Bharti plans 3-tier retail launch, mulls own label

Bharti Enterprises is planning a “three-pronged” launch in the country’s retail scene together with world leader Wal-Mart Stores Inc but a short supply of real estate is proving a challenge, MD Rajan Bharti Mittal said. Bharti is due to unveil the opening programme of its joint venture with the world’s largest retailer by the end of this month after delays blamed on the country’s tough legislation against foreign investors.

Mittal said the brand identity of the new venture was still under discussion but the deal was otherwise on track. “We are looking for at a three-pronged strategy with smaller convenience-style stores of 3,000 square feet, supermarkets of 35,000 to 40,000 square feet and hypermarkets of 75,000 to 125,000 square feet,” he said on the sidelines of the annual World Retail Congress. India’s retail industry, valued at nearly $350 billion, is forecast to double in size by 2015 with modern retail’s share set to increase from about 3 per cent now, according to research by Technopak Advisers. Bharti has pledged to spend $2.5 billion by 2015 on the new stores and expects to open 10 to 15 stores in seven years. Other considerations are the possibility of launching own label products a few years down the line, Mittal added. The stores will compete with Reliance Industries, the RPG Group, the Tata group’s Trent Ltd, Pantaloon Retail India, Shopper’s Stop Ltd, Germany’s Metro and Dutch food retailer SPAR International.

However, finding land for the supermarkets and hypermarkets is proving tough with supply limited and prices high. Bharti said the group is having to negotiate with real estate operators across India, such as DLF and Unitech, in order to corner suitable locations. “Real estate prices are a challenge and one of the reasons why it (the venture) is a little slow,” Bharti said. “Prices are softening up, which is a good thing because it was becoming non-competitive ,” he added. Indian legislation bans foreign multi-brand retailers from entering the country’s fast-growing grocery market.