Celio continues India focus, targets opening 100 stores by ’16

Celio, the French fashion retailer is all set to strengthen its connection with Indian customers. The brand, is eyeing a bigger pie of India’s organized menswear retail market. Celio brings an essentially urban European fashion trend through its collection of shirts, jackets, waistcoats, trousers, suits, jackets and accessories.

In India, Celio offers a wide range of smart casual, business wear, sportswear, clubwear and denims. Celio had stepped into the country in 2008, the brand opened its first store in R City, Mumbai in 2009. Today the brand runs 40 exclusive brand stores which are fully company owned and operated and 128 shop-in-shops. The brand has also penetrated through large format stores like Pantaloons, Central and Lifestyle. Celio is looking at rolling out 100 stores by 2016.

Riding the booming e-commerce wave, the brand has already registered 7 percent of its total revenue in the domestic market through online sales. It has tied up with leading ecommerce portals like Myntra, Jabong, Flipkart and Amazon. “The urban Indian youth is aspiring for fast, effortless fashion. In India the younger generation is as fashion seeking as their global counterparts. They have exposure of international trends through the net, TV and mobile. We want people to come up to us for global fashion,” says Rajiv Nair, CEO, Celio, Future Fashion.

Driven by a strong conviction in India market, the brand is eyeing deeper penetration through retail expansion and a strategic communication plan targeted at young consumers. “We are essentially a retail oriented company which means our philosophy or strategy is store, product and customer service centric. We are exploring various routes to increase our penetration and strongly believe internet is the way,” he says.

“We have a legacy of two decades and in India we are just a starter, we are still understanding the market. We see ourselves as a retailer first, backed by a fantastic manufacturing set up. We manufacture four crore garments in Asia per annum and 10 lakh of these per annum are for India. We are taking the slow route. We have set the route and standards. Now, our goal is to get profits at the corporate level,” adds Nair.

Although the brand is not in a hurry to open franchisee stores it does plan to slowly tap that route. “Even though we are looking at franchisee stores for expansion, it won’t be bigger than our company stores. We understand that we have to take the franchisee route to get into smaller territories,” sums up Nair.

Nike to open owned stores in India

US-based sports shoes and apparel supplier and manufacturer Nike has made a proposal to the Department of Industrial Policy & Promotion (DIPP) under the commerce and industry ministry to set up fully-owned stores in India. Single-brand retail policy allows 100 per cent foreign direct investment (FDI).

Nike is listed on the New York Stock Exchange, is one of the world’s largest suppliers of athletic shoes and apparel in the world with a market capitalization of $68 billion.

The company has been present in India since 1996 and currently operates through a network of local distributors and retail partners. Nike’s entry into India was through a seven-year licence agreement with Sierra Industrial Enterprises, which was later done away with to become a 100 per cent-owned subsidiary of the US parent company.

“Nike welcomes the government’s decision on foreign direct investment in single-brand retail franchise in India. Nike currently operates its business here through local distributors and retail partners. This model works well for us and we may consider exploring opening Nike-owned stores in the future,” the company said in an email response to Business Standard.

Competing in the sports wear category with the likes of Puma and Reebok, which work through franchise and local supplier arrangement, Nike is first in the space to make a move to open 100 per cent-owned retail outlets.

Swiss watch maker Swatch had recently made an application to DIPP for setting up own stores. Swedish fashion retailer H&M and furniture retailer IKEA are in the process of setting up their flagship stores through 100 per cent FDI route.

Experts say the application by Nike is a sign of greater commitment of the brand to the Indian market. Fully-owned stores offer a lot more control over quality, consumer experience and give freedom to the brand to choose locations for stores. “It’s a sign that a brand is here to stay for long,” said Mohit Bahl, head of retail at KPMG in India.

Lacoste to expand footprint through the franchise route

French brand, Lacoste, has decided to aggressively expand its India footprint through the franchise route. The company is looking to increase its store count to 90, adding 20-25 franchise stores in cities like Surat, Kochi, Lucknow and Jalandhar. Lacoste’s product portfolio includes: clothing, footwear, leather goods, perfumes, eyewear and watches.

