Released on = May 31, 2007, 9:49 am

Press Release Author = David

Industry = Marketing

Press Release Summary = MUMBAI, India - Corporate Lawyer Archana Singh travels to
Europe every year and returns laden with fine Italian cheeses, French wines and
single-malt Scottish whiskeys. At home in Mumbai, she likes shopping at the
meighborhood \"dollar store\"...


Press Release Body = MUMBAI, India - Corporate Lawyer Archana Singh travels to
Europe every year and returns laden with fine Italian cheeses, French wines and
single-malt Scottish whiskeys. At home in Mumbai, she likes shopping at the
meighborhood \"dollar store\", which sells exotic products like the newest flavor pf
Pringles in red-white-and-blue decked aisles that make her feel she\'s on vacation in
the U.S.

As Wal-Mart Stores Inc. and other retail giants prepare to enter India, an
unexpected American Rival -- California\'s My Dollarstore Inc. -- is already here
and attracting the affluent middle-class customers Wal-Mart and others covet.

In the U.S., most of the so-called dollar stores that sell discounted products at a
single price are in low-rent strip malls. In India, My Dollarstores target big
spenders, setting up in prime ground-floor spaces at the newest malls. Even the
prices are higher end. While everything costs $1 at My Dollarstores in the U.S., in
India the same products sell for 99 rupees, or about $2, thanks to transportation
costs and import tariffs.

Since opening its first store in Mumbai in 2004, India\'s My Dollarstore franchise
has been a testing ground for what works -- and what doesn\'t -- for a new entrant
to the subcontinent\'s nearly $300 billion retail industry spanning food to
footwear.

Ajoy Krishnamurti, chief executive of Sankalp Retail Value Stores, which was created
to manage the My Dollarstore franchise in India, walks the aisle of a My
Dollarstore in Mumbai\'s Center One mall, pointing out products. \"Hershey\'s chocolate
syrup really rocks, salad dressing is hot,\" he says. \"Papaya-and-carrot juice: not
particularly hot.\"

Though the average annual salary in India is still less than $1,000, My
Dollarstore\'s track record suggests \"Made in America\" is a good formula for
attracting India\'s well-to-do and free-spending middle class. The governments of
India and the U.S. have not always seen eye-to-eye on political issues, but goods
associated with the American way of life -- Doritos chips, Kellogg\'s Pop-Tarts,
Alberto VO5 hair conditioner -- have long been carried home by Indians living in and
visiting the U.S. That helps explain why a store chain associated with bargain
basements in the U.S. is attracting the cream of India\'s shoppers in an economy
whose gross domestic product is growing more than 8 percent a year recently.

Singh, 32, says a trip to My Dollarstore reminds her of traveling abroad. She enjoys
trying new products and likes the wide aisles -- a contrast to the mom-and-pop
shops that dominate food, cosmetics and clothing retailing in India. She spends $30
in a typical trip. \"Before you realize it, you\'ve picked up so much,\" she says.
International chains are scarce in India, where the government generally doesn\'t
allow direct foreign ownership in the retail industry. It restricts foreign
investment to single-brand retailers, such as Chanel or Nike, or those that come
through franchise agreements -- international brands provide the products, retail
technology and marketing, but the stores are owned by Indians. Guess Inc., Tommy
Hilfiger Corp. and My Dollarstore are among those that have entered the market
through franchises.

Yet the government has hinted it\'s ready to open the sector to more foreign
investment, and Indians are at last shopping enough to make large retail
investments worthwhile. In November, Wal-Mart announced plans to enter India through
a joint venture. Its Indian partner Bharti Enterprises Ltd. will own the outlets,
while Wal-Mart controls the supply chain and wholesaling operations. Last week U.S.
office supply retailers Staples Inc. announced it would also enter India through a
joint venture. France\'s Carrefour SA and Tesco PLC of the U.K. are scouting for
partners, too, and expected to follow with their own India plans.

