News As We Read - 27th Aug'13

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India:

• Lipsticks do brisk business even as cosmetics industry staggers : Here’s the slowdown painted red…or any colour you want. Lipstick sales jumped as the slowdown got sharper. So, India now offers another demonstration of the so-called ‘lipstick index’. Thought up by the then chairman of Estee Lauder, Leonard Lauder, in the late 1990s, the index posits that women turn to lipstick during hard times, shunning more expensive purchases such as handbags and shoes. Critics have called the ‘lipstick index’ sexist. Whether or not that charge is valid, Indian data seems to support Lauder’s theory.

• Weak Demand Clips Airlines’ Wings, Fares Hit 2-year Low : Despite soaring costs primarily due to the rupee depreciation, Indian carriers are selling tickets at the lowest price levels in the past two years, say airline executives and travel companies. If that isn’t enough, airlines fear that due to low demand, they won’t be able to raise fares by any significant amount, even when the festive season starts in October. “Fares are at least 25% cheaper whichever way you compare it month-on-month or year-on year,” a senior executive at India’s top budget airline told ET. Fares are at a record low, even for the current lean season, he added. “This comes at a time when costs are 25% higher. But there is no other way for us, given the demand. Also, full-service carriers aren’t maintaining any fare difference with us, so that’s worse,” he says.

• Britannia Can’t Register Snax as a Trademark : The Intellectual Property Appellate Board (IPAB), India’s patent appeals board, on Monday ruled that the Snax biscuit brand of Britannia Industries cannot be trademarked. In doing so, IPAB upheld an earlier order by the Deputy Registrar of Trade Marks, which refused to register the trademark following an objection by foods multinational PepsiCo. “The trademark Snax is phonetically similar to the word snacks. Snacks means some light food. When a trademark has a direct reference to the quality of the goods for which registration is sought for such mark shall not be granted,” S Usha, acting chairman, and V Ravi, technical member (trademarks) of IPAB, wrote in their judgement. They also noted that the mark Snax alone does not qualify for registration.

• King’s Audi India Head, Perschke Moves to Germany : Joe King has been appointed as the head of Audi India effective September 1. King takes over from Michael Perschke, who has had a successful stint in India, steering Audi to the number one position in the luxury car space, with sales more than tripling to 9,000 cars at the end of 2012. Perschke moves on to become head of network strategy and business management, international level at Audi AG. King comes with over 23 years experience in the automotive industry. King moves to Audi India from Audi Australia as general manager and dealer principal of Audi Australia’s wholly-owned retail subsidiary.

• Jubilant FoodWorks to Open up to 100 Dunkin’ Donut Outlets : Food services firm Jubilant FoodWorks on Monday said it will open up to 100 Dunkin’ Donut outlets in the next four years to grow the brand in India. “We will open 80-100 Dunkin’ Donut outlets in four years to grow the brand. We are identifying locations where we can open these new outlets,” Jubilant Food-Works CEO Ajay Kaul told PTI. The company said the Dunkin’ Donuts chain in India will be smaller to the pizza chain.

• CX Partners Close to Buying Future’s Stake in BIBA : Private equity fund CX Partners is in the final stage of negotiations to purchase Future Ventures’ 28.3% stake in women’s apparel maker Biba Apparels Pvt Ltd for . 300 crore, three persons with knowledge of the development said. “Future Ventures was in talks with half a dozen PE investors and has now moved into exclusive talks with CX Partners,” an investment banker, who did not wish to be named, said, adding the deal could be worth . 300 crore. Future Ventures is the investment arm of Kishore Biyani-promoted Future Group, which runs the India’s largest retail chain, Future Retail. It had invested about . 40 crore in Biba India in 2008 for the 28.3% stake. Biba Apparels, founded by Meena Bindra in 1986, owns more than 100 standalone stores in the country. The brand is also available at multi-brand retail stores. A spokesperson for the Future Group declined comment. Biba’s managing director, Siddharth Bindra, and CX Partners’ founder and managing director, Ajay Rehlan, did not respond to telephone calls and emailed queries sent by ET seeking information on the talks.

