Tata and Woolworths to extend their retail partnership

Tata Group’s retail arm Infiniti Retail is enhancing its partnership with Australian supermarket chain Woolworths, to enter food & grocery retailing by opening supermarkets and hypermarkets.

Tata through its group company Trent already has a hypermarket chain Star India Bazaar to tap the price-conscious customer. Trent also owns the Westside lifestyle stores and Landmark stores.

Woolworths run a chain of consumer durable stores with Tata named Croma in which it provide technical support and global sourcing facilities. Currently Croma has 3 stores which it wants to expand to 40 stores by 2007 and 100 by 2010. Croma also opened its first consumer durable and electronic retail store at Mumbai airport’s domestic terminal.

Tata wants to enter food and grocery segment as this segment accounts for 60-65% of India’s $350 billion retail market and just 1.3% of food and grocery sales in India happen through organised retail. Recently, Tata Chemicals announced a JV with European fresh produce firm Total Produce for a food and grocery distribution business.

Woolworths is the natural choice for Tata as it has already a retail venture with the company and Woolworths operates 700 supermarkets in Australia in various retail formats such as supermarkets, convenience stores, liquor, petrol, general merchandise and consumer electronics.

However, due to political uncertainty and delay in Bharti-Walmart deal, Tatas are going slow on the food and grocery business and would like the macro environment to become clear before it announces investment plans.