BackTrent mulls mid-sized stores for Star Bazaar chain
Noel Tata says a smaller format called Star Daily, in Pune, is doing very well and there are plans to launch a second such store shortly
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New Delhi: Tata group firm Trent Ltd, which formed a venture for multi-brand retail with Tesco Plc, is contemplating launching different formats, including mid-sized stores, for Star Bazaar to achieve profitability faster.
“We are evaluating other formats. We opened a smaller format called Star Daily in Pune, a convenience store that is doing very well. We plan to launch a second such store shortly," Trent chairman Noel Tata said in an interview to group in-house magazine Tata Review.
“We believe that these mid-sized formats will reach profitability faster," he said. Currently, Star Bazaar has 12 hypermarket stores, each spread over 40,000-80,000 square feet. Trent Hypermarket Ltd (THL) operates the Star Bazaar retail business in India.
In March, UK retailer Tesco announced the equal joint venture with Trent by picking up a 50% stake in THL for about £85 million. Tesco is the first global retailer to apply for multi-brand retailing after the outgoing United Progressive Alliance government allowed 51% foreign direct investment in the segment in 2012.
The Foreign Investment Promotion Board approved its proposal on 30 December. The Bharatiya Janata Party, which is forming the new government, said in its election manifesto that it would oppose FDI in multi-brand retailing. All eyes are on how Prime Minister-designate Narendra Modi will address the issue.
Tata said the company plans to add at least five stores every year in Maharashtra and Karnataka. “We have a large pipeline of to-be launched stores. The existing 12 Star Bazaar stores will continue and we intend to open at least five new stores every year," he said.
About the partnership with Tesco, Tata said: “Star Bazaar’s association with Tesco underlines the solid foundation of the business and is a signal of the untapped opportunity in the Indian market."
While announcing the joint venture, Tesco had said: “On completion of the transaction, THL will operate 12 stores retailing a range of merchandise, including food and grocery, personal and home-care products, home and kitchen, fashion and accessories."
Trent also plans to revamp its ‘Landmark’ brand stores by reducing focus on books and making it a “lifestyle product". “We are planning to reduce focus on books, although books are still a quarter of the turnover, and look at new areas such as technology, gifting options and sports," Tata said.
He added the store portfolio will be aligned more towards lifestyle products to reflect market realities. The company has also appointed a new leadership to drive the Landmark business.
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