• Mobiles, TVs to cost even more on fall : If you have been planning to buy a new smartphone or upgrade to a bigger TV before Diwali, now may not be the best time to go ahead. Prices of mobile phones, laptops, TV sets and printers are set for a second hike in as many months as the dearer rupee has upped costs for companies, forcing them to revise rates just ahead of the crucial festive season. Companies said the pressure from a depreciating rupee refuses to ease and uncertainty persists over the currency in the near future. The rupee has slipped 14.5% so far this year and fell to a record low of 65.56 last week.

• India will soon become Domino’s 2nd-largest market after US : India is set to become the second-largest market after the US for Domino’s Pizza, the company said on Monday underlinning the country’s significance in the food chain’s global strategy. “In the global Domino’s system, India is amongst the top three countries in terms of absolute number of stores,” said Shyam S Bhartia, chairman, Jubilant FoodWorks Ltd. Jubilant FoodWorks Ltd (JFL) operates the pizza chain in India.India will be the firm’s second-largest market in terms of number of outlets in the next few months, overtaking the UK. “At present, India has 600 outlets whereas UK has over 700 outlets. In other 12 to 24 months, India will become our second largest market,” said Steven Pizziol, vice-president, Asia Pacific, Domino’s Pizza. In the US, the company has 5,000 stores. The company has plans to open a total of 125 new stores in India during the current fiscal. The company opened its 600th store in Vasant Kunj, Delhi to introduce the international “Pizza Theatre” concept that features an open display kitchen and restaurant layout.

• Retailers mull cuts in import to tide over rupee fall : With the rupee depreciating to new lows, many retailers are considering either stopping the practice of stocking imported products, or substituting these with local ones. In the last three months, the rupee has depreciated 15 per cent, pushing up prices of imported products. Retailers who deal with such products say the actual price rise would be clear only when new stocks arrive at their warehouses. Consultants say those selling imported consumer durables, apparel, food products, furniture, etc, are the ones hit the hardest. Amid the economic slowdown and the depreciating rupee, retailers are reconsidering their assortment and merchandise mix. “ Out team is watching how the new prices are moving carefully. We have to potentially consider whether to bring all the products we used to stock earlier. We need to be competitive,” said Mark Ashman, chief executive of Hypercity, Shoppers Stop’s hypermarket chain.About 65 per cent of Hypercity’s sales are accounted for by food products, including imported ones. “ In a few cases, we may have to decide whether to stop bringing some products whose prices are too high,” Ahsman said.

• Merc rolls out India-made GL Class at R72.6 lakh : Seeking to capitalise on the recent surge in demand for its products as it battles to regain the number 1 position over BMW and Audi in India, Mercedes Benz has rolled out its highend off-roader, the GL Class, from its Pune plant. This is only the second location outside the GL’s mother plant in the US to make the SUV. The locally produced GL Class is priced R5 lakh cheaper than the imported completely built units (CBU), at R72.58 lakh.

International:

• Americans are Spending More on Homes Now : Shannon Burke is typical of many American shoppers these days. She’s pouring money into her home and cutting back on everything else. “If we don’t need it, we don’t buy it,” said Burke, a 33-year-old mother from Abington, Massachusetts, whose two kids are mostly making do with hand-me-downs. “The money can be spent on our home. The more valuable our home is, the better it is for us in the long run.” That’s great news for companies such as Lowe’s Cos and Home Depot Inc. Both reported blowout second quarters as millions of Americans, drawing confidence from a recovering housing market, loaded up on dishwashers, bathtubs and wall tile. It’s not so good for retailers selling clothes and other general merchandise. In recent weeks, chains from Wal-Mart Stores Inc to Nordstrom Inc to Macy’s Inc missed sales estimates and cut forecasts. Several blamed the results on consumers struggling with higher payroll taxes and an uncertain economy. While those headwinds are weighing on spending, especially for low-income shoppers, many consumers are simply buying elsewhere. Having already updated their wardrobes, they’re eager to replace ageing appliances and cars after postponing such purchases for years. Ford Motor Co and General Motors Co are benefiting from the best auto sales in the US since 2007.

