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M&S, Reliance sign retail JV |
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Retail chain Marks & Spencer Group Plc (M&S) has taken a majority 51 per cent stake in a new joint venture with Reliance Industries’ retail subsidiary, which will hold the remaining stake.
Retail chain Marks & Spencer Group Plc (M&S) has taken a majority 51 per cent stake in a new joint venture with Reliance Industries’ retail subsidiary, which will hold the remaining stake.
The value of the initial investment into the joint venture will be up to 29 million pounds, in cash or in kind, between the two companies. Both companies have agreed to provide further funding in the future.
The partnership aims to establish the UK-based Marks & Spencer, a leading retailer of food, clothing as well as home products as a major retail brand in India.The agreement is subject to the satisfaction or waiver of certain conditions, including approval by the Foreign Investment Promotion Board.
The new joint venture, which will have the right to operate Marks & Spencer stores in India, aims to open at least 50 outlets over the next five years.
According to a joint press release, the Planet Retail, M&S’s existing franchise partner in India, will continue as a franchisee in respect of the 14 existing franchise stores.
This announcement is part of Marks & Spencer’s plans to grow its international business to 15-20 per cent of group revenues within the next five years. Stuart Rose, chief executive, Marks & Spencer, said there is potential for M&S to become a major retail brand in India.
The tie-ups marks the first major international alliance by Reliance Retail Ltd and comes after the world’s largest retailer Wal-Mart Inc entered into a pact with Bharti Enterprises.
Marks and Spencer-Reliance India (M&S Reliance) will open its first outlets in the country in the next six-nine months once the joint venture gets the government’s approval.
The average size of the stores will be 20,000 sq ft, which will be three to four times larger than that of the current stores of M&S in the country. The 14 M&S stores, currently run by its franchisee Planet Retail, range from 3,000 sq feet to 20,000 sq feet.
The joint venture between Mukesh Ambani’s Reliance Industries and UK’s retail major M&S, will sell men’s wear, ladies wear, kids wear, gifts and home furnishings in the 50 stores planned in the next five years.
The JV will create at least 2,550 jobs in the next five years. M&S, in its new venture, will target the burgeoning middle class around which Indian retailers such as Pantaloon, Aditya Birla, RPG’s Spencer’s are building their businesses.
The new JV will also source higher merchandise from India to cut costs and lower prices. M&S-Reliance will source half of its products from India going forward.
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