Retail Guru

Tesco Promoted Or Demoted Bob Robbins?

Retail News From the Guardian — Fri, 03 Feb 2012 00:06:01 +0000

Tesco Promoted Or Demoted Bob Robbins?

Tesco: Being switched to special operations is often the corporate equivalent of being sent to Siberia. In some cases, however, it’s the opposite: the recipient can become the chief executive’s enforcer, a roamer who can’t be given a proper job title because that would put too many noses out of joint.

Which description applies to Noel “Bob” Robbins? He used to be chief operating officer of Tesco‘s UK stores and was, in effect, the deputy to Richard Brasher, boss of the UK stores. Now he will be reporting directly to Tesco‘s head honcho himself, chief executive Phil Clarke.

Subscribers to the Siberian theory will note that the shuffle comes less than a month after Robbins sold £200,000 worth of Tesco shares just eight days before a profit warning. The company, which insists Robbins did nothing wrong by flogging the shares to meet “necessary family expenditure,” says the episode is “entirely unrelated” to Wednesday’s announcement.

At Tesco what will his new role entail?

OK. But what will Robbins do in his new role? “Bob will work for me on a number of initiatives which will leverage the skill and scale of Tesco and allow even greater investments to be made for customers,” said Clarke in his internal memo. In other words, it’s as clear as mud.

Tesco has confused it?

If Tesco’s UK operation were a football team, one might say the midfield is starting to look crowded. Brasher is the chief executive and has a new chief operating officer in Chris Bush, who has been recalled from Thailand. Robbins will now also chip in with his leveraging initiatives. Meanwhile, Tim Mason, running US chain Fresh & Easy, is Tesco’s chief marketing officer, even though he is based in California, about 5,000 miles away from the nearest store with “Tesco” over the door.

Maybe so many senior hands will make light work of reversing Tesco’s slowdown in sales in the UK. But it’s a struggle to identify the formation they’re playing.

Tesco

Blue Star Opening Large Format Stores

Retail News From Financial Express — Sun, 29 Jan 2012 09:20:47 +0000

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.

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

IKEA Waits..

economic times retail news — Mon, 23 Jan 2012 11:52:54 +0000

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 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

Visual Merchandising

admin — Thu, 19 Jan 2012 17:22:04 +0000

Visual Merchandising

Visual merchandising helps exhibit products in an appealing manner, catching customers’ eyes and slowing progress through out the store. It refers to the display of products in stores, including signage and marketing materials. It involves analysing shoppers’ behaviour to understand what motivates people to buy.

It is the art of implementing effective design ideas to increase footfalls and sales. Visual merchandising needs creative thinking and style along with product knowledge and marketing know how. It includes designing and implementing attractive windows, displays and eye-catching signages.

Visual Merchandising communicates

It banks on signages that communicate ideas and specific information to customers. A good VM display focuses on one product or a small family of products. It involves the effective use of light, space, signages, promotions, branding and creative thinking.

Visual merchandising must be appealing to customers and attract them through color, product and signage placement, assortment and engagement. With supermarkets and specialty stores, VM is of extreme importance as it crates differentiation. The story-telling generates desire to buy in customers. Successful visual merchandising appeals and engages customers and motivates them to buy.

Visual merchandising rules are simple yet effective

Supermarkets, Grocery Stores, Hypermarkets, and Restaurants use VM as a tool to differentiate themselves in a competitive and saturated market. Generally, rules are to organize displays small to large, left to right and light to dark. A very popular technique is to display merchandise using music, video, digital media and sound.

Successful visual merchandising draws and engages customers and motivates them to buy. It can create the want and urge in the mind of customers to buy the product. The story-telling in visual merchandising generates the desire in the customers. Creating specific story around the product will ensure an eye catching display and will drive sales. With the use of digital aids, VM’s are bound to get more attractive.

Visual merchandising

What is the role of Visual Merchandising?

Starbucks Tying Up With Tata Coffee

Retail News From Reuters — Thu, 19 Jan 2012 12:39:16 +0000

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 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

Peacocks In Administration

Retail News From the Guardian — Thu, 19 Jan 2012 00:06:20 +0000

Peacocks In Administration

Peacocks, the budget fashion chain, has fallen into administration, putting 9,600 jobs at risk, after a management buyout deal collapsed at the last minute.

The collapse of Peacocks, which boasts designs by singer-songwriter Pearl Lowe, is the biggest retail failure since Woolworths went bust in 2008 with 27,000 redundancies.

