RCF in talks with rural retailers for tie-ups

State-run Rashtriya Chemicals and Fertilisers (RCF) is in talks with some leading private sector rural retail chains for innovative marketing strategies and for trading in new arenas.

RCF, which last year entered into strategic alliance with rural marketing companies such as ITC e-Choupal and Godrej Aadhar, is planning to rope in more such retail chains to enter into trading of cement, pesticides and seeds.

RCF, which is one of the largest domestic fertiliser and industrial chemical manufacturers, is in discussions with regional retail players such as the DCM Sriram Group for an alliance in South India and with Triveni of Uttar radesh.

“We are also talking to Hindustan Insecticides (HIL) to offer their entire pesticide range to farmers and with two to three cement manufacturers for strategic marketing alliances to offer cement through our network and reach. Though margins are thin in trading business, it contributes to our growth and product basket since the needs of the rural markets are changing,” said J Kohareswaran, director (marketing) of the Rs 5,243-crore turnover company.

Further, the company is planning to take up floriculture as another area of diversified business, utilising the surplus land available at its facilities. A Yes Bank report estimates that India’s rural retail market is expected to grow by 29 per cent to Rs 1.8 lakh crore by 2010, thanks to rising incomes and changing consumption patterns.

Kohareswaran said the marketing initiatives include soil testing and field demonstrations, undertaken in association with the expertise of rural retailers. The farmers will get scientific advice and training in modern agricultural practices to increase productivity through such programmes and the increase in turnover was mainly from the acceptance of such initiatives. The firm carried out over 4,000 field demonstrations during the 2007-08 period, alone with ITC e-Choupal.

RCF, which achieved the highest ever turnover during last year with a quantum jump of 46.17 per cent from the previous year’s Rs 3,643 crore, had 43 per cent of its revenues from sales of traded products.

Indian retail market to touch Rs.18.1 tn by 2010: report

(IANS) The country’s retail market will grow to Rs.18.1 trillion ($395 billion) by 2010 as organised retail is expected to be 13 percent of the total market, according to a report.”The organised retail market, which is expected to grow at 45 percent, will be worth Rs.230,000 crore (Rs.2.3 trillion) by 2012,” said the India Retail Report 2009, released by the New Delhi-based research group Images F&R Research.

“This will require investments in real estate alone of over $50 billion, much of which will be FDI spurring the balance of the trade,” it added.

“The consumer spending in India has increased by an impressive 75 percent in the last four years and will quadruple in the next 20 years, even when this quarter has seen some decline in spending on account of inflation,” the report added.

This will trigger the growth of this sector.

Food and grocery dominated the retail segment with 59.5 percent share valued at Rs.7.92 trillion, followed by clothing and accessories with a 9.9 percent share at Rs.1.31 trillion.

However, the report said the market for specialised retail, especially the luxury retail, will grow significantly in the next few years.

“Even when the metros and tier II cities will get the major share of organised retail, emerging cities like Chandigarh and Jaipur, which have a growing cosmopolitan population and high purchasing power, will emerge as new centres for the global luxury brands,” it added.

The report has contributions from over 100 think tanks in the retail industry.

“However, to enable this sector to realise its full potential FDI restrictions will have to be relaxed further and retail rentals will need to go some degree of rationalisation,” it added.

Commenting on the report, Commerce and Industry Minister Kamal Nath said: “India retail model needs to go beyond the urban shopping malls and create an attractive retail environment where a large number of rural population can also find products and services.”

Organised retail to form 18% of overall retail pie: McKinsey

This may be good news for leading global retail players waiting to enter the Indian retail bazaar scene: the organised segment of the retail industry is expected to grow from the current 5 per cent of the total market to about 14-18 per cent of the expected Rs 18-lakh crore market by 2015. But a report by leading management consulting firm McKinsey and Co cautions global players waiting to enter the great Indian retail bazaar that a ‘cut and paste’ format of their stores elsewhere would not work here.

“They need to have innovative formats based on where to participate in the retail value chain, which geographies to play in and what price points to offer. They also have to craft a customer-insight driven merchandise strategy and create an efficient retail operating platform,” suggests the report.

Indian shopper
McKinsey’s retail report also talks about the uniqueness of the Indian shopper vis-À-vis the rest of the world: least loyal to a single retailer, dislike for pre-packaged fresh foods, willingness to pay more for convenience and services but not a premium price for a brand and demands ethnicity in apparel accessories. And, in the absence of quality control, information about the product and trust in retailers, brands serve as a proxy for all these factors.

