admin
May 31, 2014
Raghavendra
Kamath, Business Standard
Mumbai,
May 31, 2014
Almost
eight years after its launch, Mukesh Ambani’s Reliance Retail
is ready to launch a multi-channel retail operation, which would
integrate its physical stores with an e-commerce portal.
The Reliance Retail team is working on the model and the company is looking to launch it this year, said sources in the know.
While Reliance has e-commerce portals in some of its international fashion brands and a website for its consumer electronics, it is for the first time that the company is exploring e-commerce in value business, digital and fashion, which accounted for nearly 90 per cent of its revenues in FY 2014.
"Since they have a large network of stores, they will enable shoppers to place orders anywhere and get it delivered anywhere they like," the sources said.
Reliance Retail is the largest retailer by revenues and runs 1,691 stores spread across a 11.7 million sq ft space in 146 cities. In FY 2014, the retailer made revenues of Rs 14,496 crore and profit-after-tax of Rs 180 crore.
Reliance’s e-commerce plans come at a time when e-commerce portal Flipkart has hit the $1 billion (Rs 6,000 crore) mark in gross merchandise value and Snapdeal is looking to achieve the target this year. Moreover, the world’s largest online retailer Amazon has already become the largest in India too, in terms of the number of products on the site.
Reliance Industries’ annual report for FY14 clearly indicated the plan. "The business is poised to launch multi-channel shopping in the coming year. The potential of e-commerce, combined with the network of physical store locations will offer tremendous choice and convenience at a great value to the consumer," the company said in the annual report.
Devangshu Dutta, chief executive of retail consultancy ‘Third Eyesight’ believes that offline retailers such as Reliance have an edge in e-commerce given that they have already established a customer connect.
However, he added that e-commerce will not help boost Reliance Retail’s revenues significantly in the short term as it is still in its nascent stages in India.
In 2012, Mukesh Ambani had said the company was expecting Reliance Retail to clock Rs 40,000-50,000 crore in the three-four years.
"Customer acquisition and repeat customers is a big issue for e-commerce ventures. But physical retailers have an edge as they already have a connect with customers," Dutta added.
Dutta says retailers going online should have different strategies in marketing communication, supply chain and merchandising for both the formats as customer mindsets are different in both.
While Kishore Biyani’s Future group has an e-commerce venture called Futurebazaar.com, the group is focusing on its new venture Bigbazaar Direct, where franchisees armed with tablets provided by the company take orders and sell the best deals of Big Bazaar.
Asked why Reliance took so long to launch an e-commerce-led strategy, the sources said: "It is a question of what they will do and when they will do. They cannot do it for the sake of doing it or because others are doing it."
In the report, Reliance had said the expansion of Digital express Mini and its cash-and-carry format Reliance Market would be key priorities for the company.
(Sourced from Business Standard.)
admin
May 23, 2014
Dhruv Changoiwala, Daily News & Analysis (DNA)
Mumbai, May 23, 2014
Flipkart,
India’s largest e-retailer, has acquired online fashion retailer
Myntra in a move that is likely to help the two domestic e-retailers
face international competition better.
The deal, announced on Thursday, is the biggest e-commerce transaction
so far in the country.
While the deal amount was not disclosed, industry officials said
the speculated deal size is about $300 million.
Sachin Bansal, CEO, Flipkart, said, "It’s a historic moment for e-commerce business. This first-of-its-kind deal would help us dominate the online fashion segment."
The current $50 million online fashion market is expected to double in next 1-2 years.
"As of today, the combined share of the two companies in the fashion segment stands at around 50%. We want to become the biggest retailer in the next six months," said Mukesh Bansal, Myntra CEO.
The e-commerce industry is expected to see increasing competition from international players like Amazon and Alibaba. Some analysts feel that the bigger domestic players may not face a major threat due to the growing potential of the Indian market.
"These investments showcase the investor confidence within this industry. In books, even Amazon is loss-making. The loss can be attributed to the process of expansion of the logistics and back-end operations. Hence, these long-term investments and the prospects of the industry continue to remain positive," Arvind Singhal, chairman and MD, Technopak, a consulting firm.
