India Retail News.

Kishore Biyani promoted KB fair Price stores will depend on Future Group's Private labels to build its business. Future group boasts of brands such as tasty Treat, Fresh & Pure and Koryo [consumer durables]. Mr. Saurabh Chadha, Head of KB's Fair Price Shop said,

Our vision is to make our own brands more prominent at our stores. Going forward, 60% of the brands would be our own. These brands would be sold at 5-15% discount to the prices in Big / Food Bazaar.

KBs Fair Price shops will directly compete with Kirana stores. Unlike Food Bazaar, these stores will stock only non perishable essential items ranging from food to apparels.

Mr. Chadha further added that,

We have commodity trading and do the sourcing and backward integration for retail formats through the staples division of Pantaloon Food Products. This same company involved in commodity will provide the business intelligence and expertise as and when Pantaloon Retail India Ltd enters cash-carry format.

Easier said than done, Pantaloon and Future Group have a bumpy road ahead with its sales chart indicating a slowdown.

US Retail Giant, Sears is planning a foray in Indian retail taking the 100% FDI route and establish cash-carry format stores. Currently, German Retailer Metro is the only foreign company adopting such a model for retailing.

Sears has the technology and the expertise in place. It has to just gain some local knowledge and it can start its store roll out. One other advantage of starting off with cash-carry large retail stores is , down the line the Government of India will lift restriction on FDI in retail, then these companies can easily convert their existing stores into hypermarkets.

French retailer, Carrefour is still undecided about its venture - whether to launch retail in tie-up with an Indian company or adopt 100% FDI route and venture into cash-carry format.

FASTRACK launched neon Disc Watches with no hands, instead two aluminum discs to show the time. Launched for both Boys and Girls in the price range of Rs 1195 to Rs 2195.

SLEEP-INS launched its bridal collection of night wear. It consists of 2pc-6pc sets in satins, nets and Georgette and starts from Rs 1099 onwards.

Park Avenue launched Park Avenue Women line. It comprises business formals, business leisure and business evening wear. Also launched was ColorPlus woman with sporty casual, outdoor and day wear range.

Biotherm launched Aquapower - moisturizing Oligo thermal face cream. It contains thermal plankton and is priced at Rs 2,200.

Greedy Kishore Biyani is planning to hive off Big Bazaar, the largest retail format of the group into a separate company. Mr. Kishore Biyani said,

We are looking at various possibilities to hive off Big Bazaar and the decision would be taken very soon. The proposal is at an initial stage and the decision has to be taken by the board. The move would help the group raise money for Big Bazaar, besides enabling it to continue expanding the network. However, the entity will not be listed immediately.

This is the typical mindset of Indian CEOs. Recall half a dozen Videocon & BPL companies in early 90s which were later consolidated into one ? They just want to cash-in on the Indian bull market. BPL and Videocon raised money separately for TV ventures and other consumer durables. There is absolutely no need to hive off Big Bazaar and it should instead try to consolidate and find operating synergies with other retail chains within the group.

With flush of disposable income in smart and hard working Indian Lady's purse, Health and Beauty vertical of the retail is getting organized itself as a separate store.

2007 saw Dabur and Reliance retail entering the segment with new-u and Reliance Wellness stores going live. MNC companies like M.A.C and Body Shop have also setup shop to cater to the demand in this vertical. Hong Kong based Health & Glow was the first MNC established exclusively in this space. Health & Glow already operates 58 stores and plans to open another 40 stores this year. The company plans to consolidate its position in Chennai, Bangalore, Mumbai and Hyderabad market and then make in-roads into Tier-II cities.

Most companies said that these H&B stores are not just for Women but also for Male, whose grooming growing at a scorching pace.

We have reliably learnt from insiders that Reliance Footwear which launched its first footwear store in Nov-2007, is all set to sell all its Private Labels in Bata stores. According to the deal, Reliance Retail will get access to 1,200 Bata stores which are spread in every corner of the country.

Reliance will sell its private label footwear brands to Bata, which include Mancini for Men, Viviana for women, Pittar Patter for infants, Monza for sportswear and Tosca for ladies party wear.

Reliance Footprint is targetting a market share of 10% of the Rs 15,000 crore footwear market in India.

Greedy Real Estate developers in India are all set to derail Retail 1.0 in India. The first one to face a burnout is American Company Levis. Levi Strauss India has said that it is pulling out of malls due to sky rocketing rentals. It will move towards small towns along its strategy to establish the brand in every district headquarters and thus establish a PAN India presence. Unfortunately, Real Estate accounts for 23% of the MRP of Levis Jeans sold in Malls.

Shumone Chaterjee, MD of Levis said,

Profit margins are getting lower and we cannot wait for the next four to five years for things to stabilize. Passing on costs to the consumers is not an option. So we will exit places [Malls] which are too expensive and increase our distribution network in small towns.

Mall Rentals in India vary between Rs 300 / sft / month to Rs 900 / sft / month according to our survey in December-2007. Realty developers are blaming it on the cost of construction which they are passing it on to mall occupants without absorbing any hit in their own margins. Some retailers like Arrow have started converting their single brand outlets in multi-brand outlets to increase the sales / sft of space.

A year after Carrefour failed in its talks with Sunil Bharti Mittal is still undecided about its venture in India. This will be the last coverage by OmRetail on Careefour until it really strikes a deal because of flip flop and weak decision makers on the Carrefour management in India.

As of today, they are planning to have multiple partners. One of the main reasons why they are unable to find anybody is they want to go slow which has irked the Indian counterparts. Insider sources revealed that they want to go solo when 100% FDI in retail is opened up. Short renewable contracts of 2-3 years was another reason for lack of interest by Indian partner.

Carrefour has talked with Delhi based Realty majors, Parsvnath Developers and DLF apart from Anil Dhirubhai Ambani group and Nusli Wadias.