A symbol of relaxed elegance, Lacoste was created in 1933 by famous tennis champion René Lacoste. Lacoste India is a strategic alliance between Lacoste and Sports and Leisure Apparel (SLA). SLA has the exclusive rights to manufacture Lacoste branded garments in India and distribute/market in India, Maldives, Nepal and Sri Lanka. It also has exclusive rights to distribute/market Lacoste branded footwear in the India and Maldives.

Established in 1993, the company considers India, an important market for growth. It is focusing on emerging markets of the world including China, Brazil and India. Currently, it enjoys presence through 45 points of sale pan India, covering 15 Indian cities, including one at Maldives.

Franchise model, most effective in tapping rural retail market, but Pricing, a major challenge in e-commerce: experts speak

More than 90% of rural retail market is left to be tapped and franchisee-based model is proving to be the most efficient one in tapping this market, echoed retail experts assembled at Evolve, a two day summit on retail and e-commerce organized by Sir M Visvesvaraya Institute of Management Studies and Research (SVIMS), a leading Mumbai-based business school.

“Our experiments in places like Kalol (Gujarat) and Karnal  (Haryana) is so far proving  that it is effective to set up a single big wholesale unit in remote places and encourage residents in villages nearby to run franchisees by sourcing products from the unit. In this way, villages will have access to the best of the products available in cities. We are running about 15 franchisee outlets around our Karnal wholesale outlet and is proving to be very successful,” said Dipayan Baishya, Associate Vice-President, Strategy, The Future group, addressing the audience assembled at the Evolve summit.

Future Group will be providing the right brand, technical and training support for the franchisees to ensure uniformity in the look and feel of these stores. He said at the moment, it made little sense to operate fully owned retail shops in tier-iii towns and villages.

In addition to rural, the Future Group plans to step up franchisee based models, in the form of convenient stores in metros like Delhi, Bangalore and Mumbai as well. “Right now we have 100 franchisee-based convenient stores in Delhi and 200 stores throughout Delhi, Bangalore and Mumbai. We plan to expand to more than 1000 convenient stores in these cities in the next two years,” said Mr. Baishya.

This would be an alternative viable option as in the next 5-7 years as the city is expected to face shortage in the availability of land for retail expansion. Customization of products and services, to suit the needs of regional and sub-regional population will be the key to success, he highlighted.

Supporting Mr Baishya’s view, Dr BR Manjunath, Director General, SVIMS said that the retail market in India is too nascent and retailers need to invest a fair share of time and resources to study understanding the customers for the next five years, as customization of products and services has become too critical today. 

In 2011, Indian retail market was about $470 billion and is expected to touch $675 billion by 2016. By 2020, the traditional and organized retail industry is expected to touch $ 1.3 trillion.

Mr. Jerry Rao, e-commerce expert and Chairman, Value and Budget Housing Corporation, said, pricing is currently a major challenge in e-commerce.  The e-commerce companies charge any rate today for their services, which may be too low or too high. According to Mr Rao, there needs to be more research and studies conducted to arrive at a standard pricing mechanism for different kinds of e-commerce products and services. “Should an e-commerce arm of a retail company sell its products at lesser rate compared to products sold out of its physical outlets is still a dilemma. The retailer could pass on the benefits he saves on rentals, staff and AC, to his e-commerce customers. However, this could also have a demoralizing impact on its retail employees. Similarly, how much a telecom company should charge its customer for using specialized calls like knowing Rahukalam or astrology  is still unclear. Should it be one rupee, five rupees or ten rupees?”

According to Mr Jerry Rao with the advancement of technology, availability of real time data will enable services with time-bound requirement of a five Star hotel or an airline to fill the unoccupied suits or business class seats through innovative concepts like last moment auctions, targeting the right customer profile. This technology to predict consumer interest is gradually moving into physical retail space. Iris screening technologies are being used to study the time spent by a particular consumer at various spaces of the super market, time spent in searching spots of her interest, products her interest, which could be utilized by companies for prediction of her interests and engagement with her of.

