K Raheja Group’s Hypercity plans to open three to five malls this year. Hypercity is the hypermarket chain of the K Raheja Group. K Raheja Group also owns the leading Shopper’s Stop. Shopper’s Stop’s Vice-Chairman, B S Nagesh said, “they are planning to add about 14 lakh square feet retail space by opening 3 or 5 malls and each mall will be about 65,000 sq ft”. This brings good news for prospective employees as Hypercity is also planning to hire about 1,800 personnel this year.

According to B S Nagesh, each store will have about 300 to 500 hires per store and the combined headcount of both Shopper’s Stop and Hypercity is 5,000. B S Nagesh, while addressing a query on the capex for Hypercity said that it would be about Rs.10 crore. And the company has obtained an in-principle approval for its QIP of around Rs.300 crore. The time frame for raising the funds is expected to be six to nine months.

Walmart, the world’s largest retail player, plans to increase sourcing from India for its global operations. Walmart, which is currently present in India under a 50:50 joint venture with Bharti Enterprises in the wholesale cash-and-carry segment, opened their 2nd wholesale cash-and-carry store in Zirakpur recently. Their first cash-and-carry store is in Amritsar which was inaugurated in May last year. Walmart, said it’s planning to increase its sourcing and make India their major supplier within 4 to 5 years. According to Walmart’s Asia President and CEO Scott Price, Indian products can be exported to other Asian countries, Europe and even the US.

The company is already sourcing goods worth USD 125 million a year from Punjab alone, mainly cotton. Scott Price said, “In the next 12 months we could talk about exports worth tens of millions of dollars… maybe hundreds of millions in the next 4-5 years. Our global sourcing organ has been restructered and I had a talk with its head and both of us agreed that India has an immense potential.” He further said that. “The government is itself identifying areas where improvement is required. FDI in retail has to be opened further, although it could be in stages.”

Retailers are eyeing at Cash-and-carry format as it has a huge demand base of unorganized independent stores. In India, nearly 80 percent of $450 billion retail sector is run by small shops or kiranas. This is a huge client base for cash-and-carry ventures. According to Anil Rajpal, vice-president consumer goods and retail at Technopak Consultants, “There are roughly about 12 million small retail outlets, or kiranas, as we call them in the country, and that is the customer base they are trying to target”. The current distribution system by FMCG companies is able to cater to only the metro cities and tier-2 and tier-3 cities. There is ample opportunity to penetrate further which is what the cash-and-carry ventures are aiming for.

There are number of companies looking at expanding to cash-and-carry format. Indiabulls’ retail arm Store One Retail last month approved a venture into wholesale trading. Global investor TPG has bid for debt-hit Vishal Retail and plans to convert it into cash-and –carry format. India’s biggest retailer, Pantaloon Retail is also planning on tie-up with French retailer Carrefour, to start a cash-and-carry format. Aditya Birla Retail is also planning to enter cash-and-carry format as they have large back-end facilities facilities such as warehouses, distribution centres and supply chains. According to Thomas Varghese, chief executive officer of Aditya Birla Retail, “We are ready with the necessary infrastructure. In fact, we have more than 600,000 square feet of back-end space which can be used for a cash-and-carry venture”.

There are certain advantages and challenges in cash-and-carry format. One of the major plus point is that India allows foreign retailers to enter retail through franchise arrangements with local players, and are allowed to own up to 51 per cent in single-brand retail, while 100 per cent ownership is permitted in cash-and-carry ventures. This enables Indian firms to partner with foreign retailers as it’s difficult to operate as a single entity and compete with foreign firms. The challenge is the supply-chain bottleneck which is improved significantly in India. Another dampener is the low-margin nature of the business. Pricing is very important for the success of this kind of format as the smaller retailers will not buy from a cash-and-carry format if they get a better deal from FMCG companies.

Organized modern retail segment is all set to grow by three times during the next five years. According to Global consultancy firm Technopak the figures are expected to reach over USD 80 billion. Private labels sales is also expected to increase from the existing 10 to 15 percent to 25 percent by 2014. Addressing the Leadership Summit 2010, Technopak President Raghav Gupta said, “The organized modern retail sector, which is at present USD 25 billion, will grow over three-fold during the next five years to reach a figure of up to USD 80 billion. It will be facilitated by growth in consumption level of the consumers and expansion of the modern retail sector”.

He further said, “The country’s modern consumption level will also double within five years to an annual figure of USD 1.5 trillion from the existing USD 750 billion”. “This increase in consumption along with an average growth of 8 per cent in the economy will help the organized retail sector to grow,” he said.