‘We favour foreign direct investment in retail sector’

When he drew up ‘Towards 2010’ plan, Gordon Campbell, managing director, SPAR International, circled India, along with other emerging markets, as an important country to be in. After having achieved that, he told DNA it is now important for the company’s growth.

There is a lot of debate going on to get foreign direct investment (FDI) into multi-brand retailing. If that is allowed, how would things change for you in India?
That (FDI into multi-brand retailing) would not affect us, because our development in India is through the Dubai-based Landmark Group. (SPAR is in India through a licensing agreement with Landmark Group). In general, though, we favour it because further investment by international retailers, particularly, in the areas of back-of-house operations would help to improve the supply chain. It would improve quality of products, quality of supply chain and reduce wastage.

As you expand in India, would you look at new partners?
No, we are happy with Landmark Group.

Are you looking at sourcing products from India for other markets?
We are looking at buying rice from India for some European markets. That is a possibility in the future.

What are reasons for importing it (rice) from here?
Firstly, India has a wider variety of rice. Secondly, as business grows, we would be buying in large quantities and would be able to get very good prices. We do that in Europe with products such as olive oil, which we source from Italy.

How has recession changed retail business in the Western markets?
Business has been very challenging in Western Europe since the financial crisis started, which was then followed by recession. But people have to eat, so the food business is somewhat protected. People, however, have changed what they eat and how they buy. So, promotions and private labels have become important. People are buying the necessities. They are not buying as much on impulse. Also, they are shopping from more stores. This has made our business very competitive, and we have become very price aggressive.

How important are private labels in India for you?
In the non-food section, there are lots of private labels. Our food labels are now well under way and will significantly increase over the next twelve months. In a market like India, we expect private labels to pick up once consumers realise they offer value at much cheaper price in comparison to branded products. Our non-food labels are priced 50% below branded products. In food, the saving is 25-30% when consumers go for private labels.

The Winning Strategies plan that you have put in place for SPAR includes growing though acquisitions; will you take this growth route in India too?
Not now. In Western Europe, it is the only way we can grow significantly, because a lot of markets are already saturated. I think the Indian market is nowhere near that and won’t be for a long time.

How do you plan to ramp up business in India?
We have set up five stores in 18 months. Our plans are now to go north and west to enter Delhi and Pune. We will open two hypermarkets in Delhi by November. We will enter Pune next year. By 2013, we’ll have 25 stores, which will make us one of largest players here.