In the past few years, global retail chains have been
increasingly attracted towards the rapidly growing Indian
market. The most recent is South Africas largest
grocery retail supermarket group, Shoprite, which is finalising
plans of setting up base here.
Since foreign direct
investment (FDI) is not allowed in the retailing sector
in India except in the cash-and-carry format, Shoprite
Holdings Ltd is entering the Indian market through the
franchisee route much like Marks & Spencer, Britains
leading retail chain, which adopted this route to set
up its operations here.
is said to have tied up with Nirmal Lifestyle to set up
a 70,000-sq ft hypermarket in the Nirmal Lifestyle Mall
in Mumbai. The South African chain will be handling the
entire mall, including food retailing and other consumer
products, and will commence operations after March 2003.
All under one
Shoprite will offer a comprehensive range of groceries,
household items and fresh food products under one roof
with a strategy of offering basic commodities at low prices.
Shoprites India plans come close on the heels of
the group making a foray into Mauritius.
Shoprite group of companies operates 598 outlets in 11
African countries apart from its home country, South Africa.
It has a broad customer base in South Africa and retails
in various store formats to cater to the different demographic
profile of its customer base.
For instance, the
stores known as Checkers, Hyperama and House & Home
stores target the middle-to-upper-end market while Shoprite
and OK Furniture target the middle-to-lower market.
recently the worlds fourth-largest retail chain
- the Duesseldorf, Germany based Metro AG - entered India
through the cash-and-carry format. The cash-and-carry
format of retail basically results in the elimination
of the wholesaler so that products are available at very
competitive prices at all cash-and-carry stores.
A global concept
format of retail is gaining popularity in Europe as well
as countries like Japan, China and Russia. Metro Cash
and Carry is expected to begin operations in Bangalore.
It is the world market leader in cash-and-carry operations
with stores in 20 countries, accounting for 75 per cent
of the divisions sales. Metro Cash & Carry has
an annual turnover of more than euro 21 billion ($19 billion).
growth drivers in the organised retail industry are household
groceries and apparel, of which grocery is the largest
segment, taking up nearly 72 per cent of the retail consumption.
Shoprite and Metro are both big players not only in household
groceries but also in retailing fresh farm produce such
as vegetables, fruits, dairy, poultry and meat products.
Global retail consultants
Ksa Technopak say that organised retailing in India is
expected to touch Rs 35,000 crore in the year 2005-06.
The Indian retail sector is estimated at around Rs 900,000
crore, of which the organised sector accounts for 2 per
The notable domestic stores
retailing household groceries in India are Food World,
Nilgiris and Subiksha, all based in South India. These
stores have successfully taken on the ubiquitous mom and
pop and kirana stores and it remains to be seen
how global chains would fare on that front.