The Euro 45 billion (Rs 3 lakh crore) French retailer Auchan Group recently signed a franchise agreement with the Dubai- based Landmark Group to open hypermarkets in India after the latter ended its pact with Dutch retailer Spar International. In an interview with Raghavendra Kamath, Thierry Martin, director, international development and partnerships of Auchan, talks about the group’s plans and views on Indian retail. Edited excerpts:
How will Auchan hypermarkets be different from others in India?
Initially, the visual aspects of the stores will change as the rebranding process is under way. The India model will evolve progressively following a detailed analysis of consumer needs. Auchan offers great value to the customer, so the value proposition of the brand will be strengthened.
What are your plans for the Indian market?
Max Hypermarkets (a unit of Landmark group) will open 12 to 15 Auchan hypermarkets every year and develop a pan-India footprint. The company already has 13 hypermarkets in eight cities.
Will Auchan look at other franchise agreements for the western and eastern parts of India?
No, Groupe Auchan has an exclusive franchise agreement with Max Hypermarkets. Max Hypermarkets has a national footprint in mind for our future expansions. As mentioned earlier, the company already has 13 hypermarkets in eight cities. The team will study and understand the markets before finalising on specific locations.
With the Indian government opening FDI in multi-brand retail, will you look at converting the franchise agreement with Max into a joint venture?
Max and Auchan have entered into a franchise agreement to open Auchan-branded stores in India. Currently, our focus is on the changeover to the Auchan brand which is happening this weekend. The FDI reform in retail opens an opportunity for Auchan to invest should they want to in future. It was agreed to discuss this if and when FDI was to open. We will look at the terms of reform and then see what is possible and appropriate.
How do you look at the conditions attached to FDI in multi-brand retail?
Currently our focus is on the changeover. We will look at the terms and conditions once it’s clear and then see what is possible and appropriate.
How much will Auchan invest in India in the next three years?
Investments are being made by Max Hypermarket India. Auchan is not an investor at the moment.
How do you look at Indian retail in terms of opportunities and challenges?
India is a country that we have been watching for many years, due to the size of the market and the demographic and economic growth. But India is also a market that has been hitherto closed to direct foreign investments in the retail sector.
For many years, we have been saying we are committed to developing franchise not only in supermarkets, but also in hypermarkets. This is why we think that this opportunity could be a great way to discover this big country full of diversity and so different from what we know otherwise.
