05 February 2011
Cash n Carry
Cash n Carry: looking up
The new FDI policy favours it.
A cash n carry is a B2B format that refers to the purchasing of merchandise by customers which consists of retailers, professional users, caterers, institutional buyers, etc. As the name suggests, the payment is made in cash on the spot and the merchandise is carried away by the customers themselves. No such service as ‘Delivery’ exists in this retail format. These outlets do not make sales to individual buyers. A huge amount of categories of merchandise are sold to the business buyers. This model is based on the grounds of buying through an efficient procurement chain and selling in cash. This enables them to charge very low mark-ups making it a suitable format.
This format suits the Indian set up appropriately, as the major pie lays with the kiryana store owners. Cash and carry has the ability to kick off an essential change to the trade and distribution structures in the country.
Players in the business:
- Metro Cash and Carry India, a 100 per cent subsidiary of Metro Cash and Carry International GmbH, Germany, were the first to foray onto the Indian shores more than seven years ago with their first store in Bengaluru.
- Tha Another important player is UK’s largest retailer Tesco. They have also set up cash & carry outlets in the country.
- The latest on the scene is Bharti Walmart Pvt. Ltd, the joint venture between Bharti Enterprises and Walmart Stores Inc who has just opened their second cash and carry outlet, ‘Best Price Modern Wholesale cash-and-carry store’ in Punjab.
Advantages
Retail business format brings along a lot of benefits. The merchandise is available on the shelves for the year round, so a small retailer can make purchases as and when required, reducing his expenditure on maintaining inventory levels.
In addition, it helps the small retailers to buy in an organised manner making them a part of the organised channel. It also gives access to all the latest and up dated range of products to the retailers in smaller cities and towns.
The buyers can also get a better price as the cash and carry operator is a big buyer and get better deals from the manufacturers. It further reduces the numerous layers that exist in the wholesale business.
Government regulations
In India, for wholesale cash and carry model, 100 per cent FDI is permitted. The Indian Government opened FDI for cash n carry because it could foresee the benefits it will bring to the country’s economy.
Recently, new rules have been issued by the Indian ministry which states that the sales to ‘Group companies’ should not exceed 25 per cent of a cash and carry company’s turnover and should only be for ‘Internal use’. Further, the cash and carry companies need to keep up elaborate records of the daily sales made. Such steps make sure that front-end retail will not come within the garb of the wholesale business.
As a result of these norms, cash and carry retailers already have their thinking caps on as to comprehend what the guidelines actually mean. As a result, we can find players to be reassessing their expansion strategies. It sends out a warning sign to the new players wanting to make a foray into India. This would result in the lowering of the money being invested in India.
French company Carrefour which is set to come to India by teaming up with the Future Group is also rethinking its plans. 
Future prospects
The future for cash and carry in India looks promising. With little co operation from the Government, the sector will see a rise in the entry of many more International players. Proper sourcing and supply chain management will be the other key factors which will give the sector the needed impetus.
Retail: Future group
'Sach'
Co-branding, involving a cricketer and a retailer.
The concept of co-creating a private brand has been given a new meaning all together with the recent launch of Sach Toothpaste by Future Group. The launch’s an initiative by Sachin Tendulkar and Future Group, giving way to a co-created toothpaste brand, ‘Sach.’
Future Group says, “Co-creation involves a well known person who comes together with an organisation in a relationship which is much more than being a brand ambassador. The co-creator is closely involved in the development of the products, which invariably are products that are aligned to the persona of the co-creator.”
Future Group initiatives
Tasty Treat, Home and personal care range with Cleanmate & Caremate, staples with Fresh & Pure and Premium Harvest – comprise the already successfully launched private brands (in the food range) by Future Group. The introduction of ‘Sach’ is expected to be a big leap for the company when it comes to working towards building the company’s private brands portfolio and that too via its association with an iconic personality like Sachin Tendulkar.
Very clearly, the initiative gives an opportunity to Future Group to co-partner with a brand where it’s beyond endorsement, and ‘ownership’ to build, lies with both the parties. Future Group private brands have always launched their products keeping ‘Indianness’ in mind through consumer’s insights.
Samsung enters education sector
Samsung enters classrooms with smart solutions
Durables and appliances brand Samsung India has forayed into the education business with the company introducing its interactive e-boards for classrooms. The company is targeting 20,000 educational institutions pan-India to deploy its smart solution.
Samsung said it expects a revenue of $100 million to come from the IT and mobility business during 2011 (January-December period). At present, the vertical earns a revenue of $38 million.
As schools transitions towards a purposeful e-learning environment, Samsung e-board offers new technologies to increase participations and classroom interactivity. The interactive e-board will make classroom experience more interactive.
According to estimates, the kindergarten to grade 12 (K-12) market in India accounts for a substantial share of the total education market. This segment is estimated to be worth Rs 20 billion and is expected to be grow at 14 per cent per annum.
E-learning market in India, though a niche category, comprises digital content in private schools, ICT programme of Government for Government schools and online education market. Several companies in the past have ventured into the business. Educomp, Dell and Smart Technologies are among those who provide content and also deploy smart solutions.
The company expects at least 25 per cent of its revenues to come from the education sector. The education initiatives have been placed under four major categories including Smart Classroom, Smart Teacher, Smart Student and Smart School, among others.
The company will be working with 15 channel partners to deploy its product and will be present in 22 cities by September.
New Telecos add new subscribers base
New telcos add 14% new subscribers in Jan-Nov
New operators, including Uninor, MTS, STel, Etisalat DB and Videocon, which were given unified access service (UAS) licences in 2008, have together captured 14 per cent of the incremental share in addition of new subscribers over the last one year. This is contrary to the perception that new players have not been able to make inroads into the Indian telecom market.
Incremental share essentially means the net new addition of subscribers each month.
These numbers go up to 24 per cent if the subscriber base of Tata Teleservices’ GSM service, launched after it got a licence under dual technology in 2008, is included.
While Uninor garnered 7.3 per cent of incremental share, Videocon got 3.3 per cent and MTS 2.3 per cent, according to Telecom Regulatory Authority of India (Trai) figures for the January-November period.
Uninor has a total subscriber base of 16.2 million, MTS has 7.8 million, while Videocon has 6.7 million users.
| New Entrants | |||
| Operator | Subscribers (in mn) | Mkt share (%) | Incremental share(%) |
| Uninor | 16.2 | 2.2 | 7.3 |
| MTS | 7.8 | 1.1 | 2.3 |
| Videocon | 6.7 | 0.9 | 3.3 |
| STel | 2.1 | 0.3 | 0.9 |
| Etisalat | 0.1 | 0.0 | 0.1 |
| Tata GSM | 38.2 | 5.5 | 12.0 |
| Source: For January-November 2010 | |||
These operators were given licences in January 2008. The Department of Telecommunications (DoT) has issued notices to many of these new players for not meeting rollout obligations of the licence allotment and imposed penalties.
The incremental share of new players is substantially high in circles like Mumbai (29.7 per cent), Haryana (21.1 per cent), Kolkata (21.1 per cent) and Tamil Nadu (20.9 per cent).
The new operators have been under a cloud because many of them have not rolled out services as stipulated in the licence agreement.
There is a clear imbalance in the subscriber base of new operators, with Uninor, MTS, Videocon and Tata DOCOMO together accounting for 22.9 per cent of incremental share and Etisalat DB and S Tel lagging with just 1 per cent.
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