Daily News Digest- 13th Oct'14

Thought of the Day:

Today in History:

Following made the Headlines:

India:

• Bezos & Biyani See a Future Together: The world's largest online store Amazon and India's largest listed retailer Future Group have signed a deal to jointly sell goods over the Internet amid growing friction between online and offline retailers over heavy discounting. Future Group will sell more than 45 own labels of apparel initially, followed by in-house brands in the home, electronics and food categories, while the US-headquartered company will handle order fulfill ment and customer service for the merchandise on its portal. Both firms will also develop a new line of products across categories to be exclusively sold at Amazon and Future Group's retail stores. ET was the first to report, on October 3, that Amazon founder Jeff Bezos and Future Group's Kishore Biyani met in New Delhi to discuss an alliance. “The deal is deeper than just transactional involvement with Amazon.We are exploring several synergies in data sharing, co-branding, crosspromotion and distribution network sharing through the partnership,“ confirmed Biyani, who has been quite vocal on whether ecommerce firms' deep discounting strategy makes business sense, suggesting that offering cheaper prices wouldn't help in the long run. “We are targeting gross merchandise . 6,000 crore in next 3 years sales of ` TNN through the alliance,“ he added. The deal comes soon after Flipkart's Billion Day Sale on October 6 led to protests by traditional retailers that they were being hurt by the alleged predatory pricing. Amazon Gets a Month's Time to Sort Out Tax Issues Until then, Karnataka tax office will not act against Amazon vendors. 15 The complaints by traditional retailers led to the government saying it would examine the policy on ecommerce. Following this, Amazon’s October 10-16 Diwali Dhamaka Week has been a subdued affair with sharp discounts restricted to stock clearances and products only being sold on the site. Under the deal, Amazon and Future will also jointly develop discounting strategy and price tags on their products won’t be very different from rates at stores so that both channels don’t end up cannibalising each other.

• Riot of Colours to Live in, Lighter Hue to Drive Out: India's famed love affair with colours that are bright and loud fades away when its citizens make the choice while buying their cars. Indians seem to prefer lighter colours for their machines, with one in every two cars sold in the country painted in white and over a quarter of the buyers opting silver or gray shades. “Any customer can have a car painted any colour that he wants so long as it is black,“ Henry Ford, the Ford Motor founder, had famously said. Few in India seem to heed; just 4% of them bought a Ford or any other car painted in the colour that personifies elegance in 2013. “As per the current sales trend for Honda Cars, white, silver and urban titanium continue to be the favourite colours of choice for our customers,“ said Jnanes war Sen, senior vice-president of marketing and sales at the Indian unit of the Japanese auto maker. He cited ease of maintenance, good value in the second-hand market and hot In dian weather conditions -for instance, black cars become too hot inside if parked in the sun -as some of the reasons for the colour preference of Indians. Brighter options have slightly higher premium, which may be making some to look the other way. Red is preferred slightly more than black at 7%.Red along with the ma roon shade together accounted for 11% of the total 2013 cars sales. The northern part of the country is more biased towards white, with 66% of the cars sold in the region being painted in that colour, according to a study by marketing information services firm JD Power. In the south, white accounts for 34%. South and west have slightly more acceptance for brighter colours like red and its maroon shade with 13% of the buyers choosing these colours. In eastern India, about 14% of new cars sold are painted red or maroon.

• Fashion Portals Rope in Film Stars to Launch Exclusive Lines, Woo Youth: Online fashion retailers such as Jabong and Myntra are increasingly tying up with Bollywood celebrities to launch exclusive lines in a bid to attract more young consumers to shop for their garments on the internet. While Alia Bhatt has tied up with Jabong for her line `Alia Bhatt for Jabong', Myntra -which launched Hrithik Roshan's label HRX last year -now stocks Mandira Bedi's sari collections as well as the Vero Moda Marquee, a limited edition collection designed by director Karan Johar in a tie-up with the European high-street fashion brand for women. Snapdeal has Shilpa Shetty Kundra's jewellery line Satyug Gold. “Bollywood celebrities have always been considered as style icons and served as a muse for the high priests of fashion and most of these celebrities have a huge fan-following online. The same people who fall in the age group of 15-35 are also the ones who shop online. Thus to marry Bollywood and fashion online ensures success of the idea,“ said Praveen Sinha, founder and MD at Jabong. Jabong officials said the site's user base has shot up by 50,000 within a week of the launch of Alia Bhatt for Jabong this month. With ripped jeans, leather jackets and floral patterns, the collection makes a direct connect with Bhatt's wardrobe in her popular films such as `Student of the Year' and `2 States'. “Online shopping is the new rage...so this, according to me, was the best platform to launch my designs,“ Bhatt said. Myntra has launched Farhan Akhtar's Mard collection and Salman Khan's Being Human, besides HRX. Roshan's HRX has this month launched a range of active and women's wear.

