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Blue Star Opening Large Format Stores

January 29, 2012 By Leave a Comment

Blue Star Opening Large Format Stores

Blue Star, Air conditioner maker in India, which is targeting Rs 1,000-crore revenues from its residential segment by 2014, plans to open exclusive large format stores to hawk products across all segments, following the success of its exclusive small outlets.

“We have about 25 Blue Star display centres and we plan to open bigger ones. We have shortlisted some locations and will have first such store within the next six months. We hope to start with Mumbai and want to have one in each metro to begin with,” Blue Star President (Air Conditioning and Refrigeration Products) B Thiagarajan said.

Blue Star will also have a factory outlet for room ACs at Thane near here by the festival season this year. On the revenue side, Thiagarajan said the company is eyeing Rs 1,000-crore revenue from the residential segment by the turn of 2014 on the back of growing demand.

“We will continue to grow in this segment. We had a turnover of Rs 535 crore last year and this calendar year our expectation is Rs 605 crore. Our plan is to reach Rs 1,000 crore by 2014 in room air conditioner segment.”

The firm, which claims to enjoy 7 per cent market share, plans to sell 2.65 lakh units of ACs this year compared to 2.35 lakh units last year, Thiagarajan said.

Next year, he said, the commercial business would account for 40 per cent of revenues and the balance 60 per cent would come from the residential sector. At present it is equal from both the sectors.

blue star

According to Thiagarajan, the penetration of room ACs is only 3 per cent and hence there is huge untapped potential in the segment.

Blue Star estimates domestic AC Market is growing leaps and bounds

The domestic AC market is worth 31 lakh units annually and it is expected to be 70 lakh units by 2013-14. The company has earmarked an advertising budget of Rs 20 crore this calendar year, with Rs 15 crore being allocated for the summer, Thiagarajan said.

It will spend Rs 25 crore on R&D and also plans to export products to North African countries in the near future, thus extending its overseas market from West Asia, he said.

Blue Star to open stores in additional 60 locations

Thiagarajan further said the firm will expand its presence in 67 locations this year from the seven last year and is aiming to capture a bigger share of the market.

“We entered the room AC market through the retail route last year and have already captured 7 per cent market share. This year it should be 9 per cent.”

He said Blue Star has 25 percent market share in refrigeration and cold storage segment.

Blue Star

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IKEA Waits..

January 23, 2012 By Leave a Comment

IKEA Waits..

IKEA, Scandinavian furniture retailer, which has been waiting to set up shops in India independently, today said the 30 per cent local sourcing clause applied for 100 per cent FDI in single brand retail might be difficult to live up to.

“We have found that the conditions applied to local sourcing from SMEs might be difficult for us to live up to,” the Group’s spokesperson in the country told reporters.

Earlier this month, government had notified 100 per cent FDI in single-brand retail paving way for global retail chains like IKEA and others to have full ownership and control of their India operations.

However, in respect of proposals involving FDI beyond 51 per cent, the mandatory sourcing of at least 30 per cent would have to be done from the domestic small and cottage industries.

Just two months back, the company was almost on the verge of announcing its foray into the Indian market but had deferred it following uncertainties due to political opposition to the government’s decision to relax FDI norms in retail, including 51 per cent in multi-brand retail.

 

IKEA

IKEA has not shelved it plans

When asked if IKEA had shelved its India entry plans, the spokesperson said: “No, India is still a very interesting potential retail market for the IKEA Group but we need to understand what the guidelines will mean for us.”

IKEA is, however, optimistic and hopes to be able to present more information shortly about its possibilities to establish retail operations in the country once the conditions are right, she said.

“India is since long a strong and growing purchase market for IKEA,” she added.

IKEA to operate on its own

The furniture retailer has been adopting a wait and watch policy to open its stores as it wanted to operate on its own.

The firm also supports Unicef’s water and sanitation programme in India and funds programmes in the carpet and cotton regions in India.

