NV The Retail Week

TRW - 120

July 05, 2011

- Reliance Brands in talks to launch BCBG and LVMH owned Sephora

- Zara owner reaps bumper profits in Q1 on international expansion

- Lite Bite Foods to open outlet in Singapore and Bangkok

- Salman's Being Human apparel range to go global next year

- DLF, Unitech, Omaxe, Ansals head to small cities for growth

- Game4u launches its 2nd store in Mumbai, plans 50 more in 3 years

- Tiger Global invests $6 million in online jewelry portal CaratLane

- Amul crosses $2bil sales turnover mark

- Coca-Cola's new fridges to retailers found defective



	NEWS
	Reliance Brands in talks to launch BCBG and LVMH owned Sephora
	Reliance Brands, a subsidiary of Mukesh Ambani Group's Reliance Retail has been in talks with Louis Vuitton Moet Hennessy (LVMH) owned beauty retailer Sephora, and a high-end French women's clothing brand BCBG Max Azria, to enhance its existing portfolio of JVs and long-term distribution pacts with global brands like Diesel, Zegna, Paul & Shark, Timberland and Steve Madden. As per reports, Reliance Brands' Darshan Mehta, has been scouting for high-street locations for launching Sephora and BCBG. The two brands fit into Reliance Brands strategy of bringing in international brands catering exclusively to women's wear, personal grooming and accessories business. The proposed alliance with Sephora and BCBG, whether it is JV or long-term licensing of the brand, could not be ascertained. The deal with Sephora was still in discussions and not sealed, sources added. LVMH has been working on Sephora's India strategy for a while, and came close to striking a deal with DLF . Sephora, with over 700 stores worldwide, sells beauty and hair care products under its own name as well as some 100 other well-known brands such as Yves Saint Laurent, By Terry and Issey Miyake. Some of the brands Sephora sells, for instance, Body Shop and Lancome are already present in India. BCBG bridges the super-premium and luxury segments competing with rivals such as Roberto Cavalli, Prada, Burberry and Donna Karen. Reliance Brands, which also intends to invest behind indigenous fashion houses, operates 25 stores in seven cities between all its portfolio brands and reported a loss of Rs6.23cr in FY11.

	Tiger Global invests $6 million in online jewelry portal CaratLane In its second e-commerce investment this month, the global PE major Tiger Global has invested $6mil in online jewelry portal CaratLane. Earlier this month, Tiger Global had invested $20mil in books-to electronics e-retail venture, Flipkart, the investment in CaratLane being its sixth this year. CaratLane, which supplies to 50 cities, will use the funding to expand its national footprint. Tiger Global is betting big on Indian e-commerce. In May, the fund had led a $16mil investment in online private sales retailer, Exclusively. in. In April, Tiger Global, along with IDG Ventures and Indo-US Venture Partners, invested $14mil in e-retailer Myntra. They also invested in online electronics retailer Lets-Buy and in online baby care products retailer BabyOye.com. While online retail has been popularly considered as driven by deals and low prices, CaratLane claims the average ticket size on their site is Rs80,000, which is up to 25% lower than retail store prices. Mithun Sacheti, CEO Tiger Global and a trained gemologist said, that in any nascent e-commerce market, low prices are the first step to attract customers. His family owns Jaipur Gems and Sacheti and he was able to leverage the connections and expertise in the area of gems and jewelry to build up CaratLane. "We are able to keep prices low as we hold minimum stocks and are able to turn around pieces in 48 hours," said Sacheti.

	Game4u launches its 2nd store in Mumbai, plans 50 more in 3 years Game4u, the specialist game retail store from Milestone Games Pvt. Ltd., launched of its second store in Mumbai at the recently opened Infiniti Mall, Malad (W), one of the main retail hubs in Mumbai's Western Suburbs. Following the success of its existing store at Mega Mall, the new store offers a complete range of video games, consoles, PC games and related accessories. The Company is in plans to launch 10 stores by 2011 and 50 stores across major Indian cities in 3 years. Some of the exclusive consumer focused properties offered by Game4u include such facilities as Pre-order - where customers can order some of the most anticipated games before its release, Re-play: Here customers can trade in their old games in exchange for new ones. The re-play section re-sells the traded in games after a through quality check for sale at a lower price. There is also Deals4u and an easy EMI scheme.

