India Retail News.

Early this Morning, RetailMantra reported that Pantaloon is seeing a pick-up in demand. We initiaed contact with Pantaloon and could confirm the same. Here is what the company has told us.

Pantaloon Retail India has reported over 14.54% growth in sales in May 2009 from its value, home and lifestyle retailing segments.

Sales from Value Retailing, Life Style Retailing and Home Retailing stood at Rs 619.27 crore as against Rs 540.66 crore in May 2008. July-May 2009 sales from these three segments stood at Rs 6,917.29 crore as against Rs 5,341 crore, indicating a rise of 29.5%.

Same store growth under Value Retailing was 8.14%, Life Style Retailing was 8.35% and Home Retailing as -28.27%. [Bad news for the Indian Real Estate Sector]

Pantaloon Retail India (PRIL) has decided to set up 9-10 Central malls in the country within the next 12-18 months. The company will infuse around Rs 25 crore in setting up each Central.

The company plans to expand further in cities like Ahmedabad, Bangalore, Vizag, Raipur and Jaipur. The lifestyle retailing mall, which set up shop in Indore earlier this month, will also come up at places like Surat, Thane and Nashik. This apart, there would be one Central spread over 1 lakh sq ft at Tardeo in South Mumbai.

PRIL also plans to come up with six Big Bazaar and eight Food Bazaar stores by the end of next month. Six eZone and two HomeTown stores are also expected to be rolled out around same time.

The company is planning to raise additional long term funds to the tune of Rs 1,000 crore by issuing securities to various investors by various means, including public or private offerings or qualified institutional placement (QIP). The board of directors of the company has approved the fund raising plan through issuance of equity based securities to various investors.

Last month, it had successful in raising Rs 368 crore through preferential issue of equity shares and warrants. The funds received from this issue will be utilised in expansion plans of the company.

Aditya Birla Retail (ABRL), part of the Aditya Birla Group, plans to set up 80 outlets of 'More' in FY 2009-10. ABRL wants to increase the number of its outlets to 720-730. Subsequently, the company also intends to close down 10-20 existing outlets as part of its clean-up operation.

Presently, the retail major operates 2 hypermarkets at Mysore and Baroda and has shown its interest to set up 6 to 8 in the similar format by March, 2010.

The company posted sales of around Rs 1,150 crore, now aims to achieve a sales turnover of about Rs 1,600-1,700 crore in current fiscal. In FY 2008-09, the company observed a growth of 110%. ABRL has been able to create network of 710 stores in just 20 months, out of this 76 outlets have been closed in the last six months.

CONCEPT - Hub and spoke model involving engagement with farmers in rural India. A rural shopping mall where farmers can sell their commodities and can buy almost everything including cosmetics, garments, electronics, appliances and even tractors. It serves as an agri-sourcing centers, shopping centers, and facilitation centers.

IMPACT - Chaupal Sagar stores have become meeting point for farmers to transact commerce and exchange useful information. ITC awarded - Innovation for India Award 2006 for e-Choupal in the Social Innovations category for business organizations. e-Choupal specially cited in the Government of India's Economic Survey of 2006-07 for its transformational impact on rural lives. e-Choupal is one of the top five alternative channels for LIC Policy sales, and accounts for 10percent of the national weather insurance market.

Overall, there is a huge market which is waiting to be served, ready to splurge, willing to explore new products and services. Retailers can tap on their wallets given they do their homework well.
According to India Retail Report 2009 by Images, - India's rural markets offer a sea of opportunity for the retail sector. The urban-retail split in consumer spending stands at 9:11, with rural India accounting for 55 percent of private retail consumption.

The technologies that retailers have deployed over the years, to serve their distributed networks, are without standards. Going forward, technology is likely to be a key differentiator to bring about efficiencies, save on costs and offer better services to customers. The problem with old technology is that there are no standards and in many instances, one does not integrate with another.

Retailers can deploy and leverage the power of IT in the following domains of their business:

• Manpower Training - Retailers need to gear up with good people management programs. One way this can be done is through certification programmes.
• Real Estate Management - IT can be leveraged to provide project management capabilities to monitor the progress of store launches. Timely launch of retail outlets can provide a good head start for retailers and save significant funds as well.
• Supply Chain Visibility - IT can help retailers set up basic forecasting, replenishment and supplier management solutions to improve supply chain management. Starting from sensor based inventory management to RFID based control over the inventory coupled with
  GPS based tracking; IT can help in maintaining the optimally minimal inventory enabling reduced input costs
• Store Operations - Innovative use of Intelligent Video Analytics, point-of- sales terminals and sensor-based shop carts can help retailers enhance customer experience and simultaneously reduce costs by controlling shrinkage.
• Logistics management - Retailers can leverage IT for back-end support. GPS technology is
  extremely useful in real time tracking of the goods moment.
  

Today 15% of Shoppers Stop networth is invested in its IT Systems and has one of the lowest shrinkage levels. Additionally, 50% of consumer shopping experience is dependent on availability of merchandise and the ease and speed of check out @ billing counter. IT plays a very handy role in both of these.

We present to you thoughts from KPMG on future outlook and how it may impact behavior in retail sector.

It is widely believed that the current slowdown might last for 12 - 18 months - depending on government incentives in increasing spends on infrastructure, development initiatives and other activities to stimulate the economy.

Expect an increased focus on value retail in the coming months and a shift away from lifestyle goods, thanks to the impact of the current slowdown. There is expected to be increasing action in food retailing and FMCG products as this segment is largely insulated from the slowdown, while sectors such as home furnishing are less favored.

Retailers are likely to start closing unprofitable stores and rationalize capital expenditure, as a part of cost optimization. Churn in malls is likely to increase in the short term when some retailers opt for low-rent premises as a means of sustenance in the current economic
situation.

Tier I cities will become saturated, retailers may move to Tier II, Tier III cities where profits are higher due to lower rentals and operating costs. There are going to be increased investments in shortening of supply chain. This is mainly due to the incentives offered by the government and the potential for higher profit margins.

The frequency with which retailers liquidate slow-moving goods by offering discounts to reduce inventory is likely to increase.