Wal-Mart, Tesco, Carrefour seeks retail foray in India

Seeks local partners to tap the $300 billion retail sector

BY OUR AVIATION CORRESPONDENT
February 25, 2007

As Wal-Mart, the world's largest retailer, seeks a footprint in India's $300 billion market, UK's Tesco and French retailer Carrefour are giving final touches to enter the country.

Reports said Tesco is talking to the Tata group for a retail foray in the country.

Tesco was earlier talking to Bharti group, but Wal-Mart clinched the deal. Bharti has announced plans for the retail foray and is lining up a war chest of $2.5 billion. India's largest private sector group Reliance has plans to invest $5.5 billion in retail. Pantaloon group will invest $1 billion by 2010 to increase its number of stores to 4,000. The Aditya Birla group is also nurturing ambitious plans in retail.

A Tesco official reportedly said the firm is interested in the market and is doing research, but did not confirm or deny any talks with Tatas.

This could be because the firm may be pursuing talks with many groups.

The Tata group owns lifestyle and specialty apparel stores under the Landmark and Westside brands.

Domestic law does not permit foreign multi-brand retailers. So Wal-Mart and Tesco may have to invest in in cash-and-carry (wholesale) and back-end linkages. In case of single brand retail, 51% foreign direct investment is also allowed.

There has been some political opposition to the entry of foreign retailers , basically on the assumption that they will endanger the over 13 million kirana stores.

Organised retail comprises of just 3% of the huge Indian market. Sales through organised retail chains are expected to reach 35% by 2015 in the country.

Wal-Mart international contributes 20% of Wal-Mart's overall revenues of $60 billion.

India 's economy is growing at a scorching pace clocking 8% in the past three years. It is projected to grow at 9.2%, boosting disposable incomes.

Wal-Mart Vice Chairman Michael Duke was in the country recently. He met Planning commission vice chairman Montek Singh Ahluwalia to clear doubts about the retail policy. Duke did not give any time frame for the retail venture.

Bharti had announced the venture in November, 2006. Bharti sees sales at its retail venture to touch $4.5 billion in eight years, through a chain of supermarkets, hypermarkets and convenience stores. While Bharti will own supermarkets and hypermarkets, the convenience stores would be operated trough franchisee model. Bharti's retail venture will be headed by Rajan Mittal, brother of billionaire Sunil Bharti Mittal, who owns the parent company Bharti Enterprises.