• Airlines' Insurance Costs Shoot Up Globally After a Spate of Accidents: The cost of insurance for airlines is on the rise with international reinsurers charging a hefty premium for underwriting both war and hull insurances due to a spate of air accidents across the world in the recent months. In July alone, there were three major crashes. Malaysian Airlines flight MH17 was shot down over Ukraine, killing some 300 people. A TransAsia Airways flight crashed in Taiwan and an Air Algerie flight crashed in Mali on two consecutive days. Earlier, in March Malaysian Airlines' MH370 went missing with some 240 people on board. “With these new accidents, the reinsurers are charging a hefty premium,“ an airline executive in the know said. “They are charging up to 250% increase for underwriting war insurance and up to 50% more for underwriting hull insurance.“ This is the first time since 2611 that the reinsurers are charging a hefty premium.“The premiums had shot up after the 26 11 attacks, but were stabilising after that,“ the executive said. There are three types of insurance an airline opts for -war risks coverage, which protects against losses due to war terrorism, hijacking and so on; hull insurance, covering damages to the aircraft itself; and personal cover insurance, cover ing liability for death or injury to passengers and third parties. While the cost of personal cover insurance is still under control, war and hull insurance costs have shot up. Besides air crashes, in the past one year there have been incidents of separatist militants attacking airports in Tripoli in Libya and Karachi in Pakistan. “With these attacks, the London insurance market has already paid about $2 billion as compensation over earnings of $1.4 billion last year,“ said the airline executive quoted earlier.

• PepsiCo’s India revenue grows in double digits: PepsiCo India’s revenue grew in double digits for nine months ended 6 September, making the country one of the fastest growing emerging markets for the global beverages and snack firm. “Our developing and emerging markets business has proven to be resilient with high single-digit organic revenue growth year-to-date, including double-digit growth in Egypt and India,” PepsiCo Inc chairman and chief executive officer Indra Nooyi said in an earnings call. “Even though the political environments are relatively stable, gross domestic product (GDP) and consumer spending growth remains mixed. Despite these challenges, our businesses performed well in the third quarter and year-to-date,” she added. Other developing markets for the company such as China, Brazil and Turkey recorded high single-digit growth while revenue in Russia grew in mid single digits. During the third quarter ended 6 September 2014, PepsiCo’s Asia, Middle East and Africa (AMEA) region business reported 11% growth in organic revenue and net revenue. It was driven by 11% volume growth in snacks and 3% volume growth in beverages. Globally, PepsiCo reported organic revenue growth of 3.1% and net revenue growth of 2% in the third quarter. PepsiCo has termed India as “high priority market”.

• RIL Launches Constitution to Adopt GeNext Practices: Reliance Industries (RIL) has formally launched an internal constitution known as Reliance Management Services (RMS) to define processes and policies for the first time in its 38-year-old history as India’s largest private sector company looks to embrace nextgeneration practices. RIL unveiled the new framework before 150 top executives at a function held at Chairman Mukesh Ambani’s South Mumbai home Antilla on October 6. As part of RMS, the company also unveiled a series of human resource initiatives including steps to promote the wellness of employees and simplify policies. A Reliance spokesperson confirmed the launch of RMS but declined to provide details. The sevenhour function saw David Oxley, BP’s senior vice-president who oversees an HR transformation programme at RIL, setting the tone by posing questions to Ambani on the reasons for initiating change. “Oxley asked simple and quick questions. Mukesh Ambani presented his views,“ said a person who is aware of the development. BP has a stake in RIL's hydrocarbon blocks. The new system clearly defines the critical policies, processes and execution measures for segments ranging from topics such as HR manage ment to risk management. RMS clearly spells out what needs to be done within a specified time. For instance, the new framework provides guidelines on the delegation of authority and clearly explains how it should percolate from top to bottom. Similarly, it also explains the processes to detect risks easily and quickly. The launch of management system RMS will accelerate the pace at which contemporary HR practices are put in place.

• CAIT to Meet FMCG Cos on E-commerce Discounts: After raising red flagover Flipkart's Big Billion Day sale,traders body CAIT on Sunday said itwill convene a meeting after Diwali with FMCG companies to discuss their concerns and product pricing. “This is a serious issue which is adversely affecting the offline market to a great extent and therefore we have decided to hold direct talks with all such companies on this complex issue to understand as to how the online retailers are able to sell at a much lower price,“ Confederation of All India Traders (CAIT) secretary general Praveen Khandelwal said in a statement. About 50 companies, including LG, Samsung, Sony, Philips, Reebok, Puma, HP, Titan, Casio, and Guess have been invited, it said, adding that a White Paper will also be prepared from the discussion which would be submitted to the commerce and industry minister Nirmala Sitharaman.