Of the current 204 million households in India, the report estimates that only about 13 million households have the income to patronise organised retail. The great news is that this relevant consumer segment will grow five fold from 13 million to 65 million households in the next eight years but mom and pop stores would continue to be relevant across the country, in both small and large towns.

The report, titled ‘The Great Indian Bazaar: Organised Retail Comes of Age in India,’ also suggests retailing in India would require an approach that is distinctively different from the rest of the world. To achieve leadership position in the sector, players would have to integrate real estate into the business model, create an effective and scalable supply chain, increase basket size by shaping consumption, develop and retain talent, influence regulation to ensure healthy development of the sector and to de-risk margins.

“Given the nascent state of organised retail and the rapid evolution of the industry, it is imperative for retailers, manufacturers, real estate developers, logistics providers and partners along the value chain to work in a collaborative spirit,” says Mr Laxman Narasimhan, Director, McKinsey & Co and leader of the Consumer, Retail and Media Practice in India.

Retailers plan course correction to beat slump

Indian retailers are focusing on lower capital-intensive formats and also restructuring operations in an attempt to boost revenues and counter the slowdown.
The Future Group now plans to focus more on growing this segment in the next 12 months, said Kishore Biyani, chief executive officer of Future Group.
Aditya Birla Retail has embarked upon restructuring its operations including administration, to beat the slump in the economy, a top company official said.
The Future Group’s low-capital intensive focus includes expanding its no-frills store model, KB’s Fair Price Stores, small convenience store format Big Bazaar Best Deals, rural retail venture Aadhar, and home solutions venture Home Town.
“We are focusing a lot on return on capital employed. We are growing those formats which require less investment but have high business potential,’’ said Biyani.
The Future Group runs nearly 140 KB’s Fair Price Stores in cities such as Mumbai, Delhi, Ahmedabad among others, and plans to open 1,500 such stores in the next 18 months.
“We are trying to make our business model profitable so that we can sustain all the costs involved in the business,’’ said Thomas Varghese, chief executive officer of Aditya Birla Retail, which has over 615 stores in the country.
The group is also conducting a pilot project on smaller grocery stores under Big Bazaar Best Deals in Kandivali, a suburb of Mumbai, and if successful, the group would launch nearly 200 stores in the next couple of years, a company official said.
“We are focusing on such models where we invest Re one as capital but can reap a turnover of Rs 10,’’ Biyani said.
The Future Group is also expanding its rural retail venture Aadhar in 800 towns and villages in the next couple of years from 60-odd towns now.
“We have grown the business of Aadhar from Rs 5 crore a month to Rs 17 crore now,’’ Biyani said. The Future Group bought 70 per cent in Aadhar from Godrej for an undisclosed amount last year.
While elaborating on the business potential in the rural areas, Biyani said, “With rentals not more than Rs 8 per sq feet, business potential is huge.’’
On the other hand, the Aditya Birla group, as part of its restructuring process, plans to eliminate unnecessary posts, freeze recruitments in back-end operations and simplify administrative process, Varghese said. He, however, declined to quantify the cost saving from the restructuring process.
Aditya Birla Retail joins the likes of the Future Group which is planning to save nearly Rs 165 crore in the current financial year by cutting administrative and operational expenses.

CavinKare to take on HUL, ITC in bottled shampoo biz

CavinKare, a Chennai-based unlisted FMCG company known for its Chik brand, has embarked on a strategy which will test its mettle as a low-cost bottled shampoo-maker in the southern markets.
The company, which has successfully competed with multinationals, including Hindustan Unilever (HUL), in the sachet segment to retain leadership in key southern markets, will now have to prove its acumen in the bottled shampoo segment, which is increasingly getting competitive with the new marketing strategy of ITC and other players.
CavinKare’s sub-brand Chik Satin will address the affluent customers, pitting the company against HUL’s Clinic Plus and Sunsilk brands. Chik as a shampoo brand has predominantly been sold in the sachet format and has been positioned as an economy brand consumed largely in the rural market.
In effect, while attempting to address a larger portion of the urban market, CavinKare is also pushing its economy brand to the next level, currently populated by brands from HUL and P&G.
The overall market for shampoos in India is estimated at Rs 2,000 crore a year. The popular segment, where Chik Satin has been positioned, commands an estimated 25 per cent of this market.
According to a CavinKare executive, 75 per cent of Chik sales come from the rural market, while the industry sells only 52 per cent of its shampoo brands in the rural markets.
In the Indian shampoo market, where sachet (7ml) format accounts for 75 per cent of the total sales, Chik has been bringing in 90 per cent of its sales in this format.
CavinKare’s Executive Director Ramesh Viswanathan said, “Chik Satin is not a premium or niche segment product. It is slightly higher in the value chain.”
Experts believe that what CavinKare is attempting now is a bit risky and has not worked in the past. However, the earlier failures were at a time when affluence levels in the Indian market were far lower than what it is now. “Traditionally, when brands tried to move from the bottom of the pyramid to the top, they have not succeeded. For instance, Lux to Lux International and liquor brands such as Bagpiper to Bagpiper Gold. But then, times have changed. Those were when the economy was liberalising and now it is liberalised. It may work. We just have to wait and watch,” said Madhukar Sabnabis, Country Head (Discovery & Planning), Ogilvy & Mather.
The pricing of the new product is also done with an intention of taking on market leaders such as Clinic Plus. Chik Satin is priced at Rs 56 for a 200-ml bottle, while Clinic Plus is priced at Rs 63 and Sunsilk at around Rs 87 at the higher price point.
Sabnabis cites another recent success — Ponds Age Miracle, an anti-aging product that has found a niche for itself.
Santosh Desai, CEO of Future Brands (part of Kishore Biyani’s Future Group), believes that there is no one stand on whether what CavinKare is attempting will succeed. “When you attempt to move the economy brand up the value chain, it will not work if you peg it on price or as a category about status. It would be a numerator game, if value is equal to what you offer divided by the price.”
Desai cities the success of Lifebuoy soap that had managed to move up the value chain from being an economy product for several decades.
CavinKare has budgeted Rs 4 crore on television commercials to promote the new Chik Satin over a four-week period.

