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Indian Retail Sector Research

Retail Research

Why Reliance bought Future Retail in Largest Deal – Insider View

After getting series of funding into Akash Ambani run Jio Platforms, Reliance Industries CMD, Mukesh Ambani set his sight on his daughter Isha Ambani Piramal managed Reliance Retail Ventures Ltd .

Talks had progressed in the backstage between the Reliance Group & Kishore Biyani’s Future Group for quite sometime. Reliance through its newly formed group company Reliance Retail Ventures Limited will acquire Future Enterprise Ltd (Future Retail, Future Lifestyle Fashions, Future Supply Chain, Future Consumer, Future Market Networks would first be merged into Future Enterprise), on a slump sale basis for an enterprise value of Rs247 bn, subject to regulatory approvals. This marks a major consolidation in the Indian organized retail sector, with two of the top three players merging.

How Reliance Retail Compares with Future Retail Ltd (FRL) ?
Reliance Retail revenue in FY20 was Rs346 bn and that of Future Retail annualized revenue of FY20 (based on 9M FY20 results) was ~Rs100 bn. Future Retail has (more…)

Retail Research

How COVID-19 Impacts Indian Retail Chains ?

The once in a decade event “Viral Infection – COVID-19” is going to have an unprecedented impact on the organized retail traders in India. With lockdown impacting business completely in April & May and gradual recovery in June across the length and breadth of the country.

Titan’s revenues to be hit nearly ~65% in Q1FY21, along with significant hit to the margins. We anticipate the watches division to be impacted the most (~92% dip YoY), followed by eyewear (~85% dip) and jewelry (~70% dip; for the remainder of the year, we expect a gradual bounce back in jewelry demand to be spurred by festive buying, wedding / occasion-based purchases, which in our view will take time to manifest in revenues, additionally we would watch for commentary on (more…)

Retail Research

Can Reliance Pull Of the Kirana & Jio Omni-Channel Retail Strategy ?

Decade and Half old Reliance Retail Ltd a subsidiary of Reliance Industries Ltd has been toying with several strategies to make its presence felt in several Hundred Billion Dollar Organized Retailing. In order to connect ~30m kirana stores with its own physical and digital infrastructure, Reliance Retail (RRL) launched the Jio PoS machine in 2019. We’ll now explore how has the market received the next generation online & offline retail business strategy.

Our visits to multiple kirana stores that have adopted the Jio PoS device pointed to healthy penetration in the pilot market. RRL has offered attractive pricing for the PoS device (an initial deposit of sub-Rs 4,000 and no recurring fee). This has aided penetration among kiranas. Note that the PoS devices offered by banks often demand an up-front fee of Rs4,000-10,000 and (more…)

Retail Research

Improved access for Indian SMEs by eCommerce

msme-driving-indian-ecommerce-salesAccording to the Economic Survey for 2016, “With 3.6 crore [36mn] units spread across the country, that employ 8.05 crore [80.5mn] people, Micro, Small and Medium Enterprises (MSME) have a contribution of 37.5% to the country’s GDP”. However, MSMEs’ share in manufacturing has been declining (even as the total share of manufacturing in India’s GDP remains stagnant) mainly because MSMEs in India must contend with the challenge of poor access to end-markets. The ministry of MSME, in its annual report for FY15, has noted that “MSMEs in India face constraints such as high cost of credit, low access to new technology and lack of access to national and international markets”.

The advent of e-commerce in India from CY10 has meant that the improvement in access to end-markets for SMEs in (more…)

Retail Research

Cafe Coffee Day Average Daily Sales Rise 4%, Goes Mobile

CDD Daily SalesCafe Coffee Day CCD reported a 14% yoy growth in revenue driven by 13% growth in the retail operations and 25%+ growth in exports. The Average Sales Per Day came in at Rs 13,910, a growth of about 4% yoy while Same Store Sales Growth came in at 4.1%. Growth in ASPD continues to lag expectations and the company’s stated target of reaching close to Rs 20,000 over the next few years.

The management stated that the recently launched mobile app, the company’s foray into home delivery and constant innovation on the food menu side should help increase both footfalls and average ticket size thereby driving growth in ASPD. The management said (more…)

Retail Research

Foreign Investment in Indian e-Commerce – New Guidelines

FDI in Indian eCommerceThe Ministry of Commerce & Industry clarified yesterday through a press note that it would allow 100% FDI under the automatic route in marketplace model of ecommerce but would continue to disallow FDI in the inventory based model. Amongst the key points mentioned were – 1. such e-commerce marketplaces would be allowed to provide support services to sellers on their platform such as warehousing, logistics, order fulfillment, call center and payment collection. 2 – Not more than 25% of the sales through these marketplaces can be from one vendor or their group companies.

e-commerce entities providing the marketplace will not directly or indirectly influence the sale price of goods or services sold through the (more…)

Retail Research

Madura Fashion + Pantaloon = Aditya Birla Fashion & Retail

Aditya Birla Retail Aditya Birla Fashion & Retail has an impressive bouquet of brands at its disposal Madura is the owner/perpetual licensor of India’s leading menswear offering – Louis Philippe, Van Heusen, Allen Solly, Peter England; the portfolio approach enables it to straddle the price-pyramid and capture opportunities across the board. The branded menswear segment, a US$16bn market of which only c.30% is organised at present, is a decadal double-digit growth opportunity. The Pantaloons business would act as a top up to this growth through its bouquet of offerings in the (more…)

Retail Research

Amazon Prime – Biggest Disruption in Retail Industry

Amazon primeAmazon Prime is the primary focus area of AMZN within the core retail business. Outside of AWS, we believe that virtually all investment from AMZN is centered on driving Prime growth. We believe that the program is the killer app for AMZN.

On top of the 50%+ Prime growth in 2014, with more than 10mm new users trying Prime for first time in holiday period of 2014 (confirmed by AMZN press release on 12/26/14), we think significant percentage converted in the first quarter, and we expect to see them (more…)

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