	Hidesign launches new exclusive store at Palladium Mall Mumbai India's leading luxury leather brand Hidesign has launched its new exclusive store at the Palladium Mall in Mumbai. Hidesign has moved from its previous location at the neighbouring Phoenix Mills. The new store spread over an area of over 600 sqft is located on Level 3 of the Palladium mall. The new store has also created a beautiful display of orchard tables that showcase newly launched styles from Hidesign.

	Amul mulls US launch via pact with local units
	Cooperative dairy giant Amul plans to set up a dairy plant in the US to produce ghee and paneer to begin with, and subsequently in European countries. Next month, representatives of Anand-based 65-year-old Amul dairy will visit the US to plan the country's first multinational cooperative venture. Amul is owned and operated by Kaira District Co-operative Milk Producers' Union, while GCMMF markets the Amul brand of milk and milk products in India and overseas. Currently, GCMMF exports its products through agents in the Middle East, Europe and the US and earns close to Rs100cr of export revenues annually. "There are about a million Indian families residing in the US besides a huge population from other Asian countries. Today, we are exporting only 500 tonne of ghee per annum. A local facility will enable us to enjoy better control over logistics and costs as we will be able to cut 45 days of time in shipping consignments to US from our Anand plant," Kaira Union MD Rahul Kumar said. He added that Amul will procure liquid milk and white butter from US cooperatives to produce ghee and paneer. "It is time to go international and market value-added products. The Kaira union is going beyond pure dairying and functioning as food processing company with the increasing presence of value-added products in our basket to garner better returns for farmers," he said.

	Bata to focus on Tier 2, 3 cities and rural markets
	As per Company reports, Bata India, the leading manufacturers of footwear in India, will focus on tier II, tier III cities and rural markets for its future growth. "We will focus on tier II and tier III cities and rural markets in the country which will provide growth and volume for our company," Bata India chairman P.M. Sinha told reporters on the sidelines of the 78th Annual General Meeting of the company. The plans are to open 70 to 80 stores across the country with an investment of about Rs1.5cr per store. Currently, the company has a total of 1,250 stores. "We have set up a team for rural expansion. We will use the wholesalers in those areas. We have designed shoes, particularly for rural areas," he said. "We have a very ambitious expansion plan. My ambition is that our turnover will grow four times in the next five years. We will invest Rs100cr in West Bengal. Near our factory at Batanagar we will develop new small and medium enterprises (SMEs)," he added. Last year, the company achieved a total turnover of Rs.12,770.9 million as compared to Rs.11,125.9 million in 2009, registering a growth of around 15 percent.

	Salman's Being Human apparel range to go global next year Film actor Salman Khan's social initiative, 'Being Human Foundation' plans to launch its range of apparels in international markets like Europe and Middle East by next year. The original plans to launch this apparel range in the domestic market by June/July 2011 have been delayed until October this year. Mumbai-based textile firm Mandhana Industries has the exclusive license to manufacture, distribute and retail 'Being Human' apparel range worldwide. plans to start with 3-4 exclusive outlets in India. Mitesh Shah, Senior-Vice President Finance and Corporate Affairs Mandhana Industries said, "Salman Khan has a strong fan following in international markets like Europe and Middle East. We intend to launch the brand overseas by next year." This would be either by opening flagship stores or by appointing distributers, Shah said. Regarding the plans for the domestic market, Shah said, "We have already finalised 3-4 locations in Mumbai to open stores and talks are going on in cities like Delhi and Chennai. By the end of this fiscal, the plan is to set up 10- 12 stores."
	Lite Bite Foods to open outlet in Singapore and Bangkok Indian restaurant chain Lite Bite Foods will open an outlet each in Singapore and Bangkok, as part of its overseas expansion plan and is looking at options in London, Dubai, Hong Kong and Macau. Lite Bite Foods is promoted by Dabur India vice-chairman Amit Burman and entrepreneur Rohit Aggarwal, and is the largest franchiser for fast-food chain Subway in India, having close to 50 outlets across the country with pland to grow to 200 outlets over the next three years. The chain's overseas expansion would initially be driven through the franchisee route, with investments coming from partners and Lite Bite taking care of the management and driving profits, Burman said. Lite Bite plans to utilise its Indian cuisine brands 'Punjab Grill' and 'Zambar' for its overseas expansion.

