Godrej too joins retail rat race
The Rs 6,000-crore soaps-to-software major wants to use its brand equity in the retail space.
By Kala Vijayraghavan & Rajesh Unnikrishnan, TNN |
MUMBAI: The Godrej Group plans to set up a chain of retail outlets across the country as a surging economy and rising affluence create new business opportunities for one of India's oldest business houses. The Rs 6,000-crore soaps-to-software major wants to use its brand equity in the retail space and is looking at tying up with a foreign retailer, people close to the development said.
The group is understood to be in talks with the UK's Makro, which is owned by Germany's Metro. A tie-up with British retail giant Tesco could also be another possibility.
"This is not an issue I'd like to comment on at present," Godrej Group chairman Adi Godrej told ET.
The move marks a change in the group's approach to the retail business. The group derives one-third of its turnover from the FMCG business and the rest from sectors such as agri business, appliances and furniture, properties etc. It was hesitant about such a venture given the potential of a conflict with the retail trade. Godrej is a leading manufacturer of consumer goods and relies on a vast network of shopkeepers and stockists to sell its products across the country.
The group’s initiatives were therefore tentative. However, given the 35% plus growth rate in modern retail, the group is believed to have been advised by experts to cash in on the Godrej brand equity with consumers and harness the synergies of being a consumer goods player in the retail space. Also, such a move would fit in with Mr Godrej's vision of a higher degree of direct interaction with the consumer and the need to come out of a 'manufacturing mindset' and lay more emphasis on the consumer.
The identity of the foreign partner is not clear. Makro is the third-largest cash & carry wholesaler in the UK with a turnover of £1.1 billion and a portfolio of 33 depots nationally. It was owned by Nederlandse Steenkolen Handels Vereniging (SHV). In 1998, the European Makro stores were acquired by Metro, a Germany-based retail and wholesale company founded in 1964. The non-European Makro stores are still owned by SHV, except for the ones in South Africa and Zimbabwe. Those are owned by Massmart Holdings. Tesco is the UK's largest retailer and one of the world's leading international retailers.
The retail initiative may be undertaken through Godrej Industries, which holds more than 80% in Godrej Properties, handled by Mr Godrej’s son Pirojsha. At present, Godrej Properties is developing 20 million sq ft of land across India. There are clear synergies in the retail business for the group, which enjoys tremendous brand equity and has a sound understanding of the Indian consumer market through Godrej Consumer Products, Godrej Appliances, Aadhaar and now Nature’s Basket.
kala.vijayraghavan@timesgroup.com
The group is understood to be in talks with the UK's Makro, which is owned by Germany's Metro. A tie-up with British retail giant Tesco could also be another possibility.
"This is not an issue I'd like to comment on at present," Godrej Group chairman Adi Godrej told ET.
The move marks a change in the group's approach to the retail business. The group derives one-third of its turnover from the FMCG business and the rest from sectors such as agri business, appliances and furniture, properties etc. It was hesitant about such a venture given the potential of a conflict with the retail trade. Godrej is a leading manufacturer of consumer goods and relies on a vast network of shopkeepers and stockists to sell its products across the country.
The group’s initiatives were therefore tentative. However, given the 35% plus growth rate in modern retail, the group is believed to have been advised by experts to cash in on the Godrej brand equity with consumers and harness the synergies of being a consumer goods player in the retail space. Also, such a move would fit in with Mr Godrej's vision of a higher degree of direct interaction with the consumer and the need to come out of a 'manufacturing mindset' and lay more emphasis on the consumer.
The identity of the foreign partner is not clear. Makro is the third-largest cash & carry wholesaler in the UK with a turnover of £1.1 billion and a portfolio of 33 depots nationally. It was owned by Nederlandse Steenkolen Handels Vereniging (SHV). In 1998, the European Makro stores were acquired by Metro, a Germany-based retail and wholesale company founded in 1964. The non-European Makro stores are still owned by SHV, except for the ones in South Africa and Zimbabwe. Those are owned by Massmart Holdings. Tesco is the UK's largest retailer and one of the world's leading international retailers.
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The retail initiative may be undertaken through Godrej Industries, which holds more than 80% in Godrej Properties, handled by Mr Godrej’s son Pirojsha. At present, Godrej Properties is developing 20 million sq ft of land across India. There are clear synergies in the retail business for the group, which enjoys tremendous brand equity and has a sound understanding of the Indian consumer market through Godrej Consumer Products, Godrej Appliances, Aadhaar and now Nature’s Basket.
kala.vijayraghavan@timesgroup.com
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