In 2010, IKEA’s sales increased to 23.1 billion euro, an increase of 7.7 per cent compared to the previous year, with Asia and Australia contributing about 6 per cent.

The Group has operations in 41 countries with 29 trading service offices in 25 countries, according to its website.

IKEA

 

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Starbucks Tying Up With Tata Coffee

January 19, 2012 By 4 Comments

Starbucks Tying Up With Tata Coffee

Starbucks Corp, the world’s largest coffee company, is finalizing its retail partnership with India’s Tata Coffee Ltd and hopes to announce the deal by the end of this month, a senior official of the Indian company said on Thursday.

In early 2011, the Seattle-based company signed a pact with the Tata group firm to buy coffee from India and explore opening retail stores in the country.

“We are close to finalizing it and are working on the final details. We hope to make an announcement very soon,” MD Kumar, chief financial officer of Tata Coffee told Reuters.

Tata Coffee plans to open a Starbucks coffee shop by the end of this year, Managing Director Hameed Huq told reporters on the sidelines of the International Coffee Festival in Delhi earlier in the day.

In India, where tea has long been the beverage of choice, an increasingly affluent and urban population with westernized tastes is embracing cafes, paying much more for a cup of coffee than at traditional restaurants.

The two companies had planned to open the first Starbucks outlet in India by mid-2011, but the plan was delayed on account of difficulties in acquiring real estate, Tata Coffee Chairman R.K. Krishnakumar had told Reuters in August.

starbucks

Starbucks and Tata: Instant Coffee Expansion

Tata Coffee, which makes and exports instant coffee and plantation coffee, plans to invest $10 million to increase its instant coffee capacity by 2,000 tonnes from the 6,500 tonnes, Kumar told Reuters.

“We will be adding capacity at our existing plant near Madurai… It should be operational by the third quarter of the next financial year,” he said. Madurai is in the southern India state of Tamil Nadu, near where they also have plantations.

Starbucks the right fit?

Tata coffee exports 60 percent of its instant coffee to Russia and the rest to Singapore and Japan. Instant coffee division contributes about 50 percent to its revenues and the company expects robust demand for instant and plantation coffee in FY13, despite sluggish consumer demand globally.

India, the world’s fifth biggest producer, accounts for only 4.5 percent of the world’s output, but exports 70-80 percent of its produce.

“Our orderbook for the fourth quarter is full and we have been receiving good orders for the first quarter of next year,” Kumar said. The nest fiscal year stars in March, 2012.

However, Tata Coffee sees demand for its U.S. coffee brand, Eight O’ Clock Coffee, which has been hurt by rising raw material costs in the current quarter and the last, to improve as commodity costs have begun to ease.

Tata Coffee on Wednesday saw its consolidated net profit fall 34 percent to 215.1 million rupees ($4.27 million) in Oct-December

Shares of the company ended 0.97 percent up at 865.95 rupees in a firm Mumbai market on Thursday that closed at a 6-week high.
Starbucks

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Country Chicken From Australia In India

January 18, 2012 By Leave a Comment

Country Chicken From Australia In India

Premier Australian fast-food chain ‘Country Chicken‘ launched its first outlet in India here today and it is expected to become fully operational in the middle of next month.

With 300 such outlets planned across India by 2015 – 80 per cent in tier II and III cities – including franchisees, the company (Country Chicken) would invest nearly Rs 200 crore for expansion over three years, Country Chicken (India) CEO Ramakrishna told reporters here.

Stating that Star Quick Service Restaurant (SQSR) (P) Ltd, the partner for Country Chicken in India, will provide the processed products to outlets in India, he said the processing plant in Chennai will supply products to the Coimbatore outlet and future outlets in the South, which would ensure standardised product quality across all outlets.

Country Chicken to open processing unit in North

Once more outlets come up, another processing factory will be opened in North, he said.

Country Chicken

With the market for fast-food growing in India every year, the company expects to capture a good market share in the coming three years, S Suresh of Thiruvikram Enterprises, who was appointed the first franchisee, said.