International:

• Iconix Brand Group Takes Stake in Nick Graham: Nick Graham and Iconix are back together again. Last week, Iconix Brand Group acquired an interest in NGX, which owns the trademarks for the Nick Graham brand, a deal that reunites Graham, the irreverent entrepreneur and founder of Joe Boxer, with the company that purchased that brand in 2005. Graham declined to disclose the financial details of the latest deal but said the investment will allow the Nick Graham brand to license a wide variety of apparel and accessories, both nationally and internationally. The label launched nine months ago as a men’s dress shirt and neckwear company. “It’s really coming together to become the company it was envisioned to be,” said Graham. “We’re looking at a very commercial, department-store-oriented brand.”

• Bloomingdale's Celebrates Reopening of Palo Alto Unit: On Wednesday night, Bloomingdale’s celebrated the reopening of its store at the Stanford Shopping Center in Palo Alto, Calif., where the retailer has been trying, since 1996, to inject fashion into notoriously fashion-challenged Silicon Valley. At the gala benefiting the Bay Area Autism Consortium, Tony Spring, Bloomingdale’s chief executive officer, set a stylish example for the locals by wearing a Canali suit, Burberry tie, Salvatore Ferragamo shoes and Eton shirt — and he suggested the techies are catching up to him in the dressing department. “They may have started more casually and maybe haven’t had the same level of interest that their parents or grandparents had in fashion, but we are seeing an interest emerge,” he said. “Beyond having an iPhone, there is a component of fashion that speaks to the special things in life. Whether it is buying a great swimsuit here or a great watch, there is a way to accessorize your life [beyond] just a hoodie and a pair of jeans, although we have hoodies and jeans.”

• Kmart Latest to Be Impacted by Data Breach: Kmart Holding Corp. is the latest retailer to have a data-breach problem. In a regulatory filing on Friday with the Securities and Exchange Commission, Sears Holdings Corp. — the parent of Kmart — said the breach was detected on Oct. 9 by the discounter’s information technology team. The breach was at Kmart’s payment data systems, and the retailer immediately launched a full investigation with a leading IT security team. The regulatory filing said the investigation indicated the breach started in early September. The security experts working with Kmart said the store payment data systems were infected with a form of malware that was undetectable by current antivirus software. While the filing said Kmart was able to remove the malware, it believes “certain debit- and credit-card numbers have been compromised.” 

• Symantec latest company to split in two: US software maker Symantec is the latest tech company to announce that it will split its operations into two. The Norton antivirus software maker said it would spin off operations into two publicly traded firms, one focused on security and the other on storage. The move follows similar operational division by tech giants Hewlett-Packard (HP) and eBay. Analysts said the break-up by struggling Symantec would make it more attractive for takeovers. Potential buyers like Cisco and NetApp are likely to show interest in Symantec's California-based businesses, said Piper Jaffray analyst Andrew Nowinski. Its earnings growth and share price, impacted by slow PC sales, has lagged behind other software makers and led Symantec to fire two chief executives since 2012.

• Macy's Herald Square Evacuated After Fire: Macy’s Herald Square was back in business at about 1 p.m. on Friday, after a small fire broke out on the loading dock forcing customers and workers to evacuate the store and triggering a massive presence of fire fighters at the scene. “Customers and associates have all been allowed back in. We got the all-clear,” said Macy’s spokeswoman Elina Kazan. She added that Macy’s turned the fans on reverse to help clear out the smoke. No injuries were indicated. Macy’s Herald Square has experienced a handful of fires in the past years, some of which were attributed to the building’s aging infrastructure. However, the company has a multiyear $400 million overhaul in the works involving top-to-bottom renovations and upgrades.

Tech:

• Samsung Develops 5 Times Faster WiFi: Samsung Electronics said it has developed a WiFi technology that can increase data transmission speeds by five times the maximum rate possible with existing consumer electronics devices. The 60 GHz WiFi technology will enable a 1GB movie to be transferred between devices in less than three seconds while allowing uncompressed high-definition videos to be streamed in real time, the Suwon, South Korea-based company said in an e-mailed statement on Sunday . The technology removes the gap between theoretical and actual speeds, and exhibits actual speeds more than 10 times faster than with existing WiFi technologies, it said. “Samsung has successfully overcome the barriers to the commercialization of the 60 GHz WiFi technology”, Kim Chang Yong, head of a Samsung R&D centre, said in the statement. “New and innovative changes await Samsung's next-generation devices, while new possibilities have been opened up for the future development of WiFi.“ The announcement came as Samsung rolls out new products amid growing competition from Apple and Chinese companies. Samsung last week said its quarterly operating profit plunged 60% because of stagnating smartphone sales and has announced a $14.5-billion investment to build a plant in South Korea to meet demand for semiconductor chips.