According to Nitin Mukadam, founder, localbaniya.com and CRM expert, Customer Relationship Management aided by data analytics is going to be the game changer from now. Technology will enable procurement of timely data based on the choices of the customer, which can be effectively used for customer engagement leading to customer loyalty.

According to Mr Mukadam, the technology is growing in such a way that it is today able to exactly predict what the customer is planning to buy, which section of an e-commerce site she visits often, what are her areas of particular interests etc. E-commerce companies could utilize this knowledge for customizing its services for this particular consumer. According to Mr Mukadam, an e-commerce company could build right data-bases by extracting intelligent data from Google analytics, incentivize the customer to register and then later engage customers in constant dialogue and foster customer communities through social media.

Mr Rahul Jagtiani, Founder, Plush Plaza, India’s home décor site said that e-commerce and social media is making it easy for the start-ups to gain visibility. “New Search engine optimization and search engine marketing models, social media sites and You Tube are enabling new entrepreneurs to gain maximum visibility in no time. These advantages were never there for a generation back entrepreneur,” said Jagtiani.

Mr Kartik Jain, Vice-President, Infibeam, a leading e-commerce site, the emergence of social-cloud-mobile media is enabling e-commerce companies to give multiple services to different vendors on a cloud-based model. The cloud-based model is negating the need for multiple server farms and at the same time enhancing the scalability and efficiency of services. 

According to Mr Jairaj Hegde, Vice-President, Sherwin Williams, India, Indian retailers should focus heavily upon improving supply chain management and training of man power. Today, there is an increasing need to deliver highly customized products and services on a real-time basis.  Most retail enterprises falter because they do not recognize that it is the supply chain which ensures Customer satisfaction and delight

Vinayak Bhat, Country Manager, FactSet India observed that FDI is going to change the whole retail scenario in the country. He observed in the new regime, there is going to be more opportunities for domestic micro and small and medium enterprises, partnership opportunities through joint ventures, franchisees and strategic licensing, and more job creation. This may put pressure on the kirana stores to innovate. E-commerce growth will result into creation of supply chain infrastructure, mobile commerce, social media leverage etc.

D. Balasubramaniam, partner, Ecovis RKCA, said the big retailer should make an attempt to learn methods on customer relationship and service from the local kirana stores and adapt them at their level. He focused on the strengths of Kirana stores, and forecasted that the Kirana stores in India would reinvent themselves, most probably on Supermarket model, to meet the customer expectations.  Ultimately, the cash Management is easy for Kirana stores, as in most Indian cities, rentals are far higher than in the west, which is a disincentive for the Retail trade.

Is HR ready for growth in retail and e-commerce? The industry says no, while the institutes think otherwise. Mr Ravindra Gupta of Micro Retail said, “If in acquisition of talent, its management and development is not done right, there is a huge rate of attrition. Hence innovative techniques are needed to retain the employee hired.”

Mr Rakesh Vanarse, founder, Brandcepts Advertising, said the retail sector has the potential of bringing in millions of job opportunities in the country. There lies a huge training potential at the level of retail management and retail operations. This is an opportunity for B-Schools, and other education and training centres to come up with new courses on retail operations management. 

The East India Company launches first franchise in Kuwait

The East India Company is once again expanding its global trade relationships with the exciting news that the first East India Company franchise store will launch in Kuwait in February.

Opening on 13 February 2013, this new franchise store will carry The East India Company's world renowned teas and coffees; artisan sweet and savoury biscuits; an exquisite chocolate range including luxurious bars and an enrobed selection of fruits, peels, coffee beans and nuts; and gourmet salts and sugars. 

The store will also feature a truly delightful new range of Chakra inspired herbal infusions that taste wonderful and help bring balance to the day.