SAP sees strong retail growth

Major retailers partner with SAP to invest in an integrated solution portfolio

With over 60 high growth Indian retail companies embracing SAP technology for Retail Solutions, SAP India has made a mark in the growing Indian retail sector. This came about at the SAP Retail Customer Value Networking Event, being held in Mumbai, September 10.

According to a press release, SAP has a strong foothold in India, some of the major retail players such as are Future group, Reliance Retail, Tata Trent, ITC Retail, Great Wholesale Retail Club, Vishal MegaMart, Welspun, Nilgiris Dairy Farm, Videocon, Spencers etc. have partnered with SAP in their move to invest in an integrated solution portfolio to catalyze consumer demand across multiple channels, increase cost efficiencies, adapt to market changes and maximize profit margins. These retailers continue to increase their business in India and also SAP footprint in the Indian retail market to get better return on Investment.

Ramesh Shanmuganathan from John Keells Holdings PLC said, "We are beginning to realize the strategic benefits from our investments in SAP by leveraging its end-to-end capabilities which has helped us manage our IT footprint effectively through better business and IT alignment, whilst driving innovation and pursuing flexible business processes in providing for a stronger platform of growth for our businesses."

Some of the retailers who went live with SAP in India this year include Dabur, Nilgiris Dairy Farm, IndiaBulls, Subhiksha, Varkeys and the customer in global environment John Keells Holdings PLC (Srilanka) and Meena Bazaar (Bangladesh). SAP for Retail has further strengthened its presence with successful wins such as DLF Retail, Numerouno, Om Store Book Store in India and Gemcon Food and Agricultural Products Ltd. (Meena Bazar) and Otobi Ltd in Bangladesh. Worldwide, 6,200+ retail and wholesale customers run on SAP including 33 of the top 50 global retailers.

Tthe recently held SAP Retail Customer Value Networking Event, provided a common platform for discussion on Indian retail industry related topics, the event saw SAP showcase its investments in retail solutions, and product roadmap for the retail industry.

The other topics of interest included leveraging technology for growth and maximizing profitability through rural retailing. The forum witnessed participation from Sankarson Banerjee - CEO, Future Bazaar, Amit Mukherjee - CIO, RPG Group, Rajashekar, Executive Advisor, Wadhawan Group, Anil Garg, General Manager, Dabur, M VR Kumar – VP Asia Pac, MENA for SEAL INFOTECH and Ramesh Shanmuganathan, CIO John Keells Holdings PLC amongst others.

Speaking on the occasion, Amit Mukherjee - CIO, RPG Group, "In an industry faced with daily pressures on margins, performance and the bottom line, SAP offers robust solution which is able to handle large volumes of transactions and adapt to the changing industry landscape of the future."

Expressing his views, Anil Garg, General Manager, Dabur commented "A flexible solution platform that allows for incremental enhancements based on business needs and a clear road map for the future is critical to the long-term success. Dabur sees SAP as the IT provider of choice and a trusted partner who truly understands our business, and one that will continue to support its customers in the long run."

