Reliance Retail Ltd has formed a 50:50 joint venture with Europe’s HAL Holding NV to open stand-alone optical stores throughout India, eyeing a business that is virtually controlled by the unorganized sector.
The joint venture proposes to seek permission from India’s Foreign Investment Promotional Board, which approves and regulates foreign investment in the country, to operate stores here, said a person involved in the deal who did not wish to be identified ahead of a formal announcement.
The stores are kosher under India’s fairly restrictive laws regulating foreign investment in the retail sector because the country allows 51% foreign ownership in single-brand retail. HAL is the holding firm for a raft of leading European optical retailers who collectively run more than 2,500 outlets in two dozen countries and operates stores under Vision Express in the UK, Apollo Optik in Germany, Pearle Opticiens and various other brands in countries from Norway to Australia.
In sight: The stores may use the Vision Express brand, popular in the UK.
The person said the joint venture hopes to roll out its stores by September and expects to have a “large network” of outlets across the nation but declined to share numbers. “The (brand) name is still being firmed up but Vision Express looks like the most prospective name as it’s very popular in the UK and other countries,” the person added even as he declined to share details of the investment each partner has pledged to the venture.
Both the Reliance spokesperson and the HAL office in Amsterdam were unreachable for comment over the weekend.
Currently, optical products are sold through Reliance’s health and wellness speciality stores but the person said that in coming months Reliance’s hypermarkets and other formats will start selling HAL’s products.
Reliance Industries Ltd, India’s largest conglomerate by revenues, is one of several companies looking to establish a nationwide chain of organized or modern retail stores across India. Reliance’s grocery stores have become the most visible sign of the spread of organized retail. For that reason, they have borne the brunt of attacks from small store owners and political activists protesting the spread of organized retail. Some states have barred the opening of modern retail stores and the Union government has commissioned a New Delhi think tank to conduct a study on the impact of organized retail on small store owners. An earlier Mint report on the study’s findings, which are yet to be made public, said the growth of organized retail had hurt small store owners.
Reliance is also making a big push in non-grocery speciality stores, including apparel, footwear and jewellery, among others, and in coming months, according to company officials, more tie-ups with overseas retailers are expected to take shape.
“Surely, (speciality formats) attracts less attention of the political kind,” said Jayant Kochar, managing director of retail consulting firm Go Fish Retail Solutions. However, Kochar added that this “doesn’t mean that they (Reliance) are focusing less on grocery stores and more on other formats. They had plans for different formats from Day One and such formats were expected from them and are not coming at the expense of the grocery store plans.”
Reliance currently operates more than 500 stores across 3 million sq. ft of space in various formats in dozens of cities across India.