Country Chicken Australia Spokerperson Craig Baker said apart from country fried chicken and pizzas and roast dishes, there would also be an eclectic mix of vegetarian items to cater to the varied palates of food lovers in the cities.

Country Chicken not to have own poultry farm in India

Asked whether the company plans to open its own poultry farms for getting quality chicken, Ramakrishna said it already has a tie-up with leading brands like Suguna in the South and Venky in the North.

Country Chicken in Australia is positioned in the market place as a premium quality product, priced to be affordable for everyone, and delivers a mix of products to satisfy the whole family’s taste and dietary needs. A one stop shop – Country Chicken offers a variety of chicken products, burgers and subs, wraps and sandwiches as well as fish products and broad pizza menu.

Country Chicken

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Indian Retail Sector – Cloudy Outlook

January 16, 2012 By Leave a Comment

Indian Retail Sector – Cloudy Outlook

Indian retail sector faces a “bit cloudy” outlook due slow growth along with persistent inflation and the government’s decision to hold back FDI in multi-brand segment, according to a report by Deloitte Touche Tohmatsu Ltd (DTTL).

‘The 2012 Global Powers of Retailing’ report by the consulting firm, DTTL suggests that retailers will, however, find some silver linings as softening commodity prices will help in improved profit margins.

“The outlook for Indian retail sector is a bit cloudy as the economy is clearly slowing, following a period in which monetary policy was tightened to fight inflation it did not bring the inflation down,” the report said.

Indian Retail Sector adopting a wait and watch approach

Commenting on the findings, Rajan Divekar Senior Director Deloitte in India said: “Given the recent policy flip-flop related to FDI in multi-brand retail, both global retailers as well as existing Indian organised sector retailers appear to have adopted a cautious ‘wait and watch’ approach before committing fresh investments.”

He, however, said the Indian retail sector offers significant potential for growth of modern trade.

Indian Retail Sector

India also has a set of obstacles that includes a high degree of trade protection, continuing regulation of labour markets and uncertainty regarding the future of the FDI policy related to multi-brand retail, it said.

Indian retail sector fine tuning

Meanwhile, Indian retailers are customising and fine tuning their business models across retail formats to ensure that there is a balance between store expansion and profitability, Divekar said.

“The recent liberalisation permitting 100 per cent in single brand retail is a welcome sign especially for select luxury/niche retailers,” he added.

The report, however, said one positive effect of slower global growth will be the continued dampening of commodity prices.

“For retailers, this means some improvement on the cost side of the ledger while retail price inflation in some economies presents an opportunity for improved profit margins, even in the context of slow top-line growth,” it said.

Revival of the proposal to permit 51 per cent FDI in multi-brand retail could bring in a positive impact on the Indian retail sector as well as the Indian Economy, it added.

Indian Retail Sector

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IKEA Set To Enter India

November 28, 2011 By 2 Comments

IKEA Set To Enter India

Scandinavian home products giant IKEA that has stayed away from the Indian retail sector saying it will do so only on its own, is set to announce its plans for the market with the government allowing 100 per cent FDI in single-brand retail.

According to people familiar with the development, IKEA‘s President and Chief Executive Officer Mikael Ohlsson is visiting India this week to “announce strategic initiative for Indian market “.

Details of IKEA‘s plans, however, could not be ascertained.

In the past, India allowed only 51 per cent foreign direct investment (FDI) in single-brand retail. Last week the government had removed the cap and allowed international firms selling products under one brand name to tap the growing consumer base here without a local partner.

IKEA was waiting for 100% FDI

Moreover, the government had also allowed 51 per cent FDI in multi-brand retail.

IKEA

IKEA has been sourcing many materials from India for a long time now. It has been adopting a wait and watch policy to open its retail stores as it wanted to operate on its own.

IKEA supports many social initiatives in India

The firm also supports Unicef’s water and sanitation programme in India and funds programmes in the carpet and cotton regions in the country.

