Saturday, April 19, 2008

Marks & Spencer to tango with Reliance

Britain's leading retailer Marks and Spencer Group (Marks & Spencer) announced a JV with Mukesh Ambani-promoted Reliance Retail on Friday, involving an initial investment of £29 million (Rs 230 crore), with plans to set up 50 stores over the next five years. M&S plans to pick up majority stake of 51% in the JV, Marks and Spencer Reliance India, while the balance will be held by Reliance Retail, once its application is cleared by the foreign investment promotion board. The UK-based clothing and food retailer expects to increase sourcing from India and bring into the country a wide range of products from its global portfolio through its proposed stores. "We intend to open bigger stores, selling a wider range of products at lower prices, including a growing number of products sourced from local suppliers,'' Marks and Spencer Reliance India CEO Mark Ashman said. "Subject to FIPB approval, we will open our first store in six to nine months. To begin with, the focus will be on cities like Delhi, Mumbai, Hyderabad and Bangalore, and in next couple of years we will also go to tier II and tier III cities,'' he added. The new JV will have the right to operate Marks & Spencer stores in India selling items such as women's, men's and children's clothing as well as homeware. Planet Retail, Marks & Spencer's existing franchise partner in India, will continue as a franchisee in respect of the 14 existing franchise stores, says a company statement. This announcement is part of Marks & Spencer's plans to grow its international business to 15-20% of group revenues within the next five years. Stuart Rose, CEO, Marks & Spencer said: "India is a very exciting opportunity for Marks & Spencer and a market where there is the potential for M&S to become a major retail brand. Reliance Retail is the ideal partner for us to accelerate our expansion and create the opportunity to open much bigger M&S stores. We have been very impressed by their strength in technology, logistics and property and the speed with which they have become a major player in India's retail scene.'' The JV is at present called Tapti Trading. Commenting on the development, Reliance chairman Mukesh Ambani said: "M&S is a very well respected brand globally. At Reliance, we have always strongly believed in the power of the Indian consumer market. We are excited to partner with M&S to combine Reliance's understanding of the Indian marketplace, and its traditional strengths in the areas such as technology, infrastructure, logistics and training with M&S's legendary retailing and product development capabilities to deliver a delightful experience for Indian consumers.'' The £8.5-billion M&S employs over 75,000 people in over 600 stores in UK, and over 275 stores in 39 territories around the world.

Rasna set to foray into fast food

In a major diversification move, Ahmedabad-based soft drink concentrate major Rasna is cooking up a foray into the fast food mart with an exclusive chain of outlets retailing fast food and beverages. To be christened Devil's Workshop, Rasna's fast food chain is aimed at not just taking on industry biggies like McDonald's but also cafe majors like Barista and Cafe Coffee Day as well.
The diversification move has been brewing for the past six months and has seen Rasna set up a separate division to be spearheaded by a CEO, apart from a central kitchen at a cost of Rs 1.5 crore in A h m e d ab a d , sources said. Rasna plans to set up small outlets of around 600 sq ft and kiosks at malls, multiplexes, educational institutions and transpor tation hubs, sources added. Interestingly, while the National Institute of Design was roped in to design the concept as well as outlets, Rabo Bank carried out the viability study.
The outlets, the first of which are to be rolled out on a pilot basis at a multiplex in Ahmedabad this weekend, will retail not just fast food delicacies like pizzas, croissants and patties but also donuts, pastries as well as hot and cold beverages. While the cold beverages will come from the Rasna stable, the company has joined hands with Italian coffee player Caffe Vergnano for its coffee offerings, sources said. When contacted, Piruz Khambatta, chairman of the Rs 300-crore Rasna group, confirmed the move and said the company was eyeing revenues of nearly Rs 100 crore from the food business by 2009-end.
"We plan to target nearly a dozen tier-II cities, including Pune and Chandigarh, for the fast food business, for which we will also take the franchisee route,'' Khambatta said, adding that the company will set up a central kitchen in each city it enters. Explaining the reason for the foray, Khambatta said: "We found that the biggest growth in the food retail segment is coming from ready-to-eat foods due to changing lifestyles and onset of modern retail.''