Bharti Retail, owners of Easy Day stores, is on an expansion spree after mostly restricting its presence to Punjab for almost three years, amid reports that the country may finally allow foreign investment in multi-brand retail. The retail arm of Bharti Enterprises, which has a joint venture with world’s largest retailer Wal-Mart in the cash-and-carry wholesale segment, plans to more than double its number of stores this year.
It plans to have 125 Easy Day supermarkets and 13 Easy Day Market hypermarts by the end of the year, a company spokesman said. It currently operates 60 Easy Day stores across Punjab, Rajasthan, Haryana, Delhi and Uttar Pradesh and six Easy Day Market stores across Punjab, Rajasthan and Uttar Pradesh.
“The fall in rentals and the real estate prices has benefited us immensely,” he said, adding that all the new stores this year will be in North India. But in another five years Bharti Retail plans to be present in every city in the country with a population of more than one million. It will invest up to $2.5 billion to add about 10 million square feet of retail space in the country by then, the spokesman said.
Meanwhile, Bharti’s wholesale partner Wal-Mart is spending millions to shop its way into India’s lucrative retail market. The giant from Bentonville has spent $11 million, or more than Rs 52 crore, on lobbying on issues related to India since signing the joint venture with Bharti Retail in August 2007, according to lobbying disclosure reports filed by the company before the US Senate. Lobbying is legal in the US.
Organised retail, estimated at $30 million, accounts for less than 10% of India’s $375-billion retail market, but is growing at an impressive 13-14% annual rate. When contacted, Raj Jain, managing director and CEO of Bharti Wal-Mart, said, “Our view is that FDI in India should open in multi-retailing. We believe it is good for India and for the development of a robust supply chain.”
The equal joint venture between Bharti and Wal-Mart plans to open up to 15 cash-and-carry stores and employ about 7,000 people over the next three years, a company spokesman said. He credited the softening of real estate prices and positive response from the two partners for an acceleration in expansion plans.
In 2007, the company had talked about opening 10-15 stores in seven years. The company in April opened the second Best Price Modern Wholesale store at Zirakpur near Chandigarh after opening the first one in May 2009. It now plans to open the third one in Jallandhar within a couple of months.
It has also signed deals for stores varying between 50,000 sq ft and 100,000 sq ft in Rajasthan and Madhya Pradesh, Mr Jain said. Meanwhile, buoyed by a pick up in consumer demand after last year’s slowdown and reasonable property rentals, other retailers and cash-and-carry players are also ready with a second wave of expansion.
German firm Metro Cash and Carry, which became the first foreign wholesale player in India when it set up in Bangalore back in 2003, recently signed a memorandum of understanding with the Punjab government to open six cash-and-carry outlets in the state for an estimated Rs 900 crore.
Vishal Sehgal, head of corporate relations at Metro Cash & Carry India, however, refused to give timeline for the project. “With our model of investing in own land and making our own construction, things tend to progress slow,” he said. Currently, Metro has five outlets across Bangalore, Mumbai, Hyderabad and Kolkata.
Khet-Se Agriproduce India, a joint venture of Tata Chemicals and Ireland’s Total Produce Plc, too plans to go nationwide, its chief executive officer GR Goves said. The cash-and-carry player, which operates two outlets in Ludhiana and supplies supplies bananas, grapes and other fruits and vegetables to Reliance Retail, Bharti Easy Day, Aditya Birla group’s More and Namdhari Fresh, recently opened a shop in New Delhi.
Spencer’s Retail, the Sanjiv Goenka-led retail arm of RPG Group that opened only four to five large format stores last year, plans to add 15 large format stores in 2010 by investing close to Rs 100 crore. It will increase its trading area by at least 50% from the current 1 million sq ft and focus on the National Capital Region, West Bengal, Maharashtra, Tamil Nadu, Karnataka and Andhra Pradesh, a company spokesman said.
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