UK retail major Marks and Spencer (M&S) plans to exit from its six-year old franchisee deal with Planet Retail
NEW DELHI: UK retail major Marks and Spencer (M&S) plans to exit from its six-year old franchisee deal with Planet Retail as part of the company's effort to focus exclusively on the joint venture with Reliance Retail.
As part of the strategy, Marks and Spencer Reliance India Private Ltd, the joint company floated by M&S and Reliance, will take over the 14 existing franchisee stores of Gurgaon-based Planet Retail in the country.
"The JV is looking at taking over the existing franchisee stores that we have with Planet Retail. While this will be a staggered approach, and in due course of time the franchisee agreement with Planet Retail will come to an end," Marks and Spencer Reliance India Private Ltd Chief Executive Officer Mark Ashman said.
M&S is holding discussion with Planet Retail on the modalities of eventually managing the 14 stores. The original franchisee agreement between M&S and Planet Retail had been signed back in 2001-02.
M&S holds 51 per cent stake in the new JV company with Reliance Retail which was signed in April this year. The new JV plans to pump in 29 million pounds (about Rs 230 crore) in the Indian market over the next five years and set up 50 stores.
The company is also aiming for increasing sourcing from India. "In next five years, we are looking at sourcing around 70 per cent of the product by volume to be sold in India sourced from the country itself. This is a critical part of our strategy which would give us a price competitive advantage," Ashman said.
The company has launched a two-pronged strategy with regard to increasing the quantum of sourcing.
"Besides increasing the volumes of product sourced from our existing suppliers in India, we will also increase the total number of suppliers who will source to our company," Ashman added.
M&S had also set up a sourcing office in India 18 months back and he said this office would remain an independent entity of the company.
The Foreign Investment Promotion Board (FIPB) had on July 4, approved the M&S 51 per cent investment in the JV, one of the 28 such approvals granted by the government.
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