The road to future: high end or low end? September 29, 2006
Posted by kk in Retail Analysis, Retail Views.1 comment so far
America’s shrinking middle class is forcing retailers to aim for the high end or the low end and to skip the middle, according to Platt Retail Institute, which reports that Wal-Mart is headed up market writes Carol Carter in Business Advisors
But going up market can be challenging, warns Platt: “Ten years ago, J.C. Penney, the mid-market retailer, ran into problems when it introduced pricier designer clothes and home furnishings. It has since regained its footing as the retailer of fashion-forward clothing to the mid-market mall shopper within its price points.”
Retailers that are positioned in either the upper or lower segment, Platt says, will need to find growth within their market or look for growth elsewhere. For example, Platt explains, Home Depot has experimented with high-end stores and continues to consider overseas expansion.
Retailers at the low end will drive out system costs and frills, according to Platt, which cites self-checkouts as an example.
Finally, Platt says, strong retailers in either camp will aim to extend their range of services. As an example, Platt notes that Best Buy created the Geek Squad, which goes to customer homes to install large screen TVs or set up wireless networks.
Likewise, Home Depot hires kitchen designers and offers roof repair. Walgreens is offering in-store medical exams, and Wal-Mart has begun adding SmartCare family medical clinics to some stores.
Whatever the tactic, the message from Platt is to pick the high end or the low end and stay out of the shrinking middle.
Reliance to focus on both; supply and retail September 29, 2006
Posted by kk in Retail News, Retailing Companies.3 comments
Reliance is not content with its massive plans to become a retail major in the country. The company is working on strengthening its procurement and supply chain efficiencies to emerge as a key supplier and exporter as well reports the Economic Times.
The company, as a way of practising its procurement tie ups, had earlier supplied fruits and vegetables to Big Bazaar. Ready to roll out its first stores- five large-format stores (5,000-10,000 sq ft) in size in Hyderabad in the third week of October, it is keen to continue supplying to other retail players here.
The company will soon receive a major consignment of goods from China, which will include electronics, apparel, stationery and also FMCGs. Sources say these goods will not just be for the retail venture and could be supplied to other buyers as well. Procurement is a separate division from retail and there will be cost advantages as the company builds up farm linkages, said a source.
Reliance is setting up rural business hubs in Punjab, Haryana, Himachal Pradesh, Uttaranchal and West Bengal. These hubs, which will come up in the next six months or so, will not only be procurement centres for grains and milk, but also house schools, medical care centres, apart from having weather and soil specialists to help farmers produce better yield.
Reliance is also keen to buy capacities, including food processing and FMCG manufacturing ones. It is learnt to have acquired a few flour processing capacities in Punjab and is scouting for others in India and abroad.
Reliance’s first “Feel Fresh” retail to go live in Hyderabad on 18th September 29, 2006
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The Reliance Group Chairman, Mukesh Ambani, a big believer in the power of number nine. has chosen to kick-off his next big bet: the launch of Reliance Retail on October 18, reports the Economic Times. Ambani and the Andhra Pradesh chief minister YSR Reddy are expected to inaugurate the group’s first retail format — a basic fresh food & vegetable chain — in Hyderabad. Nearly 28 outlets in AP are expected to go live on the same day.
After AP, Punjab is expected to be the next stop for the US$ 5.5 Bn.(Rs 250 Bn.) retail juggernaut. As is widely known, Reliance Retail has plans to launch two different formats, ‘Feel Fresh’ and ‘Feel Fresh Plus’. ‘Feel Fresh’ stores will stock fresh fruits, vegetables and staples and will be spread over 3,000-5,000 square feet.
On the other hand, ‘Feel Fresh Plus’ stores will be spread over 10,000-15,000 sq ft, and stock fruit and vegetables as well as apparel, consumer electronics, FMCG items and even medicines. Both these formats will be entirely company-owned and managed.
After the launch in AP and Punjab, Reliance Retail will then spread out to other cities such as Mumbai and Delhi, where Reliance has identified up to 80 locations each. Reliance is also in the process of acquiring six acres of land in Hyderabad from Bhagyanagar, a real-estate developer in AP, for Rs 75-100 crore. RRL is planning a mall in the acquired land which will be the centre point of RRL’s operations in Hyderabad.
RIL spokesperson declined to comment on the development. The company has already signed agreements with the West Bengal and Punjab governments to tie up for procurements and roll out retail outlets. Sources said that after entering into an alliance with Sahakari Bhandar in Mumbai, the company had been looking at strategic alliances with other co-operatives too. However, the other initiatives are yet to fructify.
