TRW - 102
July 28, 2010    
 

- US retailers try new tricks to push sales in fall season

- Amul is No 1 Indian brand in Asia Pacific

- LVMH to buy 70% of online cosmetics retailer Sacks

- Carrefour starts sale of Asia units to raise $1bil

- DLF’s insurance firm on the block - M&M, Adani in race to buy

- Bidding adieu to Swatch founder Nicolas Hayek

- Aditya Birla Group pumping more talent into More

- Kaushik Basu predicts drop in inflation by month end

- Future Group bids for Vishal Retail, upsets TPG chances

- Wal-Mart runs into trouble over Best Price brand name
 
  NEWS  
  Airport retailing flying high  
  The new improved, international standard airports in India have given a big boost to retailing within airport terminals. The giant T3 in Delhi has added to the space. Jyoti Narula, Managing Director, Genesis Colors said, “The target audience is (easily) available and the 24/7 mode of retailing takes into account the convenience of the customer, giving him the liberty of shopping at unusual hours. For us, the response has been overwhelming.” Genesis Colours, which imports and retails international luxury brands such as Jimmy Choo, Bottega Veneta, Just Cavalli, Satya Paul and Tie Rack, Satya Paul accessories at domestic terminals in Delhi, Bangalore and Mumbai airports as standalone and shop-in-shop formats is considering establishing outlets at other airports as well to boost its brand equity. Sukanya Dutta Roy, Country Manager, Swarovski India, also agrees with the retailing power at airport terminals. Food and beverages, apparel, electronic items, beauty products and fragrances are among the highest margin earners. Not just impulse purchases, but a lot of destination purchases are also happening at airport stores. Industry analysts note that by 2015 as much as 3-4 lakh sq.ft of retail space will be available at airports across India. French premium skincare brand L'Occitane said it is looking to develop a special range to cater to the airport retailing segment. Guillaume Geslin, General Manager, L'Occitane India, said “We have noticed that gift sets and travel sizes are extremely popular with the consumers and we are working towards increasing the range in the category,” Mr Guillaume Geslin, General Manager, L'Occitane India.  
     
  Wal-Mart runs into trouble over Best Price brand name  
 
The US based, world's largest retailer Wal-Mart, which operates in the country through Bharti-Walmart Pvt Ltd, a 50:50 JV with Bharti Enterprises Ltd has run into trouble with the trade- mark office over the branding of its wholesale stores in India. Over here, Wal-Mart has chosen to avoid its global brands such as Walmart and Sam's Club, opting for Best Price Modern Wholesale instead. But in June, the registrar of trademarks wrote to Bharti- Walmart's law firm, Anand and Anand, saying it had found “similar“ trademarks in its records. It asked the firm to respond in a month. However, a Bharti-Walmart spokes- person, who declined to give the details, said this was a routine query. Neil Mason, a trademark lawyer, also said the trademark office's remarks are part of a process followed in many other cases.		  
     
  Future Group bids for Vishal Retail, upsets TPG chances  
  As per information received, Kishore Biyani's Future Group has made an offer for Vishal Retail Ltd that could derail a bid by TPG Capital Ltd to acquire the troubled company. TPG had obtained the approval of lenders to purchase Vishal in March. The Indian retailer's board had last month approved a non-binding, non-exclusive memorandum of understanding for talks with TPG. Both, Biyani of Future Group and Amol Jain, director of TPG have declined to comment, as also Vishal's managing director Ram Chandra Agarwal. As per reports in Buisness Standard, the Chennai-based Shriram Group would acquire Vishal's retail business and TPG its wholesale division. Vishal told the Bombay Stock Exchange that it wasn't in talks with the Shriram Group. Vishal's bankers, including State Bank of India, HDFC Bank Ltd and ING Vysya Bank Ltd among others, are currently engaged in the restructuring of debt amounting to Rs730cr. Some of the banks that are not part of the debt recast, including Singapore's DBS Bank Ltd, London-based Barclays Bank Plc and Deutsche Bank AG, have filed separate winding-up petitions against Vishal in the Delhi high court.  
     
  Kaushik Basu predicts drop in inflation by month end  
 
The Chief economic advisor Kaushik Basu said last week that the country's food inflation, which is hovering above 12%, will ease over the next two weeks but prices of non-food items are on the rise. In June, India's inflation rate galloped to 10.55%, up from 10.16% in May. But after dropping for two straight weeks, food inflation had risen to 12.81% for the week ended July 3. A lot will still depend on an adequate monsoon, which is crucial for the summer-sown kharif crop that accounts for more than half of the country's food output. While food inflation remains at elevated levels, core inflation, or prices of goods other than food and fuel, rose by 7.3% from 6.7% in the previous month. The higher inflation rate in June partly mirrors the increase in fuel prices that were deregulated three weeks ago. Economists expect the RBI to raise both repo and reverse repo rates at its quarterly policy review meeting on July 27, which would make it costlier for banks to borrow, prompting them to charge more from final loan borrowers. RBI uses the reverse repo rate -the rate at which it borrows from banks -to suck out excess money from the system to stymie demand. RBI raised both the rates by 0.25% points less than a fortnight ago to 5.5 and 4% respectively. Barclays Capital economist Rahul Bajoria said, “We expect the RBI to hike rates by 0.25% points at the credit policy review on July 27.”		  
     