Richard Kirk, chief executive and 30% shareholder, had been attempting a rescue deal with the backing of a mystery figure described as “one of the biggest names in British high street retailing”, but the deal fell apart early on Wednesday morning.

It is understood the deal would have forced Peacocks’ 18 lenders, including the Royal Bank of Scotland, to forgo most of the roughly £600m the retailer owed them. Peacocks had been fighting for survival since talks on a complex debt-for-equity swap broke down at the weekend.

Peacocks stores to remain open

KPMG, which was appointed administrator on Wednesday night, said all Peacocks’ 611 stores and 49 concessions would be kept open while it looks for a buyer. Richard Fleming, joint administrator at KPMG UK, expected “considerable interest” and was “hopeful a big chunk of the business” would be sold. There will be no immediate redundancies, but Fleming said there would “inevitably” be big job losses to come.

“Peacocks is a brand with great heritage, and it is with deep sadness that we have been left with no other option but to place the business into administration. We have worked tirelessly over the past year to agree a new financial structure to take the business forward in the current tough retail environment, including seeking new investment for the business,” he said. “This is a hugely sad development for all of our stakeholders, especially our employees who have shown total commitment to the business over an uncertain and difficult period.”

Peacocks still in talks to sell

RBS and Barclays said they would continue to support Peacocks. A spokesman for RBS said: “We supported the proposed transaction and are disappointed the deal could not be concluded. Since the bid came in on Sunday night, we have worked around the clock to try to achieve a positive outcome.”

Peacocks is still in talks to sell its plus-sized womenswear business Bonmarché, which employs 3,800 people, to private equity firm Sun European via a pre-pack administration. Bonmarché filed a notice of intention to appoint administrators on Monday but this allows 10 working days to secure a deal before the appointment of administrators.

Peacocks

Country Chicken From Australia In India

Retail News From Financial Express — Wed, 18 Jan 2012 13:43:36 +0000

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.

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

Indian Retail Sector – Cloudy Outlook

Retail News From Financial Express — Mon, 16 Jan 2012 09:43:08 +0000

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.

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

GMROI Increases Profitability

admin — Sun, 08 Jan 2012 16:05:13 +0000

GMROI Increase Profitability

GMROI is one of the most important metrics in the retail/supplier world because it allows you to understand both the velocity with which your inventory is turning and the return you are getting on your investment.

GMROI is a measure of inventory productivity that shows the relationship between total sales and the gross profit you earn on those sales in conjunction with the amount of dollars invested in inventory.

GMROI is an abbreviation for Gross Margin Return On Inventory. It calculates the return based on the gross margin from sales. It can be expressed as either a percentage or dollar multiple.

Many retailers calculate GMROI at a product family or department level but it can also be calculated at an individual item level. Expressed as a percentage, it equals gross margin * (sales / average inventory at cost); expressed as a ratio, GMROI equals gross profit / average inventory at cost.

Continuing with the example, if the average inventory at cost equals $100,000, GMROI equals 150 percent: 15 x (1 million / 100,000); in multiple terms, GMROI equals 1.5 (150,000 / 100,000).

GMROI – using it, businesses can manage their inventory levels better

If there is too much inventory of a certain product, it may mean that the product is not selling well; on the other hand, too little inventory may mean lost business. By knowing the relative GMROIs of different products or product families, businesses can manage their inventory levels better and drive gross profits higher.

This does not mean replacing low-GMROI products with high-GMROI products because customers may want both, but rather to have the right inventory mix to maximize gross profitability.

It is closely related to turn. If your turn increases, your average inventory cost will be lower (relative to your profit), and thus the greater the return on your investment. For example, if you purchase $2,000 of inventory and sold it all in the same year for $6,000, your profit would be $4,000.

The return on your investment of $2,000 was $4,000. The GMROI in this example is $4,000/$2,000 = 2.

GMROI is almost always used to identify problem items

GMROI is almost always used to identify problem items, representing a “what should we worry about” sort of ratio. The answer, based on GMROI, is to worry about the items with the lowest return.

It is actually a measure of gross profitability of an item. It is the most widely used productivity measurement for retailers. It is a reflection of the relationship between margins and turns. It affects both cash flow and profit. This is a successful tool to use to increase inventory productivity.

GMROI is a general productivity measure that tells you how much you get in return for each dollar you spent on goods. The GMROI Ratio attempts to communicate the return on inventory investment that the item produces.

Generally, the higher the GMROI number the better the Gross Margin and Turns. It allows businesses to have the right level of inventory in their stores.

GMROI

IKEA Set To Enter India

Retail News From Financial Express — Mon, 28 Nov 2011 02:16:19 +0000

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 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