Retail giants on a property signing spree

Retail giants like Reliance Retail, AV Birla Retail and RPG are rapidly signing properties for their convenience store format, which has emerged as the most popular format for retailers given the high returns per square foot of retail space. This despite the decline in the global percentage share of fruits and vegetables format from a whopping 60% to 52% in the last 10 years.

Reliance Retail has till date signed up 1,300 properties for its convenience store, Reliance Fresh at an average rate of Rs 80 per sq ft, with around 60 properties in Delhi and Mumbai at rates ranging from Rs 125 - Rs 300 per sq feet. AV Birla Retail in turn, has signed close to 30 properties for its recently launched 'More' stores in the Capital, while the RPG Group has signed around 60 properties in the NCR for its Spencer Fresh and Spencer's Daily at a rate of Rs 90-95 sq ft.

According to industry sources, Kishore Biyani-led Pantaloons, which at present is the country's largest retailer, would soon foray into the convenience store segment.

The size of these convenience stores varies across retailers.

While large retail chains like Reliance Retail, AV Birla and the RPG Group's stores start at 2,000 sq ft, the relatively smaller and regional chains like Big Apple which are targeting around 100 convenience stores by early next fiscal, have signed dozens of properties starting at 500 sq ft.

According to retail analysts, this is the most popular segment, despite the wafer thin margins because it services the hourly needs of customers and is the only retail format which can be opened in such a small area.

Printo to open 250 retail outlets entailing Rs.100 crores investment

Printo Document Services Pvt. Ltd (Printo), India's first organized retail venture in the Rs. 17,000 crores market for print and document services, today announced its retail expansion plans at a press conference. The company plans to open 250 retail outlets over the next three years covering major

Date Released: 06/13/2007

Bangalore, June 13, 2007: Printo Document Services Pvt. Ltd (Printo), India's first organized retail venture in the Rs. 17,000 crores market for print and document services, today announced its retail expansion plans at a press conference. The venture which will induce a tectonic shift in the hitherto unorganized space is already off to a start with 6 stores in Bangalore. The company plans to open 250 retail outlets over the next three years covering major cities in India in a phased manner entailing close to Rs.100 crores investments. On the occasion, the company also announced that Naresh Malhotra, CEO, Café Coffee Day will be joining its Board as an active member from July 1, 2007. The expansion move, to penetrate the hitherto untapped market and the induction of a seasoned veteran credited with building one of India's leading retail brands augurs well for Printo which got incepted only in 2006. Talking to media persons, Manish Sharma, Co-founder & Chief Executive Officer, Printo, said, "Globally the print and document services market is an organized business worth hundreds of billions of dollars dominated by large chains that operate across geographies. In India, despite the market growing at an exponential 80% year-on-year, there has been no organized attempt in this space. In that sense, Printo was a venture that was bound to happen and going by initial market response the timing of the venture has been perfect coming close on heels of India taking to organized retail as a format in a big way. The introduction of branded retailing in this space is sure to change the market contours radically in the coming years." According to Srivats Asur, Head, Operations, Printo, "While it is innovation on the go with everything that we do, we recognize that for this format to succeed, achieving certain scale and efficiency quickly is critical. Over the next three years we plan to open 250 stores that would allow us to touch and service a consumer where ever they need us. That will lay the foundation for us to make the next big push which then combined with our growing bouquet of packaged and value-added services would give us a competitive edge." Announcing the induction of the new member to the board, Lalana Zaveri, Co-founder & Director, said, "A person of the stature of Naresh Malhotra accepting to join our Board and taking active interest is important in that it clearly validates the immense potential of our business model and this space. Besides, from the point of view of the team at Printo, we are all excited about having him amongst us since we will have the benefit of the expertise and experience that Naresh has of building one of India's biggest retail success stories from scratch." In his comments, Naresh Malhotra, CEO, Café Coffee Day, said," Printo represents the next frontier for organized retail in India - prizing open hitherto untapped or mostly unorganized spaces which have significant market size and potential. Personally, it is exciting to be able to work on retail formats in two very different sectors and being able to play my role in driving the evolution of the organized retail space in India in the service sector. I thank the team at Printo for having me and look forward to contributing to the success of the venture." Printo is India's first branded retail chain for print and document services which leverages digital and internet technologies to reduce people dependency in delivering print products of international standards. Besides regular services, the company has a novel concept wherein customers could pick and choose from its template bank, on the internet as well as in-store, and customize it to their choice - be it marketing brochures, event collaterals, business cards, brochures, posters or invitations. This approach not only helps customers in getting customized print products but also helps them source it with minimum lead-time. Importantly, the modern store design, well-trained staff, cutting-edge digital printing equipment, and internet technology would provide customers with world-class print outsourcing solutions right in their neighbourhood. Printo's retail blitz is targeted at both the corporate and retail walk in customers. The company scouts for and identifies such locations where footfall for print and document services is perceived to be high for each of its stores. Founded in 2006, Printo Document Services Pvt. Ltd. is an innovative venture that seeks to capitalize on the opportunity presented by the unorganized Rs.17,000 crores market for print and document services in India. Promoted by Manish Sharma and Lalana Zaveri, who between them have 23 years of expertise in digital printing, manufacturing, and IT services, Printo is experiencing exponential growth in all its areas of operations. The start-up has the backing of Pravin Gandhi (co-founder, Infinity Ventures and SeedFund), Naresh Malhotra (Café Coffee Day), and Raju Venkatraman (President & COO, ICICI OneSource) as advisors and investors