  Aditya Birla in fund raising mode to aid expansion  
 
Aditya Birla is currently in negotiation with Indian banks to raise funds for its accelerated expansion. According to local sources the group hopes to raise Rs250cr through debt and equity. The group expects to invest Rs200cr by March 2011 to open 100 supermarkets and 8-10 hypermarkets, growing its portfolio by around 25% to take advantage of the revival of the organised retail market and lower rental costs. Thomas Varghese, CEO, said, “Our target is to clock a turnover of around Rs1,850cr this fiscal, up from Rs1,460cr in 2009-10. We believe that the new outlets which are lined up for opening this fiscal will turn profitable within 15 months of the start of their operations.”		  
     
  M&S to open 15 more stores to India  
 

Marks & Spencer Reliance India plans to open 15 stores over the next two years. Head of Marketing at the JV, Nandini Sethuraman said that the stores were planned mainly for the metros. She added, “Though there are opportunities in smaller towns and cities, we want to make deeper inroads in metros and strengthen our base there as there is a lot more potential to grow in these places.” The growth plan is in keeping with the announcement made in 2008 to operate 50 stores by 2014. Marks & Spencer Reliance India currently has 18 stores.		  
     
  Subhiksha probe handed over to SFIO  
 
As said by a senior official in the know, the Ministry for Corporate Affairs has decided to hand over investigation of the struggling retailer Subhiksha, to the Serious Fraud Investigation Office (SFIO). A week ago, the regional office of the MCA handed its findings and recommendations to the ministry in New Delhi. Last year, the Registrar of Companies (RoC) in Chennai started investigating Subhikshas books under Section 209 (A) of the Companies Act, which included looking into the books of Subhiksha since 2007. However, accounts were available only as of April 2007. The RoC alleges that there is proof of over 100 shell companies attached to Subhiksha and has raised questions of funds siphoning and falsification of accounts. Incidentally, Subhiksha has reopened a few stores under a franchisee by name Triad Trading Services.		  
     
  Aditya Birla Group pumping more talent into More  
 
THE ADITYA Birla Group is strengthening the leadership team within its fast growing retail arm, More. Recently, Vishak Kumar took over as the chief operating officer of the hypermarkets business moving from his current role as head of Louis Philippe from Madura Garment Lifestyle Brand & Retail, which is also a group company. Jacob John will be the new bran head for Louis Phillippe. This lateral movement is an indication of how the group is roping in experienced professionals from its various divisions to power emerging businesses such as the Rs1,430cr Aditya Birla Retails (ABRL) hypermarket segment. ABRL also operates over 630 supermarkets and is projecting revenue of Rs1,750cr this fiscal. Thomas Varghese CEO of ABRL said, “As the hypermarket division has expanded to eight stores within two years, we need to rope in people to support this structure. We will add another 6-8 outlets this fiscal and will look at consolidating thereafter.” The Company’s hypermarket chain called More Megastore has a footprint of 0.5 mil sqft across cities such as Mumbai, Aurangabad, Indore and Bangalore.		  
 

 

  
  Gap gets bigger in China  
  Gap is betting big in China with the opening of four large flagships in Beijing and Shanghai that will launch simultaneously with an e-commerce site in the fourth quarter. The units will have high-profile locations and executives with global brand experience outside the apparel sector. Unlike its policy of franchising Gap stores, these four units will be company-owned and operated. The stores will be around 15,000-19,000 square feet each, will display the full range of Gap, GapKids, babyGap and 1969 Premium Jeans products. Gap also expects to open its first Hong Kong stores next year. At the new Gap China headquarters in Shanghai, a new leadership management has been established. Redmond Yeung, formerly President and Chief Operating Officer of China and Asia-Pacific for Best Buy, has been named President. He will oversee business development and real estate and navigate China's bureaucracy. Lorenzo Moretti, formerly Executive Vice President and Chief Operating Officer for Tesco in China, who also led Marks & Spencer's expansion in Asia, has been named Managing Director to oversee store operations, product-to-market activities and infrastructure development. They report to John Ermatinger, President of Gap's Asia-Pacific region. Earlier this month, Katherine Tsang, Chairperson for China at the Standard Chartered bank, was appointed to Gap's board. The officials are keeping a cautious, wait-and-watch approach towards China, scheduling a more rapid growth for later.  
     
