Retail Dude

“Organized Retail to touch $ 45 billion mark by 2010”. Does this sound outlandish to you? Well, this was the headline in a daily publication called Midday dated 11/1/07. And, the figures are taken right out of the India Retail Report 2007, released by Retail Association of India. Looking at the present day scenario whoever projected these figures might want to look back and certainly make a few corrections here and there. As it stands today, the retail business amounts to only $ 18 billion. If we peak a bit more in the past in 2006 Retail was projected to grow a handsome 37% in 2007 and 42% in 2008. Any guesses as to how much did it actually grow? “We had assumed a GDP growth of 8% to 10% during 2007-12 in the report” adds Joseph who headed the ICRIER team researching on the impact of modern retail on small outlets as per the directions of the Union Commerce Ministry. He sums it up by saying “this is now impossible, at least for the current year 2008-09 and the coming year.”

So that gives us a good idea as to why a number of retailers felt like packing their bags while others just started pulling back their resources. “We had expanded rapidly; most of the growth was debt-led. The company had planned to raise equity during 2008 and was close to doing so in September when calamity hit the global markets” says R. Subramanian, MD Subhiksha (once India’s largest retail chain). The first evident rationale is the erroneous projections or rather over-projections, as most of these organizations went by things as they looked on the face of it, eventually having to face the music as none of these projections came true.

Second, imperative reason for the failure of retail chains has been splurge of investments in real estate. Though, the retailers cannot be exclusively blamed for this reason. Even till date there is no governing authority which controls circle rates for properties, and restricts them within a reasonable limit. “Those who had big expansion plans had [acquired] real estate earlier at much higher prices. They are now re-looking at their expansion plans and renegotiating the rates” observes Gibson Vedamani, Director, RAI. Why would they no, Mr. Vedamani?

Third, the delusion in the mind of organized retailers, that with the advent of organized retail the consumer focus was bound to shift. “Mom-and-pop stores could become part of the system, benefiting everybody.” Personally, I would not agree with the fact that the retail sales of the kirana stores shelves has actually gone down in the past few months. It’s just that the anticipated pace with which the companies expected to the consumer to shift from unorganized to the organized stores which did not quite realistic. This specifically applies to smaller towns and cities where value retailers like Vishal are sailing in troubled waters.

Fourth, the only value proposition which most of the retailers relied on for luring their consumers was discounts. Many a times this lead to drop in quality of the merchandise being sold. All but a few retailers tried to introduce promotions that went beyond price offs.

Fifth, would be a coalesced effect of the a number of factors such as insufficient investment in strengthening back-end operations, inability to retain talent, in turn leading to high attrition, lack of sufficient support in logistics and infrastructure, inefficient supply chains and lower quality produce.

If you are a retailer..don’t sigh. Just hang on for the next post as it’ll be the answer to all that has gone wrong in the past. And, surely enough I won’t be projecting any figures.

- Vivin

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“Bollywood” is one of the biggest entertainment phenomena that rules India.

Last year Future Group came up with merchandise ‘inspired’ by Saawariya, which reflected the colour theme, tone, background, ambience and concepts of the movie, specially-created Saawariya merchandise was available across categories such as clothing, home, bed, bath (well Ummm..!!) , linen & beauty accessories for women and male apparel.

“Om Shanti Om” apart from a merchandising deal with Shoppers’ Stop (which involved almost 50-50 revenue sharing), also signed up with brands like Videocon, Nokia (which was the mobile-phone maker’s first such tie-up in Bollywood), cosmetics company Maybelline (Deepika Padukone is the brand endorser), and SIA Jewelry. These are just not brand associations but carry a lot of endorsement value with them both for the Actors and the products.

Well Bollywood merchandising is not a new concept really, yet, what is interesting is the scale that it has been/will be taken to.

From just one-off examples, which had a few corners dedicated to a particular movie’s merchandise, we will now see entire Bollywood Experience zones come up at retail stores.

Future Group and Percept have entered into a joint venture through which an initial investment of Rs 50 crore will create Bollywood cafes, theme parks, walk-ins and even museums at Future group’s retail outlets. Though the project seems to be going slow from what we see right now but still the business obviously seems to have become quite profitable for companies to create special experience zones to pull in more customers.

So, while apparels, accessories for men, women and children have generally been the criteria for forming separate zones till now, we have a new one henceforth- Bollywood.

There will be enough good news that bollywood’s association with retail will also give us in near future. Thanks to the desperate efforts of retailers to market their product differently and make it more attractive to buy. More recently for those who have seen “Ghajini” must have noticed Aamir khan wearing Van Heusen, a Madura Garments brand (which crafted a special range for the movie) and sporting Xylus(Titan) watches off and on.

