The Blueprint

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The Blueprint

Post  Anand on Sat Aug 16, 2008 2:52 pm

The Indian retail industry is worth approximately $270 billion and is expected to cross $500 billon by 2015. The overall growth in the retail sector is about 13 per cent. The organized retail sector, which at present constitutes only a fraction of the total Indian retail industry, has registered robust growth of over 42 per cent in 2006.

According to Mittal, the increase in spending power, consumption power and disposable income of the Indian populace across various sections of the society, clearly needs to percolate in the retail sector as well. “The Indian economy is growing at about 9 per cent; the organized retail sector is expected to grow at 30 to 40 per cent annually. We believe that we need to partake in this growth in a big way.” He further adds that countries like China and Brazil have demonstrated how retail boom can give great boost to the economy. And he is sure that the same thing will happen in India as well.

Mittal looks at the entire venture from a very different perspective; he states that Bharti's philosophy has always been to offer the consumer best quality, variety, range and choice of products at affordable prices. “In our retail venture, the consumer is of utmost importance. He/she will be able to buy everything from a pin to furniture under one roof. We aim at giving the consumer a great experience, good quality and range of products at an affordable price,” he adds.

Offering quality products at cheaper price is more of a compulsion for every retailer, if they want to survive in this industry for long. Bharti's strategy in this regard is based on facts. Mittal points out that when the economy on the retail side opens, it will help small manufacturers, farmers and artisans in a big way. “The wastage in the farming industry is about 35 to 40 per cent, because there is no linkage to the mainstream. The small manufacturers and artisans are neither linked to the mainstream, nor do they have the wherewithal to do so on their own. This is where we will pitch in by providing the linkage to these sections, bringing their goods to the fore and giving them a better price in return.” Bharti also wants to encourage private labels by giving them a platform through the retail stores.

t the retail conference organized by ASSOCHAM earlier this month, Sanjeev Duggal, CEO and executive director, Bharti Comtel Limited, had spoken at length about the crunch of manpower in the retail industry. Duggal highlighted the shortage of talent in the retail industry. The huge gap between the supply and demand of trained, skilled and talented manpower in the retail industry cannot be fulfilled by the present workforce available. In their telecom business, Bharti needs around 20,000 trained people in the next few months. Mittal is not worried about the so-called talent shortage and high attrition rate in the retail industry. On the contrary, he believes that Bharti Retail will provide employment to over 60,000 people in the front-end and many more at the back-end. “This will create opportunity of employment for youth, women and ex-servicemen,” he says.

The Wal-Mart factor

One thing that everybody wants to know is to what level Wal-Mart will be involved in the venture, especially after Sonia Gandhi's letter. To this, Mittal replied, “The retail venture is 100 per cent owned by Bharti and like any other Indian company, we are looking forward to doing business. For a business of this kind we need technology, processes, best practices and logistics, and we are in discussions with Wal-Mart in this regard. Besides this, we are also talking to them for setting up back-end and supply chain, as well as cash-and-carry, which exists in the country through other cash-and-carry resources.”

“You have to understand that these are two different ventures; Bharti Retail has to do its own job and the cash-and-carry has to do its own. These are not two divisions of the same business,” Mittal stressed.

This a clear departure from the earlier statement made by Sunil Bharti Mittal, which said that not only a joint venture with Wal-Mart was being worked out for cash-and-carry, but also a licensing agreement for the front-end was under discussion.

On being asked which brand name the company will use, Mittal said that a consumer research is underway and the brand name can be decided once the results are in. He added that even the Wal-Mart name can be used depending on the results of the research. For different formats, different strategy for brand names could be worked out. Presently, the investment on the back-end, where Wal-Mart will be involved, is being worked out.


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