In 2010, IKEA’s sales increased to 23.1 billion euro, an increase of 7.7 per cent compared to the previous year, with Asia and Australia contributing about 6 per cent.

The Group has operations in 41 countries with 29 trading service offices in 25 countries, according to its website.

IKEA Concept

The Concept is based on offering a wide range of well designed, functional home furnishing products at prices so low that as many people as possible will be able to afford them. Rather than selling expensive home furnishings that only a few can buy, the IKEA Concept makes it possible to serve the many by providing low-priced products that contribute to helping more people live a better life at home.

The IKEA Concept guides the way products are designed, manufactured, transported, sold and assembled. All of these factors contribute to transforming the Concept into a reality.

IKEA

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FDI Allowed In Supermarket Sector

November 24, 2011 By Leave a Comment

FDI Allowed In Supermarket Sector

FDI – India threw open its $450 billion retail market to global supermarket giants on Thursday, approving its biggest reform in years that may boost sorely needed investment in Asia’s third-largest economy.

The world’s largest retail group, Wal-Mart Stores Inc, and its rivals see India’s retail sector as one of the last frontier markets, where a burgeoning middle-class still shops at local, family-owned merchants.

Allowing FDI to foreign retailers to take stakes of up to 51 percent in supermarkets would attract much-needed capital from abroad and ultimately help unclog supply bottlenecks that have kept inflation stubbornly close to a double-digit clip.

FDI opening welcomed by International Retailers

“I think it will have a very deep and long-lasting impact on the Indian landscape,” Raj Jain, CEO of Wal-Mart India, told CNBC TV18. “I think it will redefine the way consumers shop in India, but more importantly the way supply chains in India run.”

Under fire for a slow pace of reform, Prime Minister Manmohan Singh’s embattled government appears to be slowly shaking off a string of corruption scandals to focus on policy changes long desired by investors.

“Opening FDI is a very bold move and the economic reforms process is back on track.” Rajan Mittal, vice chairman of India’s Bharti Enterprises, which is Wal-Mart’s partner, told reporters.

Small traders oppose allowing FDI in multi-brand retailing

Millions of small retail traders vigorously oppose competing with foreign giants, potentially providing a lightning rod for criticism of the ruling Congress party ahead of crucial state elections next year.

Food Minister K.V. Thomas said the government will allow foreign direct investment (FDI) of up to 51 percent in multi-brand retail – as supermarkets are known in India. It will also raise the cap on foreign investment in single-brand retailing to 100 percent from 51 percent, he added.

FDI

The new rules may commit supermarkets to strict local sourcing requirements and minimum investment levels aimed at protecting jobs, according to local media.

A heavyweight member of Singh’s coalition government warned on Thursday it totally opposed opening the sector allowing FDI.

The move is politically risky. Fears of potential job losses could heighten popular anger at the Congress party ahead of key state polls next year that will set the stage for the 2014 general election.

But slowing growth and investment in India, with the rupee currency around historical lows and government finances worsening, may have spurred the government into action.

“Manmohan Singh, after all the scams and the impression of government paralysis, has realized it’s time to take some bold steps. This is a very bold step that will please the middle class,” said political analyst Amulya Ganguli.

Political Opposition to FDI

India previously allowed 51 percent foreign investment (FDI) in single-brand retailers and 100 percent for wholesale operations, a policy Wal-Mart and rival Carrefour, among others, had long lobbied to free up further.

“For international retailers, it will open up a $1.6 trillion market growing at 8-9 percent so it’s a big business opportunity for all of them,” said Thomas Varghese, CEO of Aditya Birla Retail, an Indian supermarket chain.

Indian retailers have operated supermarket chains in India for years, but their expansion has been hampered by a lack of funding and expertise as well as poor infrastructure which makes the cold storage of food transported around the country practically impossible.

FDI – A new tool for ballot wars?

Political opponents of the proposal, with an eye to the ballot box, argue an influx of foreign players – which could include Carrefour and Tesco Plc  - will throw millions of small traders out of work in a sector that is the largest source of employment in India after agriculture.

