative, Bhartis are expected to achieve $ 1 billion in retail sales and employ around 60,000 people by 2015.

In view of the present policy hurdles, Bharti Retail has already forayed into front-end, multi-brand, retail on its own. It operates a general merchandise retail chain called “Easyday” comprising 28 stores under supermarket (26) and mini-hypermarket (2) formats in Punjab and Haryana. The retail chain is looking at adding 40 new stores in NCR during this quarter before the end of calendar 2009.

FDI in retail has traditionally been opposed by small traders (mom & pop -kirana- stores) as well as most political parties of India, as it is feared that this will lead to loss of livelihood security for millions of traders and workers engaged in this sector.

Bharti Retail, which has formed a 50:50 retail joint venture with the US-based world’s largest retailer-Walmart-two years ago, as such, has been forced to presently operate its front-end retail business (under the brand name of “Easyday”) on its own. “Easyday” currently operates 28 supermarket and 2 mini-hypermarket format stores in Punjab and Haryana. It is currently in the process of expanding its network in Delhi and surrounding areas (popularly known as NCR) by stting up around 40 “Easyday” stores before the end of this calendar year.

Rolling out the blueprint of Bharti Retail’s future plans, Mittal said that it is well on its way to reach the turnover of $1 billion in the next five years. By 2015, retail business of the group would employ 60,000 persons.

“We employ about 2,000 people… We are going to employ 60,000 people by 2015,” Mittal told PTI. He was of the opinion that a large number of jobs would open up, if FDI is permitted by the government in this sector. “I am saying that if the sector opens up, it will have two million people employed… The government should recognise that,” said Mittal.

According to Mittal, retail offers employment opportunities more inclusively than other sectors as it opens up jobs for people with less education as well as women.

“About 25 per cent people working at Bharti’s ‘Easyday’ stores were matriculate who would find jobs only at places like retail stores. Besides, about 22 per cent of the people employed by the sector are retired and housewives, who work on flexi timings,” said Mittal.

Bharti and Walmart in a PPP initiative have set up a skills development academy in collaboration with the state government of Punjab. The academies provides necessary skills to unemployed and rural youth in retail operations. “We are training them and we have skill set academies in Ludhiana and Amritsar to train them,” said Mittal.

Talking about advantages of opening up the retail sector to foreigners, Mittal said, “You get technology, you get sourcing, not to forget the reverse also. China gives (exports worth) $25 billion a year just to one company, which is Wal-Mart. From India, they pick up $600 million. Look at the gap.”

Mittal, to begin with, will be happy with up to 49 per cent FDI in multi-brand, front-end retail sector. “That’s for the government to decide but I would say, to begin with, 49 per cent…” Incidentally, according to current FDI policy framework, up to 51 per cent of FDI in single-brand, front-end retail, and up to 100 per cent FDI in “cash and carry” wholesale retail is allowed in India.

According to Mittal, apart from investment, FDI will also bring much needed technology and sourcing skills in the sector. Walmart is prepared to invest $100 billion in India.

“You get technology, you get sourcing, not to forget the reverse also. China gives (exports worth) $25 billion a year just to one company, which is Wal-Mart. From India, they pick up $600 million. Look at the gap,” said Mittal. “If you really see… Tea, fruits, vegetables, rice, brassware, handlooms, handicrafts, jewellery, I think we have enough to supply,” he added. This will also provide impetus to expansion of private label business in the sector. “People who manufacture for FMCG companies will do same for Easyday stores tomorrow,” said Mittal.

Exhorting policy makers to look at the big picture, Mittal said, “I think, they (the policy makers) are not looking at the larger picture. They only see one small constituent…”

After setting up five hypermarket stores in quick succession at Mumbai, Mysore, Aurangabad, Indore and Bangalore (while Mysore store was acquired, the second hypermarket store at Vadodara has been closed), the retailer is looking forward to setting up three more hypermarket stores and over 50 supermarket stores this financial year before 31st March, 2010. This will take tally of the stores under two formats (super and hyper) to over 700 in this fiscal. In the next 5 years, the retailer is aiming to expand its presence five-fold as it is planning to occupy total space of 10 million sq ft by 2015.

Thanks to the acquisition of Hyderabad-based Trinethra retail chain in 2007, bulk of the retail chain’s supermarket stores, numbering around 400, are located in the South. After being renamed, all Trinethra stores, are now also operating under the brand name of ‘More’ or ‘More for you.’