The franchise will be operated by the Al Maousherji Group which is a family-owned business enterprise based in Kuwait and Saudi Arabia with subsidiaries based in the United Arab Emirates, Qatar, Sultanate of Oman, Bahrain and India. A grand opening of the store will be held by the British ambassador of Kuwait, and a VIP reception in the British ambassador's residence.

Helios in expansion mode

Helios, the multi-brand watch retailer from Titan Industries, plans to open another 13 stores in different parts of the country by the end of this fiscal. A wide range of latest designs across 20 international brands, including Tommy Hilfiger, FCUK, Fossil, Guess and Armani, ranging Rs 3,000 to Rs 48,000 would be available in the showrooms. By the end of this fiscal, Helios would have 50 stores in India and would open more such stores in future.

Indus-League mulls franchise model to expand in smaller cities

In a difficult retail environment when sales are subdued and retailers are battling pricing pressures, Future Ventures India Ltd-controlled Indus-League Clothing Ltd is using the franchise route to expand in smaller cities and keep entry-level prices intact. Indus-League sells apparel and accessories and owns brands such as Scullers, Indigo Nation, John Miller, Jealous 21, Urban Yoga, Daniel Hechter and has recently entered into a licensing agreement for Manchester United. 

“In smaller markets in tier II and III cities, we were finding it a little difficult to run our own stores owing to manpower and other logistical issues, and so we decided to open 10 franchise outlets more as a pilot project to see how they do. We gave them six months this year, and now we have decided to open another 10 by this Diwali. The franchise format would also speed up stores in these markets. While we are not opening any flagship stores there, we will use a combination of two-three brands in each store,” said Rachna Aggarwal, chief executive, Indus- League. 

The response to Manchester United stores and the merchandise has been extremely positive and we have been surprised by the kind of fan following the brand has, particularly among youngsters, Aggarwal added. 

“We have already opened seven Man U stores and will open another five stores in the next three months. The merchandise will also be available in Planet Sports stores and shop-in-shop formats. Though as of now Man U stores are mostly coming up in metros, we are opening one store in the new World Trade Centre in Jaipur,” said Aggarwal. 

Last year, the company opened around 16-18 flagship stores and is planning to open the same number of stores this year. Among this, 40-50 per cent will be in high streets and the rest in shopping malls. 

Landmark open to more brand tie-ups

Lifestyle department stores, Max Retail and Auchan hypermarkets will lead the growth for the $4.7-billion Dubai-based Landmark Group in India. Renuka Jagtiani, who spearheads the group's international business, said the target to achieve a billion dollar turnover from India is well on track with the addition of doughnut chain Krisy Kreme and the French hypermarket chain Auchan to its portfolio, reports Times of India. 

Jagtiani, who runs the business along with husband and Middle Eastern retailing czar Micky Jagtiani, said India clocked over Rs 3,000 crore in turnover last year with a growth of 30-35 per cent annually even as the group looks to bring more brands across different categories here. "We have been here for 11 years and as a group we believe in each one of our businesses. Grocery retailing has been important for us. Auchan is a great hypermarket partner with a track record of success in emerging markets so this part of the business will be significant for the group," said Jagtiani, vice-chairperson of Landmark Group. 

The group, which will be the franchise partner for the French retailer, aims to open 10-12 hypermarkets every year after it decided to discontinue its association with Dutch retail chain Spar. Jagtiani said if the Indian government decides to open up the multi-brand retail sector to foreign investment, it may look to change the ownership of Auchan iprovided both the parties agreed on it. The group has gone slow in its investment behind its fashion portfolio other than through Lifestyle and Max stores. "We are always on the lookout for brands and are open to associations, we are not limiting ourselves," said Jagtiani, who was instrumental in setting up the multi-brand fashion retail chain Splash. 

Landmark group franchises international brands such as New Look, Aftershock, Reiss and Koton in the Middle East as well as Bossini and Kappa in India. The group withdrew Springfield and Vincci from the Indian market during the 2008 economic downturn and cut back on expansion of other fashion brands, the report added. 

