New direction

Mumbai, April 18: Marks and Spencer Group has teamed up with Mukesh Ambani’s Reliance Retail to form a joint venture, which will set up large format stores that will market the British retailer’s products in the country.

Marks and Spencer (M&S) will hold a 51 per cent stake in the venture, while Reliance Retail will have 49 per cent. The two partners will seek the requisite approvals from the Foreign Investment Promotion Board (FIPB).

M&S is already hunting for a location for its first store under the new alliance. “The first store will either be in New Delhi or Mumbai. Reliance is working with real estate people to fix the location,” said Mark Ashman, CEO of Marks and Spencer Reliance India.

It will try to open at least 50 stores in the country over the next five years. M&S has 14 stores across the country, which are run under a franchisee arrangement with Planet Retail.

Today’s announcement is part of M&S’s plans to grow its international business by 15 to 20 per cent of group revenues within the next five years.

“We will file an application seeking FIPB clearances in the next couple of weeks. The initial investment will be £29 million in cash or kind. We have not yet decided the exact financial details of our investment. This is part of our accelerated growth strategy for India,” said Ashman.

The joint venture will have the right to operate M&S stores in India selling items such as women’s, men’s and children’s clothing as well as homeware.

“Our aim is to have large format stores so that we can introduce categories such as children’s clothing, homeware, and gifting items,” said Ashman.

The new stores will be spread over 5,000 square feet.

Ashman said the retailer also planned to increase its sourcing of raw materials from India “so that we can bring down the cost of our products”.

“At the moment, our products are slightly more expensive than in the UK. We want to bring them on a par with the UK prices,” he added.

“Our franchisee agreement (with Planet Retail) is due to end this year. But we are looking forward to expanding the agreement. We are not going to close any of our franchisee stores,” Ashman added.

“M&S is a very well respected brand globally. At Reliance, we have always strongly believed in the power of the Indian consumer market. We are excited to partner M&S,” Mukesh Ambani, chairman of Reliance Industries, said.

“We want to combine Reliance’s understanding of the Indian marketplace and its traditional strengths in technology, infrastructure, logistics and training with M&S’s legendary retailing and product development capabilities to deliver a delightful experience for Indian consumers,” he said.