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Business – Bharti’s position in retail story

Bharti Retail, which has rolled out only seven stores so far, quite small compared to rivals’ pace and general expectations, says it’s not chasing numbers and will continue to move slow unless it has understood the dynamics of retail. The company, which formed a joint venture with Wal-Mart (Bhart-Wal-Mart) amid much fanfare to be able to provide a strong backend to its retail stores, now says its growth is not dependent on Bhart-Wal-Mart’s cash and carry venture.Compared to Reliance’s one-store-a-day approach, Bharti’s pace has been almost one-store-a-month. It has opened seven stores in six months, as against around 700 stores of Reliance in two years. “We plan to have pan India presence, but are in no hurry to roll out stores everywhere. Our aim is to understand the dynamics of retail and evolve the right model. We are not here to prove anything in a year or two, but looking at 5-10-year period,” says Bharti Retail president and COO Vinod Sawhny. He didn’t give any specific number of stores the company planned to open in a year, but said “we are being conservative”. “It’s easiest to tie-up with logistics and warehouse firms and roll out a number of stores, but that is not what we are looking at. We are trying to evolve a model that will serve masses,” Mr Sawhny said. He didn’t clarify how long it might take Bharti to evolve a “massification” model. A tie-up with Wal-Mart, world’s largest and perhaps most efficient retailer, was seen as helping Bharti achieve precisely this model. It’s been almost two years since the two announced a tie-up, but the joint venture is still preparing to roll out wholesale stores. According to industry observers, the slow progress of the joint venture is perhaps holding back a faster rollout of Bharti stores. “We are not dependent on Bharti-Wal-Mart nor are they dependent on us,” says Mr Sawhny, adding that even after Bharti-Wal-Mart sets up its complete operation, it would only be one of the many suppliers to Bharti Retail. So the success of Bharti Retail is not dependent on the success of the joint venture company, the company feels. Bharti stores today source around 40% of supplies from a distribution centre set up by Bharti-Wal-Mart. Bharti stores—2,500 sqft to 4,000 sqft in size—sport Easy Day’ brand name and sell food and grocery in neighbourhood store format. It has also introduced a private label ‘Great Value’ for its grocery items. The company would continue to focus on neighbourhood stores, but plans to launch medium (30,000-40,000 sqft) and hyper (70,000-80,000 sqft) formats later. Bharti is also looking at inorganic route to expand. “We are open to acquisition, but nothing significant has materialised,” Mr Sawhny said.

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September 3, 2008 Posted by | Economic Tims | Leave a comment