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Retail India Business has managed to get its 100th subscriber just a short moment ago. The email subscribtion service is provided by bloglet.com which is 100% automated and saves me the hassles. Although all I get to see is the email id, and no other data, it still serves as a good tool as its easy to identify the destination with the domain name.
Well although Retailing is finally being recognized as an industry and with all the hype over FDI in Retail, the few companies that are trading have seen thier shares flare up upto 300%. Trent, Pantaloon, Titan, Bata have all seen positive growth much above the averages and recent Shoppers Stop entry was over subscribed many times and the listing also was about 50% more than the offer price. Provogue should be resulting in a similar result.
Compared with PE ratios to the Share Price, its clear that the share price do not reflect the true value and is over valued. But this is mainly due to the lack of enough Retail Companies Listed and even if one actually notices the number of shares traded on a daily average, they are very minimal compared to other industries.
Well don't let the title mislead you but it is something to think about. With the Battle between the Ambani's something of the past, industry expects the Reliance Group to move ahead in various industries and venture into new ones.
Reliance has officially quoted over a year ago of the possibility of venturing into Retailing. Although its always speculation and hype, the dream is much nearer.
There is a recent media coverage of the same although Reliance for the moment declines to make any comment. With the Government closing doors for FDI in Retail for the moment, maybe its time the big industrial houses like Reliance, TATA, etc step up and create enough barriers before the competition hits the shelves.
Following is a good write-up on Retail India by By Andy Mukherjee Bloomberg News
Consumers in India are in no mood to stop splurging, even as shoppers elsewhere begin to feel jittery. After surveying more than 21,000 shoppers in 38 markets, the New York-based researcher AC Nielsen on Monday ranked India at the top of its newly created list of consumer confidence. Commentary: An Indian road to happinessBy Andy Mukherjee Bloomberg News
WEDNESDAY, JUNE 15, 2005
Investors want to know how long the consumer frenzy will last. India's retail stocks are red hot. Shares of Pantaloon Retail India, which owns the Big Bazaar department stores, have more than tripled in the past year.
Shoppers' Stop, India's biggest retail chain, sold stock to investors at 238 rupees, or $5.45, per share last month. The shares are now trading above 388 rupees - a 63 percent gain for investors.
Retail is the most obvious sign of growing urbanization and affluence in India.
Investors who have put their money on the nation's prowess in computer software have now turned their attention to homegrown retail chains where the country's one million young engineers and call-center employees are spending their rising wages on everything from designer clothes and children's toys to kitchen appliances and DVDs.
"Any investment manager on a work trip to India makes it a point to visit a store like Big Bazaar or Shoppers' Stop," Aadil Ebrahim, an analyst and fund manager at Bowen Capital Management in Hong Kong, said Monday in an interview.
"He comes out so impressed, he gets into the car and immediately starts calling his trader in New York or London, telling him to buy a piece of the action," Ebrahim said.
Provogue India, an eight-year-old apparel manufacturer, runs its own stores, some of which double up as restaurants in the evenings. The company, which is selling stock to the public for the first time, is asking as much as 150 rupees, or 25 times its earnings per share.
That's hardly cheap. Shares of Wal-Mart Stores, the world's largest retailer, are trading at a price-to-earnings ratio of about 20.
However, the Indian government has yet to allow global retailers like Wal-Mart, Carrefour and Ikea into the local market. So the only way investors can profit from India's retail boom is to buy shares in companies like Provogue, which has seen 10 times as much demand for its shares than it offered to sell.
Some of the penchant for owning shares in local Indian retailers may ebb once the government of Prime Minister Manmohan Singh allows bigger overseas competitors to open stores in the country. Wal-Mart last month said that it would consider investing in India, where it sees "a bright future for retailing."
On the other hand, if global retailers are allowed to buy stakes in existing Indian companies, share prices of local retailers may rise even more.
Unless global investors have a crisis of faith in the Indian economy, the local currency and interest rates should stay supportive of spending.
India attracted $50 million in equity investments in the week that ended June 8 from emerging market funds, according to the Cambridge, Massachusetts-based Emerging Portfolio Fund Research. That compares with $38 million of inflows into Brazil and an $11 million outflow from China in the same week.
