News Retail
Shoppers Prefer Kirana Shops To Malls - Assocham
 Kirana stores and local retailers remain the most preferred destinations for majority of the shoppers across the country as compared to sprawling shopping malls as they provide for cheaper purchases to an extent of 25% and also offer options for avoidance of payment of duties such as VAT and other local levies on articles sold by them. According to a country-wide survey done under the aegis of Assocham Social Development Foundation, it was discovered that goods disposed of by the malls are devoid of these twin benefits and thus attract only the upmarket buyers.
The survey which was completed in a span of two months i.e., March-April 2010 randomly taking a view of buyers in 15 major cities including those in metros, also discloses that it is a myth that malls and shopping complexes store sustained quality products as it is available in kirana shops along with other retail establishments in abundance and that too for a negotiable price. These cities include Delhi, Kolkata, Chennai, Bangalore, Mumbai, Hyderabad, Pune, Ahemdabad, Lucknow, Patna, Bhopal, Nagpur, Kanpur, Jaipur, Ludhiana and nearly 5000 shoppers across these cities were interviewed by Assocham team as there preferences for opting from kirana shops and those of malls. In contrast, the survey also revealed that mall culture is becoming a little pervasive in sub-urban cities of Ghaziabad, Gurgaon, Noida, Faridabad, Navi Mumbai etc. and the fact remains that customers in such places get disillusioned very shortly due to wide gaps in margins and lack of availability of cheaper products.
According to Assocham, malls only entertain the shoppers and make a big hole in the shoppers' pocket, while in case of retail shops consumers have the satisfaction of scanning through major brands and products for which prices are generally found to be negotiable, said Assocham Secretary General, D S Rawat while releasing its findings recently. The survey of the apex chambers suggests that the mall culture has not been able to shift the focus entirely away from local traditional markets as the shoppers prefer to hangout and shop there, more so because of the familiarity with ambiance, ease of access, variety of goods, early opening and late closing times etc. which suit to the local residents.
A compulsion to take the cash memo for every purchase made in malls is another aspect that puts off the shoppers. It is generally perceived that malls only provide different range and variety in branded stuff, it is nothing but a paradoxical mindset as in reality it is observed that well-established retail outlets not only provide affordable brands but also have abundant variety of products with significant reduction in margin.
Now Get Chinese Apparel in India, Courtesy Yishion
 A new joint venture has come up with Chinese apparel retailer Yishion with a local distribution firm to launch its line of clothing in India. Chinese Yishion has set up an ambitious target of setting up more than 100 outlets in two years that will launch its range of menswear and womenswear initially but may expand portfolio to include kidswear, footwear and accessories by next year. Yishion Group Vice President Zhou Juntao said, “We have analysed the market for two years and are now reedy for it.” The $ 12 billion company owns the majority stake in the joint venture firm Hongluan Trade with Delhi-based marketing and distribution firm Up-market Group.
Since foreign companies are restricted from entering Indian retail sector, companies are allowed to form 51:49 joint ventures for single brand retail operations; Yishion will sell all its apparel under its own brand. The Chinese firm plans to open 10 flagship stores across India and building presence in an additional 100 points of sales through multi-brand outlets by 2012.
New Womenswear Brand b:kind Launched in Mumbai
A new, affordable, trendy womenswear brand b:kind has been lauched in Mumbai. With a keen eye for fashion trends and quality, b:kind aims to bring a range of womenswear that is definitive in style and trend at affordable price points.
The range includes printed tops, graphic t-shirts, tunics, shorts and trousers priced between Rs. 499 -1,500. “Innovative in design with a sophisticated cool attitude b:kind is a fashion forward brand that is inspired by international fashion trends. The brand will provide practical everyday clothing with a keen eye on fashion,” says entrepreneur Vidhi Shah, the brain behind the brand. “We want to be a brand that becomes synonymous with chic and trendy high-street fashion clothing, while providing our customers with the most up-to-date trends of the highest quality,” adds Vidhi.
b:kind is currently available at select stores across the country and will soon be available in their exclusive brand outlets from 2011. “I am looking at opening 5 exclusive stores next year,” says Vidhi.
Spencers Retail ties up with BHPC
 The business of Spencer's Retail is a combination of garment business for premium stores and international brands. The retail giant has currently teamed-up with two international brands, Beverly Hills Polo Club (BHPC), a US-brand and UK 's kids wear brand, Ladybird. BHPC, which is well-known for its pony and the rider logo, offers variety of fashion products for men and women, including, polos, smart casuals, denims, glares, watches, bags, travel gear, perfumes and for skin care. While Ladybird offers clothing for toddlers aged 0-2 years and kids aged, 2-10 years in a range of denims to T- shirts for boys and skirts, dresses, tops and denims for girls. Moreover, the Spencer's have also set its focus on private labels.
