News As We Read- 2nd Aug'13

Thought of the Day:

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Following made the Headlines:

India:

• FDI rules for multi-brand retail eased: In a fresh bid to woo global chains like Wal-Mart and Carrefour, the government on Thursday sweetened the deal for foreign investment in multi-brand retail besides liberalizing rules for overseas companies looking to invest in defence production and telecom. Foreign retailers will now be allowed to open stores in cities that have a population of less than one million. Earlier, supermarkets could only come up in 53 cities. A relaxation was permitted only in case of states that did not have a single city with a population of one million. The move will allow stores to come up in cities like Gurgaon and Aurangabad. No investor has set up shop even 10 months after the government allowed FDI in multi-brand retail.

• Airtel Hires Suspended Walmart CFO: Pankaj Madan, who was suspended as CFO of Bharti Walmart as part of an internal probe into possible violations of American bribery laws at Walmart’s India unit, has joined its Indian partner’s flagship Bharti Airtel, in a sign of simmering friction between the two partners, reports Rasul Bailay from New Delhi. Madan has joined Bharti Airtel’s global finance team headed by group CFO Shrikanth Balachander.

• Jaypee Slashes Corporate Box Prices for F1: Jaypee Sports International, which hosts the Indian Formula One race, has slashed the prices of luxury corporate boxes by about a quarter for the upcoming race in October to make them attractive at a time when most firms are fighting a slowdown in demand. In the last two Formula One grand prix, Jaypee Sports International (JPSI) has sold one box with 30-35 seats at the Buddh International Circuit in Greater Noida to corporates and high net-worth individuals for anywhere between 40 lakh to 75 lakh, depending on the services offered and the location of the boxes. For the third season, the prices have been slashed to anywhere between 30 lakh to 60 lakh, a person familiar with the development said. Jaypee Sports confirmed its decision to “rationalise” prices to ensure more companies experienced the race. “Our effort is to involve a larger number of corporate houses with the circuit and the races. With this aim, we have tried to reduce the prices,” company spokesperson Aksari Zaidi said. The idea is to engage with more companies and brands even for other events held at the circuit through the year, he added. The circuit has 55 such boxes to offer, but, according to estimates, not more than 25-30 boxes were sold last year. However, with the price cut, the company is hoping to get more takers and the overall occupancy to go up. Jaypee Sports could rake in anywhere between 16.5 crore and 33 crore in case it is able to sell all the boxes.

• Crocs sees big opportunity in India, to bring in more brands from global portfolio: For most Indian consumers, footwear brand Crocs means colourful rubbery clogs with holes, mostly worn during the monsoons. And that is one image the US shoemaker plans to change by bringing in more of its 350-odd designs from global portfolio such as lace-up sneakers, hover boats and cobbler stud ankle boots. "In consumer minds, Crocs is a monsoon brand. Our products are diversified much more than that and we haven't done a good job of placing products in front of consumers or promoting it," Nissan Joseph, the recently appointed general manager of Crocs India, says. "We see opportunity for Crocs not only for acquiring new customers for our existing 'monsoon shoes' but also taking existing or new customers for new brands and product extensions," says Nissan, 49, who has more than 25 years of experience in brands such as Brooks and New Balance in the US and Payless Shoes in Australia. He believes Crocs has ample room to grow in the 30,000-crore Indian footwear market due to the country's swelling middle class and their demand for comfortable and durable footwear.  "You can break our world here in three groups - people who love Crocs, people who don't know much about it and people who apparently don't like Crocs because they wouldn't look good in a yellow pair of clogs. We can change the opinion of the last two sets of consumers with our new products," Nissan says. Made with lightweight anti-microbial foam called Croslite, Crocs first hit stores in 2004 as a beach shoe and became an instant hit thanks to its radical colourful design and lightweight, comfortable and odour-resistant qualities. Even today clogs account for more than half of the Colarado-based company's global sales. Crocs started its Indian operations in 2007, and the company says it has been growing its sales in high double digits. To expand its reach, the company has re-aligned its supply chain from having multiple accounts to few large distributors. Today Crocs is available in more than 340 retail outlets including 30 plus exclusive stores. Industry experts, however, feel that expanding beyond metros would be challenging for Crocs.

• Govt Issues Notice to NDMC over Taj Mansingh Auction: The Union home ministry has issued a show-cause notice to the New Delhi Municipal Council for flouting a government directive on a public auction to find a new operator for the Taj Mansingh hotel and seeking the opinion of the Solicitor General of India instead. The municipal body had written to the home ministry to seek the opinion of the Solicitor General before taking a decision on the auction after the ministry had advocated a public auction for the landmark hotel, without giving the right of first refusal to Indian Hotels Company of the Tata group, which currently operates the hotel under a lease. NDMC had proposed to give right of first refusal to IHCL. A 33-year lease for the hotel ended in 2011, and IHCL is operating it on a two-year extension.

International:

• H&M Joins Battle for US E-shoppers: Budget fashion retailer Hennes & Mauritz launched an e-commerce operation in the United States on Thursday, taking on rivals in the world's biggest online market. The launch is highly anticipated and follows successive delays. But retail experts say H&M may struggle to make the kind of profits from U.S. e-commerce enjoyed by pricier rivals. H&M has prospered in the United States without a big online presence and is mindful of the likely impact on profit margins of the high shipping and return costs associated with such a vast country. However, with more and more shoppers buying clothes from home, the Swedish firm is speeding up its online roll-out to capture a slice of the growing market. H&M has grown fast in recent years in the US, it's second-biggest market, but has twice pulled back from announced dates for the online launch, blaming unexpected complexities insetting up an operation well integrated with its stores. Meanwhile, its main rival Inditex and others such as online estore ASOS have expanded in the market, while Amazon is pushing further into apparel after EBay prospered with its fashion offering. “You don't want to lose out on being the port of call for younger shoppers. So H&M should really get in there,” Planet Retail consultant Isabel Cavill said. Apparel has become one of the fastest-growing online retail segments. H&M has e-stores in eight European countries and says they are now as profitable as its bricks-and-mortar shops.