The Rs 1,130 crore retail outfit of the group is expecting its Southern stores to begin making profit in the next few months. The turnaround in this region makes commercial sense as the stores in the South– most of which were operating as Trinethra outlets– are much older in age than their counterparts in other regions.

After pruning non-performing stores, productively utilising space, optimising displays and SKUS, and keeping property rents below 5 per cent of expected revenues, ABRL is expecting to fully turnaround operations of the company within three financial year by March 2013.

“We are half-way down the walk and we have another half-way to cover in the next 2-3 years,” said Verghese.

While, ABRL continues to remain averse to strategic partnerships with foreign partners, it is open to further acquisitions within the retail space. Having pruned down original plan of investing Rs 10,000 crore in the retail business, the company, according to Verghese, will approach capital market with IPO only after it has broken even.

“Sabka Bazaar” along with another Delhi-based retail chain “Home Store” was bought by Wadhwan Food Retail for an undisclosed amount (of around Rs 100 crore) in mid-2007. Wadhwan Food Retail is owned by Wadhwans– a Delhi-based leading group of land developers and housing finance experts.

Wadhwan Food Retail operates several retail chains including ‘Spinach’ — the flagship chain of supermarkets operating mainly in Mumbai/ Pune regions of Maharashtra.

Most of Wadhwan Retail’s growth, over the years, has been through inorganic expansion. Apart from buying “Home Store” and “Sabka Bazaar” retail chains in the North, the group also acquired Mumbai-based businesses of “Maratha Stores” as well as “Sargam Direct”– a home delivery business operated by FMCG major Hindustan Levers in Mumbai. Later on, Wadhwan Retail also acquired “Smart” — a 14 stores supermarket retail chain operating from Bangalore.

“Sabka Bazaar,” according to the newspaper report, is facing difficulties in getting the material as vendors are unhappy about delayed payments on their supplies.

Fast moving consumer goods companies are these days tough on supplies to modern retailers after loosing heavy amounts after collapse of Subhiksha –a pan-India retail chain with over 1,600 stores in the ‘value’ segment, closure of several retail chains and cash crunch faced by many other retailers like Vishal Retail.

While, the retailer has refuted the reports concerning payment problems, a stockist of FMCG major Hindustan Unilever (HUL) and Reckitt Benckiser is reported to have stopped supplies on account of defaulted payments.

“Sabka Bazaar is definitely facing (financial) problems. They do not have funds and the stores are not stocked well.” said another vendors of a multinational company to the newspaper. “In the case of big and stable retail chains we do not mind keeping some bills pending, but in the case of Sabka Bazaar, we give them credit of only two outstanding bills. In order to get fresh supplies, they have to clear at least one outstanding bill,” added the vendor.

The growth of about 42 per cent, according to the company’s chief executive officer Thomas Varghese, will be achieved through growth in same-store-sales (SSS) and opening of new stores during the current financial year.

After closing around 110 under-performing stores last year, the retailer is currently operating 641 multi-format general merchandise stores under the brand name of “More” across the country. This number also includes rechristened stores of erstwhile Trinethra retail chain. The Hyderabad-based retail chain was acquired by the Birla group company in early 2007.

While, around 25 per cent of growth will be achieved through increase in sss, the balance growth, according to Verghese, will be through unveiling of new stores.

SSS in retail industry is considered as an important parameter to gauge sales trend as this is a reflection of organic growth achieved by the company.

As far as the new business through the opening of additional stores is concerned, the company is seeking to adding around 70 new ’supermarket’ format stores across the country through the current financial year. This will take the tall of stores from 641 at present to around 710 by the end od of 31st March, 2010.

The retailer is also looking at setting up 10 to 12 hypermarket format stores called “More Megastore.” Presently, four stores of this format are being operated by the retailer.

While, supermarket format stores occupy 2,000 to 4,000 sq ft of space, hypermarket format stores occupy over 50,000 sq ft of space.

As reported earlier, the retailer is also focusing on increasing the share of business from ‘private labels’ with a view to improve profit margins as branded consumer products offer little margin.

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.

