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Year: 2015

Retail Research

Domino’s Pizza India Sales Recover

Dominos SAles Rise in IndiaJubilant Foodworks, master franchisee for Domino’s Pizza India reported Same Store Sales growth (SSSG) of 6.6% yoy. Management highlighted that acceleration in SSG recovery was aided by innovative new launches, ground-level activations and thrust on online ordering. While it is now relatively more confident of an earlier recovery to high single digit/double-digit SSG in 2-4 quarters (versus guidance of 4-8 quarters a couple of quarters ago), management did caution that broader weakness in QSR sector (as reflected in qoq deterioration and negative SSG posted by both competitors Yum! brands and Westlife Development) remains a key risk to its outlook.

Consumer sentiment continues to remain weak, although the company has been (more…)

Retail Brands

Why Bharti Retail Merge with Kishore Biyani’s Future Retail ?

Bharti Retail Merger with Future RetailFuture Retail (FRL) has announced the consolidation and realignment of retail operations with Bharti Retail (BRL). The FRL undertaking will be merged into BRL, and the retail infrastructure undertaking of BRL will be merged into FRL. Key transactions under the new agreement include (a)De-merger of the retail business of FRL into BRL (to be renamed following the de-merger). This company will have the retail operating business (b) De-merger of the retail infrastructure business of BRL into FRL (to be renamed following the de-merger). This company will have retail infrastructure and investments.

Prima facie, this deal will (more…)

News & Views

Shoppers Stop India’s Largest Departmental Store Chain Reports Modest Growth

Hypercity Retail GrowthShoppers Stop Same store sales growth recovered to 4% in Q4 led by improved growth in March. Growth was strong in the apparels segment; from the geographic perspective, South and East witnessed stronger growth. The management expects same store sales growth to pick up further from the next quarter. Average sales per sqft was flat at Rs2176 in spite of a 2% increase in transaction size and 6% increase in average selling price. LTL volume decline was at 1.7%. Customer entry was down 4.4% on an LTL basis; this was the sixth consecutive quarter of LTL customer entry decline.

No new store was added in the (more…)

Retail Brands

Online / Stores – Jockey Says No To Discounts

Jockey-No-DiscountAggregators like Myntra, Flipkart, Amazon offer heavy discounts to customers, and this is against Page Industries‘ Master Franchisee of Jockey in India & South Asia approach of never discounting its products in any distribution channel, as such repeated discounting kills the aspirational value of the brand (Does this mean Nike & Other Global Retailers’ Brand Value is Knocked off ?]. Also, the lack of discounting on Page’s new e-commerce portal helps prevent a direct conflict against the brick-and mortar retailers who are forced NOT to sell products at discounted prices.

Stock availability of Jockey’s products on aggregator portals like Amazon, (more…)

News & Views

Nike / Adidas Group’s – Direct to Consumer

Nike Direct to ConsumersAlthough all 3 brands – Nike, Adidas Group & Universal Armour (UA) will likely benefit from a growing global category over the next several years, we name Nike the winner of our Head to Head report versus adidas and UA given strong sales growth and global market share leadership, its strong digital presence, the potential for gross margin expansion opportunity driven by pricing power and innovation in the supply chain, its ability to leverage costs.

Our topic of Research is the Direct to Consumer Initiative from all the 3 Big Brands. Direct To Consumer (DTC) remains a profitable focus for all three players. DTC includes outlets, full price stores and e-commerce. Nike’s DTC is ~24% of the total company vs. adidas’ 26% and UA’s 30%. Each player is expecting to grow the division through (more…)

News & Views

TTK Prestige Under Pressure from eCommerce

TTK-Prestige-eCommerceTTK Prestige is well positioned to leverage the revival in the Indian kitchen appliances industry, through new product launches, distribution expansion and ecommerce tie-ups.

How eCommerce Gained Significance in India ?
India is an extremely Price Sensitive Market. Even 5% Discount is enough to attract a potential consumer. In this backdrop, eCommerce companies decided to sacrifice Big Fat Margins as they had very little establishment costs compared to Street Retailer. Thus began (more…)

Retail Research

How Does Domino’s Manage Largest Commissary in India ?

Dominos SupplyChain MumbaiWe visited Dominos’s 72,000 sq. ft. commissary located close to Mumbai to understand the competitive advantage the company derives from its supply chain. Note that the commissary is a key component of the supply chain and it coordinates the supply of raw materials to the stores. The commissary serves 240 stores across c800km radius in west India (stores across Maharashtra, Gujarat, Goa, and regions of Udaipur (Rajasthan), Indore (Madhya Pradesh)) and it has potential to serve c400 stores. While the key contracts (rates, terms) are negotiated centrally, the commissary is responsible for day-to-day orders (for vegetables, flour etc) and it ensures that all stores receive raw materials in 2-3 days. Note that beverages are provided directly to the store by the vendor.

It maintains three warehouses: (more…)

News & Views

How big can Online Retail / e-Commerce get?

eCommerce Value CreationThe total value impact of the long-term growth story for e-Commerce should not be underestimated, in our view. One of the key reasons for this relates to current annual online spending per buyer. Across the developing world, eMarketer estimates that buyers spend c.US$600 per year. This compares with an average of US$1,500 for most developed countries and very high levels of more than US$3,500 for buyers in the UK and Australia. Estimates from eMarketer indicate that the total value for the online retail market in the key emerging and largest developed countries may reach US$2trn by 2018. This would represent an annual average increase of 19% from 2013 levels.

Scenario analysis for the e-Commerce globally
Retail We calculate total retail spending for the key regions by forecasting nominal GDP by year for the next 10 years and assuming (more…)

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