"Obtaining the flexibility to grow and adapt to market changes is a common objective for all of our retail customers. Having fully globalized technology in place to exploit new market opportunities and seamlessly integrate into a global operations network is crucial for many of our retail clients," said Dr. Deb Bhattacharjee, Vice President, Value Engineering, Industry & Solution Group, Indian subcontinent, "We continue to design a retail environment that puts customer needs in its epicenter and empower them to evolve as the best-run-business."

SAP has created and is operating an SAP Retail Innovation Center in India to better serve both the Indian and global markets with forward-thinking uses of retail technologies. The center houses fully globalized technology to exploit new market opportunities and seamlessly integrate them into operations network, best practices-based retail expansion and consumer intimacy programs a crucial for many SAP retail clients, states the release.

Integrated technology platform

Retailing continues to gain momentum in India with the main focus being on growing customer experience and increasing retails footprints. A Springboard Research study on IT in India's retail sector confirms SAP's strong position in the Indian market, with 27% of study respondents identifying SAP as the leading primary influencer in terms of solutions investments.

"Technology is a high-priority investment area for most large and medium-sized Indian retailers, as they look to scale up their business operations in a competitive market," said Nilotpal Chakravarti, Senior Analyst - Vertical Markets at Springboard Research. "We have seen a strong momentum for investments in ERP and other back-office solutions and SAP has emerged as a leading player in this space," he concluded.

SAP for Retail provides an integrated technology platform for retailers and a one point solution for supporting and managing different business models such as owned stores, franchise stores, shop n shop concepts. Strong business decision and analytical capabilities have enabled retailers of all sizes the power to make the right decisions quickly and profitably.

The SAP for Retail solution portfolio combines the SAP Business Suite family of business applications with a broad set of integrated retail applications to help companies profitably serve consumer demand across multiple channels.

Some of the most common solutions used in the retail industry by its customers are:

Merchandise and Master Data Management: Harmonized, synchronized and optimal workflow controlled master data across the different lines of business

Merchandise and Category Management ensures that assortments meet the expectations of customers within specific micro markets, determines optimal product mix, prices and promotions – supporting step-by-step cooperation and coordination in development, implementation, and monitoring of business plans.

Forecasting and Replenishment; solution that enables retailers to dramatically improve on-shelf availability, reduce inventory, and optimize the supply chain.

Workforce Management - A centrally managed, Web-enabled workforce management solution gives retailers improved flexibility and control over their business processes. It allows corporate management to take more ownership of schedule planning and execution, giving managers more time to assist customers and coach employees.

Store Management: Store management systems need to cater to the fast-changing needs of customers today. These systems must quickly gain fast and reliable, accurate, and insightful customer information in many ways,

POS Data Management - enables you to examine all your key issues – events and promotions, prices and margins, and reason codes for returns – as well as a host of other parameters.

RFID Framework

FMCG companies get IT savvy

Adoption of projects like ‘push technology’ in sales expected to improve efficiency.

Fast moving consumer goods (FMCG) companies are looking at 10-20 per cent improvement in production and efficiency levels this year because of the adoption of newer technologies to track expansion of product portfolio and manufacturing locations, besides aggregation of godowns and shipment warehouses.

FMCG companies will spend around 10-15 per cent of their net profit on technology. Companies like ITC Limited, Emami and Marico have forayed into diverse businesses in FMCG alone. This has not only led to the rapid expansion of the supply chain but has also increased complexities.

ITC’s manufacturing locations have increased rapidly to about 200 from about a dozen-owned manufacturing facilities for its different businesses. In addition to these manufacturing locations, ITC’s aggregating of godowns and shipment warehouses have grown exponentially in a couple of years.

Emami’s recent investment in IT has ensured finalisation of its balance sheet in a record 35 days against the 60-day norm.

Mohan Goenka, director, Emami, says: “We foresee an improvement of 10 per cent in production and efficiency levels at Emami for financial year 2008-09. This will be achieved by implementing sales and operation planning, demand management and distribution resource planning which will enable system control to forecast sales, check inventories at locations, plan manufacturing resources and logistics to meet the customer schedules.”

Marico, on its part, is investing in better connectivity through enterprise portals, wi-fi enabled offices and in unified communications.

Marico is investing in automation of many workflows like Writeoffs, insurance claims, and media spend management portal.

According to Udayraj Prabhu, head, business applications, Marico: “We have commenced Project Edge, an initiative to improve the budgeting, planning and review systems using the TM1 tool of IBM-Cognos. This will enable us to strengthen our budgeting, planning and review processes by making them quicker, error-free and less tedious. This should lead to a significant saving in time for those involved in these activities.”

The company has also launched HR portal platforms as active channels of communication within the organisation.

ITC Ltd is building an IT infrastructure to bar code its produce at the warehouse itself, even before it reaches the retailers.

