RPG exits mobile retail space; sells 50% to JV partner

Fierce competition in the mobile retail space has claimed its first victim. The RP Goenka Group has sold its 50% stake in mobile and laptop retail chain RPG
Cellucom to joint venture partner Arun Nagar, founder and owner of Dubai-based Cellucom. Industry analysts peg the deal value at Rs 150-200 crore. However, this could not be independently verified. RPG group declined to provide details. While confirming the exit, a group spokesperson said, “This divestment is consistent with RPG’s focus on higher margin retail categories.” Cellucom is spread across Asia, Eastern Europe, South America and Africa. In October, Mr Nagar had announced plans to invest around Rs 300 crore on the India expansion, and said the company was adding 15-20 outlets every month. Currently, there are over 200 RPG Cellucom stores across the country, and the company plans to set up 500 stores by March 2010. It is expected that RPG Cellucom will rechristen itself to reflect the change in ownership. Cellucom, which is a mobile-and-IT product retail chain, has mandated Ernst & Young to find an Indian investor for the venture, said a source familiar with the development.

Bossini to expand to 55 standalone outlets by 2010

Bossini, the international casual wear brand from LMG Brands, plans to have 55 standalone stores across India by end of March 2009, said Bossini brand head Chetansi Markandeya.

The brand has 22 stores in India, of which 3 are in Bangalore.

Bossini is also present in multi-brand outlets of Lifestyle, Reliance and Future Groups Central and Pantaloon outlets. The brand will also be present in the new outlets of these groups.

Markandeya was speaking with indiantelevision.com on the sidelines of the 'Bossini Budding Picassos Painting Carnival' which the brand had organised in Bangalore in association with shoe brand Crocs and Pidilite industries brand 'Hobby Ideas'. Among the other marketing and BTL initiatives, Bossini is considering an end of season sale in January 2009 and a Back to School bag painting competition later.

ATL brand promotion is done by advertisements in fashion and niche print magazines. Mudra is the creative agency and Maximus the media buying agency for Bossini. Bossini has seen a sales growth this year of 88 per cent, said Markandeya. She added that the growth could be attributed to buyers of high end fashion garments to value brands such as Bossini due to current global financial meltdown.

Realty takes another blow as buyers back out

The recent terror attack has dampened the already slackened demand in the realty sector. Several expatriates and visitors to Mumbai have kept their business plans on hold, hitting the sale and rental market in this segment.

Property consultants say NRIs and expatriates have deferred, if not backed out of, their plans to buy property in the country’s financial capital. Sandeep Sadh, CEO of Mumbai Property Exchange, says three of his clients, who were in the process of finalising deals last week, have now deferred their decision. “An expatriate employed with a multi-national company had finalised a high-end property in Bandra. But following the attack, his wife has decided to wait until January before going ahead with the deal. A Singaporean, who was planning to relocate to Mumbai, too has deferred his decision,” said Sadh. He is hopeful, however, that the affect on the economy will be short-lived.

Demand for property is down also in Colaba, which bore the burnt of the attacks with Nariman House, Taj Hotel and Leopold's Café having been targeted. “Business ekdum down hai,” said Chandu Naik, a local estate agent. He added that transactions were virtually nil once the share market started its downward spiral. “Now after the recent attacks, even enquiries have stopped,” said Naik.

Financial markets research group Macquarie Research has predicted that the terror attacks will also affect the demand for office and retail space in Mumbai.

“The sense of identification with Taj and Oberoi is very strong, not only for the business community but also for visitors and investors from foreign countries. We have not seen a more sombre mood,” said Anshuman Magazine, chairman and MD for CB Richard Ellis. He added that several visitors planning business trips to Mumbai have cancelled plans.

“This time the short-term impact would be much more than one would think. The risk perception has increased and none of the MNCs want any threat to the lives of their employees. The immediate impact will be seen on the leave and licence market. However, Mumbai is known for its ability for resurgence and over the next few months the mood will definitely improve,” said Magazine.

The impact has been felt also in the retail sector. A Morgan Stanley report looks at the impact in the weekends before and after the attack. Sales for Pantaloon’s declined 18 per cent in Mumbai while rising 10 per cent in the rest of the country. Shoppers’ Stop sales dropped 12 per cent in Mumbai against a 5 per cent growth elsewhere.

Vegetable vendors recover business

Reliance Fresh’s veg biz hit by 50%, Subhiksha temporarily shuts its veg division.

