UK’s largest retailer Tesco Plc on Tuesday announced plans to enter the wholesale cash-and-carry business in India with an initial investment of up to 60 million pounds in the first two years.
The company has also entered into an exclusive franchise agreement with Tata group’s retail venture Trent, which will help in driving the latter’s hypermarket format Star Bazaar.
“This is another exciting development for Tesco. It complements our entries into China and the United States, giving us access to another of the most important economies in the world. Our wholesale cash-and-carry format will bring improved value, range and service to thousands of Indian businesses,” Tesco CEO Terry Leahy said in a statement.
Tesco plans to develop new wholesale outlets, which will offer a range of food, grocery and non-food products to small retailers, restaurants, kirana stores and other businesses.
Based initially in Mumbai, the business would benefit from over a decade of experience of setting up local businesses in international markets, the statement added.
Tesco’s exclusive franchise agreement with Trent will enable the Tata group firm to draw on the UK retailer’s extensive expertise and technical capability, cold-chain infrastructure and front-end services to drive the growth of its hypermarket business, Star Bazaar.
Currently, there are four Star Bazaars operational in Ahmedabad, Bangalore and Mumbai (two stores) and Trent plans to grow it to 50 stores over the next five years.
“Their (Tesco’s) wholesale cash-and-carry business will provide us with the opportunity to tap into a world class supply chain thereby delivering the best of products and services to our customers,” Trent Managing Director Noel N Tata said.
Tesco’s wholesale business would supply merchandise to Star Bazaar, enabling the two companies to benefit from the rapid development of a modern supply chain.
Star Bazaar offers a wide range of products including fresh foods, fruits, vegetables & non vegetarian products, dairy, home care, health and beauty products, apparel, home decor, gifts and household items.
It already sources over 170 million pounds worth of Indian products each year, with sourcing offices in Delhi, Bangalore and Tirupur. It also employs nearly 3,000 Indian staff at Hindustan Service centre in Bangalore, providing IT, financial and business services to the entire Tesco Group.