India’s retail revolution has finally begun
Monday, November 06, 2006
Reliance group opens 11 stores in Hyderabad on Nov. 3 and will spend $5.5 billion by 2011. Foreign retail giants are banned from direct selling to consumers in India. However retailers are allowed to team up with Indian companies where the foreign company wholesales and sources to the Indian retail partner who can then directly sell to the Indian consumer. The first such partnership is between Infiniti Retail (a Tata group company) and Woolworth of Australia. Rumors are Bharti Enterprises is also in similar talks with Walmart of USA or Tesco of Britain. By the end of November, Bharti will have a foreign partner says Sunil Mittal Bharti’s chairman.
Foreign retailers can’t risk to be late to the party and the Indian govt. does not open up for the FDIs. India’s retail sector is one of the most attractive in the world. India’s expected retail sales this year $250-300 billion. By 2010 that number will be as high as $430 billion and the modern retailers share will rise to more than 15% from about the current 3% this is according to Technopak a Delhi based retail consultancy firm.
Unlike Google, Reliance is not used to doing things secretly and making an announcement overnight. Their retail venture when in the works about a year ago had already created a chain reaction and sleepless nights for the major retailers all over US and Europe. US business is slowing, not just retail but all sectors. So the major retailers are dying to setup retail businesses in India as soon as possible just to avoid a permanent dent in their balance sheets. What does this mean to a consumer? This in general means better products and better prices to the consumer. You can also expect better customer service which hardly exists with the current mom and pop shops unless you are one of their favorite customers for decades. Some mom and pop shops are also on an expansion spree which probably will only work in smaller towns. The main reason I wrote this bloglet was Reliance. Now Reliance has announced that it is going to set up stores across India spending about $5.5 billion in the next 5 years. What does this mean to the stock price? Where will the money come from? What will be the returns? Anyone? Please feel free to comment?
Tags: Reliance Retail, Retail India
posted by Webmaster @ 2:20 AM,
