Even as some foreign retailers are questioning whether the Indian market is worth the trouble, Marks & Spencer Group PLC says it plans to double its bets on the South Asian nation.
The U.K.’s largest clothing retailer is planning to boost the number of stores it has in India to 80 by 2016. Today it is already one of the most high profile international chains in India with 36 outlets.
“We have an ideal platform to expand our presence in India and see India becoming our largest international market outside of the U.K. by 2016,” M&S Chief Executive Marc Bolland told reporters in Mumbai on Monday.
The retailer has around 1,200 stores globally, most of those in the United Kingdom.
In India, it operates through Marks and Spencer Reliance India Pvt. Ltd., a joint venture with Reliance Industries Ltd. one of India’s largest companies. M&S has fewer restrictions on its operations than other global retail chains because it is considered a single-brand retailer and it doesn’t sell food in India.
The world’s largest retailer, Wal-Mart Stores Inc. has recently pulled out of its joint venture in India, saying it is waiting for the Indian market to open further to international competition before it decides whether it wants to expand beyond the 20 wholesale stores it already operates here.
Mr. Bolland said M&S is hoping to capture more customers in India by bringing down costs by making an increasing amount of its clothing in South Asia. About 64% of the clothing sold in the company’s Indian stores are already sourced from India, Bangladesh or Sri Lanka, he said.
“We have been adapting our [Indian] pricing very strongly on the basis of our sourcing capabilities,” he said. “We are pricing ourselves more at the mid-market level.”
Analysts estimate that India’s retail market may already have annual sales of close to $400 billion a year but the sector is dominated by traditional markets and family-owned stores. Sales at local and international modern retail chains are expected to climb even as the Indian economy slows.
Marks & Spencer plans to roll out large stores in smaller cities – including Surat in the state of Gujarat and Kanpur in the state of Uttar Pradesh — optimistic that the demand will be there once it sets up shop even if the economy stops growing near double digit rates.
India’s gross domestic product growth slowed to a decade low of 5% in the year ended March and is expected to slip even further this year.