Malviya, The Economic Times
October 17, 2013
a week after the world's top retailer Walmart ended its association
with Bharti Group, its British rival Tesco has moved a step closer
to entering the $450-billion Indian retail market with the Tatas
launching a neighbourhood convenience store format modelled on
Tesco Plc, the world's third largest retailer, has a partnership
with Tata Group's Trent under which it provides back-end support
and retail expertise to the Indian conglomerate's Star Bazaar
Tesco Hindustan Wholesaling, the Indian unit of the British retailer,
supplies merchandise including some of its own labels, to 15-odd
Star Bazaar outlets, sized anywhere between 40,000 sq ft and 80,000
sq ft and selling food and grocery to apparel to consumer durables.
The new format, Star Daily, is completely different. The first
Star Daily outlet, opened in Pune last week, is just about 1,800
sq ft in size and stocks mainly fresh foods, groceries and essential
items, a person aware of the store launch said. "Similar
to a kirana store, Star Daily is kept open almost 15 hours starting
at seven in the morning," the person added.
Both Trent Hypermarket and Tesco did not respond to an email
Globally, corner shops such as 7-Eleven in Japan, Taiwan,
Thailand and Singapore, Lawson in Japan and Oxxo in Mexico
are among the largest retailers in their respective markets, reflecting
the growing business of small outlets in several countries despite
the presence of international supermarket and hypermarket chains.
Even Tesco runs more than 1,500 convenience stores averaging 2,200
sq ft in small shopping precincts in residential areas and countryside
in the UK.
In India, ubiquitous kirana wallahs generate more than 90 per
cent sales of consumer products industry.
Analysts say high sales volume will be the key to Trent's
success in the convenience store space. "The newer format
can help them (Tatas) penetrate better catchment areas, but volume
needs to be maintained to compensate for the higher overhead costs
including real estate," Devangshu Dutta, chief executive
at retail consultancy Third Eyesight, said.
So far, Trent Hypermarket has been relatively conservative in
its retail expansion despite rivals adding hundreds of stores
each year. In fact, it did not open a single Star Bazaar store
last financial year, but managed a 21 per cent increase in total
revenue to Rs 801 crore.
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It reported loss of Rs 72 crore. There are speculations in the
market that the Tatas will take the acquisition route to expand
its retail business. "There can be a good acquisition opportunity
for Tata in the form of Bharti Easy Day, which has a similar format,
if they decide to sell it off," an industry veteran said
on condition of anonymity.
Interestingly, Trent is entering the neighbourhood grocery market
after some of its rivals have already burnt their hands in this
space. Retailers including Reliance Fresh, Aditya Birla More and
RPG Group's Spencer's Retail started expanding into smaller formats
few years only to shut dozens of such outlets and shift focus
to big-box stores or hypermarkets.
For instance, Mukesh Ambani-owned Reliance Retail has decided
not to expand its 2,000-sq ft Reliance Fresh stores in the neighbourhood
and instead focus on 7,000-9,000 sq ft Reliance Super stores.
Future Group, the country's top retailer, has invited kirana store
owners and local entrepreneurs to operate its smallformat KB's
Fair Price stores. "The economics of operating a neighbourhood
store is very complicated as real estate and catchment areas in
urban areas is pretty complex," Rakesh Biyani, joint managing
director at Future Group, said.
The group plans to scale up from 200-odd stores now to 1,000
in the next two years. Others, too, now plan to return to this
market, with some caution. Spencer's Retail, which was forced
to shut over 64 small-format stores in the last three years, had
indicated to remodel its existing 105 stores and future ones on
the lines of the kiranas and global convenience stores like 7-Eleven.
Similarly Aditya Birla Retail, which has shut more than 100 stores
in the last two years, plans to open 100 supermarkets this fiscal.
(Sourced from The