Spencer’s six Dailies outlets from 30th September 29, 2006
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Spencer’s Retail is all set to open six new Spencer’s Dailies outlet on Friday. With this,
Spencer’s will have 80 outlets across the country reports Hindu Business Line. According to a press release issued by the company, the six new outlets are located in Pune, Hyderabad, Tiruchi and Bangalore. “Plans to open more Spencer’s Hypermarkets and Spencer’s Supers are also in the pipeline this year,” the release said. With this Spencer’s Retail will have seven hypermarkets, three supermarkets and 70 Dailies. “All the new Spencer’s stores will stock every conceivable product that is required by a household on a daily basis. At Spencer’s Daily one can get fresh fruits, vegetables, fast-moving consumer goods, household items and groceries,” the release said.
Professional Programme in Visual Merchandising & Creative Communications September 29, 2006
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Retailers Association of India (RAI), the unified voice of the Indian retail industry, and Mudra Institute of Communications,
Ahmedabad (MICA) India’s premier institution that provides professional training in communication, have come together to launch a six month Professional Programme in Visual Merchandising & Creative Communications for the first time in India reports ClickPress.
Visual Merchandising (VM) is the art of persuasion through presentation, which puts the merchandise in focus and in perspective too. It educates the customers, creates desire and finally augments the selling process. (more…)
Organised retail to contribute 20% of GDP in India September 28, 2006
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Organised retail is showing signs of traction, a sign of coming of age said Raghu Pillai, President and Chief Executive of Operations and Strategy, Reliance Retail, according to a report published in the Economic Times.
Pillai who was a participant at the CII’s Marketing Summit also said that organised retail would move from the current level of 10 per cent of the country’s GDP to 20-25 per cent of GDP in the next 5-10 years.
Pillai, however, stressed that while retail was essentially urban-centric, the rural population could not be ignored. He was alluding to famous economist C K Prahalad’s theory of wealth at the bottom of the pyramid. He stressed: “We need to start with respect for the bottom of the pyramid”. Pillai cited several examples where companies both in India and abroad have reaped financial windfalls by catering to the poorest of the poor. He considered that a shift in mind-set combined with innovation and design to suit the lives of the poorer members of society would be instrumental in accessing this very large consuming class. (more…)
Reliance to emulate Wal-Mart in hiring September 28, 2006
Posted by kk in Retail India, Retail News, Retailing Companies.1 comment so far
Reliance Retail (RRL) seems to be clearly emulating Wal-Mart in structuring its business model. Driving its lowest-operating cost structure further, RRL plans to outsource most of its 500,000 manpower requirements through a franchisee-managed stores model, reports the Economic Times.
A network of multiple agencies in each state would be roped in to source the front-end requirement for the business with very few employees being a part of Reliance’s pay roll.
The maintenance of each store including employee management will be the responsibility of franchisee, who will operate on an incentive and commission basis. The strategy is to keep operating costs variable and enable quick decisions on stores that would not get in the required numbers in the long run.
When contacted, Reliance officials declined to comment. However, sources close to the company said it is looking at ways of ‘mitigating the negative effects of collectivism,’ a phrase popular among the top management.
Clearly, unionisation of employees is a key concern within the group while managing such a large business. The scale and scope of managing 500,000 people directly or indirectly will to keep pace with the service sector. (more…)
Combating retail shrinkage with RFID September 28, 2006
Posted by kk in Retail Consumer/ Behavior, Retail India, Retail Knowledge, Retail Software, Retail Tech, Retail Views.1 comment so far
Retail shrinkage is the difference between book stock and actual stock. It is the unaccounted loss of retail goods. Its main causes are theft by employees, administrative errors, shoplifting by customers or vendor fraud.
Rakesh Biyani, Director, Pantaloon feels that as India enforces the MRP (Maximum Retail Price) system, the retailer has very little profit margin. Large retail outlets such as Big Bazaar and Pantaloon have investments in RFID, CCTV and antennas to reduce retail shrinkage reports Network Magazine. RFIDs in particular are being adopted widely by these retail majors. “If somebody steals goods without paying, it is the public who ends up paying for it. We identify compulsive shoplifters and often catch them three or more times in the same month. We try not to involve the police especially when teenagers are involved. This is where RFIDs are useful in protection of goods,” explains Biyani.
