Lockdown or not, 20% of India’s retail to shut shop

Source: ETRetail.com, May 13, 2020

NEW DELHI: About a fifth of the retail shops across India may fold up even if lockdown is lifted soon because expenses such as high rents will make business unviable amid muted sales, with customers expected to shop only for essential goods, trade bodies said.

In congested areas, where social distancing is impossible, traders have decided to remain shut even after the restrictions are relaxed. More than 60% of retail outlets in major markets including Colaba, Nariman Point and Andheri in Mumbai and Khan Market, Connaught Place and Sadar Bazar in New Delhi are occupied by tenants, traders said. Many have defaulted on rent, they said.

Rent for a 1,000 square-foot shop can be as high as Rs 5 lakh a month in Khan Market and Rs 3 lakh in Breach Candy area, said Praveen Khandelwal, secretary general of the Confederation of All India Traders. “At least 20% of Indian retailers’ business will collapse and they will wind up businesses. About 10% of other traders who are dependent on these 20% traders, too, will collapse,” he said.

In Delhi’s old markets, shopkeepers who pay rents of Rs 4-5 lakh a month are scared, said Sanjay Bhargava, president of Chandni Chowk Sarv Vyaapaar Mandal. Most rent agreements have a force majeure clause and it has been invoked. Traders are trying to manage on their own with savings. “We will not be requesting or expecting relief from the government,” said Bhargava.

Ajay Bajaj, senior advisor to Confederation of Sadar Bazar Traders Association in Delhi, said rentals are expected to fall more than 50% once lockdown goes.

Ram Lal, president of the Gaffar Market Traders Association, said, “Our only advice to shop owners and tenants (unable to pay) is that they should resolve the issue mutually and pay at least 50% of the rental.”

Retail India set for a recast as e-tailers woo kiranas

Source: LiveMint.com, Apr 24, 2020

The humble corner store has emerged as the unlikely darling of multi-billion-dollar corporations, online supermarkets and digital payment startups, courted for its reach, agility and customer insight displayed at a time when many well-heeled online vendors have buckled.

In yet another hat-tip to India’s enterprising kirana store, global online retailer Amazon on Thursday began ramping up a programme to sign up hundreds of local grocers, a day after Reliance Jio and Facebook Inc. joined hands to power Reliance Retail’s JioMart. Soft-launched in December 2019 as ‘Desh Ki Nayi Dukaan’, JioMart currently serves online shoppers in some parts of Mumbai and its suburbs.

‘Local Shops on Amazon’ helps customers discover products from local shops, while helping shopkeepers supplement their footfalls with a digital presence, and expand beyond their normal catchment, the company said. Shops that sell groceries and essentials are already live on Amazon, since India’s strict lockdown rules allow the sale of only such items. With Amazon going full steam into the corner store network, there is more competition on the way for rivals JioMart and Walmart-backed Flipkart.

Jio, Facebook and Amazon are only the latest suitors for India’s kirana stores numbering close to eight million, a segment once perceived to be on the back-foot with the aggressive entry of swanky supermarkets and online grocery platforms. Others chasing kiranas include big retailers like Reliance Retail, cash and carry companies, business-to-business (B2B) startups and even large e-commerce firms.

Reliance Retail aims to be India’s largest omni-channel retailer through its hybrid online-to-offline new commerce platform.

“After digital payments, it is e-commerce that will usher in the next big revolution in leveraging the potential of the vast network of kirana stores and resellers across the country. E-commerce has the potential to re-position and re-invent kirana stores as convenience stores from an e-commerce perspective, while offering them a new source of revenue, making it a win-win situation for all,” said a spokesperson from Flipkart, which has already partnered 37,000 kirana stores across the country.

“Our approach to work with kiranas and general trade stores is to inculcate a sense of entrepreneurship, instil a sense of discipline and develop a rewarding ecosystem for them.

These efforts will help transform the kiranas to serve the new set of consumers who are more tech-savvy and want personalized services,” the Flipkart spokesperson added.

The ability of these stores to deliver without a break during the crippling nationwide lockdown has won them much admiration.

