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Birla to enter domestic retail sector

The metals powerhouse Aditya Birla group is employing people to make forays into retail business, reports Suprotip Ghosh.

india Updated: Nov 29, 2006 18:48 IST

Close on the heels of theBharti Group and Reliance, who have announced big plans to set up their retail ventures, Aditya Birla group, one of the top three industrial houses in the country, is also concretising its plans to enter the domestic retail sector.

After months of deliberation, the metals powerhouse has started hiring people for its retail business.

The group’s retail venture would be in hypermarkets or large discount stores, sources said. These are different from departmental stores. Shopper’s Stop follows the departmental store model, while Big Bazaar is the closest approximation to hypermarkets in the country today.

The company has roped in Suman Sinha, the son of former finance minister Jaswant Sinha, to head its retail venture.

People to be hired include sourcing and merchandising professionals, quality control people, experts in supply chain, store design and business development.

The company, which currently employs over 82,000 people, expects to ramp up its employee base significantly through the exercise, sources said.

Incidentally, the retail space in the country is set for a churn with Sunil Mittal-controlled Bharti and Mukesh Ambani’s Reliance getting into the race to capture the burgeoning pockets of the Indian middle class.

The reason for the interest by big houses is essentially the highly fragmented nature of the Indian retail segment. Only 3 per cent of Indian retail, which is estimated to be $300 billion, is organised, the rest being small and medium retailers. Large players include Kishore Biyani’s Pantaloon and Tata Group-owned Trent, which owns Westside.

Tatas have recently inked a venture with Woolworths of Australia, and are planning to launch a chain of consumer durable stores to be called Croma.

Bharti would be setting up a joint venture with Wal-Mart, the world’s largest retailer, and the number two company on the Fortune 500 list of companies. The entry of Wal-Mart is expected widely to be a seal of approval for the Indian retail industry.

That the Aditya Birla Group is planning to take retail to be a major part of its operations in the country is evident in the scale of hiring. This would include cash and carry and back-end operations, contrary to Bharti’s model, where only the backend will be handled by Wal-Mart, with Bharti owning the stores and the front end.

There has been widespread debate over the entry of multinational corporations in the retail segment, the latest being the Left parties threatening agitations on Monday in a note to the United Progressive Alliance.

First Published: Nov 29, 2006 18:48 IST