Nine months after the world?s largest retailer, Wal-Mart of the US, chose Bharti Enterprises as its India entry partner, the two on Monday signed an agreement setting a soft target of 15 cash-and-carry stores over the next five to seven years.
The stores will come up only in Tier-II and Tier-III cities, not in metros. The first store, slated to open by the end of 2008, and all other stores thereafter will range in size between 50,000 sq ft and 2 lakh sq ft. They will sell to caterers, small hotels, restaurants and kirana shops.
Wal-Mart?s India head, Raj Jain, said, ?There are 12 million kirana outlets in the country, of which less than 1 million are served by big FMCG companies directly. We plan to provide them a wide variety of merchandise through our cash-and-carry stores.?
The $326-billion retail goliath and Bharti Enterprises will hold 50% each in the joint venture, christened Bharti Wal-Mart Pvt Ltd, which will employ 5,000 people in the next five years. Both Rajan Mittal, joint MD, Bharti Enterprises, and Jain refused to disclose financial details of the deal.
In another agreement, Bharti Retail, a wholly owned subsidiary of Bharti Enterprises, entered into a franchise agreement with Wal-Mart Inc, under which the overseas partner would provide it technical support, including manpower training, for retail operations. The first Bharti retail outlet will come up in the first quarter of next year.
Jain said the cash-and-carry stores would offer goods and merchandise to other large retailers and there would be no special pricing for Bharti?s front-end stores. Mittal said its stores would also be free to source from other avenues.
On whether the Bharti retail outlets would bear the Wal-Mart brand name, Mittal said, ?The option for us to use the brand is open. However, we still haven?t decided on that.? Bharti Retail had earlier announced an investment of $2.5 billion in its front-end retail stores until 2015.