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Friday, January 27, 2012

Dutch retailer Spar eyes more tie-ups to expand

This story first appeared in DNA Money edition on Thursday, January 19, 2012.

Spar International, one of the world’s largest independent food retail chains, is scouting partners to tap newer markets in India with its supermarket and hypermarket stores.

The company currently has 10 operational stores in India under a licensing agreement with Dubai-based Landmark Group’s Max Hypermarkets India Pvt Ltd.

Under the licensing deal, Spar offers knowledge transfer and international best practices, while the Indian partner takes on the responsibility of the entire business operations including capex outlay, day-to-day operations and management control.

Gordon Campbell, managing director, Spar International, said, “We are exploring new partnerships for expanding presence in India, especially in the eastern and southern regions.” Campbell was in India to participate in the Retail Leadership Summit organised by Retail Association of India.

The company has already tasted success with this approach in countries such as China and Russia and is confident of replicating it in the Indian market.

Asked whether discussions have been initiated with prospective partners for the new regions, Campbell said, “We intend to get on with that exercise soon. The partnerships will be for both large supermarket stores spread across 1,000 square metres (10,763 sq ft) to the standard range of hypermarket stores.”

Spar’s hypermarket stores generally occupy retail space between 3,000 square meters (32,291 sq ft) and 7,000 square meters (75,347 sq ft).

The Dutch chain’s India business is pegged at euro 70 million and currently has 10 stores — three in Bangalore, two in Hyderabad and one each in Mangalore, Coimbatore, Delhi, Pune and Gurgaon.

Of the 10 stores, five were added last year. The company will open its second store in Pune next month. Spar has set a target of 20 operational stores within the next three years.

“We have had a great response for our retail stores in India and it is quite heartening that majority of these outlets are profitable. A few new ones will enjoy that status after completing six months of business from the time of their launch,” he said.

On the company’s expansion plans with Max Hypermarkets, Campbell said, “There are over 20 retail sites for new Spar stores in active consideration across the geographies outlined in the licence agreement with them.”

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