“Kiranas that had lost some sheen, thanks to modern trade and online channels, are back in the limelight as they have outperformed online grocery retailers in the lockdown period,” said Samarth Agrawal, founder and CEO of MaxWholesale, a B2B platform that helps kirana stores place online orders for stocks. “Kiranas have proven their dependability and sustainability. You rush to the kirana store when in immediate need of a product which underlines their dependability. Plus, they have not only been storing products but making home deliveries profitably,” he added.

Agarwal said no artificial intelligence can match the kirana shop’s consumer understanding.

“The only missing piece in the kirana story was technology, where companies like ours come in to make them more efficient,” said Agarwal.

The Facebook-Jio deal will enable these stores to deliver products and services by transacting through JioMart, using Facebook’s WhatsApp. “Our focus will be India’s 60 million micro, small and medium businesses, 120 million farmers, 30 million small merchants and millions of small and medium enterprises in the informal sector,” Reliance Jio said on Wednesday. India’s kirana stores account for 80% of the country’s retail industry, and for Reliance Industries’ Mukesh Ambani, it is a massive opportunity.

“We see the deal as strategically significant for Facebook as it will enable transactions on WhatsApp, giving fillip to its effort to monetize the platform. On one hand, JioMart could enable inventory and back-end supply chain for small shops, on the other, the WhatsApp platform could enable ordering and payment providing seamless customer experience. We do see formidable execution challenges as well as opportunity,” Edelweiss Securities Ltd said in a 22 April report.

Reliance Retail aims to be India’s largest omni-channel retailer through its hybrid online-to-offline new commerce platform, for which it is deploying merchant point of sale (M-PoS) machines. Currently, there are 15,000 digitized stores in the country. RIL plans to grow this to 5 million by 2023. For faster adoption, it is also asking FMCG firms to insist that kirana stores and distributors use its M-PoS.

During his India visit earlier this year, Amazon.com founder Jeff Bezos had pledged $1 billion in new investments to bring small businesses online, courting merchants and the government amid regulatory scrutiny and protests by traders. The investments, said Bezos, will touch as many as 10 million small and medium businesses.

Meanwhile, B2B startups are helping digitize kiranas to enable online ordering, ensure online payments and even deliver goods to shoppers. “In the near future, we foresee all kiranas being part of a select few digital platforms. In a few years, it’ll be difficult to imagine a kirana store without a platform association. This is one of the largest retail and consumer internet opportunities of our times, estimated to be more than $60 billion by 2025,” said Amit Sharma, CEO, and co-founder, at B2B commerce platform ShopX.

Airport retail in India to grow to $9.3 bn by 2030 from $1.4 bn: Report

Source: Business Standard, Feb 25, 2020

Mumbai: The airport retail segment in the country is expected to grow to $9.3 billion (about Rs 66,000 crore) by 2030 from $1.4 billion (about Rs 9,940 crore) at present, with as much as $2 billion (about Rs 14,200 crore) coming from duty-free sales, a report said on Tuesday.

Real estate opportunity for Indian airport operators is projected to be $1.6 billion (about Rs 11,350 crore) by 2030, global property consultancy Knight Frank said in its report on transit retail.

“The total opportunity for airport retail to be approximately $9.3 billion by 2030 from its current estimated market size of $1.4 billion in 2019,” it said. Read the rest of this entry »

H&M narrows gap with Zara on the back of new stores, low prices

Source: ETRetail.com, Oct 07, 2019

MUMBAI: Swedish retailer Hennes & Mauritz (H&M) has narrowed the gap with global rival Zara in India’s fast-fashion market with more new stores as well as merchandise priced lower than most rivals.

The Indian unit of the world’s second biggest clothing chain posted sales of Rs 1,237.7 crore last fiscal, compared to Rs 893 crore a year ago, according to financials sourced from Veratech Intelligence.

Net profit jumped 29% to Rs 45 crore. The brand had opened its first India store in October 2015, competing mainly with Spanish chain Zara, which entered India five years earlier in 2010. Inditex Trent, which runs Zara stores in India, saw its revenue rise 17% to Rs 1,438 crore in 2018-19 with net profit of Rs 71 crore. Read the rest of this entry »

FDI norms eased for single brand retail, digital media, manufacturing

Source: Business Standard, Aug 29, 2019

New Delhi: The Union Cabinet on Wednesday relaxed the rules for single-brand retail, more than seven years after the foreign investment cap was removed for the segment to attract marquee foreign brands such as Gucci, Louis Vuitton, Ikea and others into the country. The latest government move is in line with the recent Budget announcements on FDI changes.

