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Murugappa plans urban retailing foray with sports goods

Murugappa plans urban retailing foray with sports goods
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First Published: Mon, Jul 23 2007. 01 28 AM IST
Updated: Mon, Jul 23 2007. 01 28 AM IST
Chennai: The family-owned Rs8,000 crore Murugappa Group is planning its first foray into organized urban retailing with stores for sports goods and equipment in India, to tap the growing market for fitness and general well-being products.
The diversified conglomerate has so far stayed away from urban retailing, though it does have branded retail stores targeting the rural market, especially the farming community, a business that it started earlier this year.
In the first phase, the Chennai-based group is planning to open six super stores, which will be positioned as one-stop sports stores, within 30 months. The investment will be made through TI Cycles of India, one of the Murugappa group companies and a major bicycle maker.
“The super stores are part of the strategy to have retail as the way forward,” said G. Ramprasad, president of TI Cycles of India. “The brand equity of BSA (the brand used for some of the bicycles) will be used in these stores.”
Investment details of the project were not given as the company is yet to finalize the details.
The retail market in India is large but fragmented. Estimated at $180 billion (Rs7.3 trillion), it accounts for one-tenth of India’s gross domestic product (GDP), according to a study conducted by accounting firm PricewaterhouseCoopers.
Sports goods retailing is also fragmented, with the exception of single-brand stores, where foreign investment norms are liberalized.
The market for sports-goods retailing is not known. Foreign single-brand stores such as Reebok do sell their products in the country.
The 109-year-old Murugappa group may explore tie-ups with specialized sports goods retailers, but it is not holding talks with anyone currently. The group will use its existing network to source products for the venture, said Ramprasad.
Faced with a stagnant market for bicycles in India, TI Cycles has focused on brand building and introduced fitness products such as treadmills as a way to increase profitability and tap areas of growth.
“We wanted to position our bicycles as fitness and recreational vehicles, rather than as a commuting vehicle,” said Ramprasad.
In the year ended March, TI Cycles, a division of Tube Investment of India Ltd, contributed only 9% of the profits for Tube Investments, despite making up one-third of sales.
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First Published: Mon, Jul 23 2007. 01 28 AM IST