The equity shareholders of Vishal Retail Ltd, the company which owns the retail chain, in the Extra Ordinary General Meeting (EGM) of the Company held on June 27, 2009, have passed a Special Resolution that authorises the company to issue and allot, in one or more trenches, upto 75,00,000 (Seventy Five Lacs) warrants on a preferential basis to Ram Chandra Agarwal, CMD of the Company. Agarwal also happens to be the founder and promoter of the company.

At the peak of the cash crunch, the retailer was said to be in talks with Reliance Retail, among others, for sale of equity by way of dilution of promoters’ equity in the company.

ABRL, which currently operates a retail chain of around 650 food and grocery supermarket format and hypermarket format stores under the brand name of ‘More for You,’ according to Thomas Varghese CEO, achieved sales of nearly Rs 1,150 crore during the financial year ending 31st March, 2009 (2008-09) against previous year’s turnover of around Rs 550 crore, is expecting to garner sales volume of about Rs 1,700 crore this fiscal ending 31st March, 2010 (2009-10).

Buoyed by the growth, most of which has come from expansion of the retail network, the company is looking at taking the tally of stores to 720 to 730 stores by adding 60 to 70 stores (80 new stores less 10 t0 20 stores under shut down) during the current financial year ending 31st March, 2010. The company’s focus this year is on opening Hypermarket stores. Against teo hypermarket format stores being currently operated by the company at Mysore and Vadodara, plans are afoot to add 6 to 8 new hypermarket stores of 65,000 to 70,000 sq ft size each, this fiscal. Four of these are expected to be unveiled at Aurangabad, Indore, Mumbai and Bangalore by September, 2009.

Having opened a total of 710 stores in the first 20 months of commencement of business, including the stores of Hyderabad-based retail chain ‘Trinethra’ that was earlier acquired by the group, ABRL in a massive exercise of restructuring operations closed down 76 under-performing stores in the last six months. The company is preparing to also close down a few more stores, numbering between 10 and 20, in the next few months.

“That was part of my cleaning up operation. The last six to eight months have been a wake-up call for the industry. We are going to focus on consolidation this year,” said Verghese while talking about closing of stores to PTI.

The 1,000 sq ft boat, which can accommodate up to 15 shoppers on board any time, is the brainchild of Consumerfed (Kerala State Co-operative Consumers Federation Ltd), an apex body of consumer cooperatives in the state working under the auspices of the state’s Cooperation Department.

While, working between 8 AM and 6 PM, the floating supermarket will cater to the needs of consumers in 17 panchayat areas of the Kuttanad region in the state. Consumerfed has identified 50-odd locations for anchoring the floating supermarket on boat to cater to consumers.

The supermarket apart from serving the needs of isolated and inacceible areas has another social objective as well. While, it will offer a 2 per cent discount on all commodities, the discount will be increased to 3 per cent for the customers belonging to SC/ST.

The floating supermarket was flagged off by G. Sudhakaran, the state cooperation minister, at a function held at Alappuzha on Sunday.

Vishal  Retail, the Delhi-based multo-product, multi-brand, value retailer, has announced breakout of a fire in one of its warehouses situated in NCR. The 300,00 sq ft warehousing facility of the company is located at Wazirpur (village Dhanwas) on Farukh Nagar Road in Gurgaon (Haryana).

While confirming the news, reliable sources in the company have said that the fire has already been brought under control. The damage caused to property and stocks on account of the fire, however, is yet to be assesed.

“We cannot assess the damage, as yet,” said Ambeek Khemka, Group President of Vishal Retail.

The report, though yet to be confirmed by either Pantaloon or Carrefour, Kisore Biyani, promoter, founder, and Chairman of Future group, has not ruled out such a possibility. According to him, “the company has not concluded any deal with Carrefour SA as yet. I can’t comment on possibilities.” Likewise, Carrefour too has been evasive. According to one of its spokespersons, Carrefour is “in talks with companies but has not signed the deal finally.”

Carrefour, which means ’crossroads’ or ‘intersection’ in French, was founded by Fournier and Defforey families in France in 1959. Carrefour SA, which operates 15,000 multi-format (hyper, super, discount, and convenience) grocery stores across 33 countries of the world, is  predominantly a European retailer with 81 per cent of its revenues of € 86.97 billion in 2008 coming from France (44 per cent) and other European nations (37 per cent). Of the balance revenues of 19 per cent, while 12 per cent came from Latin Amerca, a mere 7 per cent was contributed by Asia (including China). Carrefour SA is also quite strong in hypermarket retail format which accounts for 57 per cent of overall business. Supermarket and Discount store formats, on the other hand, contribute only 17 and 10 per cent of total revenues.

