All decks cleared for Bharti-Wal-Mart retail deal; way paved for big ticket retail foray into India

The Government of India has found ‘no fault,’ with the tie up between telecom major Bharti and the world’s biggest retailer Wal-Mart, announced earlier on 28th November, 2006, reports PTI. The Government, in the teeth of opposition from the left lobby, was forced to agree to examine contours of this retail alliance within the framework of existing FDI policy guidelines on retail.

The government in the previous year (10th February, 2006) had put the FDI in wholesale ‘cash and carry’ on the automatic route. As such, Bharti-Wal-Mart alliance, which envisages 100% ownership of Bharti Enterprises, a local entity, in front-end retail, has been found to be in conformity of the existing policy on FDI in retail, said high-level sources in the Ministry of Commerce and Industry.

While, Bharti will wholly own the front-end, back-end of the retail alliance, involving logistics, cold chain and supply chain management, according to the announcements made so far by Bharti, will be jointly managed by the two partners. Wal-Mart is also expected to operate cash and carry business based on the Sam’s Club model.

Currently, ‘Metro Cash & Carry’ of Germany and ‘Shoprite’ of South Africa have set up 100% owned wholesale retail operations in India.

This clearance of the government, also paves way for the world’s second and third biggest retail players, Carrefour of France and Tesco of the U. K. respectively, and indeed many more like them, to set shop in India with active participation of a local partner.

Tesco, with whom talks with Bharti failed on account of differences between the two on the pace of joint retail roll out in India is said to be in talks with Tatas now for its foray into India. Tatas themselves may perhaps prefer a slower roll out than Bhartis, in tune with the wishes of Tesco.

Carrefour has also withdrawn from talks for a possible alliance with Lifestyle of Dubai and may, perhaps, now be exploring possibilities with Birlas or even Biyanis, although, both of whom like Reliance Retail have announced their intentions to go alone.

In any case, this removes major hurdle for entry of big ticket, multi-brand, retailers in India. All major retailers are eyeing at India as it is not only the fastest growing but also the second most populous retail market in the world. This becomes more critical when there is hardly any growth in developed markets of the world.

Of course, players like Hutchison Whampa of Hong Kong who are looking for majority ownership stake in the multibrand, front-end may have to wait for some more time. In any case, this is more a matter of formality as the savvy retailers have already found an effective hole in the policy and, notwithstanding the noises being made by the left parties, the government is willing to look the other way.

Costco, US’ fifth biggest, eyeing India?

Costco (Costco Wholesale Corporation), the fifth biggest retailer of the U.S., which was founded in 1983 in Seattle (Washington), and which operates membership warehouse club format, modelled on Wal-Mart’s Sam’s Club and Metro’s Cash & Carry, may soon follow Wal-Mart, its legendary competitor, by foraying into India, according to an Economic Times report.

The US-based, over $60 billion, Costco, which employes over 1,25,000 persons, operates 502 wholesale retail stores across the world. 370 of these store are located in the US and Puerto Rico, while the balance 132 stores are located in six other countries of the world.

Metro Cash & Carry and South African Shoprite are the only two wholesale retailers currently operating in India, although Wal-Mart, Reliance and Pantaloon are also gearing up to roll out this format across the country.

While, current policy guidelines, unlike Wal-Mart, does not bar Costco to enter the country without a local retail partner, Costco may be looking for a partner like Bharti, who may help accelarate its entry into the fastest growing and the second most populous retail market of the world.

At Costco, which sells national and regional brands at prices below traditional wholesale or retail outlets, on a membership model with monthly billings, no branded item can be marked up by more than 14 percent, and no private-label item by more than 15 percent, whereas, supermarkets in the U.S. by contrast in general mark up merchandise by 25 percent, and department stores by 50 percent or more.

Burger King to dine with Pantaloon in India?

Close on heels of the announcement of Kishore Biyani owned, Rs. 2,199 crore, retail major Pantaloon tieing up with Starbucks- the world’s biggest coffeee shop chain, comes the buzz of Pantaloon’s possible tie up with the US-based, world’s second biggest, US$ 2,048 million, 37,000 employees strong, international fast food restaurants chain, Burger King.

Burger King, founded in 1954, in a suburb of Miami, is a large fast food chain of more than 11,100 restaurants spread across 65 countries. The restaurant chain is predominantly selling burgers, French fries, soft drinks, desserts, and sandwiches. Burger King’s trademark product is a hamburger called the Whopper. The Whopper is also a line of sandwiches, all made with the same ingredients.

Burger King Chain, which is the world’s second biggest fast food chain after McDonalds, follows a strong franchisee based model. 90% of the chain’s restaurants are, family owned, independent franchisees. It is speculated that Burger King for its foray into India would like to follow a similar model.

S Kumars’ retail push results in all round growth

S Kumars Nationwide (SKNL), the Kasliwals owned textile and apparel major, has registered a whopping 39% (Rs. 315 crore) and 29% (Rs. 33 crore) growth in sales and profits respectively in the 3rd quarter ending December, 2006, over corresponding quarter in the previous year.

Nitin S Kasliwal, managing director of SKNL, has ascribed the growth to the company’s aggressive thrusts into ready made apparel, consumer textiles and retailing earlier in the year.

SKNL plans to set up 1,000 exclusive outlets for its umbrella brands in the next three years from the current 90-odd stores across the country.

As reported earlier, SKNL will focus on fashion and accessory retailing and mostly deal with luxury, high-end super brands in the country.

Khdim’s to launch premium footwear in exclusive outlets

Kolkata based, Rs. 131 crore, leather accessories and footwear major, Khadim India Ltd., is launching ‘British Walker’ the premium shoe brand, which it had been exporting for the past few months to the US, in India.

Khadim’s, which has been known for offering footwear in affordable price range, will be foraying into the premium price range after 13 years.

Over a period of time, Khadim’s will take the British Walker footwear range to all its 253 exclusive outlets, spread across 22 states of the country, reports Business Standard.

Founded 54 years ago, in Kolkata, Khadim’s has gradually diversified into manufacturing and exporting leather products, real estate development, media, communications and chain-store retailing with a significant presence across the country.

Being bullish on the premium price segment, Khadim’s is planning to introduce newer brands in this footwear category apart from introducing a range of formal footwear for women soon.

The company, which is keen to have its presence in as many malls as it can, expect to clock an annual turnover of Rs. 160 crore this fiscal.