Me n Moms unveils first franchise outlet in India

Me n Moms, the fastest growing homegrown retail kids wear and accessories chain, has launched its first franchise store in the country. Located in Guntur, Andhra Pradesh, the store is spread across 1,000 square feet, and exhibits a dedicated range of kids wear and accessories under seven categories along with maternity care products for pre-natal and post-natal care. The store aims to become a ‘one-stop destination’ for both mothers and their children. 

Naresh Khatar, chairman and managing director, Me n Moms, said, “Keeping in mind the fact that the Indian market for Infant’s apparel is registering a healthy annual growth rate of more than 15 per cent and India is poised to be one of the largest consumer markets, a lot remains to be tapped in the organized retail space thus paving opportunities for franchise models as well. We are happy to announce our first franchise owned and operated store in Guntur. “

“We have chosen this route to grow faster and keep ourselves abreast with the ever changing retail scenario. We have arrived at selecting this city for pursuing our franchise model, post careful evaluation of markets. We are looking at replicating this model across India for our brand,” Khatar added. 

The products at Me n Moms range from footwear, furniture and toys to baby play-time and bath-time accessories. It also offers products from several other big brands in the same category under one roof as well as tailor-made products for expecting and new mothers. The products are a combination of quality and affordability par excellence that aim to promote the ‘joy of parenting’. 

The company currently has a turnover of Rs 80 crore and aims to reach the Rs 300 crore mark within the next five years. It currently has 12 exclusive stores (Lucknow: 1, Hyderabad: 3, Mumbai: 3, Noida: 1, Pune: 3, Nasik: 1)

Aadhaar Retailing aims to break even in a year

Aadhar Retailing, the rural retail joint venture between Future group & the $3.3 billion Godrej group, is embarking on a restructuring exercise for the loss making chain that aims for a break even level of operations in a year, Financial Chronicle reported, citing senior officials at Future Group. Meanwhile, the company is looking to expand its retail network via franchise model.

“We will take around nine months to break even. While 35 per cent of our existing stores are profitable, we are expecting 35 per cent to break even in two-three months,” said a senior company official in the know of the development. On an overall basis the chain plans to achieve break even within a year.

For the financial year 2010-11, Aadhaar Retailing had sales of Rs 68 crore and a loss of Rs 20 crore. As of end of March 2011, the group had invested Rs 86.18 crore in this venture, which retails products such as apparel, seeds, fertilisers and FMCG products.

The group is trying to lure rural customers to stores with personalised communication via mobile messages, loyalty programmes instead of banking on print or television media. There is new technology in place to link up to the stores through the internet.

Kishore Biyani is trying to rationalise costs and rentals by relocating staff, hiring less qualified employees at the front-end and shutting down unviable stores. “We are trying to increase the sales throughput to be more profitable,” said a senior company official.

The group that currently has 40 stores of its rural retail chain plans to add 40 more over the next three months across clusters around districts in Punjab, Haryana and Gujarat, added the senior official. The first round of expansion would be around Gujarat and the second phase in Punjab. As part of its restructuring process, the group is trying to launch a wholesale format that would stock food and grocery. Each of the wholesale stores would have around 1,600 stock keeping units (SKUs) against typically 10,000 SKUs in a Big Bazaar, said another senior company official. The size of the retail store would be scaled down to 500-1,000 square feet from average 5,000 square feet.

The new model being piloted at Kalol in Gujarat, will see Aadhaar become a cross between a cash-and-carry store and a front-end retailer. Under the proposed pilot, the company will operate a hub and spoke model where its existing outlets will serve as supply hubs while the franchisee outlets will be spokes.

In a typical cash-and-carry format, the store serves as a front-end outlet to wholesale goods and services for commercial/industrial consumers and small store owners.

But the model Biyani is proposing involves Aadhaar also ensuring last mile delivery and working with small kirana outlet owners to run stores.