After having obtained shareholders’ approval, Pantaloon Retail, India’s largest multi product, multi format, multi-segment retailer, is currently in the process of creating three subsidiary companies; one each for FMCG, retail and fashion business. The group is also being renamed as had received shareholders’ approval for restructuring the company into three separate entities catering to Future Markets & Consumer Group (FMCG). While, Pantaloon’s fashion division together with the entire investment in its subsidiary Home Solutions (Retail) India is being sold to the wholly owned subsidiary, Future Value Retail, its retail division is being sold to its subsidiary Future Speciality Retail.

Pantaloon, despite ban under current policy guidelines on FDI in retail, is testing waters for inducting foreign capital in multi-brand retail through subsidiary route. The possibilities for this have opened up in terms of Press Notes No. 2, 3, and 4 issued by the government that provide for induction of capital in restricted sectors like media and retail via subsidiary companies subject to parent company having majority Indian ownership. Pantaloon has already taken steps to increase ownership of Indians in the parent company by raising equity capital via issue of rights and warrants to its promoters.

Aditya Birla Retail, a retail initiative of Kumar Mangalam Birla group, which began operations in 2007 after acquiring operations of Hyderabad-based Trinethra superstores retail chain, according to an ET report, is believed to have incurred a net loss of Rs 534 crore on sales turnover of Rs 1,030 crore in 2008-09.

The company sources, however, said that losses are a part of initial investments as the period of gestation in retail business is quite long. While refusing to confirm the financial numbers to the newspaper, these sources have maintained that the company’s retail business is on track.

Apart from operating two hypermarket stores undre the umbrella brand name of “More.. for you” at Mysore and Vadodara, the retail arm of the group operates around 670 supermaket format, neighbourhood food, grocery, and general merchandise, stores across the country. These stores include the erstwhile stores of Trinethra retail chain, which after the acquisition were also rechristened as ‘More’ stores.

More, under the stewardship of its new CEO Thomas Varghese, an old Birla hand, who was roped in after the Sumant Sinha, has taken several initiatives to revamp the operations of the loss making chain. Some of the initiatives include:

• Close some of the non performing stores.

• Take a re-look at the design, positioning and merchandise offered by the retail chain.

• Focus more on large sized stores. The retailer will set up hypermarts of 30,000 to 40,000 sq. ft. spce each.

• Aggressively expanding the retail network; add 200 Supermarket stores and 12 Hypermart stores in 2009-10.

• Renegotiation of property rentals for almost all leased properties with their landlords. The rents in some cases have come down by 30 to 40 per cent.

• Introduction of private labels, mostly in fast moving consumer products category, to increase share of private lablels to 40 per cent in the next 4 to 5 years.

• Look for earning rent from ’shop-in-shop’ opportunities. Recently, ‘Dial for Health’ wellness retail chain owned by Zydus group has inked an agreement to set up such outlets in Gujarat and Maharashtra.

• Look for a financial partner. “We are not looking at a strategic partner. We will be happy to have a financial partner. We have received lots of preliminary interest from investors. We would be open to this idea,” said Kumar Mangalam Birla. Some private equity firms like Warburg Pincus are believed to have shown interest equity stake in the company.

Aditya Birla group, incidentally, also operates 340 apparel stores across the country of brands like Louis Phillippe, Van Heusen, Allen Solly and Esprit in the lifestyle and value fashion segments. These stores are operated by Madura Garments Lifestyle & Retail and Peter England Fashions & Retail, which are part the group’s flagship company Aditya Birla Nuvo. The garments business, which clocked Q4 turnover of 273.3 crore (2008-09) and a nett loss of Rs. 82.2 crore during the quarter, has also embarked on several measures to stem the rot, including closure of 30 stores that will save around Rs 100 crore a year.

The front-end neighbourhood, food and grocery, value retail chain was launched in mid-April 2008 from Ludhiana, the hometown of Mittal family.

“Easy Day” retail chain is wholly owned by Bharti Retail as under present policy guidelines no foreign investment is allowed in fron-end retail in India. However, Bharti Retail has also set up a joint venture with Walmart, the world’s largest US-based retailer, to set up a chain of Cash & Carry stores in India. The first of the three C&C stores this calendar is expected to go on stream in Amritsar during this month.

