Professional Documents
Culture Documents
52ISIEmergingMarketsPDF
. images retail . April 2013
in-kpmg1
Downloaded by in-kpmg1 from 115.114.45.146 at 2014-04-03 08:27:09 EDT. ISI Emerging Markets. Unauthorized Distribution Prohibited.
cover story
According to an independent
analysis by Wazir Advisors for Images
India Retail Report 2013, in India,
hypermarkets contribute to almost
2.50 percent of the total organised
retail sales. As space crunch is an
issue in this country, hypermarkets
here tend to be smaller than global
standards, average store size being
around 40,000 sq.ft. Lack of large
retail space at reasonable prices has
been a big deterrent to the rapid
expansion of this concept in metros.
HISTORY OF EVOLUTION
In 1962,Meijeropened their first
hypermarket Thrifty Acres inGrand
Rapids,Michigan,and in Europe
Carrefour launched their first store in
1963 atSainte-Genevive-des-Bois,
France.The hypermarket concept
started spreading in the US in 1987
with the introduction of stores by
Carrefour Planet is a prominent example of hypermarket regeneration in Europe and the rollout of the concept
Downloaded by in-kpmg1 from 115.114.45.146 at 2014-04-03 08:27:09 EDT. ISI Emerging Markets. Unauthorized Distribution Prohibited.
cover story
that offers substantial discounts. Club
members can vote online for offers
they wish to see become a Promotion
of the Month and they can also
download money-off vouchers.
Further benefits of the service for club
members include a dedicated Internet
platform with contests and free advice
on hot topics such as health and
childhood nutrition.
Retailers across the globe are doing
some great experiments using social
media. Some are even getting shoppers
involved in product creation. For
instance, British supermarket chain
Waitrose has set up an online panel
WaitroseKitchenTable.co.uk where
customers can, as the website says,
have a chance to tell us what you love
the most and where we can improve.
Asda, the UK subsidiary of Wal-Mart,
createdAsdaChosenByYou.com, which
lets customers give their take on Asdas
recently launched mid-tier private label
brand Asda Chosen By You. The
3,500-SKU line was created with input
from customers. Some 40,000 people
did 2,00,000 taste tests.
In India, any retail outlet occupying over 50,000 sq.ft. space is termed as hypermarket
Downloaded by in-kpmg1 from 115.114.45.146 at 2014-04-03 08:27:09 EDT. ISI Emerging Markets. Unauthorized Distribution Prohibited.
cover story
among others, were relocated. Big
Bazaar is the largest and one of
the oldest hypermarket chains in
India. Starting operation in 2001, it
popularised organised retail in the
country. Currently, it has 166 outlets.
The number of Food Bazaar stores
stands at 43. Biyani informs that the
group had revamped about 90 Big
Bazaar shops, which now have a
better look, increased cash counters,
improved visual merchandising, etc.
The chain has also launched a project
called Seva in their Rajaji Nagar store
in Bangalore, where it has grinders
for wheat, soya or ragi and helps
make multi-grain floor. It also helps
shoppers get cut vegetables at no extra
At an operational level, most professionally run, big group stores break even from two months onwards
Downloaded by in-kpmg1 from 115.114.45.146 at 2014-04-03 08:27:09 EDT. ISI Emerging Markets. Unauthorized Distribution Prohibited.
cover story
pharmacy, in-store cafe, barber shop,
laundry, and so on. Spencers plans
to make that list of services longer
with small bookstores and QSRs to
trigger impulsive purchases among
consumers. Spencers Kolkata branch
will lead the pack, to be followed by
similar hypermarkets elsewhere.
While in-store cafe and bakery
have by now become integral to some
new-age supermarkets, other offerings
such as electronics, car accessories
and jewellery are slowly making the
scene exciting. Andhra Pradesh, Tamil
Nadu, Karnataka, West Bengal, DelhiNCR, Uttar Pradesh and Maharashtra
are among the states that will host
Spencers hypermarkets. Besides state
capitals and major cities, Spencers
will foray into tier II and III towns.
The company links this move to high
double-digit same-store sales growth
of some stores in the non-metros.
Spencers will also sharpen focus on
private label (or in-house) brands
which now account for only
15 percent of their sales. The target
is 25-30 percent as private label
brands give hypermarkets control
over pricing, which is important in a
regime of maximum retail price.
More
Aditya Birla Group has taken a new
strategy with the More hypermarket
format. The aim is to open more
stores but only those that work with
customers. More, which closed nearly
More is doing catchment surveys among focus groups in the 1-5 km radius of the store to find out what exactly consumers in that area are looking for
Downloaded by in-kpmg1 from 115.114.45.146 at 2014-04-03 08:27:09 EDT. ISI Emerging Markets. Unauthorized Distribution Prohibited.
cover story
care. Almost 10 percent of the chains
revenues come from private labels
and the company hopes to double it
in the next five years. Even products
of their back-end supply chain and
infrastructure provider Tesco are
getting extended at Star Bazaars 15
hypermarkets. At present the company
sells about 100 products from Tesco
but intends to take it up to 500 with
new categories such as plastics,
hangers and toys, apart from their
regular food and home products range.