	Zara owner reaps bumper profits in Q1 on international expansion
	The Spanish fashion retailer Inditex, owner of the Zara retail stores, has posted €332mil in profits for the Feb-April quarter, up 10.3% from last year. Sales leapt 11% to €2.96bil, and earnings were up 7.0% at €601mil, before interest, taxes, depreciation, amortization or EBIDTA. The group said it opened 110 stores in 29 different countries during the quarter, bringing the total to 5,154 as of 30 April, 2011, "providing a snapshot of the global growth potential of the Inditex Group's retail concepts." They included the opening of Zara's first store in Australia, which increased the number of countries where Inditex sells its products to 78. Inditex, whose other brands include youth label Bershka and the upmarket Massimo Dutti, also plans its first stores in South Africa, Taiwan and Peru before the end of the year. It said e-commerce operations of Zara, currently present in 16 European countries, will begin in the United States from 7 September, 2011. In the financial year ending 31 January, Inditex reported a 33% jump in profits to €1.73 billion. Asia was the fastest growing revenue source during the year, expanding its share to 15% from 12%.

	Amul crosses $2bil sales turnover mark
	The Gujarat Cooperative Milk Marketing Federation (GCMMF) which markets the popular Amul brand of milk and dairy products crosses the $2bil sales turnover mark. During the financial year 2010-11, GCMMF registered a top line growth of 22.1%, achieving turnover of Rs9774cr. The results of the apex body of the dairy cooperatives in Gujarat were declared on 21st June 2011, in the 37th Annual General Meeting of GCMMF. GCMMF, chairman, Parthibhai G. Bhatol said that this performance is even more remarkable, when viewed from the perspective that the organization was able to achieve $1bil turnover in the 33rd year of its formation while it took only just four more years to add another $1bil to its turnover. Turnover of GCMMF registered CAGR of 23% during the last 4 years. 'GCMMF plans to achieve turnover of Rs12,000cr in the year 2011-12," he said. During the year 2010-11, GCMMF paid Rs8345cr to its 30 lakh farmer members. Payout to farmers also registered 23% CAGR in the last 4 years. This organization further enhanced in 2010-11, its market-share in different product categories. Sales of Amul butter have increased by 26%, Amul milk in pouches by 34%, Amul processed cheese by 29%.

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MARKET

NV Retail Index

75.29

1st July 2011

The NV Retail Index on last Friday was 144.32. There was a decrease of 69.03 points (47.83%) 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 24/06/11	Price as on 01/07/11	%Change	Company Name	Price as on 24/06/11	Price as on 01/07/11	%Change
Bata India	528.60	610.75	15.54	Provogue India	33.75	35.45	5.04
Celebrity Fashions	9.38	9.36	-0.21	Shoppers Stop	429.55	450.70	4.92
Kewal K. Clothing	594.00	675.45	13.71	Titan	4,216.85	213.50	-94.94
Kouton Retail	25.80	26.40	2.33	Trent	1,063.00	1,158.00	8.94
Liberty Shoes	91.95	102.05	10.98	Vishal Retail	30.75	33.25	8.13
Pantaloon Retail	280.75	318.45	13.43	Zodiac	371.45	384.90	-1.90
Indiabulls Retail	13.75	16.25	18.18	Sensex	18,240.68	18,762.80	2.86