While 30 per cent local sourcing remains a mandatory condition for single-brand retail, the government has now agreed to a long-standing industry demand to make things easier for foreign retailers. With the change, foreign retailers’ India buy for exports will be factored in to meet the 30 per cent domestic sourcing norm. Companies in the single-brand space can also start online retailing without opening brick-and-mortar stores first, something that was not allowed earlier. While 100 per cent FDI is allowed in single-brand retail, whenever the foreign investment exceeds 51 per cent, the mandatory local sourcing norm kicks in. Read the rest of this entry »

No global company in multi-brand retail: Piyush Goyal

Source: ETRetail.com, Jun 18, 2019

NEW DELHI: Commerce and industry minister Piyush Goyal on Monday said the government would not allow multi-brand retail trade by foreign ecommerce companies and that they could only be agnostic platforms.

Goyal said this at a meeting with ecommerce companies including Amazon, eBay and Walmart-owned Flipkart, and other global digital giants such as Facebook, Dell, SAP, Google, PayPal and IBM. “The minister forcefully said that India will not allow multi-brand retailing by foreign companies…they can only be an agnostic platform,” said an official present in the meeting.

In December last year, the Department for Promotion of Industry and Internal Trade (DPIIT) tightened the foreign direct investment (FDI) rules for ecommerce companies through a Press Note. It barred marketplaces from selling products from sellers in which they have an equity interest and entering into deals with brands to sell product exclusively on their platforms. Read the rest of this entry »

Future Retail inks pact to bring convenience store chain 7-Eleven to Indian

Source: Business Sandard, Feb 28, 2019

Mumbai: Putting all speculation to rest, the world’s largest convenience store chain 7-Eleven on Thursday said it was launching in India through a franchise arrangement with Future Retail. The plan included setting up stores, which would roll out this year, with the help of master franchisee SHME Food Brands, an arm of Future Retail.

In a statement to the stock exchanges, Future Retail said its board had approved execution of the master franchisee agreement with 7-Eleven, pitting the latter against conventional grocery retail chains such as DMart and Reliance Smart at one end and round-the-clock chains such as 24Seven, promoted by Modi Enterprises.

24Seven, for the uninitiated, is led by Samir Modi, youngest son of industrialist KK Modi. He could not be immediately reached for his comments on the competitive intensity in the sector. But Abneesh Roy, senior vice-president, research (institutional equities), Edelweiss, said the franchise deal would give Future Retail an additional revenue basket. Read the rest of this entry »

After record FDI in 2018, retail sector gears up for more M&As in new year

Source: The Hindu Business Line, Dec 20, 2018

New Delhi: With the lines getting blurred between organised brick-and-mortar model and new-age online platforms, retail sector is ending the year 2018 with a record level of FDI and is gearing up for more mergers and acquisitions, partnerships and other deals in the new year.

According to the sector experts, the year 2018 brought big tickets investments across all formats while bridging the online and offline divide to bring their customers closer and the trend may continue further.

The sector, which employs over 60 million people and received one of the largest FDI in 2018 would continue to invest on supporting tools like data analytics, virtual reality and artificial intelligence to boost trade volumes, while new tie-ups, innovative thinking and accelerated adoption of omni channel systems should also become order of the day. Read the rest of this entry »

Organised retail firmly on a roll in Bharat

Source: The Hindu Business Line, Nov 14, 2018

Mumbai: People in smaller towns are increasingly shopping at organised retail stores such as supermarkets and hypermarkets.

According to market research firm Nielsen, smaller towns and villages are fuelling the growth of FMCG sales on the back of growing income, increased use of plastic money, and the rise of regional FMCG players. Read the rest of this entry »

India’s retail sector projected to grow to $1.3 trillion by 2020

Source: The Hindu Business Line, Oct 04, 2018

Bengaluru: India’s retail sector is projected to grow to $1.3 trillion by 2020 from the level of $672 billion in 2017, said Anuj Kejriwal, Managing Director & CEO, Anarock Retail.

“The India’s retail sector is on a faster roll than ever before and the boosters acting on retail sector are rapid urbanisation and digitisation, rising disposable incomes and lifestyle changes, particularly that of the middle-class,” he explained. Read the rest of this entry »