Retail News You Can Use
ICRIER report supports growth of organized retail
It is reported that the Indian Council for Research on International Economic Relations (ICRIER) is in the process of submitting the final report on the effects of modern retail. The study was commissioned earlier in Feb post reservations that Sonia Gandhi and others expressed on the growth of large and financially powerful retailers, on small but far more numerous traders. The political fallout of rapid urban expansion of new formats has been devastating so far.
The ICRIER study polled 1000 small & traditional retailers and 2000 consumers. According to leaked reports in the media, the study supports the modernization of Indian retail through new formats including large ones. According to these reports, the study admits that small retailers in the vicinity of new modern outlets have been stung by sluggish or even declining sales. However, it adds that the negative impact of the organized sector will wear off with time. In fact, contrary to many expert forecasts, the study even suggests that the unorganized sector will retain as much as 84% market share in 2013. It finally recommends that the Government should streamline controls to encourage growth of organized retail.
The report is unlikely to ease the Governments political pressures. Further, in an election year, it is unlikely to make prudent but unpopular decisions.
Reliance: Petrol pumps to general stores?
Reliance Industries failed 1400 outlet petrol pump chain has prompted the corporate to consider alternative uses of the properties. One such possibility under scrutiny is to convert the properties to retail outlets, malls or multiplexes. While all the petrol pumps may not fit the requirements for retail, Reliance estimates that 800 would. As many as 500 petrol pumps in the chain are owned or run by Reliance and would be easy to convert. The others would have to be taken over. Reportedly, Reliance is offering between Rs 2-4cr per property for them. An estimated Rs 4-6cr will be required additionally for the conversion.
Bolder plans from Spencer Retail
The RPG Group, promoters of the Spence Retail chain, is churning out even bolder plans. The latest is a plan to make an investment of Rs 1500cr to open 250 outlets within a year. The Company hopes that this will take its stock of retail space to 2.25mil sqft by March 2009. In addition, the Company plans to sign off several international tie-ups. Hopefully, this would raise this fiscal turnover to Rs 1800cr.
Papa John to open 100 outlets
Promoted by the Middle East based master franchisee Jawad Group, JIP Fashion & Restaurant India Pvt Ltd plans to open over 100 Papa John pizza outlets in India. The company will invest Rs 250cr for this. With an outlet in Gurgaon already under their belt, the second one has come up in Vadodra and more are planned for Surat, Ahmedabad and Rajkot. The Indian pizza market is estimated to be all of Rs 300cr.
Indiabulls president joins DLF
DLF has grabbed, Munish Baldev, who was earlier President of Indiabulls Real Estate Ltd. He was also a CEO with the Ansal Group. At DLF, Baldev has been given the designation of VP, Marketing. He has had a meteoric presence in India's retail real estate development scene. This includes association with such projects as Metro City Walk and The Great India Place.
Parsvnath to develop mall near Connaught Place
Parsvnath has paid Rs 200cr to acquire a 5,735 sqyd plot close to Connaught Place at 27 Kasturba Gandhi Marg - in central New Delhi. The purchase was made through a subsidiary company, Primetime Realtors. The developer plans to construct a Rs 1lakh sqft luxury mall and high-end offices. The total investment is likely to be Rs 300cr and be ready in two years. The company is targeting average rentals of Rs 600-700 per sqft. Parsvnath currently has around 210 mil sqft of developable area, including seven special economic zones.
Home Depot scales down growth
he US second largest retailer, Home Depot is planning to scale down growth including opening of new stores. This will translate to a reduced 1.5% growth in sqft terms or 20-30 stores. Further, it will close 15 underperforming stores and abandon 50 store locations in its hands. This is just a third of previous year growth. This is a similar decision to that of Wal-Mart and Starbucks who have also bitten the bullet. The culprit is the economy which is in recession-like condition resulting in a slump in the home improvement market.
Contributed by:Nithin Narayanan