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November 12, 2013
Zahra
Khan, Sapna Agarwal, MINT
Marc Bolland, chief executive of London-based Marks and Spencer
Group Plc, said India is the retailer’s new “priority
market” and a “key sourcing hub”.
“We also want to expand to attractive tier-II cities like
Surat and Kanpur, and aim for more than 80 stores by 2016,”
he said in an interview, adding, “China used to be the priority
international market, but now that has changed.” The company
declined to give details of its investments plans.
The company runs its business in India through a 51:49 joint
venture with Reliance Retail, owned by Mukesh Ambani’s Reliance
Industries Ltd, called Marks & Spencer Reliance India Pvt.
Ltd.
M&S said it will continue to work closely with its Indian
partner and does not plan to invest directly in the country. India
last year allowed 100% foreign direct investment in single-brand
retail. “Sometimes, cooperations can be difficult, but this
one (Reliance Retail) has been a great partner,” said Bolland.
The company said its India sales were up 28% in the first half
of fiscal 2014, with double-digit growth across all stores. Apart
from its growing store presence in the country, M&S has given
a push to its local sourcing operations as well. Bolland did not
disclose the revenue generated by the Indian subsidiary, but said
going forward “the financial contribution will be much higher”.
M&S competes with local retailers such as Shoppers Stop Ltd
and Dubai-based Landmark Group that runs the Lifestyle chain of
stores. It also competes with stand-alone brands Benetton India
Pvt. Ltd and Tommy Hilfiger (the latter is present in India through
a joint venture with Ahmedabad-based Arvind Ltd). Japan’s
Uniqlo and Sweden’s H&M are in the process of opening
stores in the country.
M&S has always been aggressive about the Indian market and
moved from a franchisee model to the joint venture model in 2008.
In 2008, the British department store chain outlined plans to
set up at least 50 stores in India by 2013, a target it could
not meet, mainly because of an economic slowdown. Currently, M&S
has 36 stores in India.
“We don’t focus on quantity, but on quality; we always
look for good placing of our stores…and this time our strategy
for India is different than it was three years ago,” said
Bolland.
Devangshu Dutta, chief executive at Third Eyesight, a retail
consulting firm, said M&S started cautiously in India with
a franchise model, but moved to the joint venture as it considers
India a key market. Over the years, the retailer has increased
its India sourcing for domestic and global markets, and has lowered
prices and widened the range of offerings to appeal to a larger
number of consumers in India, Dutta said. As such, both Reliance
and M&S have deep pockets and they can make the commitment
to grow, he added.
M&S recently opened a flagship store in suburban Mumbai,
a 35,000 sq. ft outlet with over five floors. “We require
bigger stores as we have a bigger catalogue, but we will also
have more mid-sized stores going forward,” said Bolland.
“We have been cutting pricing, mainly backed by our sourcing
capabilities, and have brought it down to mid-market level,”
he said, adding, “33% of all M&S’s products sold
around the globe are made in South Asia, while 64% of products
sold in India are sourced from local suppliers”.
India’s organized apparel market accounts for $8 billion,
or 20%, of the overall domestic apparel market, according to Technopak
Advisors Pvt. Ltd, a retail consultancy. “Most department
retail chains in India are expanding and opening five or more
stores per year depending on availability of real estate,”
said Abhishek Ranganathan, vice-president (retail, real estate,
institutional equity research), PhillipCapital (India) Pvt. Ltd.
Shoppers Stop and Lifestyle are also expanding. Shoppers Stop
has over 65 stores and plans to open 8-10 stores a year. Lifestyle,
which has 45 stores, plans to open three-four stores this year,
Kabir Lumba, managing director of the Landmark Group owned company,
had said in a 1 September interview.
The Times of India newspaper, in a report in March, had said M&S planned to launch its food retail business as well in India.
(Sourced from MINT.)