Latest Property News on 'Retail Market in India'

10 Percent Per Annum Growth in Unorganised Retail Sector

The unorganised retail sector is expected to grow at about 10 percent per annum to reach $496 billion in 2011-12 despite the steady expansion of organised retailers, a study released Wednesday said. The report on the impact of organised retail on small shop owners, released in parliament by the Delhi-based think tank Indian Council for Research on International Economic Relations (Icrier), said the retail business in the country would grow at 13 percent annually from $322 billion in 2006-07 to $590 billion in 2011-12. The unorganised retail industry was valued at $309 billion in 2006-07. However, given the relatively weak financial state of the unorganised retailers and the space constraints on their expansion prospects, this sector alone will not be able to meet the growing demand, the report said.

Hence, the organised retail that now constitutes a small four percent of the total industry is likely to grow at a much faster pace of 45-50 percent per annum and quadruple its share in total retail trade to 16 percent by 2011-12, the Icrier said. However, the Icrier added that small shop owners in the vicinity of organised retailers have experienced a decline in their volume of business and profit after the entry of bigger players. According to the report, consumers have gained with the entry of organised retailers and their overall spending has also gone up. While all income groups saved through organised retail purchases, the report revealed that lower income consumers saved more. Read More »

NEC Plans to Enter Indian Retail Sector

NEC India, a subsidiary of NEC Corporation Japan, has launched TWIN POS 3500 G1 machine to meet the much required PoS hardware for the retail space. The solution would enable the retailers to get the feel of internationally adopted technology. With its flagship model — the TWIN POS 3500 G1 machine, NEC India has ear-marked key retail formats to position its product and solutions.

David Arambhan, head (retail solutions) of NEC India said, “Our aim is to enhance the capability of the Indian retail segment to handle its operations in a more structured and effective way. Hence, NEC’s offerings and models look to cover all formats of retail and will soon foray into the entire gamut of retail solutions offering both hardware and software solutions in the retail space. One of the key impacts would be Japanese quality at Indian prices” The products are available across India through its registered partners and channel and are supported by a nation-wide ASP.

Slowdown in Organised Retail

The organised retail sector in India is experiencing a slowdown with expansion projects either getting postponed or put on hold. But interestingly, the rural sector has been largely untouched by the economic slowdown, according to industry experts.“The rural industry has done even better than last year in the last six months due to record output of crops and the loan waiver of Rs 60,000 crore by the Central Government. As a result, the rural populace has a higher disposable income for fresh purchases,” C K Ranganathan, Chairman and Managing Director, CavinKare told to this website’s newspaper on the sidelines of the Conference on ‘Retailing for India’, organised by the Confederation of Indian Industry (CII) Tamil Nadu. The loan waiver size had later been increased to Rs 71,680 crore.

Earlier, CII and advisory firm, PricewaterhouseCoopers (PwC) released a retail report on ‘The Benefits of Modern Trade to Transitional Economies’. The report states that with modern trade, consumers would benefit from widely available choices and quantity along with rationalization and convergence of prices. It would lead to a zero tolerance policy for inefficiencies since consumers would be unwilling to pay for substandard products. Since modern trade players were tax compliant and their sale figures outnumbered that of the organised sector, revenue collections would increase. Large retailers would require development of a support mechanism for their operations including logistics, transportation and warehousing which would generate further revenues for the government. Read More »

Demand for Office, Retail Space can Suffer Because of Terror Attacks

Mumbai’s terrorist attack, the deadliest in India in 15 years, may cut demand for offices and retail space in the nation’s financial capital, Macquarie Research said today. “If the government action does not help bring confidence back for foreign investors, we could see an impact on demand for commercial real estate putting further pressure on rents,” analyst Unmesh Sharma wrote in a note to clients today. Stocks of Indiabulls Real Estate Ltd., a developer backed by billionaire Lakshmi Mittal, and its Singapore property trust may decline, Sharma said. He rates Indiabulls Real Estate as “outperform.” Gagan Banga, the spokesman for the Indiabulls group of companies, declined to comment.

Indiabulls Real Estate climbed 4.1 percent to 97.90 rupee in Mumbai trading as of 10 a.m. local time. The stock has dropped 87 percent this year, matching the 88 percent decline in the Realty Index of the Bombay Stock Exchange. At least 195 people were killed and 295 injured in Mumbai last week as terrorists attacked luxury hotels, restaurants, the main railway station and a Jewish center over 60 hours. “Demand for residential property in south Mumbai is already under pressure due to high interest rates and the unwillingness of developers to cut prices,” Sharma said today. “The attacks may impact sentiment and consumer confidence in the near term.”