India’s biggest listed company, Reliance Industries, was forced to backtrack on plans in 2007 to open Western-style supermarkets in the state of Uttar Pradesh after huge protests from small traders and political parties.

The main opposition Bharatiya Janata Party (BJP) opposes allowing FDI in the retail sector, arguing that letting in “foreign players with deep pockets” would bring job losses in both the manufacturing and service sectors.

“Fragmented markets give larger options to the consumers. Consolidated markets make the consumer captive,” the BJP’s leaders of the upper and lower houses of parliament said in a statement before the decision. “International retail does not create additional markets, it merely displaces (the) existing market.”

FDI

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FDI Decision In Multi-Brand Retail Tomorrow

November 23, 2011 By Leave a Comment

FDI – Decision On Allowing FDI In Multi-Brand Retail Tomorrow

The government is likely to approve 51 per cent FDI in multi-brand retail tomorrow, a decision that will allow global mega chains like Walmart, Tesco and Carrefour to open outlets in India.

Increasing the foreign investment ceiling to 100 per cent from the present 51 per cent in single-brand retail is also on the agenda of the the Union Cabinet meeting scheduled for tomorrow, sources said.

Most of the ministries, including the finance and the textiles, are in favour of the industry ministry’s proposal to open the politically-sensitive sector to foreign players and the Cabinet will take a final call, they said.

FDI in Retail

 

FDI to be allowed with riders?

Earlier, a panel headed by Cabinet Secretary Ajit Kumar Seth had recommended 51 per cent FDI in multi-brand retail with certain riders, like minimum investment of USD 100 million and local sourcing.

The decision on the issue is pending for over two-years as Opposition parties are against foreign investment in this sector. The $ 600 billion segment is dominated by small kirana (mom & pop) shops. Some Congress ministers including Veerappa Moily and Mukul Wasnik have opposed FDI in retail.

The government, however, is likely to face stiff opposition, not just from Opposition parties like the Left and the BJP but also from it’s own allies like the TMC and DMK.

The government, it is being claimed, will address the concerns by other political parties on matters like agricultural products still remaining with the government. The Cabinet will also talk about setting up retail branding outlets only in those cities which have a population of over 10 lakh as per the census.

FDI opening could lead to unemployment – fears opposition

Opposition have expressed concerns that allowing majors global retailers would lead to unemployment among the unorganized sector.

The government had opened the single-brand retail for FDI way back in 2006 and ever since 60 foreign players have entered the country in joint venture with local firms.

Several global retailers are waiting in the wings to enter India’s multi-brand retail segment. Sources have claimed that the government has also proposed to increase the FDI ceiling to 100 per cent from the present 51 per cent in single-brand retail.

FDI

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FDI In Retail Slated To Open In Multi-Brand Retail

November 19, 2011 By Leave a Comment

FDI In Retail Slated To Open In Multi-Brand Retail

Cabinet may decide by next week to allow FDI in retail, chains such as the world’s largest retailer Wal-Mart Stores Inc to operate in the country with a majority stake under strict local sourcing rules, a senior government source said.

A draft Cabinet note suggesting so-called mult-brand retail foreign firms could hold up to 51 per cent ownership allowing FDI in retail has already been reviewed, a senior government source said on Friday.

We have already sent it to the cabinet for their approval, the source said, adding that a decision could come next week.

Inadequate road, rail and storage facilities mean significant logistical hurdles and extra expense in moving farm and factory goods to Indian consumers, driving up prices nationwide.

Wholesale inflation in India has remained stubbornly high for more than a year and is now close to 10 per cent despite 13 interest rate rises by the Reserve Bank of India (RBI) since March last year.

FDI in Retail

Small shop owners oppose FDI in Retail

Small shop owners that account for more than 90 per cent of India’s $450 billion retail sector oppose the entry of foreign players, fearing that they will be put out of business.

