European Retailers Target India

MUMBAI – India’s burgeoning middle class is proving an enticing target for European retailers.

Britain’s Marks & Spencer is reportedly looking for joint venture partners in India, according to a news report, and French furniture maker Gautier and retail giant Carrefour detailed plans Monday to set up operations on the subcontinent as well.

Three or four companies are keen on partnering with Marks & Spencer (other-otc: MAKSYnews people ), which will own 51% of the venture, the Economic Times reported Monday, citing an anonymous source. The company already has around 20 stores in Indian cities, operated by the Planet Retail brand.

Earlier this month, Marks & Spencer Chief Executive Stuart Rose said the company was looking to expand into the Indian market, with a focus on cities like New Delhi, Mumbai and Bangalore. He also announced plans to enter China on a wholly owned rather than a franchise basis. (See: “ M&S Looks To China For Growth”) The company’s first store in Shanghai will open next year.

Britain’s largest clothing retailer reported a 40% rise in net profits for the six months to Sept. 29.

In India, where single-brand retailers can own up to 51% in joint ventures, the company is reportedly planning to make a foray into food and home furnishings under its new format.

French furniture maker Gautier said Monday it will enter the Indian retail market by year-end, with a range of furniture for children and infants. It is looking to open outlets ranging from 20,000 to 40,000 square feet, and is scouting around for a local partner for a joint venture.

“The escalating lifestyle aspirations of the new-age Indian consumers along with the retail industry boom sweeping through the country has prompted our company to seriously look at establishing its presence in the Indian market,” Gautier Chairman M. Dominique Soulard said in a statement.

Also Monday, the head of Carrefour was quoted as saying it would choose an Indian supermarket partner early next year and plans to launch a cash and carry venture under its own brand in 2009.

Carrefour has identified “two or three potential partners” and plans to make a final decision in the first quarter of 2008, Chief Executive Jose Louis Duran told La Tribune newspaper.

India’s $350 billion retail industry–dominated by mom-and pop stores–is expected to double by 2015. The government does not allow foreign retailers selling multiple brands to set up shop in the country, but Wal-Mart (nyse: WMTnews people ) recently entered the market in a cash-and-carry venture with Bharti Enterprises. Plenty of protests greeted the U.S. retailing giant over its entry, with small-scale retailers saying millions would lose their livelihoods if both foreign and domestic firms brought radical change to the retail market.

With India’s economy expanding at around 9% every year, the ranks of the rich are steadily rising. Retail consultancy Technopak Advisors estimates there are now 1.8 million households earning $100,000 or more per year and spending about $9,000 annually on luxury goods and services. That number is growing by 14% annually and represents a market potential of about $18 billion.

But there still aren’t many customers for brands like Cartier, Gucci (other-otc: GUCGnews people ) and Chanel, the firm says, mainly because India’s rich have different priorities, like housing, education, automobiles and consumer electronics. And the main craze in India is for jewelry, accounting for 27% of the luxury market pie.

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