IndiaRetailBiz

“We believe that there is a significant opportunity to grow our International business going forward and are targeting a 15-20% contribution to Group revenues within the next five years… We also plan to invest in major developing markets including China and India. We believe both of these markets offer substantial opportunities for us to develop our brand.” — Stuart Rose, Chief Executive, Marks & Spencer (Half Yearly Review of the company).

Marks & Spencer (M&S), the iconic UK-based retailer of fashion, food, travel, and electronic products, which at one point of time perhaps was the most aspirational global retail destination for Indians travelling abroad, is likely to soon ink a joint venture agreement with Mukesh Ambani owned Reliance Retail, a wholly owned subsidiary of Reliance Industries Limited.

While M&S, according to a Dow Jones Newswires report, bases on sourced information, would hold majority stake of 51%, Reliance will hold minority stake of 49%, in the joint venture.

The partnership, according to the Newswire source, is expected to be announced by May, 2008.

This joint venture, if and when it fructifies, will mean a win win situation for both the partners. While, Marks & Spencer will get a strong hold in the world’s second fastest growing market taking it closer to the goal of achieving 15% to 20% of group revenue from international business (within the next five years), Reliance apart from benefiting from sourcing and technical expertise of the iconic retailer, will be able to draw upon M&S’ strength of selling private labels and consolidating in home market. M&S is incidentally the world’s largest private label retailer with over 93% of revenues being generated from home market.

Founded 124 year ago in 1884 by Michael Marks in partnership with Tom Spencer, M&S (as of H1 ended September, 2007) operated over 515 company owned stores in the UK Hong Kong and Taiwan. It also had over 257 franchisee stores in 36 countries across the world. Against 2007 revenue of £ 8.59 billion (March end), the company earned £ 4.18 billion in H1 (September, 2007).

M&S is currently operating 13 franchisee stores across 9 cities in India. These stores operated under a franchisee agreement with Planet Fashion, are located in Mumbai (2), Delhi (2), Gurgaon (2), Bangalore (2) and one store each at Kolkata, Chennai, Hyderabad, Pune, and Noida. V. N. Sharma, an Indonesia-based NRI, owns Planet Fahion.

There is no clarity, however, on likely fate of the franchise agreement between M&S and Sharma, if the new joint venture fructifies.