Star Bazaar is also bringing in the
Tata connect for its private label
products displaying the message A
Tata Product with the Star private
label brand below it. The idea is to
bring in the Tata brand name on the
private label packs to assure customers
about the quality of the private label
products in spite of the price being
10-15 percent lower than the regular
brands. Star Bazaar also has live
kitchens and is also looking at having
community foods at their stores.
Hypercity
The K Raheja Group firm Shoppers
Stop is changing business model for
their loss-making hypermarket stores
Hypercity as the format has taken
Total
Total is a prominent regional
hypermarket chain that is on a
significant growth trajectory. Based
out of Bangalore, Total is owned
by Hari Bhartia controlled Jubilant
Retail. The company plans to open
eight new Total hypermarkets in
Indian Hypermarkets
Retailers
Indian Group
Big Bazaar
Spencer's Hyper
Reliance Mart
More Megastore
SPAR
Star Bazaar
Hypercity
Future Group
RPG
Reliance Retail
Aditya Birla
Landmark Group
Tata Group
K Raheja Group
No. of
Outlets
160
29
17
14
13
12
12
Total
Easyday Hyper
Jubilant Bhartia
Bharti-Wal-Mart
5
1
No. of
Cities
90
22
4
11
8
3
9
1
1
Hypercity is changing the business model, will focus more on apparel range
Country of Origin
No. of Outlets
No. of Countries
Wal-Mart
USA
France
UK
France
US
4,000
1,300
230
639
251
17
20
14
12
2
Carrefour
Tesco PLC
Auchan Group SA
Target Corp
Downloaded by in-kpmg1 from 115.114.45.146 at 2014-04-03 08:27:09 EDT. ISI Emerging Markets. Unauthorized Distribution Prohibited.
cover story
which has emboldened the Bhartias
to fund the rollout of more Total
hypermarkets in Bangalore with fresh
equity infusion.
Jubilant Retail claims to be the
second largest value-for-money
hypermarket chain in Bangalore. The
group also takes on lease the entire
mall to provide family entertainment
options and ensure a tenant mix and
activities that encourage consumers to
visit the malls. The integrated strategy
also helps the firm to ensure lower
lease rental costs for the hypermarts
giving greater control over the success
of the malls. The retailer also claims
to have a strategy of farm to fork
to source produce from farmers at a
lower price which enables it to offer
affordable pricing.
According to media reports, the
promoters have so far invested
`400 crore in the business with
around `225 crore as equity. Total
hypermarkets carry an assortment
of 95-100 lines of products, spread
Easyday Hyper
Bharti Retails Easyday Hyper has
opened their first outlet in Mumbai
offering a destination shopping
experience that caters to all household
needs of every family. They bring
together a wide range of highquality products and a great in-store
experience. The product assortment
includes jams, spreads, religious
requirements, spices, flour, biscuits,
Reliance Retail has traditionally focussed on smaller format stores, but the company is now stepping up on big-box stores that are build on 60,000-80,000 sq.ft.
Compact Hypermarket:
A Probable Growth Driver
The concept of compact hypermarkets
has been widely discussed among
retail industry experts. They believe
that with the right location and
operating strategy this concept can
emerge as a winner. The compact
hypermarket is a cross between
the large hypermarkets and small
neighbourhood stores called
supermarkets, a format that has
become widely unprofitable for Indian
retailers because the local merchants,
calledkiranas, continue to dominate
the more populated urban areas.
Downloaded by in-kpmg1 from 115.114.45.146 at 2014-04-03 08:27:09 EDT. ISI Emerging Markets. Unauthorized Distribution Prohibited.
cover story
option but to look at smaller cities,
the saving grace being the number
of aspirational customers. Poor
choice of location also hampers the
growth.
Still struggling to offer services
provided by neighbourhood kirana
stores.
Over reliance on debt funding had
led to financial risks. However,
retailers are learning form their
experience.
THE SILVER LINING
As the Union Government has opened
the FDI flood gates in multi-brand
retail in India, industry watchers feel
that organised retail, now estimated
at $500 bn, will grow at 15 percent
annually. The major advantage of the
entry of private companies, including
Compact hypermarkets (around 4,000-6,000 sq.ft. in size) are just the right size to tap into Indias significiant urban retail opportunities
Downloaded by in-kpmg1 from 115.114.45.146 at 2014-04-03 08:27:09 EDT. ISI Emerging Markets. Unauthorized Distribution Prohibited.