• Andy Murray Set to Launch Own Fashion Line in US : World no. 3 Andy Murray is all set to launch his own line of clothing in the US possibly following the footsteps of fellow Wimbledon champion Fred Perry. Murray’s advisers feel there is a gap in the market because the US doesn’t have its own male tennis superstar and want him to own a fashion line like the iconic brand of shirts and items bearing the name of his predecessor as Perry. Sources close to Murray said that showbiz guru Simon Fuller is ready to turn him into a global figure like David Beckham and is convinced the US is the best place to start.

• Google Plans to Turn Self-Driving Cars into Robo Taxi Service : Although Google’s self-driving cars have been a technological success, the search-giant has had difficulty finding a method of getting the vehicles into mainstream use. However, new reports now suggest that the company is considering using its vehicles to create an autonomous ‘robo taxi’ service. The self-driving vehicles would pick up and drop off passengers without human intervention, and would presumably be paired with a mobile application. Google recently led an investment of $258 million in Uber, a three-year-old taxi hailing app now valued at $3.5 billion. Uber started by offering customers the chance to order high-end vehicles from their mobiles within minutes, but the service has been so popular that a string of competitors have emerged (including Lyft, Hailo and Sidecar) whilst taxi unions and local governments have sought to obstruct the service’s growth. It’s not clear whether Google would operate a fleet of cars itself or hire out its expertise to other companies. Tech reporter Amir Efrati has said that Google had previously considered offering the service as a trial to specific cities as it has with Google Fibre. This would hopefully stimulate interest in the project and pressure other industry players to get involved.

• Microsoft chief Steve Ballmer to retire within 12 months : Microsoft emerged as the undisputed leader in the technology sector, and became the world's largest company by market value.But the company had been criticised by investors recently for not reacting quickly enough to the way Apple and Google have led the way in mobile devices.Microsoft struggled as consumers began to shun desktops and laptops in favour of tablets and mobile devices. While its Windows software is used on the vast majority of PCs, Microsoft made little impact in the fast-growing tablet and smartphone segments. Microsoft's transformation plan, announced last month, is trying to address that. In a memo to staff last month, Mr Ballmer said that the changes meant the company was "rallying behind a single strategy as one company - not a collection of divisional strategies". The aim, he said, was to react faster to changes in the market.

• Instagram, Vine and Netflix hit by Amazon glitch : Users of Instagram, Netflix, Vine, Airbnb and several other services reported problems getting through to the services for several hours late on Sunday. All of them rely on servers that are part of Amazon's cloud-based network. The problems were traced to a data centre in northern Virginia that was struggling to keep up with demand. Also caught up in the network problems were cloud software firm Heroku and web automation service IFTTT. Instagram was the first to acknowledge that access to its services was intermittent via Twitter and other services put out warning messages soon after.

• China Growth Plan on Track : New economic indicators show China’s economy is stabilizing and on track for 7.5 percent overall growth this year, officials from the China National Bureau of Statistics said Monday. “The economy is showing some positive changes. Signs of growth stabilization are becoming more obvious,” statistics bureau spokesman Sheng Laiyun told a news conference here. “We are confident that the economy is sustaining the positive momentum in the second half and confident of meeting the economic growth target.” China’s initial growth target for 2013 has been shaken by slowed production and export data in recent months, a trend that appeared to reverse this summer when July manufacturing output increased to the fastest rate all year. The economy grew by 7.7 percent in the first quarter of this year and 7.5 percent in the second quarter.

• Gant Appoints Global Marketing Director : Gant has named Caroline Roth its new global marketing director, effective Sunday. She joins the Swedish sportswear firm from Ralph Lauren, where she had been senior director of marketing and global brand management since 2010. At Gant, she succeeds Laurens van der Vijver and is to oversee marketing and brand management, as well as visual merchandising and store concept teams. A Swedish national, Roth has worked in fashion in her native land, France and the U.S. A company with American roots, founded in New Haven in 1949, Gant AB is today owned by Swiss retail group Maus Frères SA and posted 2012 revenues of 9 billion Swedish krona, or $1.33 billion at average exchange rates.