Indo Arya to ink warehousing deal with Birla Retail, talks to Wal-Mart

The latest entrant in the retail race Aditya Birla Retail, which recently opened its first 'More' supermarket outlet in Pune on June 1, is in advanced talks with Indo Arya Logistics for exclusive warehousing space. The logistics company will also provide transport and value added packaging services.

"We have been working with a few other Aditya Birla group concerns like Hindalco . Right now, talks are on for an exclusive warehouse for its retail operations," said Indo Arya Logistics director Yogesh Arya. The size of the warehouse will be between 50,000 and 1,00,000 square feet, he said.

Initially, the retailer is looking at an exclusive warehousing facility and the number may gradually be increased in accordance with the company's growth plans. The negotiations will be hammered out in the next few months, Arya said. The logistics company has announced the launch of India's largest Regional Distribution Center (RDC) at Hassangarh, Haryana, with an area of 5.14 lakh sq.ft. This RDC would take care of its retail clients Pantaloons, ITC, Reliance Retail — offering services from source to destination delivery, assembling and packaging. "Such high technology warehousing provides great strategic competitive advantages and is core to a company's business. Companies have started strategising growth plans in synergy with the high quality warehousing space available in the country," said Arya.

The company is also in talks on handling of logistical operations for Walmart in India. "But nothing has been finalised yet and the talks are at a primitive stage, where it will be very difficult to comment," said Arya.

The increasing investment in infrastructure, booming manufacturing sector and development of the organised retail sector are providing huge business potential for the logistics services, he said. Looking beyond India, Indo Arya is planning acquisitions in the international freight forwarding business, with operations in Europe, South Asia and South-East Asia by mid 2008. "It is time we leveraged the supply chain network internationally, grow with our clients and go global," said Arya.

By 2010, it plans to bring an IPO to fund its Rs 200 crore expansion plans to open RDCs in cities like Kolkatta, Chennai and Mumbai with a total space of 1 million sq ft. In 3 years, Indo Arya has plans to expand its reach to six other cities in India with a 2 million square feet capacity .

Organized retail print player Printo to open 250 outlets

Print and document services are an unorganized industry in India. Printo Document Services, (PDSPL), a Bangalore based company formed with angel funding has announced plans to ramp up their outlets from the current six in Bangalore to 250 over the next three years or even earlier.

The document services and print market in India is about Rs 170 billion per year, and growing even at conservative estimates by about 80 per cent annually. The market is expected to touch 1.6 per cent of the GDP and beyond according to industry speculation. Printo claims to be the first player in India on this scale. They have chalked out their growth in three phases – the first phase was opening on six outlets in Bangalore, which has already been completed. The second phase which is expected to be complete over the next 12 months is targeting 54 outlets in the metro cities in India. The focus however is more towards the south of the country. During the third phase Printo plans to open up to 250 outlets, 60-70 of which would be through the franchisee route. The total investment would be in the range of Rs 1 billion.

Organized retail will help reduce food wastage, Crisil report says

This wastage may occur in the form of food simply rotting or not getting its full market price because of gaps in the current food supply chain

Adding yet another conflicting data point to the simmering controversy of whether organized retail will benefit or hurt the average Indian, credit rating agency Crisil Ltd has come out with a report saying that around Rs1 trillion worth of food is not being used in the country because of wastage, poor storage and middlemen commission costs.

This wastage may occur in the form of food simply rotting or not getting its full market price because of gaps in the current food supply chain, the report says, suggesting the emergence of organized retail will only strengthen the supply chain, increase farm incomes and reduce food spends for consumers.

Food and grocery sales form just 18% of organized retail revenues, according to the report. But with many new players, including Reliance Industries Ltd, the Aditya Birla group and Bharti Enterprises setting up retail operations, food and grocery retail could form 25% of revenues for organized retail. This could bring wastage down from the current level of 25% to 15%, which is as much as is wasted in more developed retail environments.

That could then boost farm incomes by as much as 37% and reduce the country's food spending by 3.5%, the report estimates.

"We are already seeing that there are less layers and less wastage of food in organized retail," says Ajay Dwivedi, director, Crisil Research, in a conference call to discuss the report's findings.

The findings of the report come against the backdrop of the Left parties asking for regulations to curb organized retail as they believe that the shift to organized retailing could lead to an elimination of jobs in the unorganized retail. After agriculture, organized retail is India's second largest employer.

Faced with such concerns, the government has commissioned a study on the impact of organized retail on unorganized retail, by the Indian Council for Research on International Economic Relations.