• Moto X 'always listening' phone launched by Google's Motorola: Saying "OK Google now..." will prompt the Moto X's Touchless Control system to listen for instructions. The phone will be manufactured in the US, with customers given extensive customisation options. The device is the first to have been designed from scratch since Google's $12.5bn (£7.9bn) takeover of Motorola last year. Industry analysts said the release could prove disruptive to the Android market, as many other manufacturers using Google's operating system are struggling to turn a profit. The hardware will be manufactured in the US at a newly-built plant in Texas, making Motorola the latest in a growing number of firms keen to bathe in positive "Made in USA" public relations. It also means customers can change their customisation options - with multiple colourings, and personalised engravings to be on offer. The company said there were over 2,000 possible combinations for what could be created.

• Critical Mass: Three Beauty Execs Buy Brazilian Chain: The lid is about to be blown off the simmering Brazilian beauty market. And a group of beauty veterans plan to be at the center of the boom. Last week, Brasil Beauté — led by Paul Block, a former chairman and president of Revlon International; Renaud Dutreil, former chairman of LVMH America, and Joe Lago, former partner of the fashion brand Ellus — took over ownership of the Agua de Cheiro personal care chain from Henrique Pinto, owner of the Globalbras Group. Pinto rolled a minority interest of his holdings into the new company. Further terms of the deal were not disclosed. Currently, the 800-unit chain stocks its proprietary brands in stores averaging 350 square feet. The new owners plan to overhaul the stores, injecting new brands while adding more exclusive products and expanding the store count to 1,200 doors by 2018. An avenue to attract more global brands (and reduce high import taxes), Agua de Cheiro links brands with local production capabilities. “This is a very exciting opportunity. There’s a lot of growth in Brazil and changes that make the U.S. market pale in comparison,” said Block, who is the executive chairman and chief executive officer of Brasil Beauté. “Recognizing the growing awareness of the Brazilian consumer for sophisticated personal care products at accessible prices, we are optimistic about the potential for providing international brands and new exclusive Agua cosmetics and fragrances to both existing and new Agua customers.” 

• DreamWorks Animation Expanding Into Retail: Are consumers ready for Shrek coming to life in stores? The studio behind “Shrek,” “Kung Fu Panda,” “Madagascar” and “The Croods” thinks so. DreamWorks Animation has appointed Paul Kurzawa, previously chief operating officer of Caruso Affiliated, the Los Angeles-based owner of The Grove and The Americana at Brand, among other retail properties, to the newly created position of head of retail development and entertainment. He is responsible for DreamWorks Animation’s retail brand development and integration initiatives. “As soon as we made the decision to expand our brand into the retail space, there was no doubt in my mind that we needed Paul Kurzawa,” said Jeffrey Katzenberg, chief executive officer of DreamWorks Animation. “Caruso Affiliated has successfully redefined the shopping experience in the United States, and Paul, the protégé of its founder, Rick Caruso, will now lead our efforts to take the powerful DreamWorks brand and do the same thing for families across the world. We could not be happier to have him on our team leading the charge for this new initiative.” Kurzawa said, “For years, shopping center owners and developers have struggled with how to differentiate their properties and keep them relevant, and I have no doubt that DreamWorks Animation’s incredible portfolio will bring that magic to these unique shopping destinations.”

• Trina Turk Expanding Offering, Store Count: Trina Turk has big plans to expand her retail empire, beginning with a new store concept unveiled Monday in her boutique in Atlanta’s Phipps Plaza. The 2,100-square-foot space, designed by MR Architecture + Decor, is inspired by the midcentury architecture of Richard Neutra and Donald Wexler crossed with the California modern aesthetic. Blurring the lines between indoor and outdoor living, the store features contrasting textures such as concrete block walls, silk tussah wall coverings, a woven brass canopy and herringbone-pattern brick flooring. The ivory and taupe palette and gold accents are meant to provide a clean showcase for Turk’s colorful patterned sportswear. “We are planning on opening multiple retail stores in the next few years and wanted a fresh and neutral concept to provide a backdrop to our clothing,” said Turk, who opened her first store in Palm Springs, Calif., in 2002 and has since opened in Los Angeles, New York, Newport Beach and Burlingame, Calif., Miami and Dallas. “Palm Springs has been great for our brand identity, but we’re not just the desert,” Turk said. “We have an aggressive retail strategy that could see as many as 20 doors over the next three years,” said Trina Turk president Rob Trauber. Additional openings this year include Manhattan Beach, Calif., and the company’s first outlet, located at Fashion Outlets of Chicago. Scottsdale Fashion Square, Ariz.; Houston Galleria, and The Marketplace at the Woodlands outside of Houston are set for next year. “Texas is one of our top markets. Our Highland Park Village store does $1,600 per square foot,” he said. The company is also looking at moving its Los Angeles store from Third Street to The Grove next year. “We think a mature state would be 35 to 40 stores in the U.S. Our goal is to be productive in the right locations,” said Trauber. To that end, the company hired Gilbert Santiago, formerly of Diesel, as its head of stores. “The road map is pretty clear for us, and there are a lot of examples of companies in our space. We are about $100 million at retail today, and we are looking to double that in the next three years,” Trauber said.