 Ghajini gives you another reason to rejoice. The pic above is actually a campaign currently running and one which you can avail right away. You can get the ticket money reimbursed on the bill value of your purchase from the Van Heusen Ghajini collection. So for those who have still not seen the movie go ahead, it is paisa wasool all the wayJ!!  For those who are luckily still carrying the ticket, its still worth discount on your favourite shirt. I’m sorry for giving the information late for those who have thrown the tickets.

Happy Shopping the Bollywood Ishtyle !!

- Roli

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These days came to fill some colors to the black and white balance sheets of american retailers, or we can say black, cyber and mobile days came to save the holiday season in this weak economic period. And as a result retailers not only got huge footfall but also an awesome sale. Some store managers quoted –

“Morning traffic was “awesome”, and “even better than last year.”

“I’m guessing it was about 85 percent credit and 15 percent cash,”

“People are happy, and few — if any — mention the economy.”

 As soon as I heard about these black Friday and cyber Monday, one thing came into my mind and that was Big Bazaar. It’s the only retailer in India who leveraged these similar occasions in India like “Maha Saver theen din” on Dhanterash and something similar even on Independence Day(I am not saying other retailers don’t do these kind of promotion but the kind of advertisement Big bazaar do just overwhelm all others). And because of this it made huge retail sales, regardless of razor thin margins due to offers there was profit, reason was volumes. But there is negative aspect of these days and that is handling tremendous traffic and rush, which Big Bazaar many a times failed to handles and same happen on Black Friday, retailers were unable to handle rush and on Cyber Monday most of the retail websites goes down too often causing inconvenience to customers. But in the last what matters were the sales for retailers and special offers to consumers.

And whats there in this for Indian retailers – a lesson to form a community not a competition and organize these days nationwide and organized retail wide, together they will be better equip to handle rush and to make profits.

- Prateek Katiyar

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At this time of great global economic hit, where everybody is trying to predict the future of retail, I thought to look back and have a peek into the history.

So folks, let me ask you a question – “Which is world’s first original department store?” I know answers will vary from Walmart to Macy to J.C. Penney but none of these are right. However, department stores were not conceived by Americans. Those were French who created Department stores and then Americans followed their example. Allow me to introduce a man who had the first real department store in Paris, France. A man named Aristide Boucicaut. His dry goods store was called Bon Marché and it was transformed into what we now call a department store.

Aristide Boucicaut, born on 14 July 1810,the son of a banker, he began as a simple clerk in Bellême before he left to become a fabric salesman selling shawls. In 1829 he settled in Paris. He set up Le Bon Marché as a goods store in 1838, but his innovations in distribution became most noticeable after 1852. After this the store grew to be among the, if not the, largest in Paris, where he spent the rest of his life. The World’s Fair in 1855 gave him further ideas on how to innovate. These involved the notion of browsing, greater advertisements, fixed prices and in 1856 a catalogue. His wife also played an important role in expanding the business.

Bon Marche differed from the specialty and dry goods houses that came before in four significant ways.

First, the initial theory of dry goods houses was to sell items with a high mark up and a slow turnover of goods. Boucicaut sold his merchandise at a small mark up. Compensating for this smaller profit margin was the high turnover of goods. The volume of goods sold and the speed at which they were sold differentiated department stores from the ordinary specialty shops and other dry goods stores. Another difference was that goods were offered at a fixed price in Bon Marche. The prices on goods would be the same for every shopper; a certain kind of equality was offered. Previous to this, bargaining in stores was not only allowed but expected. The third conceptual change made by Boucicaut was the custom of free entrance. Every person could enter the shop, inspect the goods, and be free from the obligation of purchasing anything. This denoted a shift in expectations; people were obligated to buy something upon entering the specialty and dry goods stores that came before this. The last major change that was instituted by Boucicaut involved the idea that customers could return the goods they had purchased. If they wanted their money back they could get it or if they preferred to exchange their returned item for something else they were allowed.

Boucicaut’s success was impressive. He went from a total of a half- million francs in sales in 1852 to five million in sales in 1860. Because of this boom, Boucicaut diversified his lines of merchandise. He started by selling only piece goods, and expanded to offer dresses, ladies’ coats, underwear, and shoes. These new lines were carried in the same store but in separate departments. This change occurred around 1860. Boucicaut’s new handling of goods and how they were offered represented the first real department store.

The United States was the first country to follow the French example. Though there were many successful apparel and dry goods stores, many of them did not immediately follow Bon Marche’s model. Stores like Lord and Taylor (1826), Jordan Marsh (1841), Macy (1858), Wanamaker (1861), and Marshall Field (1866) still limited their merchandise to dry goods and the traditional retail lines. The first stores in America that followed the Parisian example were A.T. Stewart of New York (that was later a part of Wanamaker), Wanamaker of Philadelphia, and Marshall Field of Chicago. This occurred in America in the 1870’s. These stores refer to Boucicaut as their source of inspiration.

