After Reliance, Aditya Birla group enters the Retail Sector

By Vipin Agnihotri

Taking cue from India’s largest business houses Reliance, Tata and Bharati, the $24 billion Aditya Birla group announced its plans for the retail sector. The move will give the cement-to-telecom conglomerate a piece of the action unfolding in the organized retail trade in India.

Birla group that has recently acquired southern retail chain Trinethra launched the brand name of its store- More. In the coming years, the group will invest Rs 9,000 crore for entering into the $320 billion retail market, of which only 3 percent is organized.

According to Aditya Birla group chairman, Kumar Mangalam Birla: “The business will not be funded by any of our listed companies. The investments will be through a mix of debt and equity.”

It is worthwhile remembering that in the recent years, Reliance Industries and Bharti Enterprises have said that they would pump in Rs 25,000 crore and Rs 10,000 crore respectively for their retail ventures.

Initial signs are that new stores of Birla group will be made in two formats. First and foremost, supermarkets of less than 10,000 sq ft and secondly hypermarkets of up to 75,000 sq ft. According to company sources, the first of its retail stores would come up in Pune by next month. In the starting, company would set up around 1,000 super markets, but has not decided on the number of hypermarkets. All the different format of stores will however sport the same brand name ‘more’.

“Our value proposition will be to offer more variety, cost effectiveness and a comfortable and world class shopping environment,” pointed out Birla. At the present juncture, company has a presence in south India through Trinethra, which has 170 outlets. The group is working overtime to have a pan India presence and will eventually put up stores in big metros too.

If experts are to be believed, the move is bound to spur another round of demand for real estate across the country. The Aditya Birla group which already controls over half a million sq/ft of retail space through Trinethra, did not disclose the estimate of space needed for the planned stores.

When journalists asked whether it would look at a foreign partner, Birla clearly said that the group would not seek a joint venture partner, either domestic or overseas, for the retail foray. “We have sufficient understanding of the Indian customers mind and we are not tying up with any partner for the retail store,” pointed out Birla.

Pretty identical to Reliance, the Birla group also plans to build linkages directly with farmers so they can ensure fresh supply if fruits and vegetables to customers. In the coming months, the group hopes to hire thousands of young employees for their stores. It has hired two expatriates with expertise in running super and hypermarkets in global markets.