Performance of retail scrips on BSE- 4th Quarter FY 2010-11	Performance of retail scrips on BSE - First Week June of 2008, 2009, 2010, 2011	Performance of retail scrips on BSE 24/06/11 and 01/07/11

click to see full graphs

REALTY
Realty scrips (important retail developers) listed on BSE

Company Name	Price as on 24/06/11	Price as on 01/07/11	%Change
DLF Ltd	216.50	220.35	1.78
Unitech Ltd	30.25	32.65	7.93
Ansal Infrastructure Limited	39.70	42.05	5.92
Parsvnath Developers	45.80	47.35	3.38
Omaxe Ltd	129.10	130.00	0.70
Landmark Properties	2.81	2.63	-6.41

REALTY

DLF, Unitech, Omaxe, Ansals head to small cities for growth

According to a research report by Crisil Research , large builders like DLF , Unitech , Parsvnath , Omaxe , Ansals and Emaar MGF have already diversified into cities like Bhopal, Bhubaneswar, Coimbatore, Indore, Jaipur, Lucknow , Nagpur, Surat , Vadodara and Visakhapatnam, with an eye on future growth. These cities are expected to add 354 milsqft of residential development in the next three years and in 2011-12 are expected to generate sales of Rs18,000cr. The big developers are attracted to these regions due to the price stability and growth prospects. While prices of homes in large metros have seen a huge jump of 25-30% over the last two years, these tier-II cities have seen a moderate price increase of 10-12%.

The research, which covered over 500 developers across these cities, pointed out that even if there is a considerable price correction in the larger cities over the next few months, smaller cities will remain stable or at worst see a moderate decline in prices. The report by Crisil foresees prices rising in seven of the 10 smaller cities it has identified. In contrast, prices are likely to increase only in four of 10 large cities, it says.

Looking at this new demand, banks and financial institutions too are looking towards these cities to bridge the financial penetration gap. At the moment, the proportion of buyers taking home loans is relatively lesser in these smaller cities. A gradual increase in penetration of home loans would also boost demand. The growth prospects in the smaller cities are attracting large developers with multi-city presence.

Reliance Retail hires ex-Walmart China execs as CEO and COO

Mukesh Ambani led Reliance Retail has appointed Rob Cissell, former COO Walmart China, as CEO and Shawn Gray, former VP store operations Walmart China, as COO, and the two will start work in September. This information was sent via email to Reliance Retail's top executives. Gwyn Sundhagul, incumbent CEO of the retail arm who was hired from the Thailand arm of British retailer Tesco early last year, will move to Reliance Industries' consumer businesses comprising insurance and telecom. As per informed inside sources, "RIL is sharpening its focus on consumer businesses-retail, telecom and insurance-because it wants to balance its portfolio and de-risk its core business. You will see many senior-level hires across these three businesses as they are top priority for the company now." He said RIL has no plans to sell out or form a joint venture with a foreign partner if food and grocery retail is opened to foreign companies. Cissell and Gray have resigned from Walmart China over the last three months. The two were part of the top team of Walmart's China arm that has around 333 outlets, generating $7.5bil revenues, or 1.8% of the Bentonville, Arkansas-based company's total sales of $420bil last year.

MISCELLANEOUS

Coca-Cola's new fridges to retailers found defective

Coca-Cola India is faced with the problem of some of its new coolers or fridges supplied to retailers across the country having caught fire. The Company had distributed since early 2010, new 15,000 units designed at Coca-Cola's in-house Atlanta facility, of which 15 have been reported to have caught fire. However, as per sources, there are no plans to recall the entire batch of coolers by the Company. In India, these coolers are made by the Western Group and Frigoglass India Pvt Ltd. While the Company has compensated some of the retailers for losses incurred, one Hyderabad based retailer has sued Coca-Cola India. Western Group's Kaushik Roy Chaudhury, general manager (West), said "there were some design problems with these coolers". He added: "But in many places where there were fires, stipulated precautionary measures were not taken." He said Coca-Cola, along with the two manufacturers of its new coolers, is spreading awareness about proper steps to be taken while handling such coolers. The coolers are provided for free to the retailers as part of the sales generating assets.