India currently allows 51 per cent foreign investment in single-brand retailers and 100 per cent for wholesale operations, a policy that Wal-Mart and Carrefour among others have lobbied to change for years.

FDI in retail in single-brand retail to 100 per cent

Another government source said the finance ministry had thrown its weight behind a second proposal to raise the cap on FDI in retail in single-brand retail to 100 per cent from 51 per cent.

The cabinet note also stipulated if FDI in retail was allowed, businesses would have to source at least 30 per cent of manufactured and processed goods from local small industries, the Business Standard newspaper reported on Saturday.

It also said the minimum amount a foreign retailer would have to invest was $100 million, if FDI in retail was allowed, at least half of which would go to back-end logistics and storage infrastructure.

Those conditions are in line with those first agreed by a group of senior civil servants in July.

An executive of UK retail giant Tesco Plc told Reuters on Monday the company plans to build on its existing tie-up with India’s Tata Group to expand if foreign operators are allowed FDI in retail to invest in multi-brand retail.

FDI in retail

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Gitanjali Gems Launches Jewelry Vending Machine

October 24, 2011 By Leave a Comment

Gitanjali Gems Launches World’s First Jewelry Vending Machine

Gitanjali Gems, the world’s largest integrated-branded diamond jewelry manufacturer and retailer, has introduced gold, silver and diamond sales through vending machines, for the first time in the world.

In operations, these Jewelry Vending Machine would be like banks’ automated teller machines (ATMs) used for cash withdrawal. However, it differs in the nature of transactions. Instead of cash, the Jewelry Vending Machine vends gold and silver coins, medallions and jewelry of customers’ choice, instantly.

Gitanjali Gems Jewelry Vending Machine will dispense products in the price range of Rs 1,000-30,000

“Sale of precious metals, meant especially for last-minute gift purchases, is a unique concept. The products sold through these Jewelry Vending Machine would be in the price range of Rs 1,000-30,000, aiming to serve all classes of customers,” said Sanjeev Agarwal, CEO, Gitanjali Exports Corporation Ltd, a subsidiary of Gitanjali Gems.

The denomination of gold and silver coins would be decided by the purchaser. The precious metals and stones are available in 36 different varieties, including gold and diamond pendents, and sole gold diamond pieces. The company has made a provision to pay either by Visa debit/credit card or by cash. For instant payment by cash, however, the payment of higher denomination currencies would be preferred.

Gitanjali Gems are targeting customers seeking last-minute purchases through Jewelry Vending Machine

“Gitanjali Gems are targeting customers seeking last-minute purchases, mainly for gifting purposes. Instead of gifting flower bouquets, etc, people may like to gift precious metals, which have appreciated consistently in the last few years. Such gifts are also appreciated by the recipients,” Agarwal added.

Gitanjali Gems

An individual can operate these Gitanjali Gems Jewelry Vending Machine like they operate ATMs. The machines display all 36 types of products available for sale, along with the details of purity and weight of precious metals and stones. The product also displays actual prices on the screen. On selecting the product and payment made, the product comes out of the machine in attractive gift packs. The worth of selected items in one go, however, should not exceed Rs 30,000.

Gitanjali Gems first Jewelry Vending Machine is in Phoenix Mills at Lower Parel, Mumbai

Gitanjali Gems has launched the first Jewelry Vending Machine of its planned network of Jewelry Vending Machine in Phoenix Mills at Lower Parel, Mumbai. In the coming months, Gitanjali Gems plans to expand the network in places with high consumer footfalls, such as premium malls, airports, temples, etc, to provide visitors with a range of last-minute purchase choices.

“Gitanjali Gems want to install 75 such Jewelry Vending Machine in three years with an aim to generate a turnover between Rs 450 crore and Rs 500 crore,” Agarwal added.

These Jewelry Vending Machine are said to be part of the larger ‘Go for Gold’ umbrella branding initiated by Gitanjali Gems to promote the purchase of gold — in the form of jewellery or coins/bars.

Gitanjali Gems

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