Bharti Retail, the wholly owned subsidiary of the group’s flagship company, had in 2007 proposed an investment of $2.5 billion in retail over a period of 8 years. This amount also includes the investment to be made in the wholesale Cash & Carry venture through its JV .

According to Vinod Sawhny, president and chief operating officer, Bharti Retail, who recently spoke to DNA, the retailer is looking at expanding its operations further this year in the North by opening new stores in Uttarakhand, Delhi and Himachal Pradesh. The retailer is also exploring opportunities for inorganic growth by acquiring existing chains.

Bharti Retail, according to Sawhney, is targetting a customer base of 400 to 500 million customers in the middle layer across the country on the plank of ‘value’ retailing. According to him value retailing means ”offering value for money.” Given the strength of its joint venture partner Walmart in this area, Sawhney is confident of leveraging the advantage of Bharti-Wal-Mart JV’s method of buying, which globally sources products at lower prices. He is also gung-ho about Walmart’s arrangement with its suppliers that provides for longer shelf period without incurring additional inventory costs.

Sawhney is also happy about the location of most of its existing 27 “Easy Day” stores as only 2-3 of these may eventually require relocation due to inadequate footfalls. One of the 27 stores is in supermarket format, occupying around 25,000 sq ft of space and located in Ludhiana, called “Easy Day Market.”

Easy Day is currently garnering 15 per cent of its sales revenue from private labels sold under grocery, apparel, and household chemicals, categories. However, it is looking at dobling their share from present 15 per cent 30 per cent in the next three years. New private labels will be added after observing consumer preferences, says Sahwney.

Sawhney, though is concerned about property rents. Although, rents have fallen recently, they are still high by 80%. He expects the rents to fall about 40% more.

Walmart, the world’s largest retailer, is now ready to make an official entry in India 30 months after it inked an agreement to set up JV with India’s telecom giant Bharti Enterprises.

The first Cash & Carry wholesale store of Bharti Walmart joint venture is slated to go on stream this month (April, 2009) at Amritsar in Punjab. The C&C store at Amritsar is part of the three stores being planned by the joint venture for opening during this financial year (2009-10).

This was disclosed by Rajan Bharti Mittal, Vice-Chairman and Managing Director, Bharti Enterprises on the sidelines of the national executive meeting of the Federation of Indian Chambers of Commerce and Industry (FICCI). All the Cash & Carry stores of the joint venture this year will be established in the North, as the group is initially focusing on this region.

Bharti Walmart has already begun the process of registering customers for its Cash & Carry operations. Under the policy guidelines, Cash & Carry wholesale stores can supply merchandise in bulk to only registered commercial and/or institutional customers. These customers, which may include the likes of  small retailers, caterers, hostels, hospitals, etc, should have obtained statutory approvals like VAT registration etc from competent authorities. In the U S and other developed retail markets, Cash & Carry stores are allowed to sell merchandise in bulk even to individuals and household customers.

Bharti Enterprises has already entered front-end retail on its own. Its retailing arm Bharti Retail is already operating a retail chain 25 supermarket and one medium format stores under the brand name of “Easyday” in Punjab and Haryana. In fact, the number of stores at one point of time had reached 28, however, the group had to close down some non-performing stores.

The pace of growth of “Easyday” retail chain, which was launched in April 2008 from Ludhiana, has not been as fast as some of its large scale counterparts in the corporate world like Reliance, Birla Retail, Future group, and Spencer’s.

Explaining the reasons for slow roll out, Mittal had earlier said, “We were very clear that there will be a struggle and we have a struggle. You do these experimentations in a controlled environment. So, we are only in Punjab, a bit in Haryana and that is it. The fact is if we would have opened 500 stores, we would have had to shut half the stores. That would have been very expensive.”

The “Easyday” front-end retail chain is solely owned by Bharti’s retail arm Bharti Retail, since under the current policy guidelines, it is not possible for Walmart to invest in front-end retail operations of the group. Walmart, though has been roped in to offer sourcing, logistics, and back-end technical services for Bharti Retail’s front-end operations. Bhartis are not averse to inducting Walmart as its partners for front-end operations as well once the policy guidelines are suitably revised to allow such an investment.