  Amul is No 1 Indian brand in Asia Pacific  
 

As per Amul’s official release, the company has retained for a second year running, the number one rating in the list of top 1,000 brands released by 'Media Magazine' published from Hong Kong and Singapore. Amul is also ranked as No.1 dairy brand, ahead of leading food and dairy brands of the Asia Pacific region like Kraft, Dutch Lady, Dumex, Walls, Anchor, Magnolia and Everyday. The magazine survey has ranked Amul as the 73rd best brand in its ranking of Top 1,000 brands of Asia-Pacific based on a consumer survey conducted in Australia, China, India, Japan, Korea, Hong Kong, Malaysia, Singapore, Taiwan and Thailand. The other Indian brands ranked, as per the survey, are Kingfisher (140), ICICI Bank (182), State Bank of India (226) and Tata (256), to name a few. According to the rankings published for the India market, the top four out of the five brands are MNCs viz. Sony (1), LG (2), Samsung (3), Amul (4) and Google (5).

Indian consumers, too, have given Amul a top rank in the Food and FMCG category. Asia-Pacific's Top 1,000 brand listing is based on a proprietary survey by Media, sponsored by the Wall Street Journal. Ten markets were included in the seventh year of the survey: Australia, China, India, Japan, Korea, Hong Kong, Malaysia, Singapore, Taiwan and Thailand.

  
     
  Carrefour starts sale of Asia units to raise $1bil  
  Carrefour, the world’s second largest retailer has launched the sale of units in Malaysia, Singapore and Thailand, which is likely to raise around $1bil. As per informed sources, Carrefour is working with investment banks Goldman Sachs and UBS on the auction, which is expected to generate interest from both corporate buyers and private equity. Carrefour,Goldman and UBS declined to comment. Reportedly the sources declined to be identified as the sale process was still not public. The auction is allegedly in its early stages and like any sale process could change at any time. Carrefour exited Japan and Korea over the years to focus on bigger and fast-growing markets such as India. The group has been struggling due to challenging economic conditions. The asset could be attractive for other global retailers that are expanding into Asia. Indonesia's Para Group, which has banking, media and retail interests, has said it aimed to raise more than $350mil from a global bond this year to buy a 40% stake in Carrefour's local unit. Trans Corp, the media, entertainment, Lifestyle and retail unit of Para Group wants to increase its stake in PT Carrefour Indonesia from 40% to 100%.  
     
  Gitanjali Gems to open 500 stores  
 

Gitanjali Gems Ltd plans to open about 500 stores by the end of this fiscal as it seeks to tap demand in the market. Mehul Choksi, chairman of Gitanjali said that the company plans to add another 3,00,000 sqft of retail space in this financial year. The company also plans to expand in China and the West Asia, he said. The expansion is based on the rising demand for gold and diamonds in the domestic market, which is a result of economic growth and rising incomes.		  
     
  LVMH to buy 70% of online cosmetics retailer Sacks  
 

LVMH Moet Hennessy Louis Vuitton SA, the world’s largest luxury-goods marker, said it agreed to buy 70% controlling interest in online fragrances and cosmetics retailer, Sacks to take its Sephora beauty chain into Brazil. Sacks current management, led by co-founders Carlos Andre Montenegro and Marcelo Franco, will remain in place, Paris-based LVMH said on Friday in a statement, without disclosing the price.

  
   
 
MARKET  
 
NV Retail Index
129.00
23rd July 2010
The NV Retail Index on last Friday was 127.27. There was an increase of 1.73 points (1.36%) over the previous week.

The NV Retail Index is a capitalization-weighted market index reflecting the performance of 'retail related' equities on the BSE.
     
Company Name
Price as on 16/07/10
Price as on 23/07/10
%Change
Company Name
Price as on 16/07/10
Price as on 23/07/10
%Change
Bata India 273.50 279.25 2.10 Provogue India 60.60 58.90 -2.81
Celebrity Fashions
25.25
29.85
18.22
Shoppers Stop
613.70
610.75
-0.48
Kewal K. Clothing
364.45
353.75
-2.94
Titan
2,670.00
2,766.30
3.61
Kouton Retail
318.30
321.35
0.96
Trent
930.75
921.65
 -0.98
Liberty Shoes
97.25
99.45
2.26
Vishal Retail
52.95
50.20
-5.19
Pantaloon Retail
460.25
457.20
10.60
Zodiac
522.10
542.45
 3.90
Indiabulls Retail
31.25
30.75
-1.60
 Sensex
17,955.82
18130.98
0.98
     
