Rs 480 cr initial plan will see three cash-and-carry hubs
MUMBAI: Tesco, the largest retailer in the United Kingdom, followed global competitors Metro and Wal-Mart into the Indian retail industry with a cash-and-carry (C&C) format, and an alliance with Trent Ltd, the Tata Group’s retail arm.
Tesco will initially invest Rs 480 crore to set up three hubs —Mumbai, Delhi and Bangalore — in the next two years.
Philip Clarke, the international and IT director of Tesco, said most of this investment would go into setting up the supply chain for its operations.
“We intend to bring in our expertise in cold chain, distribution and IT systems and also work closely with farmers,” he added.
The first store will open in Mumbai by the end of 2009.
The £50-billion retailer will follow the business-to-business cash-and-carry format, the only format allowed for a foreign retailer currently. It will supply food and grocery as well as non-food products to small retailers, neighbourhood stores, hotels and restaurants.
Asked if Tesco will enter the front-end retail business, Clarke said, “We’d love to operate in retail because that is what we do best. But we are not planning our own business at this point and are focusing only on what is allowed here.”
Industry experts see Tesco’s foray as a positive for the retail sector. Arvind Singhal, the chairman of retail and consumer goods consultancy firm Technopak said its entry is ‘like a vote of confidence for the retail industry’. “At a time when the domestic media is talking about a slowdown here, we see more and more international retailers such as Wal-Mart, Marks & Spencer and Metro entering the Indian market,” he said.
For Tesco, India is part of a bigger plan to expand its Asia operations, which currently posts sales of £7 billion and is growing at 15% annually, said Clarke.
The company already sources Rs 1,400 crore worth of products from India for its global operations. It set up a Tesco Hindustan Service Centre in Bangalore a couple of years ago.
Tesco operates 3,730 stores in 13 countries through five formats, including hypermarkets and small neighbourhood stores. It entered the United States with ‘Fresh and Easy’ in October 2007.