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Retailer Tesco teams up with Tata

MUMBAI: U.K.’s largest retailer Tesco on Tuesday announced that it intended to develop a wholesale cash-and-carry business in India, with an initial investment of up to £60 million ($114 million) in the first two years.

The new wholesale outlets will be designed for the Indian market and will offer a comprehensive range of fresh food, grocery and non-food products to small retailers, restaurants, kirana stores and other business owners at reasonable price. The business will also provide farmers and other suppliers with an efficient route to market. Initially based in Mumbai, the business will benefit from over a decade of experience of setting up local businesses in international markets, Tesco, one of the world’s leading international retailers, said in a statement.

Tesco is also entering into an exclusive franchise agreement with Trent, the retail arm of the Tata group.

Under the agreement, for which Tesco will receive a fee, Trent will be able to draw on Tesco’s extensive retail expertise and technical capability to support the development of its hypermarket business, Star Bazaar. Trent has now four hypermarkets and plans to grow this number to 50 stores over the next five years.

Tesco’s wholesale business will supply merchandise to Star Bazaar, enabling the two companies to benefit from the rapid development of a modern supply chain. Tesco already sources over £170 million worth of Indian products each year, with sourcing offices in Delhi, Bangalore and Tirupur. It also employs nearly 3,000 Indian staff at its Hindustan Service centre in Bangalore, providing IT, financial and business services to the entire Tesco group.

Noel N. Tata, managing director of Trent Ltd, said: “Our ability to access Tesco’s retail knowledge and expertise will play an important role in our endeavour to offer a unique shopping experience to customers across the country.”

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