Retail rents to fall 6% further: Crisil

Painting a grim pictue of the retail real estate market, Crisil Research today said retail rentals would further fall an average of six per cent in 2010 due to oversupply of mall spaces.

Retail rents fell up to 30 per cent between March to December 2009 as retailers scaled back expansion to save cash during the slowdown.

TRENDS| Global tie-ups, private labels to be buzzwords in retail this year

Tie-ups with international retailers and brands, emphasis on profitable growth and increased focus on private labels are set to be key trends in the Indian retail sector in 2010, say retailers and consultants Business Standard spoke to.

TRENDS| Retailers back to hiring, expansions

After an extended hiatus, the first quarter brought some sheen back to retailers as discretionary spending by consumers rose. Add to that the ongoing festival season sales and discounts, and retailers seem confident enough to resume their expansion.

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Retail stores continue to face slowdown troubles

Together, India’s modern retailers have closed more stores than they have opened over the past year.

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Firms such as Pantaloon Retail (India) Ltd, Reliance Retail Ltd, Spencer’s Retail Ltd, Aditya Birla Retail Ltd, and Subhiksha Trading Services Ltd have closed hundreds of outlets.

Mint research shows that the sector has seen the closure of at least 2,000 stores in the last 12 to 18 months. Subhiksha accounted for a major portion of this number—it closed all of its 1,600 stores.

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TRENDS| Indian Retail Industry Witnesses Steady Growth

Recently in July 2009, Minister of State for Commerce and Industry in India, Mr Jyotiraditya Scindia, informed the Parliament that India’s retail trade, the second largest employer after agriculture, is estimated to touch US$ 590 billion in the next two years. He also informed the esteemed Lower House that retail trade in India is estimated to grow at 13 per cent per annum from US$ 322 billion in 2006-07 to US$ 590 billion in 2011-12.

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According to industry research the growth in Indian retail business has shown positive effects owing to the evolving consumer behaviour, changing market dynamics as well as to easier access to capital by both the retailers and consumers. Market research information reveals that Indian consumers are becoming more aspirational and looking forward to adopting a western lifestyle. This trend will drive retail and logistics to have sustained growth and new brands from overseas to cater to an expanding middle class customer base.

As per consulting firm KPMG’s findings in a March 2009 report, the organised retail market in India was worth US$ 25 billion and has witnessed steady growth at 15 per cent in fiscal 2009. Modern organised retail will grow much faster, at the rate of 30-35 per cent annually, than the traditional one in the coming years and will be at the size of US$ 54 billion in the next three years, feel industry retail specialists. Fast moving consumer goods (FMCG) and apparel sectors are likely to drive this growth.

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TRENDS| Retailers focus on building private label business

With some of the big players such as Reliance Retail, Aditya Birla’s More and Future Group’s Big Bazaar focusing on their private label strategy, manufacturers and vendors are willing to acknowledge its growing prominence in recent times.

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According to Mr Hoshi Press, Vice-Chairman, Godrej Consumer Products, “The existence of private labels is due to the fact that consumers are willing to down-trade.”

With attractive prices, today retailers are trying to woo consumers to buy into their brands.

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TRENDS| Indian retail sector to grow by 9 pc; to touch $521 bn by 2012 - Economic Times

Indian retail sector to grow by 9 pc; to touch $521 bn by 2012
Economic Times
"FMCG and apparel sectors contribute the maximum to the growth of the retail market in India," Bharti Retail President and COO Vinod Sawhny said during a FICCI event. He said the Indian retail market is estimated to be around $350 billion, of which modern retail or the organised segment has only four per cent share.

TREND| The Shopper of Tomorrow

Over the next 18 months, Hutchinson predicts, consumers will learn to become more frugal and are likely to carry those skills over once the economy recovers.

In an article at knowledge@wharton the following is the outcome of the research

Consumers who had learned to trade up when times were flush are now learning to trade down, Hoch adds. They realize they were wasting money on higher-priced goods and services when less expensive alternatives were available with little real trade-off in quality or satisfaction. Indeed, many consumers regret what they used to spend; they are finding a new sense of well-being in becoming more discerning shoppers. "There will be more of a premium placed on seeking value," Hoch says. "People will realize that's being smart.

I saw this in my local malls/shopping areas in the past few months and I believe this is not going to reverse soon.

What do you think?

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TRENDS| Retailers will look to consolidate, downsize to beat recession

Retailers will acquire weaker rivals, close stores and increase discount-product ranges to survive the global slowdown, an industry body said today.

As the recession leads to “downward pressure” on shelf prices, retailers will have to “re-evaluate” their size and the strategic worth of the markets they operate in, according to an annual poll published today by CIES, a Paris-based trade association. Responding to economic challenges has replaced corporate responsibility as the most important concern facing chief executive officers, the survey of 596 company heads in 54 countries found.



In the wake of the credit crunch, leaders of food retailers and manufactures face challenges ranging from shifts in consumer behavior to fluctuations in currencies and share prices, according to the CIES Top of Mind survey. Where companies have failed, such as Circuit City Stores Inc in the US and Woolworths Plc in the UK, there is opportunity for stronger performers to grow through acquisitions and expansion, it said.

“Those retailers that still have a good war chest are in a really strong position this year. Smart companies are looking to greater collaboration and greater consolidation as a way of increasing efficiency and building market share,” said Alan McClay, chief executive of CIES.

Scope exists for mergers and acquisitions “of all sizes,” despite the lack of available credit from banks, said McClay. The UK and US, which have the largest share of distressed retailers compared to countries in Europe and Asia, are likely to feel the pain.



Retail chiefs are looking to cut prices to appeal to consumers looking to trim household spending, CIES said. Discount supermarket owners such as Aldi Group, Lidl U.K. GmbH and Wal-Mart Stores Inc’s Asda chain are particularly well placed to capture market share in a recessionary environment as they can attract “canny middle class shoppers” from more expensive rivals, McClay said.

“Consumers are trading down but they now expect the same quality to be delivered at that lower price. Those retailers who are nimble, who adapt quickly to this shift, will survive, while those that don’t risk going under,” McClay said.

Businesses said they will look to cut operating costs in any way possible to avoid margins suffering from aggressive pricing policies. Retailers and suppliers will share research and collaborate on developing products and promotions as one way of achieving greater efficiency, according to the findings of the survey, whose respondents included senior executives at Unilever, PepsiCo Inc. and Tesco Plc.


Far from looking to change their company strategies in the face of a global slowdown, boards and shareholders will look for “consistency” and “almost stubborn leadership” from those in the top job, McClay said.

“Strong leadership is the single most important factor in these times. You’re not going to see musical chairs in the top jobs of these companies,” McClay added.

CIES said the CEOs and senior executives involved in the survey replied anonymously online between December 2008 and January 2009. Of the total number of respondents, 247 were retailers and 132 were manufacturers; 173 were service providers and 16 fell into none of those categories.


Source| insidefranchising.net
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