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March 9, 2017
Foreign retailers, big and small, are scrambling to make a mark in the big Indian bazaar
It’s the company that’s showing foreign entrants how to succeed in the Indian retail maze. Swedish fashion retailer Hennes & Mauritz has been on the fast track from when it opened in September 2015. This month, it’s moving further into India’s second-tier cities and launching in different corners of the country — Indore, Coimbatore, Amritsar and Kolkata. In just two years, H&M has opened 17 stores and expects to end 2017 with 25. In the Indian market, that pace represents lightning speed.
When they first came to India in the early noughties, many foreign retailers floundered, flummoxed by complex market conditions. They also found their way
Source: thehindubusinessline
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February 16, 2017
Raghavendra Kamath, Business Standard
Mumbai, 16 February 2017
Indian fashion chains are betting big on the consumption story here as American chains shut stores, amid competition from online retailers.
Macy’s, the largest department store chain in the US, said it was closing 68 stores. Sears will also close 42 stores. Kmart is closing 108 stores and and discount chain Kohl’s has closed 18 stores, according to reports.
Indian chains are scripting a different story, despite a strong online retail presence. Future Group-owned Central plans to add 15 new Central HD stores. Central HD has upgraded their décor and has minimalistic fixtures with an aspirational fashion boutique feel.
“The store is designed to offer an enhanced and more customised service to shoppers,” said Vishnu Prasad, chief executive officer, Central. “We have received great response with the new Central HD. We are expecting 15-20 per cent like-to-like growth.”
Shoppers Stop, the country’s largest department store chain, is planning to open four new stores this year and is working on a 35,000 sq ft format for smaller cities, against the average size of 45,000 sq ft. “The new stores have designated shop-in-shops for private brands to provide a luxe experience,” said Govind Shrikhande, managing director, Shoppers Stop. “We are targeting seven-eight per cent like-to-like growth in the department store segment.”
Max, Landmark Group’s value fashion chain plans to open 40-45 stores at an investment of Rs 5 crore each. These stores have the latest retail identity as in their home market of Dubai with omnichannel capabilities in terms of digital displays and a WiFi environment.
Vasanth Kumar, executive director of Max, said, “Unlike the US, India’s per capita retail space creation is very low and so is the share of organised retail. Also, 60 per cent of our population is below 30 years,”. “As a country, we have a long way to go before being saturated,” Kumar pointed out.
Rajat Wahi, partner and head (consumer markets) at KPMG, said with rents declining and e-commerce facing a slowdown, modern trade would resume expanding its footprint, especially in large formats (over 50,000 sq ft) and medium formats (10,000-30,000 sq ft).
“While e-commerce will continue to grow and some categories will be bought predominantly online, most Indian consumers will continue to shop for high-value products in brick and mortar stores,” Wahi said.
Devangshu Dutta, chief executive officer at Third Eyesight, said in a market as fragmented as India’s department stores “have a role to play as authoritative ‘experience environments’ for the consumer and as platforms to showcase diverse brands.”
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February 14, 2017
Rasul Bailay & Shambhavi Anand, The Economic Times
New Delhi, 14 February 2017
Global marquee fashion and lifestyle brands such as Gap, Zara and The Body Shop are resorting to price cuts to stay competitive and increase their market share in the price-sensitive Indian market.
UK’s cosmetic brand The Body Shop slashed prices across categories in India by 20-30% on Friday while US fashion brand Gap is looking to bring down prices of certain products by 10-15% by allowing its India franchisee Arvind Lifestyle Brands to manufacture them locally.
Arvind will produce 30-40% Gap merchandise in India to be sold here, said J Suresh, chief executive at Arvind Lifestyle Brands. “The process has started and we will introduce them in springsummer 2018,” he said.
Spanish brand Zara, the market leader in fast fashion, too is looking at slashing its prices to bring them closer to Swedish rival H&M, said two people familiar with the matter.
Experts say price cut is one of the most effective ways to increase sales and market share in a price-sensitive market like India, particularly in highly competitive and fast-growing segments such as branded apparels and beauty products.
“Most brands strategically lower prices for the value conscious Indian consumer,” said Devangshu Dutta, chief executive at retail consultancy firm Third Eyesight. “In most cases prices are reduced to drive the demand further,” he said.
Gap currently imports all its merchandise into India and its products are about 40-50% more expensive than those of rivals Zara and H&M. Local production will help it bring down prices and compete better with the two faster-growing rivals.
Suresh of Arvind Lifestyle Brands said his company had an agreement with Gap to produce in India since May 2015 when they entered India, but was waiting for attaining a “minimum quantity” to produce here.
Gap has been struggling to keep pace with Zara and H&M in the Indian market. According to business head of a prominent mall in Delhi that has all the three brands, Gap’s sales are at times less than half of sales of Zara and H&M.
A Gap spokesperson in San Francisco said, “We tailor sourcing strategies as appropriate for the markets and channels we operate in to enable competitive positioning.” A Zara spokesperson declined to comment on a specific query about any price cuts in the near future.
The Inditex-owned fashion brand had reduced prices by up 15% when H&M entered the Indian market in October 2015 with its global strategy of aggressive pricing. The move helped record a 17% sales growth during FY16, though that was its slowest sales growth since opening its first store in the country in 2010. Zara posted sales of Rs 842.5 crore during FY16.
