Corporate investment in the retail business is perhaps the best news for India's retail revolution. Though some market watchers bemoan that the relative slow pace of the corporate entry into retail, the fact is that it's happening.
The RPG group's foray into this area and its success with its four lines of retail businesses has lured other groups. The biggest corporate retailer by far, RPG has managed a Rs 156-crore turnover through its four Spencer's superstores, 27 Foodworld, eight Health & Glow, and two Musicworld outlets. The group's shops occupy 2 lakh sq ft of retail space.
The RPG group has announced investments of Rs 350-400 crore in expanding its retail formats. The number of Foodworld outlets is expected to rise to 50 by September 2000. "We also plan to have 16 Health & Glow stores by next March and 24 by end-June 2000," says Oscar Braganza, chief executive officer of RPG Guardian Ltd, which own this business. Currently, the chain has six outlets in Chennai and two in Bangalore. Musicworld too plans to expand its outlets to eight by next year.
And then there's the K. Raheja's Shoppers Stop chain in Mumbai, Bangalore and Hyderabad. Dealing in apparel and accessories mostly, Shoppers Stop's turnover of Rs 130 crore is no small achievement. Buoyed by its success in the eight years since its first store opened in Mumbai, Shoppers Stop is talking of 15 to 17 stores all-India in the near future. Delhi and Jaipur have already been declared as targets.
Shoppers Stop chief executive officer B.S. Nagesh talks of the need to provide Indian consumers international class buying experience. He says, "Increasing exposure to shopping experiences abroad is changing the way Indian consumers are measuring their expectations. We are reworking our chain to make our services and ambience world class."
He plans to reformat the very design and look of the stores, for which the chain has hired international design and retail consulting expertise. Nagesh says the existing stores will also be redesigned completely. And to back the "international class experience", Shoppers Stop is now hiring MBAs, even foreigners with retail experience, to bolster its sales force. The chain currently occupies 1 lakh sq ft of retail space.
K. Raheja's cousin Rajan Raheja may have followed the former's example a little late, but is determined nonetheless to make his group's foray into apparel and accessories retailing, under the Globus name, a big success. Ved Prakash Arya, head of Coronet, the group's retailing division, points out that Globus will differentiate itself by taking its chain across not only metros but also smaller towns. To prove the point, Globus opened its first outlet in Indore in Madhya Pradesh, on 9 June 1999, followed by an outlet in Chennai. Mumbai is on the anvil, but may take more than 12 months to open.
Mr Arya is practical. He prefers to expand gradually rather than rush pell-mell. "We have assigned a large funds over the next three years to take our number to 10 outlets. We want to be perceived as a multi-brand convenience store for the price-conscious consumer who has a cluster of brands in mind. We will attempt to provide a large price range with guaranteed quality." According to Arya, Globus is currently handling 1.2 lakh products.
Globus has employed 13 MBAs from the Indian Institutes of Management. Through its JDA software package, two warehouses are already linked electronically to the central operations. (See ) EDI connectivity with vendors, for which the latter must invest, is currently being pushed aggressively. So far, Globus totally occupies over 71,000 sq ft of retail space.
After she sold off the Lakme cosmetics business to Hindustan Lever in 1996 for Rs 200 crore (profit of Rs 93 crore), Simone Tata wasted no time in snapping up the Indian operations of Littlewoods, including the Bangalore store and sourcing operations. Subsequently, two more stores were opened in Hyderabad and Chennai, and very recently, in Mumbai too. The aim is to establish a chain of own-brand stores across India, under the new company established for the purpose, called Trent Ltd -- a merged entity of Lakme Exports Ltd and Littlewoods International. The retail chain goes under the name of Westside.
Some of the chains are going for own brands. Subiksha's director R. Subramanian believes that "one should stick to one's core competency". Nagesh takes the middle path, talking of a combination of other and own brands. Arya says, "When I want to do branding, I want to be very sure of my supply chain." Own-shop labels are not yet on his agenda.
The general norm in garment retailing is to have a private and in-store brands mix in the ratio of 70:30. The reason: heavily advertised outside brands attract steady shopper traffic and regular cash flow. With own labels, economies of scale will be absent until one establishes a good number of outlets. Brand building also requires heavy investment -- for the retail brand as well as the products.
Simone Tata, of course, is not in agreement, though surely she must know the challenges. She believes that own-brands, done right, can attract more consumers. She too, may have a point. Ms Tata is sure her model will succeed. Trent has lined up ambitious investment plans to the tune of Rs 150 crore towards expanding the Westside chain.
The south-based Nilgiri's own-brands contribute a decent 35 per cent to total turnover. Foodworld, on its part, is only now planning to launch its own brand of biscuits, sauces, jams, even detergents.
One of the most high-profile corporate retail launches has been Crossroads, the 's foray into retailing, which opened its first "shoppatainment" mall in south Mumbai about three months ago. Already, the group is talking about converting a second property, Bandra Talkies, in suburban Mumbai, into another Crossroads mall.
Crossroads occupies 1.5 lakh sq ft of floor space, where its own megastore, Piramyd, occupies 35,000 sq ft. While Crossroads, overall, functions on lifestyle with entertainment appeal, Piramyd's proposition rides on browsing, enjoying, indulging and making choices. And, no mark-ups on prices. Piramyd claims at offering the finest brands in India. The rest of Crossroads has offered retail space to a cross-section of upper-end consumer brands and eateries.
So much action, so much ambition, so many plans. It is just hype or is the potential real? Shakeouts are bound to happen soon enough, but one thing's undeniable. With the entry of corporate houses in large-format retailing, the whole business is bound to be viewed with much more seriousness. This retail revolution is for real.
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