The Apparel Head of the Group, Anurag Rajpal said that, Spencer's Retail has developed and strengthened its private label range over the past seasons, according to the needs and aspirations of the consumers.
It has evolved new categories and re-aligned its store layouts and brands. The group owns and operates around nine BHPC standalone stores, through which it generates healthy and decent top lines, informed Rajpal. He further said that, the Spencer's Retail is consciously launching its stores in cluster form. The company has stores in New Delhi and now intends to set up outlets in Punjab, followed by Mumbai, Pune, Bangalore and Hyderabad .
The company is setting up franchisee stores in other territories and aims to multiply the number of BHPC stores at least to 40, by the end of the current year. It intends to launch two stores with its new brands, Ladybird and Ecko, in New Delhi, informed Rajpal.
Levi's Tie-ups with Banks to Drive Growth
 Levis is working hard to promote its growth by tie-up with banks. Riding on the success of its equated monthly instalments (EMI) scheme, denim major Levi Strauss India is looking to join hands with four more banks to drive consumption growth. Last year, the company had launched this unique EMI scheme in an attempt to fit into tight pockets of consumers during the reversionary phase. This scheme allows consumers to buy premium-priced denims on a zero per cent interest.
At present, the company has tie-ups with Axis bank and HDFC Bank, where a buyer can pay the total amount over three equal instalments using their credit card for a shopping value of a minimum of Rs 1,500.
“We are now in talks with four more major banks for expansion of this scheme as we are seeing a rise in the number of consumers availing this initiative,” said Shyam Sukhramani, Director Marketing, Levi Strauss India. He added that after the launch of this scheme, Levi's has seen a 50 per cent rise in its average value of transaction. Sukhramani, however, did not disclose the number of customers or the percentage of overall customers availing this scheme.
Levi's was the first retailer to offer such a deal in India and now many others including Provogue, Dr Batra's, gold jewellery chain Tanishq and furniture retailer @home are following its footsteps. Sukhramani said that through this scheme the company is trying to expand its loyal customer base as well as tap into the client base of these banks. In addition, the denim major, which has already launched collaboration lines with Indian designer Tarun Tahiliani and has a collection designed by UK-based Damien Hirst, is also looking to bring in a collection by Jean Paul Gaultier next month in India.
The denim market in India, according to Sukhramani, is a 100 million pair market of which about 40 per cent is in the organised sector, while premium wear accounts for about 30 per cent of it. Levi's operates in the premium segment with prices ranging from Rs 1,399 to Rs 34,000 at the upper end. Levi's denim ranges between Rs 1,500-4,000 compared to unbranded jeans that is available under Rs 500. Levi's also offers mid-priced denim under the brand Levi's Signature.
Identiti Looking for All India Identity
Identiti, a Western casual clothing brand, plans to increase the number of its EBOs in India to 30-40 in the next two years from the existing 13. The stores will be in south Indian states like Kerala and Andhra Pradesh. The brand was launched in 1998 for the domestic market by Bangalore-based clothing exporter Indian Designs. Of the 13 EBOs they have already, nine are in Bangalore and one each in Mysore, Kochi, Mangalore and Chickamanglur. The new stores would take the franchisee route and the long term plan would be to become a brand with a pan-India presence retailing through EBOs, MBOs and large format stores.
Identiti offers the latest in fashion at prices that are affordable and a range that is truly a temptation for the discerning consumer. It may be pointed out that many exporters like Indian Designs have turned to the domestic market because of the global economic crisis and the fluctuating rupee. The move was taken to maintain the ongoing operations of their plant. In fact, since the onset of the economic crisis, Textile Minister Dayanidhi Maran has been exhorting garment manufacturers and exporters to concentrate on the Rs 330 billion strong Indian domestic textile and garment market. Naseer Humayun, Managing Director of Indian Designs elucidates, “If the variation is 25-30 per cent like in the last couple of years, there is a lot of uncertainty for the exporters as well as the buyers. This uncertainty has a negative impact on the business environment. The Government can help by ensuring that the fluctuations in the currency are minimized.”
Lotto Sports Extends License Deal with Sports Lifestyle
 Sportswear firm Lotto Sport Italia has extended its licensing deal with India 's Sports Lifestyle by 15 years. Indian partnership, which began three years ago, is for the production and distribution of Lotto brand products in the country. Lotto said its extension, as of January 2011, followed "excellent results" obtained during the current agreement. It reported Indian sales of INR304m (US$6.5m) for the 2009 fiscal period, subdivided into 85% footwear, 10% apparel and 5% accessories, and forecasts total wholesale equivalent growth of 20% this year.