Modern Retail the Next Hot Sector of Indian Economy

As India’s middle class grows and disposable incomes rise, “modern” retail is becoming the next hot sector of the Indian economy. Hundreds of millions of new consumers will join this retail revolution, venturing into supermarkets, department stores and air-conditioned shopping malls for the first time. But instead of just window shopping, many of them will be serious buyers with money to spend. To cater for their needs, established players in the modern retail sector such as Biyani, Raheja and Goenka are being joined by the big names of Indian business - Reliance, Birla, Bharti, Tata etc - who plan to spend billions over the next few years rolling out supermarkets, big-box outlets and specialty stores. At the same time, property developers are getting on with the “malling” of India, and looking for high profile anchor tenants to lure customers.

On the sidelines of this Indian retail revolution are big overseas players such as Wal-Mart, which already has a tie-up with Bharti to provide much-needed “back office” support. But what Wal-Mart really wants is the right to set up its own stores in India. The same goes for Tesco, Carrefour, Metro and other international players.While the macro outlook appears bright, the problems are astronomical for India retail industry. There is no reliable cold chain, transport logistics are appalling, there is a huge lack of managerial talent, there is no consistency for quality and quantity of supply, there is political opposition from groups such as market middlemen, the mom and pop “kirana” corner stores have to be catered for, as do the farmers who grow the produce that is integral to a successful retail revolution. How well will these disparate players cope with the various pressures of a dynamic and fast-moving industry?

Mumbai Terrorist Attacks are a Blow to India’s Retail Industry

The attacks in Mumbai struck at the core of the fledgling luxury-goods industry in India, threatening to dampen the vibrant growth of one of the sector’s key developing markets. Mumbai’s Taj Mahal Palace hotel, the epicenter of the attacks, is the most coveted retail address for luxury goods firms that are tapping into India’s growing numbers of wealthy individuals. European brands Louis Vuitton, Bulgari and Fendi all have boutiques in the hotel, which was the target of various explosions, hostage-taking and a fire. The Oberoi Trident Hotel, which was also hit, houses luxury brands including Salvatore Ferragamo. Some of Ferragamo’s employees were being held hostage, the Italian fashion house said.

Any prospective slowdown in the promising Indian market would come at a bad time for the industry. Luxury goods companies have been relying on new markets such as India, Russia and China to counter sluggish growth in Europe and the U.S., where the global financial crisis has drained appetites for expensive goods. Most experts don’t anticipate a long-term impact from this week’s attacks. And the Indian market is still small in terms of how much it contributes to overall sales at most companies. “Even if [the Indian market] comes down, it’s not significant,” says Neelesh Hundekari, principal at AT Kearney Inc., a management consulting firm in Mumbai. Still, India is important symbolically for many luxury-goods brands, so companies may become more cautious about investing there if the fear of further terrorist attacks intensifies. Read More »

Retail Sector India Welcomes Self- Service Technologies

The global economic downturn has opened up opportunities for self-service cash transaction and check-out kiosks at retail stores across the country. The self-service kiosk concept, a hit in markets such as the US, the UK and Japan, among others, enables retailers to deploy cashiers on the shop floor to enhance customer experience, apart from helping the cut down costs. In this context, Peter Frielick, vice-president, marketing, Asia Pacific region, NCR Australia Pty Ltd made his first official visit to India to tap opportunities in self-service technologies in the retail sector. NCR Australia Pty Ltd, whose technology solutions are deployed by retail giants like WalMart, Tesco and Home Depot, among others, wants to “empower retail majors in India on self-service technologies,” according to Frielick.

Speaking to FE, Frielick explained the rationale behind the company’s foray into the Indian market. “Self-service technologies at billing counters will enable customers to operate cash transaction kiosks by placing products on the bar code reader. This will help retailers get rid of long customer queues at billing counters,” he said. “Also, retailers will be able to deploy cashiers on the shop floor to enhance customers’ shopping experience. This is the right opportunity to enter the Indian market,” he added. According to Pradeep Sen, managing director, NCR Corporation India Private Ltd, “At the recently held Retail Excellence Technology 2008 seminar, retail majors like Reliance Retail, Pantaloon Retail, Tata’s Trent, Titan and Westside, Café Coffee Day, Barista showed significant interest in installing self-service billing counters and check-out kiosks within their hypermarkets and retail stores. The retail companies witnessed product demos and inquired about the sustainability of the technology.” Reliance Retail officials, requesting anonymity, told FE, “We have experienced the demo (of the kiosks). They will benefit shoppers. Deploying self-service cash transaction kiosks will be a good cost-cutting exercise for us as well, as they will be able to prune employees and shift cashiers on the shop floor.”