Performance of retail scrips on BSE-
1st Quarter FY 2010-11
Performance of retail scrips on BSE - First Week
August of 2007, 2008, 2009, 2010
Performance of retail scrips on BSE
16/07/10 and 23/07/10
click here to see full graphs
REALTY
Realty scrips (important retail developers) listed on BSE
Company Name
Price as on 16/07/10
Price as on 23/07/10
%Change
DLF Ltd
319.65
322.35
0.84
Unitech Ltd
82.35
84.05
2.06
Ansal Infrastructure Limited
82.55
80.40
-2.06
Parsvnath Developers
133.80
130.45
-2.50
Omaxe Ltd
107
110
2.80
Landmark Properties
6.77
57.75
-15.07
     
   
 
 
 
REALTY  
 

DLF’s insurance firm on the block - M&M, Adani in race to buy

As per informed sourced, DLF Ltd is looking to sell its 74% stake in the life insurance firm, DLF Pramerica Life Insurance Co, a mere three years after it entered it. Speculations are rife that the Mahindra group and Adani Enterprises Ltd are among the interested buyers. However, Mahindra's deputy GM, corporate communications and DLF Pramerica's Kapil Mehta declined comment; and Adani's chief financial officer Devang Desai denied that the company was interested in the business. Due to absence of standardized regulatory norm to evaluate the value of an insurance company, the valuation of DLF’s 74% could not be ascertained. As per informed sources, “DLF Pramerica Life has not been able to grow its policy- holder-base much, while other players have recorded an aggressive growth over the past three years. An exit is a better decision rather than continuing to incur losses.” The company has a capital base of Rs221.3cr. It collected premiums of Rs38.44cr during the fiscal year ended 31st March. The company posted a net loss of about Rs93cr in 2010.
 
   
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HR  
 


Howard Bryant quits Reliance Retail

HOWARD Bryant,chief merchandising officer of Reliance Retails value format has left the company citing personal reasons. He was a key member of a leadership team that the company hired from Tesco Thailand end of 2009.The new leadership team, led by CEO Gwyn Sundhagul, has been revamping operations at India’s second-largest retailer since January. Merchandising is a critical function in the retail business and the value format accounted for more than Rs3,000cr in revenues or over two thirds of the company’s business for the year ended March' 10. A Reliance Retail spokesperson has confirmed the report, but has not revealed the name of the replacement. A retail professional with more than 35 years of experience in the industry,Mr Bryant has served as commercial director at Tesco Lotus Thailand and as trading director at Tesco,UK before joining Reliance Retail. Ever since the new management team took over the reins, senior executives such as Raghu Pillai and Sanjeev Asthana have quit. Now, only Kurien,who handles the Lifestyle division,and Sahoo, who manages HR are with the firm on a full-time basis.

  
 
MISCELLANEOUS  
     
  US retailers try new tricks to push sales in fall season  
 
With the prevailing low buyer sentiment, retailers are resorting to unconventional methods to boost sales. The Sam’s Club unit of Wal-Mart Stores is helping members obtain loans of up to $25,000, backed by the Small Business Administration. and Target will give shoppers with Target branded credit and debit cards discounts of 5% off purchases. Saks Fifth Avenue, part of Saks, is readying a cheeky campaign for fall fashions that carries the prescriptive theme ‘I’m going to Saks Fifth Avenue’ and offer reasons like ‘…because the right dress can stop traffic and for the advice you can’t get from jealous friends and clueless husbands’. Barneys New York is planning a new catalogue with 3-D images of its designer denim line. Humor, latest technology, heritage associations, social media like Twitter and Facebook, all of it is being used to make it work. But the question yet remains, that will clever marketing help?		  
     
  Bidding adieu to Swatch founder Nicolas Hayek  
 
Nicolas George Hayek, the founder of the biggest watch-manufacturing company in the world, the Swiss watch company Swatch, breathed his last on June 28. He was 82 years old. In 1980s, when the Swiss watch industry was reeling under the onslaught from Japan, he rescued the flailing industry by making the Swatch brand synonymous with disposability, affordability and reliability, and swept the markets with the fashionably funky no-frills watches for every occasion. Today Swatch launches 300 designs every year, of which about half are phased out after six months, making them highly collectable and almost a cult item. Hayek began to wind down his career when his son, Nick Hayek, took over as Swatch chief executive in 2003. Nicolas père stayed on as president and remained active in the running of the company, which now comprises 19 watch brands. Today there are more than 700 Swatch shops worldwide, eight of them in Britain. In 2007 Forbes magazine ranked Hayek the world's 273rd richest person with an estimated wealth of $3.2 billion. Last year the Swatch Group earned at least five billion Swiss francs		  
     
     
     
 
Editor in Chief : Vinod Kaul
Editor : Neelima Mishra Agrawal