Foreign masala in Indian retail
By Venkatachari Jagannathan and Anita Sharan | 01 Dec 1999
The chief of Marks & Spencer has been making trips to India over the past year. Global investment bank Warburg Pincus is awaiting the Indian government's clearance to pick up a 25.1 per cent stake, worth $13 million, in Shoppers Stop.
Dairy Farm International/Jardine Matheson are present here, through tie-ups with the RPG group. Fast food major McDonalds has already made a dent in the marketplace and in Indian palates. The Dubai-based Landmark group is making its presence felt in Chennai through its Lifestyle mega store of over 30,000 sq ft.
Landmark is owned by Mukesh Jagtiani, a non-resident Indian. Lifestyle International Pvt Ltd, formed in India recently, is a wholly-owned subsidiary of the Mauritius-based Lifestyle International which, in turn, is wholly-owned by the Landmark group. The group's presence extends across 100 retail outlets across Dubai, Bahrain, UAE, Oman, Qatar, Kuwait, Saudi Arabia, Lebanon and Cyprus.
In India, according to Lifestyle International's marketing manager, Roshan Mathew, the target is to "have nine-to-12 stores by 2002." These stores will sell all lifestyle products, barring furniture, under one roof.
Immediate plans include opening a 46,000-sq ft store in Hyderabad, which Mathew terms "the millinieum store". If all goes well, this store could be inaugurated on the last day of this century. "The Hyderabad store will have additional sections for books and music, unlike the Chennai store." Besides, as soon as Lifestyle gets a keenly awaited Foreign Investment Promotion Board clearance for a Rs 100-crore investment, it will create outlets in Bangalore (by mid-2000), Pune, Mumbai, Delhi and Ahmedabad.
Though Mathew is cagey about sales figures, market sources say the Chennai Lifestyle outlet is clocking around Rs 4.5 lakh worth of sales every day, and is well set to achieve its first year sales target of Rs 15 crore. Stocking own brands as well as others' brands, the store, Mathew says, is for all consumer segments. "Leveraging our global sourcing advantage, we get our stocks at attractive prices, the benefit of which is passed on to our customers."
The Hong Kong-based Dairy Farm International, a 125-year-old retail major with around 1,300 outlets across nine countries, recently converted its technical tie-up (since 1996) with the RPG group's Spencer & Company for Foodworld into a 49:51 joint venture. The new venture is called Foodworld Supermarkets Ltd. DFI also has a 50:50 joint venture with the Indian group in RPG Guardian. DFI is the retail arm of Jardine Matheson.
In Western markets, a familiar sight is the McDonalds golden arch. The fast food chain is gradually building a presence in India too. Over the three years or so since it entered the country, it has spread its presence rather conservatively in Delhi and Mumbai.
In India too McDonalds has maintained its unique sellng proposition -- providing the same quality of food and the same ambience as anywhere in the world. Its raw material requirements are totally out-sourced. But what it has taken care of is world class quality in all its raw material sourcing, with specifications ensured strictly. The chain has been smart enough to tailor its products to the Indian environment, adding fare for the large number of vegetarians who love fast food, and avoiding certain beef and pork in deference to social sensitivities.
In a market place where Kentucky Fried Chicken failed to make an impact, McDonalds seems to be finding its place slowly but surely. In this light, the FIPB clearance in mid-August 1999 for McDonalds' plan to invest Rs 9 crore in expanding its chain of restaurants across the country is significant. The figure does, however, underline McDonalds' conservatism in spreading its magic in India.
