New Delhi: Bharti Enterprises Ltd marked its retail entry with a low-key opening of three grocery stores in Ludhiana, Punjab, the home town of its founders—the Mittals—who also run the biggest mobile phone service provider in India.
Resisting tagging Bharti to the store, the company chose Easy Day as the name for the stores, that will be spread over 2,500-4,500 sq. ft and stock food and grocery, personal care, stationery as well as other household items.
Bharti’s retail venture has been in the news for almost one-and-a-half years after it announced plans to team up with the world’s largest retailer, Wal-Mart Stores Inc., to bring organized retail to India. In the months following the announcement, everyone from street vendors to politicians raised concerns about Bharti and other big firms entering retail, and possibly taking away the livelihoods of the small kerbside and neighbourhood stores that dominate food and grocery sale in India.
That has put the spotlight on big retailers which are now choosing to open stores quietly to avoid the protests and picketing that the stores could attract from increasingly organized anti-retail protesters. Bharti’s stores will get expertise including technology, supply chain and logistics from US-based Wal-Mart, which is also an equal partner in a separate venture that will sell to other retailers and businesses.
“I am sure it is just to be sort of careful and I am sure they won’t make a big splash…a lot of people do that way, even Aditya Birla doesn’t make a song and dance of their opening of stores,” says Jayant Kochar, managing director of retail consultancy firm Go Fish Retail Solutions. “After the Reliance experience, people would prefer to have a low-key launch and get on with business rather than attract too much protests” by making high-pitched launches.
Kochar’s reference was to the intense protests faced by Reliance Industries Ltd’s retail venture as shopkeepers to state governments blamed the conglomerate’s stores of eating into small-shop business.
Bharti’s first stores mark the run-up to the launch of supermarkets ranging between 30,000 sq. ft and 50,000 sq. ft and hypermarkets of 75,000-125,000 sq. ft. The firm, which plans to invest up to $2.5 billion (Rs10,000 crore) in building a retail venture spread across at least 10 million sq. ft by 2015, is one of the largest Indian firms to enter the country’s booming yet controversial retail business.
“We will see consumers getting benefits on experience, pricing, quality and all that. Employment generation will happen, the farmers will benefit,” said Rajan Bharti Mittal, who is spearheading Bharti’s retail venture, in an interview last month with Mint. “Once you get that kind of scale in the industry, you will start finding the change,” he had said.
The concern over the fallout of organized retail last year forced the United Progressive Alliance government to commission a study to an independent think-tank to map the fallout of organized retail on small stores and vendors. The findings of this study by the Indian Council for Research on International Economic Relations are yet to be made public, although Mint obtained a copy of the study that said small vendors in the vicinity of big stores had seen a decline in their business.
Meanwhile, the Bharti-Wal-Mart joint venture is expected to roll out its wholesale or cash-and-carry hypermarkets by the end of this year or early next year. India allows foreign retailers such as Wal-Mart to have fully owned units in cash-and-carry ventures that can sell only to retailers and businesses, but Wal-Mart said it chose to partner with Bharti for its knowledge of India.
The Mittals are no strangers to new businesses. In the mid-1990s they entered the mobile phone service business in India as newcomers and succeeded even as more established business groups faltered. Bharti ended up building India’s biggest brand in the sector, Airtel. Bharti Enterprises’ chairman Sunil Mittal heads the country’s top business lobby group, the Confederation of Indian Industry.