Spar plans tie-ups for India footprint

After opening a hypermarket in the country, Dutch retail company Spar International is looking for expanding its footprint by licensing agreements with Indian retailers.

Spar is looking at tying up retail chains or business houses who can be the licensees of Spar for the entire state or city and with individual stores who can run their stores under the Spar brand name. Spar will provide them with the branding, know-how in marketing, store design, supply chain expertise for a fee.

Spar has already signed a licensing agreement with Dubai-based Landmark Group's Max Hypermarket to set up seven hypermarkets and supermarkets in the country. It has already opened its first hypermarket in Bangalore.

India's retail market is estimated at $350 billion and organized retailing, which constitutes four per cent of this, is expected to grow at 10-15 per cent over the next couple of years, according to estimates by retail consultancy Technopak Advisors.

The Indian retail market has already attracted international players such as Wal-Mart, Carrefour, South Africa's Shoprite, Germany's Metro who are operating or planning to launch cash and carry formats and back end support for Indian retailers. There is a prohibition on foreign retailers from entering the front-end retailing in India.

"Initially, we are looking at big cities in the country since the organized retailing has just begun here and then we will move into tier-II and III cities," said Gordon R Campbell, managing director, Spar International, on the sidelines of Asia Retail Congress organized in Mumbai today.

Campbell said Spar could look at smaller formats at a later date since the group thinks that bigger formats were essential to achieve scale and volumes, better supply chain efficiencies and sourcing and lower prices to the consumers.

Spar operates in 34 countries and has four formats such as hypermarket Interspar, large supermarket Eurospar, local supermarket Spar and small format Spar Express in European countries.

Elaborating on their differential strategies Spar has adopted in India and China, he said: "Organized retail has grown quite rapidly in China, which has 60,000 hypermarkets, whereas in India, it is very miniscule portion.

That is why we focused on big cities in India which have much higher consumption capacity."

On the challenges and issues in operating in Indian market, he said: "Finding right partners and right sights is a big issue in the Indian market. However, delays in getting real estate are common problems in most of the countries we operate in," he said.

On the protests by trade groups against big retail chains, Gary Alberts, head, retail, Spar International said: "We have not seen this happening anywhere in the world. In our particular case, we want to work along with small stores and local community," he said.

Spar was established in Netherlands as a group of independent retailers and wholesalers in 1932, who came together to work collaboratively.