A one-year consumer loan in India is available at an interest rate of 7 percent. Five years ago, financing was twice as expensive. The Indian rupee is at 43.55 to the U.S. dollar, almost 10 percent stronger than it was in September 2001.
Moreover, India has only now begun to enjoy the so-called demographic dividend. Three out of five Indians are 15 to 64 years old, a percentage that is projected to keep rising beyond 2035. As more people in the economy work to support fewer dependents, discretionary consumer spending may increase manifold from the current $178 billion a year.
Credit card debt is on the rise in India, though it is nowhere near the exorbitant level reached in South Korea when a spending boom went bust in 2003.
Globally, the big concerns of consumers at the moment are: the state of the economy, personal health and job security. Those anxieties are rather muted in India, where nine out of 10 consumers surveyed by Nielsen said they were optimistic about their job prospects in the next 12 months.
Valuations of India's retailing companies may indeed be too high. The Indian consumer, however, is nowhere near the top. It looks like the "happy people" can stay that way - happy for now.
Copyright © 2005 The International Herald Tribune I guess its flattering to see almost every media talking about the Watson Group entering India. Well the flattering bit is Retail India Business Blog was the first to publicise the same.
Read about it at http://retailindia.typepad.com/retailindia/2005/05/retail_india_as.html
There is always more thats left unsaid and unknown. Wal-Mart CEO had made a trip to UK in 1999 to meet the Prime Minister, Tony Blair. 3 months post the visit, Wal-Mart had taken over the retail giant ASDA.
Now with all the speculation is there a similar story to be repeated in India? Wal-Mart CEO has clearly stated it would be best for the Government to open up FDI in Retailing in India. But in a recent press conference he has also stated that if India chooses not to open then Wal-Mart will look for other possible entries and arrangements.
The customer is the King! Customer is your Boss!
Tired of those phrases? Well be ready for more threats from your boss (customer). With increased awareness and as the population gets better educated, globally aware and advanced in thier own careers, apart from their aspirations and purchasing power going up, they also appear to have very high expectations in terms of delivery and service.
Well there is nothing wrong expecting great service but we still live in a mass market and not a niche market. The customer still wants the price benifit and not quality and service. Although world over we have different classes of consumers and retail formats serving each, India is a complex one. Indian's want the best of both worlds. They want the lowest price and yet expect unbelivable quality and service. Well not that they should be directly unrelated. Not that strategists advocate high prices and high quality and low prices with low quality, but they do have a correlation. And in a price sensitive market where margins are eroded due to competition and consumers purchasing even expensive home furnishings and electronics only through bargaining then the customer is to be blamed for poor service.
India is probably the only place where you would not find any difference how customers purchases grocery in the street markets (by arguing and negoitiating for the lowest price) and at organized retailers be it jewellery, durables, etc.
Well anyways to get to the point, customers who experience bad service usually expect to be treated like kings. And any organization would have experienced this. While in most other countries there is a certain protection from customer abuse, verbal or otherwise, India lacks any such protection. Its a growing phenomenon being experienced by many companies and retailers especially. For every other simple thing, the customer threatens they would go to Consumer Court. Wonder when retailers and others could shoot back against customers resorting to violence, threats and abuse in any form from the customer.
I guess the image is too small to be viewed unless clicked an viewed in a seperate window. Anyways to get to the point I was surprised although pleasently at the way Arcus Stores has sent a mail about the status of its stores.
Below is the real excerpt from the mail I just recieved a short while ago. Arcus finally has stated to the public they have shut both shops and the term they use is something to think about - "operational closure". That definitely means closure of operations (stores) but not the company (legal aspect and constitution). Well thats my interpretations. Its a good sign of the company setting a customer feedback cell to address any customer issues.
Guess we are in the phase where we would see many more great stores rise and fall in a very short span of time. Arcus did hail from ground zero and was compared in standards to the best and was a concept that India had never seen. With Arcus shutting down, one would wonder when would we get a Home Improvement Store again. Although the real reasons are very unclear it does have a lot to do and many things fell out of place after the company opened its second outlet in the mall. Signs of the mall destruction? Not really but the malls do charge a hefty premium which make retailing unsustainable.
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