The current e-commerce business is estimated at $3 billion, and will grow to $50 billion by 2020, while fashion will contribute about 40% to total sales, according to market estimates. Binny Bansal, COO Flipkart, said, "We want to capture this market, and for this we plan to invest $100 million in Flipkart in the next 12-18 months."
Company officials said the two companies will continue to act as separate entities, managed and handled by different set of teams.
"The main focus will be integration of logistics, with Myntra using Flipkart’s customer reach to expand its operations in the country," said Mukesh Bansal.
According to the company, the talks between the two multi-brand retailers were initiated by Flipkart.
The companies declined to comment on the share-holding pattern but said an IPO is on cards in the longer period.
According to analysts tracking the industry, most players in the online retail space are currently in red. Flipkart reportedly lost Rs 281.7 crore in the year ended March 2013, while Myntra reported loss after tax of Rs 134.7 crore for fiscal 2013.
"Fundamentally, nothing has changed in the market. E-commerce platforms still need to figure out how to make money, because the scale they have achieved so far has been driven mainly by discounts and promotions in a race to the bottom that no one is winning," said Devangshu Dutta, chief executive, Third Eyesight, a retail consultancy.
"Most e-tailers have a low base of repeat customers, so they are constantly having to spend money on getting customers to their websites," he said.
(Sourced from DNA.)
admin
May 20, 2014
Purivita
Chatterjee, The Hindu
Mumbai,
May 20, 2014
Indian
retailers are hopeful that the new BJP-led Government will do
a volte face on its decision to oppose foreign direct investment
(FDI) in multi-brand retail.
Once the new Government is formed, it might re-think its strategy as bringing down inflation is going to be of prime concern. FDI is expected to help improve supply chain efficiencies for retailers, thereby bringing down the cost of goods.
Last year, UK-based retailer Tesco became the first foreign player to apply for entering India’s multi-brand retail sector through a proposed equal JV with Trent Hypermarket, a Tata Group company. Considering that Tesco already has a back-end tie-up with the Indian retailer, it was natural to propose a front-end FDI-based deal to open multi-brand retail stores. But getting final approval is in the hands of the new Government.
Tesco’s deal is going to be a test case for other retailers who are waiting in the wings for similar ventures.
“As of now, there is not enough clarity but Tesco is going to be a test case for the retail industry. We could consider an international tie-up for our big box format under HyperCity. FDI in multi-brand is still in theory. We have to wait and see how the new Government views it,” said Govind Shrikhande, Managing Director, Shopper’s Stop.
But such FDI-led JVs may not immediately take off. “While Tesco’s FDI proposal was quickly approved, in this scenario it is doubtful that Tesco would be bringing in the money. The FDI retail policy is still flawed, and is not going to be a priority for the new Government,” said Devangshu Dutta, CEO of Third Eyesight.
In 2011, the UPA Government had taken a Cabinet decision to allow foreign retailers to own 51 per cent in the multi-brand retail. At that point of time, Kishore Biyani, Chairman of the Future Group, had said: “It’s a win-win-win situation for us. There will be better infrastructure, especially at the farm side of the business, create new job opportunities and bring in capital. More retailers will create more choices for consumers. There will be $8-10 billion of fresh investments coming into the country over the next 5 to 10 years.”
But since then, there has been a flip-flop on the FDI policy with many States opposing the policy.
While there may be no short-term benefits for the retail industry, in the long run, the new Government may change its outlook and end the uncertainly surrounding the FDI policy.
“The new Government will weigh the pros and cons of its decision to oppose FDI in retail as it would like to have a progressive face in terms of inviting more international companies to come in. It would look into consumer behavior, spending and investments required in supply chain and realise the benefits of having clear policy measure in retail,” said Saloni Nangia, President, Technopak.
(Sourced from The Hindu Businessline.)
admin
May 4, 2014
Sharleen
D’souza, Business Standard
Mumbai,
May 4, 2014
Van
Heusen’s renewed focus on womenswear has led to it contributing
a higher percentage than the average of the parent brand. Van
Heusen Woman brings in eight-nine per cent of its revenue (latest
financial year), higher than the five per cent that womenswear
returns for Madura Fashion and Lifestyle, on an average.
