Tesco has ruled out a move into UK wholesale after it announced the launch of a C&C business in India, marking the next phase of its international expansion.
International director Philip Clarke, who will oversee the new Indian operation, said there was no prospect of a move into the domestic wholesale business although a push in “less developed markets” would stay on the agenda.
“In developed markets the cost of launching a wholesale business tends to be very high,” Clarke said.
Tesco is to plough up to £60m into the Indian venture over the next two years, targeting the country’s 15 million family-run ‘kirana’ businesses as well as restaurants and other small retailers. The first of three wholesale ‘hubs’ will open in Mumbai in 18 months’ time under the Tesco fascia, with centres in Delhi and Bangalore to follow.
In a related move, Tesco is to advise Trent, the retail arm of Indian conglomerate Tata, on the development of its embryonic Star Bazaar hypermarkets. Star Bazaar currently comprises four outlets but plans to grow to 50 over the next five years. It will be supplied by the new Tesco wholesale business.
Clarke denied Tesco would get a hostile reception from local businesses. “They will judge us not by what we say but by what we do,” he said. “Hopefully they will become loyal customers. We will give them prices they don’t expect and quality they won’t believe.”
Tesco remained “very keen on retail” if the Indian authorities liberalised the retail market, he added, but said there were no signs it would open up in the future.
Clarke played down talk of competition with Wal-Mart, which entered the market last year via a tie-up with Bharti. Tesco had previously held discussions with Bharti in 2006. “I don’t think that handed the advantage to Wal-Mart but the fact both companies are here is good for the market,” Clarke insisted. “It would’ve been nice to be first but what matters is to build quality. Trent has hypermarkets open here already, which I don’t think Wal-Mart has.”
International director Philip Clarke, who will oversee the new Indian operation, said there was no prospect of a move into the domestic wholesale business although a push in “less developed markets” would stay on the agenda.
“In developed markets the cost of launching a wholesale business tends to be very high,” Clarke said.
Tesco is to plough up to £60m into the Indian venture over the next two years, targeting the country’s 15 million family-run ‘kirana’ businesses as well as restaurants and other small retailers. The first of three wholesale ‘hubs’ will open in Mumbai in 18 months’ time under the Tesco fascia, with centres in Delhi and Bangalore to follow.
In a related move, Tesco is to advise Trent, the retail arm of Indian conglomerate Tata, on the development of its embryonic Star Bazaar hypermarkets. Star Bazaar currently comprises four outlets but plans to grow to 50 over the next five years. It will be supplied by the new Tesco wholesale business.
Clarke denied Tesco would get a hostile reception from local businesses. “They will judge us not by what we say but by what we do,” he said. “Hopefully they will become loyal customers. We will give them prices they don’t expect and quality they won’t believe.”
Tesco remained “very keen on retail” if the Indian authorities liberalised the retail market, he added, but said there were no signs it would open up in the future.
Clarke played down talk of competition with Wal-Mart, which entered the market last year via a tie-up with Bharti. Tesco had previously held discussions with Bharti in 2006. “I don’t think that handed the advantage to Wal-Mart but the fact both companies are here is good for the market,” Clarke insisted. “It would’ve been nice to be first but what matters is to build quality. Trent has hypermarkets open here already, which I don’t think Wal-Mart has.”
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