Coming soon to your town: Bharti Walmart

Sunil Mittal's Bharti Retail plans to roll out stores in South India soon, as part of its plans to become a national retailer, sources in the know have said.

Bharti Retail had already signed three-four properties in the southern states and was looking at booking spaces for around 50 stores by the year end, said a person involved in the transactions.

According to sources, the retailer is also scouting for properties and western and central India to open stores and is holding talks with property developers in this regard. The chain has hired a dozen persons to scout and book the properties, sources said.

On Wednesday, Mukesh Ambani's Reliance Retail announced its growth plans, focussing on hypermarkets and world-class infrastructure.

"Considering Bharti's original plans to have 10 million sq ft by 2015, it has a lot to catch up," said an analyst who did not want to be quoted.

In February 2007, when Bharti announced the foray into retail, it talked about investment of $2-2.5 billion by 2015 and $5 billion in revenues.

When contacted, a Bharti Retail spokesperson said: "Bharti Retail has announced plans to increase the number of retail stores to about 140 across India by end of this year and in support of this plan, we are sourcing real estate, pan-India."

Bharti Walmart, the joint venture between Bharti Enterprises and Walmart, the world's largest retailer, is also expected to open cash and carry stores in the South in the next 12-24 months.

Earlier, the chain said it wanted to expand presence in one region, North in this case, before entering new regions. In sharp contrast to Bharti's strategy, new entrants such as Reliance Retail and Aditya Birla have launched their operations from the South and expanded other parts of the country.

For instance, while Reliance Retail opened its first store in Hyderabad, Aditya Birla Retail acquired south-based retail chain Trinethra in late 2006 to launch its operations.

According to Susil Dungarwal, founder of Beyond Squarefeet, a mall advisory firm, southern cities such as Bangalore and Chennai offer reasonable retail rents compared to other cities and limited supply. "South offers quality real estate at affordable rents,'' he says.

Currently, Bharti has a total of 70 stores, including 64 Easy Day stores and six Easy Day Market stores, in Punjab, Haryana, UP, Rajasthan, among others.

The retailer recently appointed former Hypercity CEO Andrew Levermore as its chief operating officer to spearhead  operations.

Retail consultants say Bharti Retail will have to face challenges in scaling up in South as the region already has a established organised retail market with the presence of  majors such as Spencer's, Aditya Birla, Reliance Retail, Nilgiris, among others.

According to estimates, India has a total retail market of $385 billion and organised retail accounts for five per cent of that. The share of modern trade is expected to touch 14 per cent by 2013.

The penetration of modern trade is expected to be as high as 25-30 per cent in the South, compared to five per cent elsewhere in the country.

Image: Policemen stand inside the first cash-and-carry Wal-Mart store during its inauguration ceremony in Amritsar. Photograph: Munish Sharma/Reuters