This is expected to help ITC keep track of product manufacturing time, thereby enabling implementation of first-manufactured-first-out (FMFO) strategy, which means items manufactured first are shipped out of the factory and the warehouse earlier than products manufactured later.

Among other projects, ITC will also implement this year usage of ‘push technology’ for its sales force.

VVR Babu, chief information officer, ITC Ltd, says: “Each salesman is allotted specific locations and he has to track sales and requirements of all shops and stores of a particular area. We are working on an integrated IT system which will gather and push information onto our salesmen’s laptops so that they don’t have to waste time looking up details on the company portal. For instance, if a salesman is covering 10 outlets of a region, every evening ITC’s systems will push onto his laptop the sales, distribution and requirements of that region and also the target to be met.”

Business Std: Thursday, Sep 11, 2008

To open 30 Xcite consumer electronic outlets in India by 2009.

Impact Retail Private Limited, a newly-incorporated company promoted by West Asian retailer Tony Jashanmal, has drawn up plans for the Indian consumer electronics retail market.

“We plan to open 30 exclusive Xcite consumer electronic showrooms in top 15 cities in the country by the end of 2009 with an investment of Rs 200 crore,” Srikant Gokhale, chief executive officer of Impact Retail, told mediapersons, after inaugurating the company’s first store in India at Hyderabad on Wednesday.

Impact retail has forged a franchise and original equipment manufacturer (OEM) relationship with Alghanim Industries, a Kuwait-based conglomerate with interests in consumer electronics retail, auto retail and manufacturing, to run its stores under the Xcite brand.

Gokhale said each of the multi-branded large-format stores, with a carpet area of over 20,000 sft, will offer over 3,000 products across different categories – home entertainment, small appliances, white goods, computers and peripherals, communication, music, imaging and gaming – from 150 national and international brands.

Besides, it will sell its private label products (excluding laptops and mobiles) under the Wansa brand, sourced from the OEM.

“The company will soft launch eight Xcite stores in cities like Pune and Bangalore by the end of 2008 to fine tune our understanding of customers and the format. With this learning, we plan to expand aggressively for a pan-India footprint,” Gokhale said.

The Indian consumer electronics market is currently pegged at $13.3 billion and growing at 10 per cent a year. Of this, organised retail accounts for 7.3 per cent.

5 Reasons Retailers Replace their Retail Management System

Article From:Software advice

http://www.softwareadvice.com/articles/retail/5-reasons-retailers-replace-their-retail-management-system/

As software selection advisors, my team has talked to thousands of retailers considering a major new software purchase. The vast majority are replacing an existing system - one they’ve used for years. Why?

Why replace what’s familiar? Why pay up for something entirely new when an upgrade is - on paper - less expensive? Why move away from a long-term vendor relationship?

There are plenty of reasons. Here are the top five responses we hear when we ask, “What’s driving you to replace your existing system?”

1. Improve usability and adoption. For many businesses, the system that best matched their functional requirements turned out to be too difficult to use. In an environment where employee turnover is high, poor usability can make it very difficult to get new employees up-to-speed. By far the biggest challenge we hear from buyers is that their existing system is non-intuitive; they are looking for a new system and their primary requirement is ease-of-use.
2. New store growth. It’s a big leap to go from managing one store to managing two, five ten, one hundred or more… This challenge is especially difficult if a retailer plans to manage their inventory and accounting for multiple stores in one single POS software or inventory management system. Often the simple, single-store system that was easy to get going is grossly insufficient for rapid new store growth.
3. Poor tech support. Frequently, buyers come to us when they’ve gotten too frustrated with the poor support they are getting from their existing vendor. Either the vendor was a “one-man shop” that couldn’t keep up, or the vendor “lost its personal touch” as it grew too big, too fast. This impetus for change is even more powerful when poor service is combined with increases in support fees.
4. Integrating multiple channels. Many retailers are moving to support multiple channels - retail stores, e-commerce websites, mail-order catalogs… As they roll out new channels they often implement separate, redundant software systems - one for each channel. We talk to a lot of buyers that are now looking for a new, all-in-one system for multi-channel retailing.
5. Hardware failure. Many retailers have been on the same system for a decade or more. They may have remained patient with an old, DOS-based system, but their hardware eventually gave out. An upgrade to new hardware presents a logical opportunity to bring their software up to current standards as well. Much of the time, they can’t even install a dated system on new hardware and are forced to move to new-generation software.

We’ve heard many other reasons for replacing existing systems, but these are the most common. They also present a good lesson for new retail organizations that want to invest ahead of rapid growth. Consider these challenges and invest in a retail management system that will support your expansion plans.