Vegetable-vendors and fruit-sellers across Nashik, whose vegetable business had been hit badly due to opening of Reliance Fresh and Subhiksha stores during last few months, have restored their business as consumers have once again turned towards them.

On the contrary, the vegetable and fruit business of Reliance Fresh has been hit by 50 to 60 per cent at its 11 stores in different locations across the city during the last six to eight months as most of their vegetable consumers have moved away. Another major retail chain Subhiksha has temporarily closed its fruits and vegetables division at its 11 stores across Nashik for the last two months and its reason is yet not known.

The livelihood of close to 6000 vegetable-vendors and fruit-sellers across Nashik city was affected following the opening of retail stores of Reliance Fresh and Subhiksha, in the second half of the calendar year 2007. Initially, most of the consumers had diverted towards these retail stores. Vegetable markets within a radius of 2-3 kms from these stores had been hit badly due to the sale of vegetables and fruits in these retail stores. Pawan Nagar’s Jijamata Vegetable Market, where 150 vendors sell vegetables, had worn a deserted look due to absence of consumers.

"Initially, my business and livelihood was at stake as sales had been hit by 70-80 per cent due to opening of retail stores of Reliance Fresh and Subhiksha here. But, this effect was upto six months only. Now, I have recovered 90 per cent of my business. Consumers diverting to these retail stores was just a part of the attraction and curiosity, but we have won their trust back. They (consumers) have experienced that only vegetable-vendors can offer fresh and quality vegetables,” said a 49-year-old vendor, who sells fruits and vegetables at Trimurti Chowk market, which is at a walking distance of three minutes from Subhiksha store and 1.5 km away from Reliance Fresh outlet at Cidco.

Laxmibai, who sells vegetables in the same area, says, “When our consumers had diverted to these retail format stores, it had become really difficult to earn even Rs 30-40 a day. But today, with our customers returning, I earn a profit of Rs 100-150 a day." Other 60 vendors at Trimurti Chowk have also heaved a sigh of relief after restoring business.

Bandu Narayane, who sells vegetables at Jijamata Vegetable market (Pawan Nagar) just one km from Reliance Fresh store, said, "Our traditional occupation was at stake due to the opening of branded retail stores. But, this effect was for the first few months only. My daily sale of vegetables, which had come down to Rs 700 a day, has reached again to Rs 2500-3000 a day. This market, which had worn a deserted look, is brimming with consumers again.”

Sunita Pendse, a 45-year old housewife, says, “Initially, I bought vegetables from Reliance Fresh store. Now, I prefer buying vegetables from vegetable-vendors as I get fresh vegetables from these vegetable-vendors at the same rate. On the contrary, vegetables at retail outlets are stored for two-three days in their cold storages.”

“The sale of vegetable and fruits at its 11 Reliance Fresh outlets across the Nashik city has been affected 50 to 60 per cent during the last six to eight months due to decrease in demand,” Reliance Fresh official told Business Standard on condition of anonymity.

Subhiksha official, who did not want to be identified, said, “Subhiksha has temporarily closed its vegetable and fruits division at its 11 stores across Nashik for the last two months and it is expected to commence again within a month's time.” He avoided a comment on the reason to stop the sale of vegetable and fruits at its outlets.

Retail workers report abuse by public

Stressed shoppers have been called upon to respect retail workers in the run up to Christmas after a new survey revealed that 70 per cent of shop assistants have been verbally abused by customers in the last 12 months.

The trade union Mandate, which represents over 50,000 workers in the retail sector, launched a new campaign today to draw awareness to the abuse that those working in shops experience.

According to research commissioned by the union, 30 per cent of retail workers received threats from a customer over the last year while 10 per cent were assaulted.

The union said that many incidents of abuse experienced by employees are based around issues which are outside the control of the worker.

"Our survey results show that nine times out of ten, the problem the customer has is completely out of the control of the employee. Issues such as clothing sizes, refund policies and a lack of stock are high on the agenda of customer complaints, yet retail workers have very little control over these matters," said Mandate's national coordinator for campaigns, Brian Forbes.

"It's clear from the survey that it is a minority of customers who treat retail workers badly and this is not acceptable in the long run," he added.

Mandate called on shoppers to show respect for retail workers over the holiday period and said that employers should also be aware of the stress that its employees are under.

The wholesale and retail sector now accounts for the largest share of employment in the Irish economy with over 200,000 people working in the retail industry alone, according to the union.