Retail News You Can Use

Report: Best Buy Plans to Double Sales in 5 Years
Minneapolis (June 26, 2008) Best Buy Co. expects to double its sales to $80 billion in the next five years, president and COO Brian Dunn said at the company's annual meeting on Wednesday, according to the Minneapolis / St. Paul Business Journal.

Best Buy doubled its revenue from $20 billion in fiscal 2003 to $40 billion in fiscal 2008. The company expanded from 679 stores to 1,314 during that time.

 

 Ralphs Unveils Lower-Price Policy
Los Angeles (June 26, 2008) Ralphs Grocery Co. is initiating a lower-price policy that involves reductions on goods that customers buy most often, according to the Los Angeles Times.

The 262-store chain in Southern California is planning to cut prices on thousands of popular goods.

 

 Rite Aid Posts 1Q Loss
Harrisburg, Pa. (June 26, 2008) Rite Aid Corp. said Thursday that it swung to a big loss in its first quarter as it continues to spend heavily to absorb more than 1,850 newly acquired stores and offered promotions on items such as food and toiletries that hurt profit margins, according to the Associated Press.

Rite Aid also said it has turned around the declining sales in the Brooks and Eckerd stores it acquired last year, and is a matter of several months away from full integration.

 

 Bed Bath & Beyond 1Q Profit Tumbles 27%
Union, N.J. (June 26, 2008) Bed Bath & Beyond Inc. said Wednesday its fiscal first-quarter profit tumbled 27%, as costs outweighed sales growth.

For the quarter ended May 31, Bed Bath & Beyond earned $76.8 million compared with $104.6 million for the same quarter in 2007.

 

 Report: Barack Obama Urges Tesco to Work With Unions
London (June 26, 2008) Presumptive Democratic presidential nominee Barack Obama has urged Tesco CEO Sir Terry Leahy to meet with the United Food & Commercial Workers Union (UFCW) over employment rights at its Fresh & Easy Neighborhood Market stores in the United States, according to the Daily Telegraph.

"I again urge you to reconsider your policy of non-engagement in the United States and advise your executives at Fresh & Easy to meet with the UFCW," Obama wrote in the letter, the report said.

 
J.C. Penney to Reduce Store Openings in 2009
Plano, Texas (June 25, 2008) J.C. Penney Co. will further slow the pace of new department store openings and cut capital spending next year because of the weak economy. The company said Wednesday it now plans 20 new or relocated stores next year, down from the 36 it expects to open in 2008.

Penney had once planned 50 new stores a year through 2011, but backed away from that goal in April, when it set the target of 36 new locations this year.

Contributed by:Nithin Narayanan

Overview of Retail Finance

Written by Nithin Narayanan

 
Retail finance can be defined as an overview of which products are purchased, in what quantity, and when these are purchased. Financial planning consists of methods of accounting, merchandise forecasting and budgeting, unit control system and financial inventory control.

 There are two accounting systems that the retailer can use. They are-

 
     Cost method

     Retail method of Valuation.

 
In the cost method the retailer has to maintain a careful record for each item which is purchased. This is necessary to calculate the value of ending inventory at cost. As far as the retail method is concerned, closing inventory value is calculated by the average relationship between the cost and the retail value of the merchandise. This kind of method will accurately reflect the market conditions, but it is more complex. For example in case of Inflation the merchandise would be priced higher as it might bear the added cost of raw materials, and cost of operations. This is also dependent on the scale of operations as the scale if bigger, would offset the inflationary rise in prices to a large extent.

 
Merchandise forecasting and budgeting is a control system consisting of various steps-

 
Designating Control units.

Sales forecasting

Inventory level Planning

Planning retail reduction

Planning purchases and

Profit margin Planning.

 
Control units are merchandise category for which data is gathered. They must be narrow enough to identify opportunities or problems. Inventory planning is the process through which the retailer sets the merchandise level during a particular period. Retail reduction means reduction due to markdowns, discounts, sales etc.

 
There are various ways of doing retail finance which will be covered in the subsequent articles.

