After years of pondering, the Union cabinet cleared foreign direct investment (FDI) up to 50 per cent in multi-brand retail and 100 per cent in single-brand retail last week. Bijou Kurien, president and chief executive officer, Lifestyle, Reliance Retail, speaks to Swati Garg about the importance of the move and areas most likely to see consolidation first. Edited excerpts:
The initial reaction from the industry seems to be that it is a good policy step.
It is a positive move from the government and it is difficult to see it in any other way.
What are Reliance Retail’s plans?
We have no specific interest in looking at partnerships at this point. We already have multiple partnerships in the single-brand and multi-brand front ends, and those will continue on the structure that they currently exist on. We are not cash-strapped and are not looking at this as a source of funding. Whatever we have done so far, we have done on our own. We have spent five years and built the retail business across several formats. Where we felt there was a need to create some value adds through a partner in some format, we have gone on our own and done that in single-brand and several premium retail categories. For the rest, we have gone our own, and are happy with that.
So, you are not in talks with anyone and have no plans of partnering with anyone anytime soon?
Not now, No.
Which are the areas where you see consolidation happening first?
The international players, who are already in the Indian market, like Tesco and Walmart, will now make a more concerted effort where the front end is concerned. Single-brand retailers who are currently not present in India will now look to enter the country with a lot more interest.
Which are the formats where partnerships are likely to emerge in the beginning?
The first partnerships will happen in the food vertical. The ones who are present, like Walmart, already have a play in this vertical; Carrefour has a store as well. When they look at retail, they will also come into food with a classical hypermarket format. That’s where I first see the activity happening.
The second would be international retailers which do not have a presence and are looking to enter the market and partner domestic retailers. Of course, in no sense of chronology, single-brand retailers will look to exploit the 100 per cent opportunity.
What about issues of protests and political opposition?
Protests are a way of life; no one should be deluded by such things. I am sure there will be issues in the beginning, but I think, over time, these would settle down. In states where the political will is against the move, it will be that much tougher to enter. But any international retailer coming into India for the first time are most likely to skirt those states. Those looking to partner domestic retailers might not have that flexibility.
What is your estimate on the size of the market and future outlook?
Our understanding is that the Indian retail market is pegged at between $400 and $450 billion i.e. about Rs 22 lakh crore. It has been growing at six to eight per cent yearly. My sense, is that, this will get spurred a bit by all the activity. It is likely to grow at 8-10 per cent per annum. If one were to differentiate between the modern, organised and traditional and unorganised format, then the percentage growth is likely to differ. Overall, my sense is it will grow at about 8-10 per cent.