"We do not have enough evidence to show the extent of wastage caused by middlemen," says Reena Desai, campaign director of the FDI Watch campaign, which opposes opening up India's retail sector to domestic and foreign organized retailers.

"Many livelihoods will be lost where these companies are entering. Besides, there are also implications of having a few companies controlling the entire supply chain of food," Desai added.

Currently, just about 1% of food and grocery is sold in an organized retail environment. But, with organized retailers increasing their presence and customers' shopping habits changing, food and grocery retail in an organized set-up will grow at 37% over the next five years, compared to 26% for the entire industry.

Punjab farmers entering new field to reap the retail harvest

The great Indian retail revolution seems to be catching on. First it was corporate houses and now it's the enterprising Punjab farmer.

Baljeet Singh Dosanjh, a farmer based in Doaba, has joined hands with other growers to launch Veggie Wonders, a retail chain of fresh food items. The maiden store covering 2,300 sq feet opened recently in Jalandhar. Dosanjh plans to come up with four more in the next few months.

So far the results have been heartening with 150 customers walking into this store every day. "The response is so good that we have now opened another Veggie Wonders outlet in the city," Dosanjh said.

What is most notable is the place and timing — Veggie Wonders opened around the same time as Reliance Fresh, both in Jalandhar. Dosanjh now claims the Reliance store has not affected his business and customers appreciate the high quality stuff sold at his store.

Another example is Sandhu Organics, a retail store selling organic food in Jalandhar's Model Town area. Owner Kulwant Singh Sandhu found it convenient to sell his own produce, which he grows in his fields in a nearby village. Sandhu plans to open a new outlet in Ludhiana. But he cautions that the retail business is tricky. "Better be the first than the best" does not always work in this field, he said. "I started my retail business around two years ago when organic food was not in vogue and people were not used to purchasing vegetables from a proper shop, but all that has changed," Sandhu said.

That explains why the Potato Growers Association of the district is all set to come up with its own fresh food retail chain. Group head Jaswinder Singh Sangha gave the business model: "We are a group of around 150 farmers with large tracts of land. We also have our own warehouses and a well-developed transport network. We will allot different crops to different farmers. So, one farmer will do tomatoes, while the other grows green chillies, for instance, to save us procurement hassles."

Namdhari Seeds, which started as a group of farmers growing crop on community land, is also making inroads into the agro-retail sector. "We already have a big farm in Malwa, now we are planning to set up a retail store in Ludhiana and Chandigarh," said Uday Singh, chairman of the Namdhari Group. The Namdharis already have 15 stores in Bangalore and five in Delhi.

Ask these farmers what's prompting them to jump into a field dominated by the powerful corporates, and they cite their expertise in the field and wide network. As Dosanjh puts it: "We have seen companies like Subikhsha and ITC setting up their retail stores in the region with goods that are far from satisfactory. It's not easy to run a supply chain. But as farmers, it would be easy for us to procure the best possible produce for the shop racks."

The trend is also going beyond raw food to cooked food. Sangha, for instance, owns the SubWay outlet in Jalandhar. Similarly, the McDonald's outlet in the city is owned by a prominent farmer.

Jalebi Junction and Glassy Junction, two of the most popular eating joints in Jalandhar and Phagwara, are owned by Manmohan Singh, a farmer of repute. Singh sums up the popular sentiment: "Why should we rein in our entrepreneurial potential? We know we can perform well in more than one field."

Walmart on hunt for storage biz partners?

Walmart is in talks with an Indian company to set up warehouses and cold chains. With retail expected to grow at 12%, the logistics industry will see Rs 5,000 crore of investment in the next three years, reports CNBC-TV18.

 
 

India will spend approximately 11% of its GDP or about Rs 5,00,000 crore on logistics and related services by 2010. According to a Goldman Sachs study, a lion's share of the investment will be made by three key sectors - FMCG, consumer durables and retail. Almost Rs 5,000 crore will be pumped into setting up the logistics infrastructure for these growth drivers in the next three years.

 
 

The largest warehouse in the country was recently launched by Indo Arya, one of India's leading logistics company. It will soon offer a cold warehouse facility too. Indo Arya is in talks with some top retailers, including Walmart and Tesco to construct and operate warehouse facilities for them.

 
 

"We are already in talks with Walmart, Aditya Birla Retail and we are talking to Tesco on a very primary stage, as of now. We are trying to take it forward with them," said Yogesh Arya, Director, Indo Arya.

 
 

Indo Arya is also in talks with Reliance Retail for repackaging of its staple food. It is already doing so for Reliance in Hyderabad and is hoping to duplicate it in other cities like Delhi and Jaipur.

 
 

Cold warehousing currently makes up only 3-4% of the industry, but with retailers going big on fruits and vegetables, the demand for cold chains is set to increase. Currently, the logistics industry is seeing 15% growth and with a few foreign logistics providers looking at getting into JVs with Indian companies, this sector is expected to grow faster than the retail sector.

 
 

Newer businesses are also likely to come up. Some logistical companies are open to setting up exclusive warehouses and service center for retail players.