 

World's most competitive economies

The 20th annual World Competitiveness Yearbook, published by IMD business school in Lausanne, Switzerland, ranks 55 economies based on economic growth and how they manage their path to prosperity. The 12 of the world's most competitive economies with their ranks are as follows

1. U.S.
2. Singapore
3. Hong Kong
4. Switzerland
5. Luxembourg
6. Denmark
7. Australia
8. Canada
9. Sweden
10. Netherlands
11. Norway
12. Ireland

We will take each of these 12 most competitive economies of the world in detail in subsequent posts

 

- Contributed by Vaibhav Agarwal

Human Resource Management In Retail

Written by: Nithin Narayanan

 
A retail firm would want to structure and assign task, policies and resources in order to meet the ever-changing needs of the firms target market, employees and management. Now retail organizations have prioritized retention and growth of employees within the organization due to high attrition and demand for skilled work force. There are a few steps that form the core of HR Practice in retail.

 
Outline the specific tasks among channel members and customers.

 
Grouping the tasks into jobs.

 
Classifying the jobs.

 
Finally integrating the position in the organizational charts.

 
The Specific tasks mentioned above deals with a number of activities which a retail firm undertakes such as setting prices shipping merchandise, logistics, research, marketing, customer interaction, sales, follow up services .according to the needs these tasks may be outsourced or divided among the retailer, manufacturer middle men and so on.

 
After the retailer determines the tasks which it would perform, they are grouped into jobs such as sales persons, cashier, merchandisers, display personnel, store managers and marketing executives. Each organization has a different structure and culture hence the certain jobs could be clubbed as on. For example the merchandise department would deal with display as well as procurement.

 
Retail jobs can be categorized by function, product, geographic or a combination classification.

 
Human Resource Management in retailing is composed of several integrated factors such as recruitment, selection, training, compensation, and supervision

 
In the retail sector there could be some difference in HR practices due to long hours of work, pool of inexperienced workers, variation in customer demand, and location of the store.

 
One striking feature of personnel management in India is that the personnel are not given importance as this very sector is at the developing stage. Hence retailers give less importance to In-Store Executives and also their training which is imparted by the experienced staff is inadequate.

 
One must understand along with a good décor and environment, services are also important to make a mark in the customers mind. Hence Quality of the services and how these services are provided to the customer becomes significant in our present times.

 

India's top 10 pharma companies

The Indian pharmaceutical industry is the second-fastest growing industry sector in the country. It has shown a revenue growth of 27.32 per cent (as per the latest data available) to touch Rs 25,196.48 crore (Rs 251.96 billion) in 2006-07.

#1. Ranbaxy
Ranbaxy is India's largest pharmaceutical company with a 2007 turnover of Rs 4,198.96 crore (Rs 41.989 billion) by sales. The deal will create the 15th biggest drugmaker globally.

#2. Dr Reddy's Laboratories
Dr Reddy's Labs, with a 2007 turnover of Rs 4,162.25 crore (Rs 41.622 billion), is India's second largest drug firm by sales.

#3. Cipla
Pharma major Cipla is India's third largest pharmaceutical firm. Its 2007 revenues stood at Rs 3,763.72 crore (Rs 37.637 billion).

#4. Sun Pharma Industries
The Dilip Sanghvi-led Sun Pharma is the nation's 4th largest pharma company at a 2007 revenue Rs 2,463.59 crore (Rs 24.635 billion).

#5. Lupin Labs
Lupin Labs is India's 5th largest drugs firm. Its 2007 revenue was at Rs 2,215.52 crore (Rs 22.155 billion).

#6. Aurobindo Pharma
Aurobindo is India's 6th largest pharma firm by sales. Its 2007 revenues stood at Rs 2,080.19 crore (Rs 20.801 billion).

#7. GlaxoSmithKline Pharma
GSK is India's 7th largest drug company with a turnover of Rs 1,773.41 crore (Rs 17.734 billion) for 2007.

#8. Cadila Healthcare
Cadila's 2007 revenue was Rs 1,613.00 crore (Rs 16.13 billion), which makes it India's 8th largest pharma firm.

#9. Aventis Pharma
Aventis Pharma, with a 2007 revenue of Rs 983.80 crore (Rs 9.838 billion) is the 9th largest Indian drug company.

