Bharti eyes Big Apple as starter for retail feast

Bharti Enterprises, slated to start its retail business in the first quarter next year, may acquire Big Apple — the Delhi-based supermarket chain with 65 stores. Bharti’s acquisition blueprint in the retail sector may be a replay of its telecom business, where the group built up a pan-India mobile presence by acquiring telcos such as JT Mobile in Karnataka and Andhra Pradesh, Skycell in Chennai and Hexacom in Rajasthan.

A senior source said the Bharti Group and Big Apple are at fairly advanced stages of negotiations and if price expectations match, the deal could be sealed as early as next month. He also said Big Apple has quoted its price and Bharti has given a revised offer. “Talks will resume after Christmas vacations,” he said.

Bharti plans to start retail operations in March by opening its first small format retail store in North India while the cash and carry business in partnership with Wal-Mart will start in the third quarter of next year. Acquisition of regional retail chains is likely to give Bharti a headstart in terms of locations, a readymade supply chain and operations.

Bharti plans to invest $2-2.5 billion in retail by 2015. It is planning pan-India operations and is looking at approximately 10 million square feet of retail experience across all cities in India with a population of over one million.

As western-style supermarkets take off in India and large companies enter the business, a consolidation is likely. Small regional chains, unless backed by a large group, have limited funds to expand and scale up, and will look for joint venture partners and buyers.

The process has already started. Wadhawan Retail, which runs Spinach retail chains in the west, took over Delhi’s Sabka Bazaar and Home Store as well as the management contract of Maratha Stores in Mumbai. Similarly, AV Birla group’s retail arm took over Trinethra stores in the south. Reliance Retail took over Adani Retail in Gujarat but steep valuations in other states kept it away from acquiring more.

Spinach retail buys out Sabka Bazaar

June: 2007

After Aditya Birla–Trinethra and Reliance–Adani Retail deal, more consolidation is happening among small and medium-sized retailers. Mumbai-based Wadhawan Retail, owners of stores under name ‘Spinach’ have taken over Delhi-based Sabka Bazaar and The Home Store for over Rs.100 crores.

Wadhawan has also bought 15 outlets of Mumbai’s co-operative Maratha Stores. The Home Store offers home and lifestyle products and present in nine major cities while Sabka Bazaar sells food and grocery items has 35 stores in Delhi-NCR.

The acquisitions slips nicely into Spinach’s fold as Wadhawan Food Retail had plans to open 1,500 stores in 90 cities. Currently it has 23 Spinach stores in Mumbai. It gives a good hold in the northern and Mumbai market and initially would retain the same brands as they are well-known in their respective regions and own clientele. .

The Home Store was also in need of funds to expand and looking for Rs.150 crore funding from venture capitalists to expand its operations nationally with 100 outlets. Besides this it is establishing 3 hypermarkets in northern India for Rs.15 crore.

Now, Wadhawan Retail (a retail venture of Dewan Housing Finance) would spruce up the acquired outlets to take on Reliance Fresh and Food Bazaar. Spinach earlier bought HLL’s home-delivery retail business, Sangam Direct in Mumbai.

As unorganised retailing picks pace in India, small and medium sized retailers will consolidate to scale up their operations and meet capital requirements. Also, they could then meet with problems of rising real estate prices and lack of quality space availability.