Luca Tomat, Business Unit Director Asia-Pacific of Lotto Sport Italia, said: "This new licensing agreement testifies the success of Lotto Sport Italia's relationship with Sports Lifestyle over the first contract term. It is providing our partners with the confidence necessary for a long term union justifying the engagement into the high marketing investments necessary to adequately promote the brand into this vast and promising market."
The Italian company said one of its main development strategies was brand expansion in foreign markets. Since October 2008, the number of Lotto mono-brand stores in India has grown to 30, in addition to more then 100 shop-in-shops at Shopper's Stop, Reliance Footprints, Spencer's, Central, Pantaloons and Planet Sports.
Lalit Kishore, Founder and Managing Director of Sports Lifestyle, said: "This is possibly the longest ever deal signed by any international brand in India, thus indicating the confidence and belief Lotto Sport Italia has in the Indian market, along with the satisfaction of the strategy, execution and strength that we demonstrated through the past two years of our working relationship. "Lotto was the first and only international sports brand available on local territory until the early 1990s, and has managed to still carry the maximum consumer recall. We are determined to make the Italian brand the most significant sports brand in India ."
Zara Lands at New Delhi; Mumbai to be Next Destination
 The Euro 11.1-billion Inditex group plans to open Zara stores in all the major Indian cities. The Spanish fashion retailer opened its first Zara store in Delhi 's Select City Walk recently. It plans to open a store in Mumbai's Palladium mall and in Delhi 's DLF Promenade this year.
“The brand's expansion would depend on the feedback we get from customers, we also want to open stores in Bangalore, Hyderabad and Chennai very soon. The average size for a Zara store would remain 1,200-1,500 sqm,” Chief Communication Officer, Inditex, Jesus Echevarria said.
Inditex has a 51:49 joint venture with Tata Group's retail arm Trent. Zara is the second Spanish fashion brand to enter India, after Mango. Of late, many international fashion retailers are making a beeline for the country besides the already existing ones — Diesel, Marks & Spencer and Tommy Hilfiger. Echevarria said the company would ship new clothing designs to its Indian stores within two weeks of manufacturing. “For us, every fashion brand present in the vicinity is a competitor, specially the local brands,” he said.
Mothercare-DLF JV to Set up Retail Stores
 Mothercare, which had set up shop in India three years back, will open exclusive retail stores in the country under its joint venture with DLF Brands. Mothercare will hold a 30 per cent share in the venture, with DLF Brands controlling the balance 70 per cent stake. The UK brand also operates under a separate franchise agreement with Shoppers Stop. The plan is to open 100 standalone stores (under the joint venture route) over the next five years which may involve an investment of around Rs 200 crore. At present there are two standalone stores, and there are 25 shop-in-shop stores within Shoppers Stop outlets.
There will be a cumulative 30 to 40 shop-in-shops over the next three years. Around 40 per cent of Mothercare's apparel requirements are sourced from India. The sourcing which started a decade back is expected to be stepped up to over 50 per cent. It offers a value-proposition to the country's middle class. Mothercare sees a huge potential for growth with some 24 million babies being born in India every year and an estimated market size is $3 billion. Mothercare which offers apparel, toys and equipment for infants and children is worth $1.5 billion and operates in 50 countries through 1,100 stores worldwide.
Mango Sticks on to Expansion Despite Decline in Profit
Spanish fashion chain Mango is likely to continue to expand around the world, even if it has not been immune to the fall-out in consumer spending brought on by last year's deep global recession. The chain's international expansion director Isak Halfon conceded in an interview that profits fell "slightly" last year, after a 3% rise in revenues to EUR1.48bn was unable to offset high operating expenses in some developed markets. The result is much lower than arch-rival Inditex, which posted a 5% profit jump last year. To adapt to the crisis, Mango engaged in a significant cost-cutting round in which it managed to slash some store-rental expenses by 20% and sharply lowered administrative and corporate travel costs.
"We didn't need to close stores or fire anybody," Halfon added.
Mango met last year's 60,000 square-metre shop expansion target, Halfon continued, by opening fewer flagship outlets (and reducing investment in the category) and installing more department-store corners, particularly in high-rent markets such as the UK, Germany, Holland, Belgium and the US. "We realised we could open many corners there so we decided to do this to optimise costs," Halfon explained.
Indeed, privately-owned Mango plans to up the ante on its "shop-in-shop" expansion strategy in coming years. While it had earmarked 150 openings this year, it will now inaugurate 250 by rolling out 100 new corners, mainly in the US where it recently struck a joint venture with department-store giant JC Penney.
Mango will continue to set its expansion sights on Asia, Europe and Eastern Europe in coming years, Halfon added. With this week's global openings, Mango can boast of 1,457 stores in 100 countries.
