Marks & Spencer JV eyes food retail business
This follows government's move to allow Swedish furniture retailer IKEA to operate its cafes under the single-brand retail licence.
MUMBAI: British retailer Marks & Spencer (M&S), which operates a joint venture with Mukesh Ambaniled Reliance Retail, plans to move the foreign investment promotion board (FIPB) seeking permission to start food retailing in India. M&S wants to bring in its food business as part of the existing single-brand foreign direct investment ( FDI) approval which currently operates more than 28 stores selling clothing and home products in the country.
This follows the government's move to allow Swedish furniture retailer IKEA to operate its cafes under the single-brand retail licence. India raised the FDI limit in single-brand retail to 100% in January 2012.
The JV between Marks & Spencer and Reliance Retail is expected to approach FIPB, the agency that approves all foreign investments in the country, after the Centre issues clarifications broadening the scope of single-brand retailing in April, said three people briefed on the matter.
"We are expecting some revised definitions on singlebrand retail after clearances to Ikea and Decathlon, and we would move accordingly," said a person cited earlier.
India has turned flexible on some of the stringent single-brand retail clauses to attract more FDI in recent months. M&S has already started booking larger store locations in new malls to roll-out its food business, which is its biggest unit by revenue. A spokesperson for M&S India declined to comment on speculations about future business plans of the retail major.
A second source privy to the retailer's plans said that M&S has had meetings with commerce ministry officials before moving a formal application on food retailing. M&S is likely to sell only packaged foods — deli, bakery and salads — and products that are "unique to their stores" . It will keep its food business as part of the fashion and home products retailing in India, though it operates standalone food express stores in the UK.
The potential of food and beverage (F&B) market has attracted the interest of marquee global fine dining restaurants to fast food giants, despite India's slowing consumption story. The segment appears to have outpaced rivals in their fight for the consumer's share of the wallet.
Over the last few years, M&S has reported a flagging clothing business even as its food retailing performed strongly in the UK. The food retailing business is now the top revenue grosser with 4.7 billion pounds followed by clothing and home products at 4.2 billion pounds. The latter saw sales decline 0.9% while food retailing reported 3.9% growth in 2012.
M&S chief executive Marc Bolland has been under pressure to step up growth in key emerging markets — China, India and the Middle East. The company's clothing and home products business has faced the heat from aggressive fast fashion giants like Zara in its home country, making a case for bigger international operations that crossed 1 billion pounds last year.
This follows the government's move to allow Swedish furniture retailer IKEA to operate its cafes under the single-brand retail licence. India raised the FDI limit in single-brand retail to 100% in January 2012.
The JV between Marks & Spencer and Reliance Retail is expected to approach FIPB, the agency that approves all foreign investments in the country, after the Centre issues clarifications broadening the scope of single-brand retailing in April, said three people briefed on the matter.
"We are expecting some revised definitions on singlebrand retail after clearances to Ikea and Decathlon, and we would move accordingly," said a person cited earlier.
India has turned flexible on some of the stringent single-brand retail clauses to attract more FDI in recent months. M&S has already started booking larger store locations in new malls to roll-out its food business, which is its biggest unit by revenue. A spokesperson for M&S India declined to comment on speculations about future business plans of the retail major.
A second source privy to the retailer's plans said that M&S has had meetings with commerce ministry officials before moving a formal application on food retailing. M&S is likely to sell only packaged foods — deli, bakery and salads — and products that are "unique to their stores" . It will keep its food business as part of the fashion and home products retailing in India, though it operates standalone food express stores in the UK.
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The potential of food and beverage (F&B) market has attracted the interest of marquee global fine dining restaurants to fast food giants, despite India's slowing consumption story. The segment appears to have outpaced rivals in their fight for the consumer's share of the wallet.
Over the last few years, M&S has reported a flagging clothing business even as its food retailing performed strongly in the UK. The food retailing business is now the top revenue grosser with 4.7 billion pounds followed by clothing and home products at 4.2 billion pounds. The latter saw sales decline 0.9% while food retailing reported 3.9% growth in 2012.
M&S chief executive Marc Bolland has been under pressure to step up growth in key emerging markets — China, India and the Middle East. The company's clothing and home products business has faced the heat from aggressive fast fashion giants like Zara in its home country, making a case for bigger international operations that crossed 1 billion pounds last year.
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