South African supermarket chain heads for India

Monday, 25 August 2003, 07:00 Hrs
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Leading South African supermarket group Shoprite Holdings is set to enter the Indian market with its first concession store opening in Mumbai in November.

JOHANNESBURG: Shoprite Holdings has 641 stores in 14 countries across Africa, with the Indian venture being part of its plans to meet its objective of earning half of the company's profits from outside South Africa in the medium term.

"We can go to town in the Indian market," said Shoprite chief executive Whitey Basson.

"However, I don't believe we will achieve the full potential of the Indian market in my lifetime, because it is a huge market of a billion people."

Basson said the retail market in India was now at the stage where the South African market was in the 1960s. He said more than 90 percent of the Indian market was served by small enterprises and hawkers, with practically no major chain stores in the country.

However, this sector was rapidly transforming, with indications that the establishment of shopping centres was the direction in which the Indian retail sector was moving.

This development includes the international trend to have an anchor tenant, which is where Shoprite had an edge. It is currently the major tenant at many of the largest shopping centres in South Africa.

Basson said the opening of the Mumbai store would give the company the opportunity to refine its business model and adapt it to the unique Indian business culture before further extensions were undertaken.

He pointed out that even if only 10 percent of Mumbai's population of 15 million were to become Shoprite customers, they would be more than the company has at any of its South African cities.

But South African suppliers who are rubbing their hands in glee at the prospect of expanding their markets to India may have to keep their hands folded for a while at least. For one, India is largely self-sufficient in the kind of goods the store will stock.

Coupled with the current unfavourable exchange rate against the dollar, the recently-initiated trilateral alliance between Brazil, India and South Africa is expected to make Brazil a serious competitor to South Africa.

Basson is convinced most of the stock Shoprite would need would be available in India itself. He is also very optimistic about the opportunities in India.

"India is one of the only two countries in the world where you have a market of over a billion people. India will not serve as a gateway to Asia or any other place. India is a gateway to India itself."

Source: IANS

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