Godrej plans foray into food retailing

Will decide upon either acquiring a food retail chain or setting up a new one.

The Rs 4,000-crore Godrej group is foraying into food retailing, either by acquiring a food retail chain or by setting up a new one.

"The group is yet to firm up its strategy "" whether to adopt the acquisition route or to set up a greenfield project," said a source close to the development.

Godrej group Chairman Adi Godrej said: "We are looking at retailing as a new business avenue. In fact, we had talks on acquiring a food retail chain. However, that did not materialise. We are still open to it (the proposal of foraying into retail)." The group was in talks for the acquisition of the south India-based retail chain, Trinethra.

New Delhi-based retail consultancy firm KSA Technopak is helping the group draw up plans for the new venture. The organised retailing industry grew 25 per cent to Rs 22,500 crore in 2003-04. The food and grocery segment accounts for 14 per cent of the market.

Others venturing into food retailing include the K Raheja Corp, promoters of retail chain Shoppers' Stop, and the Indo Rama group, the New Delhi-based polyester producer.

The Goenka-controlled RPG Enterprises, which manages supermarket chain Foodworld and hypermarket store Giant, is setting up more stores.

Through Trent, the Tata group has a presence in apparel retailer Westside and is planning to enter the food retailing business.

The Kishore Biyani-controlled Pantaloon Retail India has a presence in this segment through Big Bazaar and Food Bazaar. Also, Shoprite, South Africa's largest supermarket group, has decided to set up shop in India.

The rush into retailing is prompted by the industry's growth potential, demographic trends, higher disposable incomes of the middle class and a glut in commercial real estate. An industry source said rentals had come down nearly 10 per cent across the country.