• India can be a Tough Mkt for Android One, says IDC: Google's ambitious move to address the fragmented Android ecosystem with its Android One devices will help in redefining the affordable smart phone segment, but the Indian market will be a tough call for the US-based tech giant, feels research firm IDC. “Despite significant marketing spend already in evidence on Android One, IDC believes India will be a tough crucible for Google. Blocked out of China, Google has no choice but to make a large downstream investment in the Next Billion consumer segment in India,“ the research firm said. “IDC believes that Android One is crucial for Google to execute on its strategy to leverage the fast-growing Android user base to drive engagement for its increasing portfolio of essential Google services, including search, Maps, Google Now and others,“ it said. A consistent user experience, or at least a vastly improved one, will greatly increase engagement and ultimately revenues, IDC added.

• Adobe Sees $4-B Opportunity from Talent Search, Apps, Analytics: Adobe, the maker of the popular creative tool Photoshop, is venturing into areas such as talent search, marketing and analytics, which it sees as a $4-billion revenue opportunity . In an interview with ET, Adobe's Senior VP, David Wadhwani, said the cloud model, which the company adopted six months ago, is creating data-driven revenue opportunities for the company. “With the help of analytics in our cloud, today we have insights into user behavior like never before,“ Wadhwani said. Adobe is also utilising the 4 million user base of its Behance platform, which is a social network for creative professionals, to offer talent search capabilities. Unlike the traditional model, Adobe's platform lets recruiters search for talent on the basis of keywords and creative portfolios. For example, companies can look for experts in Photoshop who live in Mumbai and have worked in automotive design.Recruiters will get access to all 4 million profiles on Behance. Creative Talent Search is a highmargin business for Adobe. While subscriptions for Adobe Creative Cloud varies from $10 to $70 a month, talent search subscriptions start at $1,500. “It is free for creative talent and the people that pay are the creative directors or recruiters and the model is very similar to LinkedIn, where you can do a selfservice model and start searches at $1,500 a month,“ Wadhwani said.

• Pay U Money Buys Payment App Maker: Online payment solution provider PayUMoney has acquired mobile-based payment application startup Eashmart to strengthen its mobile payment platform and enable small and medium businesses to go cashless. Eashmart, founded by Amit Kumar, a BTech in Avionics from Indian Institute of Space Science & Technology, enables consumers to use creditdebit cards to make payments without having to swipe the card in a swipe machine.The five member Eashmart team will join PayUMoney's app development vertical. The deal value was not disclosed by the company. “Increasingly, more and more customers do not carry cash but are forced to make a trip to ATM to pay for deliveries or small ticket items like food, groceries, pizza etc,“ said Nitin Gupta, co-founder and CEO, PayU India. “We want to get all these small mom-and-pop stores on mobile and give customers the flexibility to pay even `. 10 from their credit card.“ “The time is now to solve the mobile payment issue as traffic is increasingly moving to mobile devices,“ said Rahul Chowdhri, partner at Helion Venture Partners. “Mobile has the fastest growing traction since most of the smaller towns and cities in India are coming online on mobile first.“ With PayUMoney app, transactions can be paid online through the user's mobile phone.The customer needs to identify the shopmerchant, enter the amount and pay. In all cases, real time confirmations is sent to user, delivery boy and the shop owner.

• HCL Tech plans to invest in emerging technologies: India’s fourth-largest software services company HCL Technologies Ltd plans to “invest significantly” in applications of emerging technologies such as those that power driverless cars and enable the Internet of Things (IoT) and wearable devices. “In the automotive industry, we are looking at areas like driverless cars. It is one of the robotic concepts that we have been working on,” said G.H. Rao, president of engineering and R&D (research and development) services at HCL Technologies in an interview last month. The company, for instance, is investing in the “active safety systems of self-driven cars” that help avoid collisions. “There are a lot of things which can use imaging in a car, including giving you a 360 degree view of your car, when you are driving. That, in turn, will lead to driverless cars because now you have complete software and electronics in a car which can steer it towards safe zone wherever you are,” said Rao. Rao also sees “IoT’s early adaptation in smart cities, transportation, utilities and healthcare”.