The British iconic retail giant, Marks & Spencer (M&S), which is present in India for over seven years, is going on a major expansion mode in the country. M&S has recently signed an agreement with Reliance Retail with the goal of establishing itself as a major retail brand in India. The company feels India offers an exciting long term opportunity to expand its presence given the swelling middle class population looking for quality products.
NDTV: What would you like to say on your tie up with Reliance Retail when you are already present into the Indian retail market?
Stuart Rose: Actually we wanted to move in more quickly into this market if we look at the growth story of Indian retail sector. But I think we were slow to capitalize at the immense opportunity in retail sector here. Our partner Reliance Retail has got the infrastructure and knowledge of the local market, which will match our retailing skills, and I am very confident it will work.
NDTV: Do you feel that this might be slightly a delayed attempt at the Indian market?
Stuart Rose: I think we have been slow because we had to concentrate on getting our UK business back in good state. Our UK business has tough 3-4 years but now we are putting it back on track and you can’t do overseas expansion if your core business is not working. Now it is time to move forward in a vibrant economy like India.
NDTV: How will things change in the new partnership avatar as oppose to standalone Marks & Spencer?
Stuart Rose: You will see larger Marks & Spencer and see more of them more quickly. The partnership with Reliance will enable us to show the customers in India the fabulous range of merchandise such as women’s, men’s and children’s clothing as well as home wares.
NDTV: Will we expect first a certain segment to roll out into the Indian market?
Stuart Rose: After getting FDI permission we need to get regulatory things sorted out. This may be done by the end of the year and I am sure then you’ll see some stores soon after that. The main hurdle for us is to acquire retail space, which Reliance can help us with, and thereafter we’re hopeful to expand steadily.
NDTV: Is the JV initially going to be riding on Reliance’s retail estate or is this going to be a fresh approach in terms of location, stores and branding?
Stuart Rose: It is a true and independent partnership set up with Reliance Retail. Both the companies have the similar philosophy about the opportunity in India. Reliance has seen explosive growth in the past 20 years to emerge as a world-class company and we want to work with people like Mukesh Ambani to drive our business.
NDTV: What makes you choose Reliance over the others?
Stuart Rose: In any relationship the most important thing is not only the technical skill that people bring but also the understanding of each other. I think we’ve got a good understanding between the two management teams.
NDTV: But why not anyone else?
Stuart Rose: Well, you have to make a decision. So, it is always difficult! It is like choosing a partner in your life and when you find somebody who is good, you have a marriage.
NDTV: Are we going to see any partnership in Reliance’s existing stores?
Stuart Rose: The answer is yes because that wouldn’t be unhealthy.
NDTV: What do you see in India beyond the fact that it is a big opportunity?
Stuart Rose: I think India offers a fantastic opportunity and I expect that the Indian market n the next 5-10 years could be the biggest overseas revenue earner. At the moment only 7 per cent of our revenue comes from overseas market and we plan to double it in a very short term and India would absolutely be the place where it happens.
NDTV: Should Indians be convinced that it is going to be India over China?
Stuart Rose: Well, I would be because India is slightly ahead in this game. There are few factors that favours India like English speaking population, the way Indians are inclined to espouse new thinking, better understanding of the brand, and the country’s legal system.
NDTV: How fast are you targeting your growth in India?
Stuart Rose: We have come from nowhere and now we’ve offices in Delhi, Bangalore and Mumbai. Over the next five years our production in India could double because the country has all the right elements.
NDTV: But what could India offer beyond just garments in terms of sourcing?
Stuart Rose: The real benefit in India for us is it will give us the ability to make sure that our products are much more affordable and still offering the same Marks & Spencer value in quality.
NDTV: What is the timeline in terms of rolling out new stores?
Stuart Rose: Well, we are looking at 30-50 stores in the next 3-4 years. I suspect that we might go faster than that but let’s get the few stores open first.
NDTV: Are you looking to first revamp the already existing Marks & Spencer stores before rolling out new stores?
Stuart Rose: I have visited several stores in Delhi and Mumbai and the only disappointment that I have is that these stores doesn’t give you the true representation of Marks & Spencer. So we’re going to give you bigger stores. I would be very happy if we could open one store before December this year.
NDTV: May people have been expecting you to move into the food segment specially through JV with Reliance so what is your thinking on that front?
Stuart Rose: Traditionally when we operate overseas our business consists of 90 per cent general merchandise clothing but we do sell fruit and grocery items. We have no immediate plans to move into food segment in India but I am very anxious to develop a textile business.
NDTV: Will some of the private labels of Marks & Spencer’s UK outlets be available in the company’s Indian stores?
Stuart Rose: Yes, anything we’ve got in the UK will be available in our Indian stores. Thus, you could see some of our new brands like the new ‘Autograph’ menswear collection.
NDTV: Would it be possible for you to imagine some synergy with a brand like Vimal?
Stuart Rose: Well, I think no. You will see a well established independent brand Marks & Spencer and we’ll trade as Marks & Spencer. I think we can carve out a niche for ourself.
NDTV: How would you position Marks & Spencer?
Stuart Rose: It will be a mid market, well priced, fantastic quality and a fashionable store. Since India is a price sensitive market Marks and Spender will not target itself as most expensive brand.
NDTV: Do you think at any stage M&S and Reliance together will need to acquire other brands to expand?
Stuart Rose: Absolutely no, because we are convinced that there are plenty of opportunities to drive M&S brand in India. Since we are not short of capital we’ll be investing more over a shorter period of time.
NDTV: Does this joint venture actually put in a clause that doesn’t allow Reliance to look at tie-up with other brands in textiles?
Stuart Rose: No because all we would want to do is to protect our existing brands and brand positioning. Reliance is an ambitious company and they have got other deals but I believe it is not in Reliance’s interest to do a deal with Marks & Spencer and compromise the deal with someone else.
NDTV: What kind of rate of growth you expect from emerging economies?
Stuart Rose: Certainly the rate of growth from emerging economies would be substantially ahead as it has been for the last 2-3 years than our UK business. But there are still opportunities in the UK but we want to catch up fast in overseas business.
NDTV: Are you going to rap up the franchisee part?
Stuart Rose: No franchisee part is important for us because it allows us an entry into smaller markets like Greece. One thing about India is that it is a vast country and we know so little about India and Reliance knows so much. So I think the joint venture would be a powerful force.
NDTV: Do you think smaller towns and cities are more attractive than larger metros?
Stuart Rose: No I think what we want to do first is to get our footprint down in the big cities. The one difference I have noticed is India is of course the transport infrastructure is more complicated than smaller cities.