Certainly just setting up shop will not be enough. Wal-Mart last year had to pull
out of both the German and South Korean markets after years of disappointing
results there. In India, these behemoths will likely be learning some of the same
lessons the tiny My Dollarstore chain has already absorbed. Dollar stores have
been around for decades in the U.S., but My Dollarstore is relatively new. In
1996, Indian immigrant and former leather importer Rex Mehta started Dollarstore
Inc. as a Web portal to help independent shops buy and sell goods. In 1999, it
moved into the brick-and-mortar business of running a chain of My Dollarstores, and
the next year it took the franchise abroad. Now, the privately held company has
annual sales of close to $30 million from franchise fees, wholesaling and
consulting. It typically charges $15,000 upfront to anyone who wants to open a My
Dollarstore, provides the layout of the stores, the products and the technology
needed and charges the stores around 4 percent of sales.

It\'s been expanding faster internationally than at home, and now has around 200
store franchises abroad, from Eastern Europe to Central America to Southeast Asia.
In the U.S., where it has about 50 My Dollarstore franchises and provides 100 other
independent stores with products and services, its major competitors are the
listed giants of the industry, including Family Dollar Stores Inc. and Dollar Tree
Stores Inc. Abroad, Mehta says, he has little competition.

\"We are very excited about India,\" says Mehta, who heads the entire operation and is
chief executive officer of Dollarstore International Inc., the company that runs
the group\'s international franchising. In India, My Dollarstore plays heavily on the
American Dream theme. The store in Mumbai\'s Center One mall features the same
red-white-and-blue decorating scheme and employee uniforms as the U.S. stores, and
takes it a step further with posters of the Statue of Liberty on the walls.

So far the formula is working. Last year, 4.5 million customers shopped in My
Dollarstores in India, up from 370,000 two years earlier. Most of the 42 My
Dollarstore outlets, mainly in India\'s larger cities, attract more than 600
customers a day, three times the average in the U.S. Mr. Krishnamurti estimates
the My Dollarstores in India brought in more than $10 million in sales last year,
almost twice the previous year\'s revenues.

He plans to expand to more than 400 stores across the subcontinent in the next three
years. My Dollarstore learned other lessons on the way to its current success. Its
first shops offered exactly the same products sold in U.S. stores: container-loads
of goods from the franchise\'s long list of products, from baby clothes to
health-and-beauty products, snacks and stationary. While Indians rushed to buy
super-size bottles of shampoo and cartons of apple juice, they were also wary of the
discounted products, fearing the goods might be shoddy, or locally made imitations
of international brands. My Dollarstore solved this problem by hiring more staff to
answer questions. The stores in India have around 20 employees per 1,000 square
feet -- more than 10 times that of the U.S. stores. It\'s possible because labor is
cheap in India: the average shop helper makes less than $150 a month.

\"Is this really Old Spice?\" a customer asks Krishnamurti at the Center One store.
Customers are confused about newly arrived cans of hair mousse, the store\'s
manager says. \"They keep calling it mouse.\" To encourage consumers to try unfamiliar
products like blueberry syrup and dog shampoo, My Dollarstore offers something
unusual in India: a money-back guarantee, no questions asked. One customer
returned a partially eaten jar of peanut butter.

Chinese-made products re-exported from the U.S. proved too expensive, so the stores
in India found a way to import directly from China, a practice allowed under the
franchise rules. Some industry experts caution the novelty of My Dollarstores could
wear off once Wal-Marts, Carrefours and Tescos come to town. But Krishnamurti
notes that in the U.S., dollar stores have thrived under the noses of the
mega-retailers for decades. Meanwhile, his team is learning every day -- an edge
Krishnamurti hopes will help when the global retailers arrive. \"It doesn\'t scare
me at all,\" he says. \"They still have to figure out what is going on with the Indian
consumer.\"


Web Site = http://www.dollaritem.com

Contact Details = dollaritem@concordsoftech.com