IndiaRetailBiz

Close on heels of India’s GDP crossing US Dollars One Trillion on 26th April,2007, the market cap of equity stocks of companies listed on the Indian bourses also crossed the One Trillion mark on Monday, the 28th May, 2007.

What is most interesting, however, is the fact that the top five business houses with highest market cap in the country, having combined market cap of 9.62 lakh crore rupees on 28th May, comprising Mukesh Ambani (m-cap: 3.02 lakh crore), Tatas (2.53 lakh crore), Bharti (1.59 lakh crore), Anil Ambani (1.51 lakh crore) and Kumarmangalam Birla (0.97 lakh crore) not only have direct interest in organised (modern) retail but are also betting big on the sector with mega investment plans in the next three years. In fact, aftter 3-5 years, retail will be among the most important verticles in their business portfolio.

Let’s take a detailed reality check of each of these houses’ retail plans and their present status:

Mukesh Ambani has commited investment of over Rs. 25,000 crore (around US$ 5.5 billion) on its retail initiative through Reliance Retail. The group in what is known as ‘farm to fork’ initiative, has already invested about 4,000 crore. Reliance has decided to go alone for retail without MNC partners. It has, in the past six months, already rolled out over 150-odd neghbourhood convenience stores across 18 states, occupying over 4.2 lakh square feet of space, under the brand name of Reliance ‘Fresh,’ . These stores offer a wide range of horticulture (vegetables, fruits & flowers), food, grocery and dairy products.

The company has also rolled out two consumer durables stores in the National Capital Region (NCR) under the brand name of Reliance ‘Digital.’ The company is also said to be getting ready with the new formats, including, supermarkets, hypermarkets and speciality stores.

Media and industry circles were agog with speculation about big ticket acquisition by Reliance in the West. Reliance, in the past, was believed to be acquiring a part of equity stake in the world’s second biggest french retailer Carrefour or one of its supply chain subsidiaries. Reliance had recently acquired Adani Supermarkets, an Ahmedabad-based supermarket retail chain having 54-odd outlets located across big cities of Gujarat.

Reliance hopes to garner turnover of over Rs.90,000 crore from its consumer retail business, while plans are also afoot to clock similar turnover in wholesale through its cash and carry venture ‘Ranger Farms.’

Ratan Tata controlled, Tata Sons, has two retail ventures through group companies Trent and Infiniti Retail.

Trent Limited (Market Cap: over 1340 crore), headed by Noel Tata, began its retail journet in 1998 with Westside store, in Mumbai. It currently owns three brands ‘Westside‘ (Lifestyle fashion and household accessories), ‘Landmark’ (Books, Music, Entertainment and Stationery) and ‘Star India Bazaar’ (hypermarket).

Westside which currently operates 26 stores has plans to open 11 more this year. Landmark currently operates 9 stores. Star India Bazaar, the company’s hypermarket format, which currently has only one store operating in Ahmedabad has plans to set up one more store in Bangalore, this year.

Trent, in a recently signed deal, has agreed to anchor 12 malls set up by DLF Universal Ltd across the country, at its Westside, Landmark and Star India Bazaar outlets. This amounts to about 27 locations, totalling to about a million square feet of space.

Infiniti Retail, headed by R.Krishna Kumar, on the other hand, has begun rolling out large sized consumer/professional electronics and durables stores under the brand name of ‘Croma.’ Croma plans to open 40 large format stores across the country by March, 2008. Croma has tied up with the Australian retail chain ‘Woolworth’ for sourcing and technical support.

Tatas also have direct interests in single brand retail formats like ‘Titan’ and ‘Tanishq.’

Sunil Bharti Mittal owned Bharti Enterprises, which is the biggest private telecom player, with interests in insurance and agriculture farming, has after dating with a number of world’s retail biggies, like Carrefour, Tesco, etc., finally decided on the world’s biggest retailer the US-based ‘Wal-Mart.’

Due to government policy resrictions on FDI in retail the venture, while front-end retail will totally be managed by Bharti Retail, the partnership will initially be confined to wholesale (cash and carry) retail business. The role of Wal-Mart in front-end retail will, however, be confined to sourcing and technical support. Wal-Mart is also expected to lend its brand name for front-end stores as well, however, speculation is rife in media circles about as to whether Wal-Mart will agree to extend its brandname for smaller format stores. Bharti, apart from setting up speciality stores, is believed to have decided on three tier approach for its retail formats, viz., Small Convenience (2,000 to 5,000 sq ft), 25,000 to 50,000 sq ft Mid level, and 75,000 to 1,50,000 sq ft hypermarket stores.

Bharti has announced investment of US$2.5 billion (over 10,000 crore), by 2015, in front-end retail alone (excluding the cost of real-estate). This means that overall investment including that of properties (if owned) could exceed US$ 10 billion. Bharti will roll out of hundreds of stores in beginning March, 2008. Initially, it will set up multi format stores in large cities with population of over one million.

Anil Ambani owned ADAG (Anil Dhirubhai Ambani Group) is already present in retail through ‘Reliance World,’ ‘Reliance Money’ and ‘Zapak‘ Gaming Portal.

While, Reliance Money has already set up 2,500 broking kiosks across the country, it is looking expanding the network to 10,000 by March, 2008. Similarly, Zapak is targetting 10 million subscribers through 600 gaming zones (Zapak Zones) in 200 cities with kiosk capacity of 10,000 in the next one year. Reliance World is also expanding fast with over 240 stores across over 100 cities in the country. These initiatives, however, unlike others are not pure retail play. They are part of the group’s telecom and multimedia entertainment verticles.

ADAG, is believed to be in talks with a number of big MNC retailers including Carrefour and Tesco, it is also looking at entering into independent retail verticle through healthcare sector. It may, according to reports, invest Rs. 6,800 crore in this sector. It is trying to rope in existing chemists and druggists through All India Organisation of Chemists and Druggists (AIOCD) to set up a chain of medicine stores across the country.

Kumarmangalam Birla owned Aditya Birla group has promoted Aditya Birla Retail to fulfill its retail ambitions. Birla, like Mukesh Ambani, has also decided to go it alone in retail without a foreign partner. Aditya Birla Retail (ABR) will open 1,000 ‘More’ store with an outlay of Rs. 8,000-9,000 crore (over US$2 billion). The company has already invested Rs. 200 crore (perhaps, mainly in acquiring Trinethra chain). More will have two retail formats, viz., convenience (less than 10,000 sq ft) and Destination hypermarket (over 75,000 sq ft).

Birla has got a headstart over its competitors with the acquisition of ‘Trinethra’ — an existing supermarket chain with 172 stores operating mainly across Andhra, Karnataka and Tamilnadu in South India. Trinetra will soon be merged with the new brand identity.

Birlas have zeroed in on ‘MORE’ brandname for its retail foray. The first MORE store of the chain will go on stream soon in Pune. ABR wants to introduce two private labels: ‘More for You’ and ‘More Select.’