Shriti Malhotra, chief operating officer at The Body Shop India, said the price cut will make its products more accessible to consumers. “Lower prices of our best sellers will bring affordable cruelty free beauty closer to diverse consumers across age groups and geographies, recruiting new fans along the way and strongly reinforcing our philosophy of beauty beyond boundaries,” she said.
Price correction is a tried and tested strategy to revive sales in India.
In September 2015, when Arvind Lifestyle Brands took over the business of beauty and wellness retailer Sephora from former franchisee DLF Brands, the first thing it did was a price correction. “We looked at pricing in Dubai and Singapore and we kept it in the band of 5-10% lower than that,” said Vivek Bali, chief executive of Sephora in India.
The company still does small tweaking of prices here and there on slow moving products.
(Published in The Economic Times)
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February 10, 2017
Sharleen Dsouza, Bloomberg Quint
Mumbai, 10 February 2017
Less
than seven years after launching the Vivanta brand and four years after
inaugurating its first Gateway property, Indian Hotels Co Ltd. has
decided to re-brand the two verticals and bring them back under the Taj
Group brand.
All existing properties run by the Taj Group will
now be classified under four categories — Taj Hotels, Taj Palaces, Taj
Resorts and Taj Safari. Only its budget chain, Ginger Hotels, will
continue to be operated under the existing brand.
Analysts and
brand consultants maintain that this entire exercise will have no
impact on the company’s performance in the near term. They peg the
benefit of reclassification seeping in only after five years, if at all.
Consultants
also argue that the rebranding exercise by the hotel major won’t do
much to change the perception in the mind of the consumer, which has
been dented due to a drop in service quality.
Devangshu
Dutta, chief executive officer at Third Eyesight, a retail and brand
consultancy firm, is not so critical of the new strategy stating that
the new branding will help Taj classify its properties better and build
market share over a period of time.
Brokerage
house IIFL Ltd. says Indian Hotels’ long-term strategy is to chase
profitability over a period of time. “The earlier positioning didn’t do
much for the consumer. There was a sense of ambiguity in the minds of
the consumer with the earlier classification of hotels. It is very
clear that the company is now looking to improve its bottom line,”
according to Amar Ambani, Head Of Research At IIFL Ltd.
The rebranding will be complete by the end of 2017, the company said.
Chinami
Sharma, chief revenue officer of Taj Hotels, Palaces, Resorts, and
Safaris, said the company will spend not more than three to four
percent of its revenue on the rebranding exercise.
Indian
Hotels’ consolidated revenue in the quarter ended December stood at Rs
1,129.29 crore, down 2.8 percent year-on-year compared to Rs 1,162.19
crore. Its net profit rose to Rs 93 crore compared to Rs 13 crore in
the year-ago period.
The reclassification of hotels will not have an impact on the pricing strategy of the Taj Hotels properties, the company said.
(Published
in BloombergQuint)
admin
January 25, 2017
Raghavendra Kamath, Business Standard
Mumbai, 25 January 2017
To expand its storage capacity in India, Amazon had opened its largest Fulfilment Centre in Sonipat, Haryana.US-based e-commerce giant Amazon took about a million square feet of office spaces on lease last year, making it equal to what it took between 2008 and 2015 in the country.
Founder and chief executive Jeff Bezos said last year that it would invest another $3 billion in India, amid intense competition in the e-commerce space.
Much of the leased space could be used for seller and development services, besides a 30,000-sq ft building in Bandra Kurla Complex for its India headquarters.
According to Propstack, a data analytics firm for commercial property transactions, various Amazon entities have leased about 1.3 million sq ft since 2008.
Amazon launched its online marketplace in India in 2013 but had been present in the country for eight years for research and development services.
An Amazon India spokesperson said: “As a policy, we do not comment on what we may or may not do in the future.”
Properly consultant Colliers International elaborated on the latest activity by Amazon as the year closed — 100,000 sq ft in the Mohan Co-operative area in Delhi, 150,000 sq ft in Ambience Corporate Tower 2 in Gurgaon and 300,000 sq ft in World Trade Tower Noida.
Before that, through 2016, it leased 90,000 sq ft at Ambience Corporate Tower II NH8 in Gurgaon and 350,000 sq ft at Mindspace, Madhapur, in Hyderabad.
Rival Flipkart, which operates through Flipkart India, Flipkart Internet and Flipkart Payment Gateway, recently took 600,000-sq ft office space in an Embassy group project in Bengaluru.
“Amazon has been investing systematically in expanding its product portfolio, bringing Indian merchants on to their Indian and global platform, and expanding its delivery infrastructure,” said Devangshu Dutta, chief executive officer at retail consultancy Third Eyesight.
Dutta said with its plans to grow private labels and the current e-commerce foreign direct investment regulations which require companies to increase the share of unrelated merchants, the Bezos-led company requires significant organisational capacity and hence is growing office spaces.
Added Raja Seetharaman, director at PropStack, “Amazon is going ‘all out’ in the battle for e-commerce market share in India. They realise that India would be their next biggest market outside the US. With a median age of 27 and growth rate of 6.5-7 per cent, Amazon is willing to invest ‘whatever it takes’ to win.”
The company’s long-term investments, along with futuristic technology like drone deliveries, which it is already piloting in the US, indicate that Amazon is well positioned to be a leader in the e-commerce sector, Seetharaman said.
LEASE DEALS IN 2016
Source: Colliers International
(Published in Business Standard)