#10. Ipca Laboratories
At a revenue of Rs 980.44 crore (Rs 9.804 billion), Ipca is India's 10th largest pharma firm by sales.

Retail News You Can Use

ICRIER report supports growth of organized retail

It is reported that the Indian Council for Research on International Economic Relations (ICRIER) is in the process of submitting the final report on the effects of modern retail. The study was commissioned earlier in Feb post reservations that Sonia Gandhi and others expressed on the growth of large and financially powerful retailers, on small but far more numerous traders. The political fallout of rapid urban expansion of new formats has been devastating so far.
The ICRIER study polled 1000 small & traditional retailers and 2000 consumers. According to leaked reports in the media, the study supports the modernization of Indian retail through new formats including large ones. According to these reports, the study admits that small retailers in the vicinity of new modern outlets have been stung by sluggish or even declining sales. However, it adds that the negative impact of the organized sector will wear off with time. In fact, contrary to many expert forecasts, the study even suggests that the unorganized sector will retain as much as 84% market share in 2013. It finally recommends that the Government should streamline controls to encourage growth of organized retail.
The report is unlikely to ease the Governments political pressures. Further, in an election year, it is unlikely to make prudent but unpopular decisions.

 

Reliance: Petrol pumps to general stores?

Reliance Industries failed 1400 outlet petrol pump chain has prompted the corporate to consider alternative uses of the properties. One such possibility under scrutiny is to convert the properties to retail outlets, malls or multiplexes. While all the petrol pumps may not fit the requirements for retail, Reliance estimates that 800 would. As many as 500 petrol pumps in the chain are owned or run by Reliance and would be easy to convert. The others would have to be taken over. Reportedly, Reliance is offering between Rs 2-4cr per property for them. An estimated Rs 4-6cr will be required additionally for the conversion.

Bolder plans from Spencer Retail

The RPG Group, promoters of the Spence Retail chain, is churning out even bolder plans. The latest is a plan to make an investment of Rs 1500cr to open 250 outlets within a year. The Company hopes that this will take its stock of retail space to 2.25mil sqft by March 2009. In addition, the Company plans to sign off several international tie-ups. Hopefully, this would raise this fiscal turnover to Rs 1800cr.

Papa John to open 100 outlets

Promoted by the Middle East based master franchisee Jawad Group, JIP Fashion & Restaurant India Pvt Ltd plans to open over 100 Papa John pizza outlets in India. The company will invest Rs 250cr for this. With an outlet in Gurgaon already under their belt, the second one has come up in Vadodra and more are planned for Surat, Ahmedabad and Rajkot. The Indian pizza market is estimated to be all of Rs 300cr.

 

Indiabulls president joins DLF

DLF has grabbed, Munish Baldev, who was earlier President of Indiabulls Real Estate Ltd. He was also a CEO with the Ansal Group. At DLF, Baldev has been given the designation of VP, Marketing. He has had a meteoric presence in India's retail real estate development scene. This includes association with such projects as Metro City Walk and The Great India Place.

 

Parsvnath to develop mall near Connaught Place

Parsvnath has paid Rs 200cr to acquire a 5,735 sqyd plot close to Connaught Place at 27 Kasturba Gandhi Marg - in central New Delhi. The purchase was made through a subsidiary company, Primetime Realtors. The developer plans to construct a Rs 1lakh sqft luxury mall and high-end offices. The total investment is likely to be Rs 300cr and be ready in two years. The company is targeting average rentals of Rs 600-700 per sqft. Parsvnath currently has around 210 mil sqft of developable area, including seven special economic zones.

 

Home Depot scales down growth

he US second largest retailer, Home Depot is planning to scale down growth including opening of new stores. This will translate to a reduced 1.5% growth in sqft terms or 20-30 stores. Further, it will close 15 underperforming stores and abandon 50 store locations in its hands. This is just a third of previous year growth. This is a similar decision to that of Wal-Mart and Starbucks who have also bitten the bullet. The culprit is the economy which is in recession-like condition resulting in a slump in the home improvement market.

Contributed by:Nithin Narayanan