Corporate News
Foreign brands Lean on Indian Market for Survival
Several American and European retail brands in segments as varied as fashion, cosmetics, lingerie, food and beverages, among others, are preparing to make their presence felt in the Indian market through franchise route, as a result of sharp drop in sales in these markets following economic slowdown. Certain brands from countries like the UAE, Brazil and Thailand are also eyeing Indian market.
“Drop in retail sales in Europe and the US markets are leading to this phenomenon. Retail brands that built great amount of manufacturing capacities are under pressure to offload excess inventories and are therefore entering into alternative sales practices by setting up their franchise in large-sized markets like India,” Gaurav Marya, franchising expert and President, Franchise India Holding, told. Following the collapse of the international retail markets, several brands like Beverley Hills Polo (USA), Spa Siam (Thailand), Taman Gang Restaurants (UK) and others entered Indian market through franchise route.
Companies that have long nurtured ambition to enter retail-friendly markets like India and China are finding this a convenient time as sales in their own countries have tapered. They are trying to convert this as an opportunity to test Indian waters, which they plan to do for 2-3 years before they decide on their future plans in these countries, says business strategy specialist Harish Bijoor. “Several brands are looking for green pastures, and India having a decent GDP growth of 4.3% holds lots of potential for them. They are taking up franchise route as they cannot risk coming on their own at this juncture. This also means a big chunk of business coming in for entrepreneurs,” Bijoor said. Several brands are targeting grade B and C cities rather than expanding in metros, as smaller cities are more brand hungry and retail is not much hit here, say experts.
“With the presence of limited brands in Indian markets, the country holds big opportunity for these brands as this would also help them re-route inventories and orders to new markets and keep their sagging sales volume intact. At the same time, their Indian counterparts are finding this a right opportunity to strike negotiations to their advantage,” added Marya.
Giorgio Armani is in India to 'Stay'
Giorgio Armani SpA, the Italian fashion company which designs fashion accessories, apparel, cosmetics, fragrances, home interiors, eyewear and watches, among other things showed the courage of its conviction about the hopeful promise that the Indian luxury market holds, when it opened its store in India in the middle of a slowdown. This was reflected in what its Deputy Managing Director John Hooks said during the course of discussions when he was here in India for sometime recently.
When he was asked to how come Armani store was opened in India right at the thick of recession, he said they were satisfied with how things are going in India particularly when they have good Indian customers and the Armani name is very well known here. He shared his plan of working in India “for a long period of time”. He added “It is important to understand a market culturally. Indians have always been quality conscious and they recognise quality because they have a long tradition of luxury. But our biggest challenge was location. Where to locate our stores? We tied up with DLF as our Indian partner because it gave us good location and the knowledge of the system—on how things work in India. That was part of our plan, to put in the larger share of money ourselves and have DLF as a minority partner. On the other hand, such arrangements are also a guarantee against competition. You know that others will face the same problems.”
When quizzed that the model for luxury retail in India has failed, he countered by saying, people are too quick to judge. Counselling patience, he said, India has had a long tradition of luxury but is a very new market for luxury. We will take three-four-five years to get going and we are not in a hurry because we are here for a long time. It is an extreme statement to make. He recalled that he was in China in the 1980s and was closely involved when Giorgio Armani started retailing from there in 1997. They had more extensive infrastructure, better quality malls and the great advantage of Hong Kong and yet it (luxury retail) took time to take off. He opined that the Indian customer is the most discerning in the world unlike in China which has lost its luxury tradition. Certain individual cases (of retail in luxury) may have failed because of their own reasons but if you choose the right partner, there is no problem. We have franchisee partners all around the world.
He was of the opinion that by appointing a franchisee, you are delegating and are entrusting your brand to someone else. In India, there is no significant experience when it comes to luxury retail. There were only people who ran garment stores and the like. So we decided to have a direct involvement. The only way you can do this in India is through majority shareholding and direct management.
On the question of higher-priced products, John Hooks, while acknowledging that their products are priced somewhat higher, but he believed that did not make any difference. He said, most of their products are impulse buys and nobody would wait till the next time he went abroad to pick one up? He added that China has customs duty but Hong Kong does not and yet they did not find any difference in the stores at both the places. In fact, Chinese customers don’t even go to Hong Kong to pick something up.
John Hooks emphasized the fact that the products being sold at their showrooms in New Delhi, offer the very same products that are being sold in their stores elsewhere in the world; be this at Beijing or Milan. He also added, “We have already been looking at our cost and price structure, at being able to provide more value for money. Some of this should be evident in our spring/summer lines. Our main line, Giorgio Armani, will always remain made in Italy. But for things like jeans, we are looking at getting more work done abroad especially in Asia, where labour is less expensive and therefore we’d be able to give a better quality:price ratio.”
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