Message for Unorganised Retail- Cooperate or Combat

In order to survive in the growing reorganised retail market, the kirana stores business should either cooperate or combat with the organised Indian retail. This is the proposed futuristic model for the unorganised Indian retail by the students of Mumbai-based Jamnalal Bajaj Institute of Management Studies (JBIMS) to ensure the growth of this sector without incurring losses to any of the stakeholders.Given the relatively weak financial state of unorganised retailers, and the physical space constraints on their expansion prospects, the students feel that this sector alone will not be able to meet the growing demand for retail. Apart from this, traditional unorganised retail is expected to face tough times to withstand against modern, organised retail which now constitutes a small four per cent of total retail sector.The organised retail is likely to grow at a much faster pace of 45-50 per cent per annum and quadruple its share in total retail trade to 16 per cent by 2011-12. Government is also apprehensive about the uncertain future of this sector. Considering the vote bank attached to the unorganised retail, political environment is not quite willing to take the risk of letting 100 per cent Foreign Direct Investment (FDI) in retail.

To conduct the study, the students adopted various methods, including studying secondary data related to around the globe markets where organised and unorganised retails co-exist. Primary data was collected from Indian retail stakeholders like traditional shops, modern retails, manufacturers (FMCG companies, farmers), government or bureaucrats and intermediaries. Based on data analysis, the students have developed feasible cooperation or combating models balancing benefit to all stakeholders.“After studying more than 300 kirana stores in and around Maharashtra, including Mumbai and Nashik, we suggested a business-to-business model, where the kirana stores can club with the modern retail. This will help elevate the dwindling sales that the kirana stores are facing due to the coming up of retail outlets, besides ensuring quality management. The advantage to the retailers would be brand visibility and penetration into deeper pockets by reaching out to the sub-middle class,” says Umesh Divate, one of the students who conducted the research. Read More »

ARCIL Sees Hope in Retail Sector

ARCIL, an asset reconstruction company, hopes to acquire stressed assets worth Rs 2,500 crore in the current year, said Mr S. Khasnobis, Managing Director and CEO. Of this, 20-25 per cent will be retail assets, he said. Speaking on the sidelines of a banking seminar by FICCI and IBA, Mr Khasnobis said the company has done securitisation deals worth Rs 1,100 crore in the first half of this fiscal, of which retail loans account for about Rs 400 crore. This consists of mainly mortgage loans. Vehicle loans form a small portfolio of about Rs 20-30 crore. Retail loans are likely to touch about Rs 600-700 crore this year.

The total AUM (Assets Under Management) is at Rs 10,000 crore and has been growing at a rate of 20-25 per cent, which is likely to continue. The budget for the AUM this fiscal is about Rs 11,500 crore, Mr Khasnobis said. The company has deals with over 60 banks and added 5-6 new banks in the last quarter. “The incremental growth in NPAs is not going to be significant in the next six months. Banks will sell only those loans from where recovery will be nil. So, it makes sense for them to sell it off. Banks in India have holding capacity as they are well capitalised. So, they will hold onto those assets from where recovery is possible,” Mr Khasnobis said.

India bulls Real Estate Optimistic about Retail Growth in India

Indiabulls Retail (64% owned by IBREL) shut four Megastores and 20 Megamarts in the previous quarter that brought stores under operation to four Megastores and 20 Megamarts, respectively. Results for Q2FY09 for retail operations were consequently muted with revenue increasing only 2.3% sequentially to Rs421 million. EBITDA margins continued to decline and were lower by approximately 600bps sequentially as the company focused on clearing existing inventory. We have maintained that acquisition of Piramyd Retail, which had one of the highest operating cost structures in the industry, was ambitious. We view the steps taken to cut retail losses positively impacting the outlook for IBREL shareholders.

The company continues to remain optimistic about retail growth in India and plans to infuse approximately Rs10 billion over next two years. With real estate prices anticipated to come down, we expect the cost structure to be more favorable for retail expansion. However, we still do not expect the company to achieve EBITDA breakeven before FY11.