ANOTHER big corporate is entering the retail business, but not in the controversial food and grocery segment as speculated earlier. The $4.5-billion Mahindra & Mahindra Group has zeroed in on urban lifestyle retail. According to sources in the retail industry, the group has appointed key personnel, including the CEO. The retail division will be headquartered in Bangalore.
Sources said it is “a niche segment related to urban lifestyle that is being targeted”. The retail foray will be through Mahindra Intertrade, a subsidiary of M&M that has been selling LEGO and other kids products. M&M is “not looking at a Bharti-Wal-Mart type of tie-up”, said a source in the retail industry.
M&M has already appointed a senior official from the Alfatim Group, a diversified Dubai-based conglomerate, as the CEO. The HR, commercial and finance heads for the retail business have also been appointed.
Sources said the venture may focus on top-end, niche lifestyle products like antiques, high-end apparel, home decor items, toys, jewellery, entertainment and wellness products. Retail analysts said this is a safe entry into a sector that has become a political hot potato.
Urban lifestyle is too niche to ruffle any feathers and the margins are fat enough to make bottom line sense. Some retail debutantes like the Godrej Group have combined the two with the Nature’s Basket line of organic veggies, fruit and herb stores.
However, the crucial pull factor in urban lifestyle retail are top international brands. So, M&M may go in for partnerships or master franchise agreements with some global lifestyle brands, retail analysts said.
M&M isn’t the only large local business group to move away from food and grocery towards a niche lifestyle focus. Earlier, the Munjals of Hero Group decided on this route with the Oma chain of stores after contemplating a fullfledged retail foray. The Burmans of Dabur have also decided to focus on the health and wellness segment to leverage their competence in that area.
Increase in disposable incomes and the real estate boom have also helped spur investment interest in these highend, niche retail segments. Even mass market retailers like Reliance are looking at this option. Reliance is in talks with high-end foreign labels for a partnership.
The Tata Group, already into mass market lifestyle with the Westside chain of stores, recently tied up with the Benetton Group’s Sisley brand for five years. A strategic partnership has been signed between Benetton and Trent, as part of which the latter will manage and operate Sisley stores.