Source: Virginia University

-Prateek Katiyar

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“Everything you desire, everything that glitters, everything that swims, everything on ice

Welcome to everything”

The Dubai Mall

Welcome to World’s new largest mall – The Dubai Mall, outnumbering the previous largest mall “South china Mall”, Dongguan, China with approx. 5 million sq ft. And if you are in a mood to say “Size doesn’t matter” then I have something more to tell you about this flagship shopping mall by Emaar Malls Group.  The Dubai Mall will have over 1,200 retail outlets and 160 food & beverage outlets spread over a gross leasable area of 3.77 million sq ft. Over 165 retailers – or 30% of the mall’s total gross leasable area is dedicated to new retailers to the region, or brands opening up standalone stores for the first time. The mall is an integral component of Downtown Burj Dubai, a 500-acre mixed-use development anchored by the iconic Burj Dubai, the world’s tallest building.

Amongst other world-class attractions at the mall are-

·         SEGA Republic®, an indoor theme park

·         KidZania®, a unique children’s ‘edu-tainment’ concept

·         The Grove, an open air streetscape with fully retractable roof and a 22-screen Cineplex

·         world’s largest gold souk

·         the 850,000 ft² Fashion Island

·         one of the world’s largest aquariums

·         an Olympic-sized ice skating rink

·         Oasis Fountain Waterfall

·         WaterFront Atrium

·         a view of the (soon to be completed) world’s tallest building, Burj Dubai

The Dubai Mall has confirmed its two department stores Galeries Lafayette and Bloomingdale’s, both making their regional debut. There are over 14,000 undercover car park spaces across three car parks and an adjoining luxury 5-star hotel – The Address, Dubai Mall - with 250 rooms and 450 serviced residences.

The mall has already won five awards. It won two awards at the Retail Future Project Awards at MAPIC, Cannes, in 2004, for Best Retail Development Scheme (Large), Best Use of Lighting in a Retail Environment. And the Dubai Mall brochure has won three awards at the Summit Creative Awards 2005, in Portland, Oregon; Gold award for Best Art Direction / Graphic Design, Silver award for Best 4-colour B2B Brochure, and Judges Special Recognition award.

The Dubai Mall will open doors to the public on Tuesday, 4 November at 2pm(Local Time). The opening of The Dubai Mall marks the largest-ever opening of a shopping mall in the world in terms of retail offer. The mall will have smooth and easy access from Sheikh Zayed Road, off Financial Street Road (previously Doha Road), Emaar Boulevard, Downtown Burj Dubai and through the newly opened bridge off Interchange One. Opening attractions at The Dubai Mall include over 600 retail outlets including Waitrose, Hamleys and Kinokuniya Books; Dubai Aquarium & Discovery Centre that has been awarded the Guinness World record for the ‘World’s Largest Acrylic Panel’ and featuring a 270-degree walkthrough tunnel.

-Prateek Katiyar

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ITC’s Wills Lifestyle, is planning to open 50 more exclusive brand outlets and expand its presence in 40 cities (from 30 cities currently)  including tier II and tier III cities. They are planning to do it in next two years. Wills Lifestyle is also a main sponsor for “India Fashion Week” which is starting from October 15.  

On one side branded retailers are tensed of increased minimum support price of cotton, increases rentals etc. But again every week we hear of an expansion plan. And also of store closures, job cuts in retail and losses at same time. In India these things are going simultaneously. This make me confused whether it is time for expansion or correction?

-          Rajeev Damani

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If you want to buy a jeans or a t-shirt, do it before the festive season ends. Well I am suggesting this as a consumer. As a retail dude, I will like to inform readers that prices in branded apparel market is supposed to increase after the festive season because of costlier raw materials, higher taxes, increased  rentals and electricity costs. Though many brands like Provogue increased it in June but they will raise it again after the festive season due to increase in minimum support price of cotton. Levis is also thinking on same lines. Whereas others like Roopam & Roopmilan who are in business of readymade garments have resorted to cost cutting. They have reduced their electricity cost by turning off air conditioners and reducing on advertisement budget which use to be upto Rs. 50 lacs earlier. Even stores like Loot and Globus are planning to hike prices.

-          Rajeev Damani

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We will be soon seeing Cherokee, a US based brand in Arvind’s Megamart which sells brands at discount. Arvind Ltd. entered in a licensing agreement with Chekokee Inc. to market their family lifestyle brand across India. Arvind already has strong presence in Male segment, this agreement will help it to grow in Women and Kids segment too.

“Arvind has been a specialist in men’s brand in India, through this agreement we are planning to tap the women and children’s apparel market in a big way,” Megamart’s chief operating officer K.E. Venkatachalapathy said at a press meet.

- Rajeev Damani

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