Even though Van Heusen had entered womenswear in 2007, it had not scaled up before. Van Heusen started to launch exclusive womenswear outlets in the past one year. It has nine stores and plans to add another nine-10 this financial year. The expansion plan is on the heels of Aditya Birla Nuvo’s (of which Madura is a part) acquisition of Pantaloons. At the time of acquisition, Rakesh Jain, MD of Aditya Birla Nuvo had said, "The reason we acquired Pantaloons was to fill the gaps, especially in womenswear, kidswear and ethnicwear in which Madura does not have a presence."
Earlier Van Heusen Woman took up only a small section in around 100 Van Heusen stores (with the lion’s share of shelf space taken up by the men’s collection) and 200 shops-in-shop. "The space was very limited in the menswear section and didn’t do justice to the shopping experience," says Vinay Bhopatkar, brand head of Van Heusen.
The chain plans to increase the contribution of womenswear by another five per cent in the next three to four years with stores that measure around 500-600 square-feet, situated mostly in malls.
The Van Heusen Woman stores have already broken even, according to Bhopatkar. "We have received good response so far and even the limited edition which we launched with Deepika Padukone has been doing well for the brand," he says. The limited edition also had the actor not just act as the brand ambassador, but also sit with the designers to approve the designs , according to the company. The collection was priced higher than the average product of the brand, starting at Rs 4,000 while the regular range starts from Rs 2,000.
While women’s formalwear has seen an expected traction in cities with brands from Zara to Fabindia catering to the buyer, Van Heusen is also keen on tapping the demand from smaller cities and towns, something that multi-brand e-tailers have pursued so far.
"We have seen interest coming in for Van Heusen Woman from Tier-II and III cities through online sales," says Bhopatkar about the demand seen on its own e-commerce portal.
"Brands which offer formalwear in India need to get the fit right to gain a good customer base. The scope of the market is large and capable of good growth, as the number of women working in urban areas is increasing and mindsets are changing. If Van Heusen Woman gets the fit right, then there is a good potential to grow," says Devangshu Dutta, CEO of Third Eyesight.
Madura also has Allen Solly (with a limited women’s range) and Louis Philippe that are still predominantly menswear brands. But buying the majority stake in Future Retail & Lifestyle’s Pantaloons two years back is expected to fuel a shift away from such single-minded focus and Van Heusen’s plan for womenswear is the first step.
Experts say Madura has to get its womenswear merchandise right, because it already has a strong sourcing and distribution set-up, to make a mark in this space – where Pantaloons can help it with enough insights. "Very few brands are available in western-wear besides the likes of Zara and Mango. If Van Heusen gets the merchandising right, it can succeed as a brand," says Arvind Singhal, chairman of Technopak Advisors. Around 60 per cent of branded apparel is womenswear of which western-wear is the fastest-growing segment, clocking a growth, faster than ethnicwear, of around 20-22 per cent on a base of Rs 10,000 crore, according to market experts.
Van Heusen Woman has also launched accessories like bags, shoes, belts and scarves. However, contribution of accessories to the brand is minuscule. Van Heusen has one exclusive accessories store in Kerala and plans to add another two or three this financial year.
(Sourced from Business Standard.)
admin
April 30, 2014
Sayantani Kar, Business Standard
Mumbai, April 30, 2014
"Those
who have tasted it loved it. But we are also enjoying the buzz
created by those who have just heard about it," says Sanjiv
Razdan, general manager – Pizza Hut & Restaurant Excellence,
at Yum! Restaurants India (Yum) about the chain’s latest product,
the Birizza. The combination of Indian-style rice with a bread
crust and gravy on the side has triggered varying reactions among
consumers, ranging from bemused, incredulous to curious, especially
on social media. After rolling out tandoori pizzas, it is offering
a take on the Indian tawa pulao/biryani. Detractors have underlined
how the concept is at odds with the chain’s branding, a concern
that Razdan says is laid to rest when one samples the product.
