Annual Report - Brandhouse Retails

BRANDHOUSE
R E T A I L S
8 TH ANNUAL REPORT 2011-12
13
Management Discussion and Analysis
India is being seen as a potential goldmine. It has been ranked second in Global Retail Development Index of 30 developing
countries drawn up by A.T.Kearney. Many foreign investors are also showing keen interest to enter into the Indian market. If
FDI in retail sector sees the light of the day it will see many changes in the coming years. Demand for readymade and western
outfits is growing at 40-45% annually. Critical success factors are to deliver affordable and accessible fashion, provide value
added services to sustain consumers. Indian Retail Market has grown at CAGR of 10% in the past six years. Food segment
contributes largest part of total value of retail market, followed by fashion, leisure & entertainment and fashion accessories.
Although the Organized Retail market does offer a vast untapped potential, it should also be recognized that it is not that
easy to operate in Retail market because of several problems. Retailers need to address the challenges to become successful
on long term. The sector in India is still at a developmental stage, characterized by a very small number of players trying to
create a new paradigm. To become a flourishing industry, the Indian retail sector has to attract leading Indian and foreign
players to make substantial investments. Technology is one of the major challenges faced by organized retailers for efficient
management. Shortage of skilled workforce prevails in the retail sector. Understanding customers in terms of customer
behaviour and loyalty is a difficult job. Retailers need to implement effective customer relation management and loyalty
program.
Supply chain is an integral part of any retail organization. Delivering the right goods to the right place at the right time is
main task of Supply chain. Retail majors are under serious pressure to improve their supply chain systems and reach the
levels of quality and service desired by customers. The lack of proper infrastructure and distribution channels in the country
results in inefficient processes. Organized retail outlets use very large volumes of electricity for a variety of applications from
lighting, air conditioning, escalators, cold storing, billing systems, lifts etc. As a result of insufficient and inefficient power
supply, a huge amount of private investment goes into ensuring power backups. This makes it very difficult for organized
retail to grow.
The retailers in India are paying very high cost for real estate. This increases the maintenance cost and reduces profit
margins. Competition from unorganized sector is another challenge facing the organized retail industry in India. As more
and more organized retail outlets are dotting the Indian topography, competition is no more restricted between organized
and unorganized retailing. It is now quite evident between organized retailers as well.
COMPANY’S RETAIL BUSINESS
Reid & Taylor
Reid & Taylor (R&T) is Company’s brand offering in the premium suiting and garment segment. R&T has approximately 24%
of the market share for worsted suiting and fabrics and is rated amongst the top two brands for premium clothing.
Stephens Brothers
The brand has been discontinued since December, 2011 as Reid & Taylor (India) Limited which had an arrangement with
Austin Reed did not see fit to renew the Agreement.
Belmonte
Belmonte is Company’s brand offering in the mid premium segment that offers fabrics as well as garments retailed by the
Company through a pan-India network. Belmonte offers fabric, suiting and ready-to-wear clothing and is a brand ideal for
consumers who are both fashion and value conscious.