Dharmesh Lamba, Country Head, Checkpoint echoes the sentiments. He points out that India’s organised retail is only 3 percent while 97 percent is unorganised. “India is the second largest growing economy in retail, after China. Around 300 plus shopping malls are coming up in 2006 alone. New products launched globally are now launched simultaneously in India as well,” says Lamba. (more…)
Leading Indian retailers form association September 28, 2006
Posted by kk in Retail India, Retail Industry, Retailing Companies.2 comments
India’s leading retailers have come together to launch an association — Retailers Association of India (RAI) — with a vision to develop, facilitate and propagate practices and processes that will grow the Indian retail industry reports Hindu Business Line.
The agenda of this body will be to have a strong charter and code of conduct for its members with a strict self- regulatory mechanism. The three main aims of this body would be development, facilitation and propagation.
RAI”s founder members comprise Pantaloon India, Shoppers’ Stop, Trent, Globus, Piramyd, RPG Retail, Vivek’s and Subhiksha. The CEOs of these retailers have pledged to make RAI the leading voice of retailers across the country and a model association which will benefit society and the common man. It will organise activities such as conferences, seminars, training programmes, interaction with Governmental and legislative decision makers to achieve its goals. (more…)
Indian retail majors planning online retail blitz September 28, 2006
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Reliance Retail and Future Group (Pantaloon) have decided to build up significant
online channel to run parallel to their physical formats, adopting the highly successful online model of Wal-Mart reports Business Standard. Online sales of Wal-Mart has been growing faster than sales of eBay and Amazon. This, therefore, is a clear warning signal to fledging online retailers in India.
Given the muscle of Reliance and the hunger for growth of the Future Group, these players are aggresively setting up online channel to tap the fast growing e-commerce pie.
Currently this market is worth around US$240 million (Rs 11 bn.) and is expected to touch US$ 500 million (Rs 23 bn.) in the one year. Though a majority of this is accounted for travel and ticketing, the retail sale through these channels is doubling. (more…)
Retail sector in India to offer two million jobs September 28, 2006
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The organised retail sector in India will require an additional 2 million professionals in two years reports Business Standard.
The Retail Association of India (RAI), which represents the country’s US$ 20 Billion (Rs 900 Billion) organised retail sector, estimates that the current personnel requirement at the front-end alone is about 1.25 million. It will go up to 3.25 million by 2008-09. According to RAI, the total employee base in the organised retail sector currently is one million and it expects that the current initiatives will produce another 1 to 1.5 million trained manpower by 2008. To meet the immediate manpower requirement, big retail houses such as Pantaloon, Wadhwan, Pyramid and Shoppers’ Stop, Lifestyle, Arrow, Landmark among others have initiated massive recruitments and the newcomers, including Reliance, Raymonds, Aditya Birla and a few other corporates, are also on an extensive head-hunt. In addition, existing retail companies Westside, Spinach,Oddisey, Depot are also looking for countrywide expansion in the next few years. However, the dearth of trained personnel and retail professionals in the country has just started.This has forced many retail houses to start inhouse training programmes as well as management courses with the support of RAI and various universities and business management schools. (more…)
Wal-Mart to promote cross selling September 27, 2006
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Rather than trying to bring new customers into the stores, Wal*Mart is looking at promoting cross-selling of high value, high
margin items to its customers. For example, Wal*Mart, after a new ad campaign, expects to increase sale of consumer electronic items while appealing to children and their parents.
According to a brief issued for a US$200 million chunk of Wal*Mart’s massive US$570 million annual account, the contesting four agencies have been asked to accomplish the campaign’s branding goals using TV and traditional media, the web, and Wal*Mart’s in-store environment, reports BusinessWeek.
Wal*Mart wants the final four agencies (reportedly, Omnicom Group’s GSD&M; Interpublic Group’s Draft FCB Group and The Martin Agency; and WPP Group’s Ogilvy & Mather) to make their presentations next month, focussing on five categories of Wal*Mart’s business: food, apparel, pharmacy, consumer electronics and home furnishings.
Smart shelves heading your way September 18, 2006
Posted by kk in Retail Consumer/ Behavior, Retail Display, Retail News, Retail Tech.add a comment
An RFID enabled technology, under development, is soon to begin gathering information on buying behavior of customers.Thanks to deployment of RFID enabled smart shelves, retailers will be able to collect data on questions like:
- How many of customers considered buying an item?
- How many of them really bought it?
- Which of the other items were bought together?
- Which of the items on display received attention of the customers?
In short, it would now be possible for retailers and marketers to collect information on popularity or otherwise of any item, according to a report published in Engadget.
