Marks and Spencer (M&S) could scarcely have given a clearer signal of the exalted place India has in the British retailer’s plans.
Just one week after announcing on February 1 that he would step down as its chief executive, Sir Stuart Rose flew to Mumbai for a meeting with the chairman of Indian conglomerate Reliance Industries, Mr Mukesh Ambani, India’s richest man and an M&S partner.
“Mr Mark Bolland, our new chief executive, is very keen to grow the overseas market, and India is just top of the list,” said Sir Stuart who remains the chairman of M&S during the visit. “In fact, I have been discussing with Mr Ambani about the need to get aggressive and both of us are looking to have several more stores.”
M&S plans to open six to eight new shops this year in India and aims to have 50 stores there by 2014. In this, M&S is at the forefront of a second wave of international investment in the Indian retail market as global retailers dust themselves off after the downturn and start to look to the world’s growth markets once again.
Next month will see the London toy shop Hamleys, the Spanish fashion giant Inditex’s Zara chain, and Arcadia Group’s Top Shop all launch in India. France’s Carrefour is expected to announce a tie-up with an Indian partner in the next few months, making it the last of the four big international supermarket chains to enter India alongside Wal-Mart, Tesco and Metro.
Only a few years ago, M&S was a textbook example of how not to enter India. It allowed its former franchisee in India, Planet Retail, to treat it as an upmarket rather than a mid-market brand, pricing M&S goods even higher than in the UK, and it failed to adapt what it offered to local tastes.
In 2008, frustrated that Planet Retail had opened just 10 stores in the seven years since it signed up with M&S, the UK-based supermarket chain ended the relationship and in the same year relaunched in a joint venture with Reliance Industries.
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“There’s a real difference when you put people on the ground who really understand the brand and what the customer is looking for, and there is a different mindset when you invest your own money,” says Mr Mark Ashman, the chief executive of the Reliance joint venture. “India is not a panacea or an easy win. It takes time, and you have to understand that.”
Since taking over, Mr Ashman has cut prices by as much as 30 per cent by increasing the share of goods made in India from 18 per cent in 2008 to about 55 per cent today. He is aiming to bring the share to 70 per cent by 2014.
In 2005, the global retail consultancy AT Kearney rated India the world’s hottest emerging retail market in its Global Retail Development Index. It cited its 300 million-strong middle class, and retail spending tipped to more than double from 300 billion dollars in 2006 to 640 billion dollars by 2015. Technopak estimates that it will hit 435 billion dollars this year.
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