A bit late in the day but Tesco has finally said ‘I do” to the Tata’s after wooing suitors like Bharti, the Wadias, DLF and Parsvnath among others. Though it seems that in this case, Tesco seems to be having the cake and eating it too !
On one hand they have decided to enter the great Indian Retail party solo, the ‘cash-and-carry’ way, with the first wholesale outlet scheduled for launch in Mumbai, followed by 2 others in the next 2 years at an expected investment of 60 million pounds. On the other hand they will support Tata Group’s Trent Retail to launch its discount hypermarket format for a pre agreed fee. Trent launched its big box format Star Bazaar in 2004 and there are 4 Star Bazaar stores since then. Trent have now announced plans to open 50 stores in the next five years at a cost of Rs 2,000 crore.
According to this exclusive arrangement, Tesco will provide marketing, stock management, Information systems, cold-chain infrastructure and front-end services expertise to Star Bazar without the use of Tesco branding at the Star bazar outlets. In return, Trent Retail will source merchandise from Tesco’s wholesale outlets which will be exclusive suppliers to Start Bazar.
Tesco already operates sourcing 3 offices in Delhi, Bangalore & Tripur to feed its international stores. It may be noted that Tesco first came to India in 1998, wasn’t excited about retail but got excited about IT instead ! So it set up its IT systems in Bangalore & proceeded to enter Thailand. In 2006 it dated Bharti but would not commit. Its taken so many years for Tesco to finally take a call !
Trent Retail is the Retail Vertical of the Tatas and is headed by Noel TataTrent’s and operates Westside – apparel and lifestyle, Landmark – books and music and Sisley – Italian apparel brand. Tesco, a $99.5-billion company is UK’s largest retailer with over 2100 stores in the UK. It has 3729 stores in 13 countries around the world.
Tesco’s German rival Metro was the first to enter India in 2003, through the wholly-owned cash-and-carry operations in which 100% FDI is allowed by the Indian Government. The other ‘Big’ boy, Wal-Mart has a 50% JV with Bharti and Carrefour is still keeping the suitors guessing ! South African, Shoprite, which has a franchise arrangement with realty firm Nirmal Lifestyle.
It is also interesting to note that the Tata group has also recently created joint venture between Tata Chemicals and Europe’s largest fresh produce company, Total Produce, to set up 20 cash-and-carry distribution centers across India. The JV is called ‘Khet-Se Agriproduce India’ and will invest Rs 212 crore until 2012. The first ‘Khet Se” franchise store has already been signed on in Ludhiana for wholesaling fresh fruits and vegetables. For this store, the company has set up a cold storage and ripening facility at Malerkotla that functions as an integrated collection, processing and distribution centre. The franchisee on his part runs the store, which services local clientele such as vegetable vendors and small retail outlets. As we know the first of Bharti Easy Days is also located in Ludhiana ! Though of course there is not a shade of the Tesco connection, nevertheless, still sounds like a scoop.
Tata Chemicals in fact already has a network of 613 Tata Kisan Sansar Kendras to sell agricultural inputs & advice farmers on crops to grow and farming practices to adopt. Therefore the natural progression for some of these stores would be to become fruits and vegetable wholesale stores.