While quick service restaurants (QSRs) had entered the food scene with Indianised menus, the market has also had a lot of products withdrawn since then. After the initial success, is it now a case of more misses than hits in new menu-items for these QSRs?
Why fix what ain’t broke
Devangshu Dutta, CEO, Third Eyesight, says QSRs have a set of core items that define the branding of a chain. "Beyond these, other products will come and go."
For Pizza Hut, the contribution of its core product – pizza – is around 60 per cent, according to Razdan. Senior officials at McDonald’s say that for the burger chain the core mid-range menu of burgers, wraps and fries comprises around 40 per cent, while the premium range which is seeing the most product innovations contributes around 23 per cent, the entry-level ‘happy price’ menu 23 per cent and beverages 14 per cent – categories that also see the chain revising its line-up often.
Why do the QSR brands, then, look to expand beyond their core? Dutta says, "New items bring in additional footfalls, drive up price-points and ticket sizes, adding to margins in these times of low consumer spending." Fast-food chains sure need the help with the three major companies – Jubilant Foodworks, Yum and Westlife Development (owns Hardcastle restaurants which is the franchisee of McDonald’s in the west and south) – seeing a decline in growth ranging between 2.6 and 9.8 per cent in the December quarter.
The chains’ reasons
For Birizza, Razdan says, "We wanted to get new users for not just our brand but for the category as well, ie. who don’t like pizzas. It was time to take a big leap rather than incremental innovation such as a variant of a pizza." He informs that the birizza would be a permanent fixture as rice is a preferred staple in most of India.
Pizza Hut’s sister brand, KFC, owned by Yum, had already experimented with a flavoured rice meal with gravy. Razdan says Pizza Hut Sri Lanka too had recently set a precedent with rice. "We had to introduce something with Pizza Hut’s twist and hence, the crust," says Razdan.
President and COO of Dunkin’ Donuts India, Dev Amritesh, says they have to keep in mind the palate of the Indian audience in picking flavours, spices and herbs. The doughnut chain managed by Jubilant FoodWorks that also handles Dominos, is set to enter its second metro city, Mumbai, in May and has recently launched wraps and a bagel bun-burger. Amritesh says, "New product development keeps the brand promise of being an adult QSR brand in mind. It is not for the first-time QSR customer, but an evolved one. So the menu would have some complexity with a story behind the items and a western vocabulary." Dunkin’ is currently tailoring its new products such as the Tough Guy burger, which has a bagel bun instead of the usual bun, to make customers get their ‘mojo’ back.
For McDonald’s, it is about premiumising its menu. After its chunky McSpicy range, it is now pushing the Royale range that is its most expensive.
The strategy would increase the ticket size and serve the customer at different meal-times too.
Lessons from the misses
But what about the products which lost their spot on the limited menus, typical of fast-food chains? The lessons are being ploughed back in product innovations. "We have learnt that we can’t get new customers by just bringing in more of our international flavours. So, even with a pasta range abroad, more pastas in India would not mean more customers in our fold," says Razdan. Pricing, especially in this climate of low consumer spending, is another lesson. "With both our new big pizza and Birizza, we are mindful of the prices. Now, we have pizzas which are on an average 23 per cent more than the regular size of competition without a price hike."
Senior director, marketing, corporate communication and menu management at McDonalds, Rameet Arora, says, "We have learnt to launch products that preserve the credibility of the brand. To keep interest levels up, we have always had limited edition products such as chicken popcorn, cheesy fries and a Mexican spice festival range."
Dutta says that chains often don’t mention the trade-offs: "A low-margin product could become the default order, and it may not be profitable, requiring a trade-off between footfalls and profitability. For example, the McAloo tikki burger has been made unavailable in some markets and certain outlets of McDonald’s." Abheek Singhi, partner and director at The Boston Consulting Group, says "Eighty per cent of the time, new flavours and food products don’t work. Often they are not meant to garner volumes but generate excitement."
(Sourced from Business Standard.)
