Business Studies Profile: WESTSIDE STORES

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WESTSIDE STORES

  1. HISTORY OF WESTSIDE:

Style, affordable prices, and quality — these are the factors that have shaped Westside’s success story in the retail fashion stores business. Launched in 1998 in Bangalore, the Westside chain has, ever since, been setting the standards for other fashion retailers to follow.

The Westside story really began in 1997, when the Tatas sold Lakme, their cosmetics business, to Hindustan Lever and acquired the Britain-based Littlewoods retail chain. A new entity called Trent Limited emerged from this move and Littlewoods was renamed Westside. Today Westside has seven outlets, one each in Bangalore, Hyderabad, Chennai, Mumbai, Pune, New Delhi and Kolkata.

Profile Of Trent:

Trent Limited was incorporated in 1952 as Lakme Limited. A leading player in the cosmetics and toiletries segments, Lakme divested its business to FMCG giant Hindustan Lever Limited in 1998. Lakme Limited then acquired the Littlewoods store in Bangalore and reopened the store under the Westside name and renamed the company as Trent Limited in 1999. Lakme paid only the written down value of the assets (no brand value) to Littlewoods International, UK for the acquisition.

The acquisition provided three advantages:

1) Running operations

2) An established supplier base

3) Relevant trained manpower

The company is focusing on designing and gets its apparels manufactured from outside. Tatas' have only 27% stake in the company.

Starting out with one retail store under the brand name ‘Westside’ in Bangalore in April 1998, Trent has expanded its network to 14 stores across 9 cities. Specializing in apparels, Westside is positioned as a store for the family and is aimed at the middle and upper end of the mass market. Unlike other stores, Trent decided to have its own brands in apparels rather than take up franchises of established brands names like Arrow and Allen Solly. It has its own team of in-house designers who design exclusively for the store. Currently, a typical Westside store portfolio consists of menswear, women swear, lingerie, kid swear, household accessories, footwear, cosmetics and perfumes. However, all merchandise at the stores, except cosmetics and perfumes, bears the Westside label. 

  1. OTHER BUSINESS:

Coming from the house of Trent, the company that runs the Westside department stores, Star India Bazaar is version 3.0 in Indian retail's three-year history of hyper marketing.

Trent would foray into the Hypermarket format through the launch of its 1st store in Ahmedabad in mid October. The mass retailing foray is being done under a new name and logo and would be called the ‘Star India Bazaar’ The 50,000 sq ft. hypermarket is targeted at the lower middle class or ‘Budget’ consumer. It would offer the entire range of products required by any household - food, groceries, vegetables, personal products, electronics, household appliances, clothes, etc at an attractive pricing and discounts. Investment in the outlet is estimated at Rs50mn. The company plans to open two more hypermarkets in Mumbai and Bangalore of 50,000 sq ft each by the middle of next year.

  1. BUSINESS ENVIRONMENT:

The Indian Retail Market

The Rs 2.6-lakh crore Indian retail sector is poised to become the largest market in the world in the next few years.
According to management consultant A T Kearney's 2004 Global Retail Development Index, India is currently the second most attractive destination for global retailers.

The Index provides an annual ranking of retail investments in 30 emerging countries. The biggest competitors for India are Russia, at number one position, and China, placed at number three positions.

According to the Indian Market Demographic Report 2002, only 14.2 per cent of the 142.4 million Indian households in 1989-90 had a monthly income of at least 7,500 rupees ($155), which then defined them as middle class. By 2001-02, 28 per cent of the 188.2 million Indian households enjoyed a monthly income above US$155. And it's forecast that in 2009-10 nearly half of all Indian households will get into this income bracket (48.4 per cent of an estimated 221.9 million households).

As the corporates – the Piramals, the Tatas, the Rahejas, ITC, S.Kumar’s, RPG Enterprises, and mega retailers- Crosswords, Shopper’s Stop, and Pantaloons race to revolutionize the retailing sector, retail as an industry in India is coming alive.

Retail sales in India amounted to about Rs.7400 billion in 2002, expanded at an average annual rate of 7% during 1999-2002. With the upturn in economic growth during 2003, retail sales are also expected to expand at a higher pace of nearly 10%. Across the country, retail sales in real terms are predicted to rise more rapidly than consumer expenditure during 2003-08. The forecast growth in real retail sales during 2003- 2008 is 8.3% per year, compared with 7.1% for consumer expenditure.

Modernization of the Indian retail sector will be reflected in rapid growth in sales of supermarkets, departmental stores and hypermarts. Sales from these large-format stores are to expand at growth rates ranging from 24% to 49% per year during 2003-2008, according to a latest report by Euromonitor International, a leading provider of global consumer-market intelligence.


2.5-3.5 per cent of the total retail business happens in the organized sector. But it is growing rapidly such that in the next one or two years 15-20 per cent of the retail market in India will be in the organized sector i.e. shopping malls and urban and semi-urban super markets. When the unorganized sector is also taken into account, India's retail industry is growing at 30-35 per cent annually. Though many of the metros are closing in on saturation point as far as retail space is considered, the tier 1 and tier 2 cities are fast cropping up. More than 300 malls are under construction in these cities. By the end of 2005, 25 million square feet of organized retail space will come up across the country.

Data released by Retailers Association of India (RAI) indicates that the retail consumption in the country is around Rs. 900,000 crore annually and with value addition the figure goes up to Rs 1,200,000 crore.

If one plugs in figures on likely GDP growth in India and what happened at similar GDP levels in Thailand or Malaysia, organised retail in India should touch 15% of GDP in a few years.

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  1. COMPETITION:

The economies of scale Westside has built help keep prices well within the reach of the middle and upper-middle classes, which account for 25 per cent of the population. Unlike Shoppers' Stop or Piramyd, which have targeted the upper 5 per cent of the population with expensive brands, Westside has looked at the larger base of middle-and upper-middle class consumers. With most of the other chains fighting for a piece of the high-price pie, Trent has the field open for itself.

Himanshu Chakrawarti, declared: "There is an almost limitless capacity in the Indian retail segment. I ...

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