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Noel Tata outlines his vision on retail

Last updated on: June 27, 2011 14:46 IST

Noel Tata outlines his vision on retail

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Arijit Barman, Raghavendra Kamath

At 54, Noel Tata is a believer. For him, once you are in retail, you stay sold to it. Over the years he has played a pivotal role in the evolution of the retail strategy for the entire group as the MD of Trent, the flagship retail company of the Tata Group.

Responsible for many foreign tie-ups, strategic rollouts and acquisitions, he is now giving Tata International, the trading arm of the conglomerate, a retail twist.

As its new managing director, he is spearheading the entry into footwear retailing with Tashi stores. In a rare interaction, Noel Tata outlines his vision.

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Image: Noel Tata, managing director, Tata International
Photographs: Reuters
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Noel Tata outlines his vision on retail

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Inflation is the talking point today. Do you think modern retail has been successful in reducing the impact of high food inflation?

Hypermarkets have certainly tried to offer customers lower prices and better value on the products they sell. High rents, very high electricity charges (highest among all users) and recently imposed taxes such as service tax on rentals, reduce our ability to lower prices further.

So is FDI the only way out? Where do you stand in the debate?

FDI is permitted and exists in several areas of retail. The debate today is whether it should be allowed for multi-brand retail which would be, principally, food and grocery retail. FDI must eventually be allowed in all areas of retail to give customers maximum choice.

The government is discussing the opening up of multi-brand retailing with various conditions in order to protect small retailers. In this respect, I would rather see a simple yearly cap on square footage that can be opened by retailers enjoying FDI than some of the conditions that the government currently seems to be contemplating.

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Noel Tata outlines his vision on retail

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Let's turn to Trent now. Many argue that Trent has sacrificed scale and growth for profitability. Though you have been profitable throughout the downturn, when the economy rebounded, you could have ramped up significantly. Why did Trent and Star Bazaar not do so?

While both Trent and Star Bazaar prioritised profitability over scale, our growth has also been tempered by a lack of properties in the right locations and at the right prices.

That said, Star Bazaar has opened seven stores and Westside has opened 18 stores in the last two years and have set a good pace of growth.

Why hasn't the Tata Group synergised its different retail entities and operations like the way Future Group has done? Do you have plans to bring all the retail formats - Trent, Infinity, Tanishq and so on - that are spread across the group under one single entity?

To my knowledge, there are no plans currently to bring all our formats under one entity. In fact, if you look at the 20 largest retailers of the world, you will find that each one of them has specialised in a particular type of retail, such as value or luxury, fashion or consumer durables.

It must be recognised that the competencies required for jewellery and watch retail are different from retailing fruits and vegetable or, for that matter, fashion apparel, and therefore it is not surprising that these evolved at different times along existing lines.

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Photographs: Reuters Photo/Amit Dave
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Noel Tata outlines his vision on retail

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How will Westside stand apart from competition when increasingly everybody is doing the same? Will it be a price warrior?

Departmental stores have good growth prospects in India, especially when one takes into account the rising income levels of our urban population. Westside's uniqueness comes from its entirely proprietary product range, which is not available at any other departmental stores in the country.

How will Star Bazaar scale up? What will Tesco bring to the table going forward?

As we have already indicated, our plan has been to set up 50 hypermarkets over a period of five years. While we have already signed over 25 properties, we are also - like the rest of the retail industry - affected by delays in delivery of shopping centres and shopping malls by developers, which is beyond our control.

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Photographs: Reuters
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Noel Tata outlines his vision on retail

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You are responsible for bringing Zara to India. Will the Tata Group look at bringing other global brands into India?

We are currently exploring the possibility of bringing to India another retail format of the Inditex group.

Can any of the Tata retail formats go global? Can you share the international plans if any?

While there is indeed an opportunity to look at international markets, the Indian markets also present a huge opportunity and while I cannot speak for all the Tata retail formats, Trent is currently spending time addressing the growing domestic market.

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Image: Pablo Isla, Inditex's Deputy Chairman and CEO with Noel N. Tata, Managing Director of Trent Limited, a Tata Enterprise

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Noel Tata outlines his vision on retail

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You had tied up with private equity fund Xander to develop malls in partnership with developers. The venture seems to have made no headway. What are the reasons for that?

Our tie-up with Xander continues to make progress. Currently, there are four malls in various stages of construction, and the first mall is expected to open at the end of this calendar year.

Discussions are going on for six other proposals which we hope to finalise during next year.


Photographs: Miguel Vidal/Reuters
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