Business Line:
Does it make sense to forge joint ventures in lifestyle retail during an economic downturn? Of late, several big corporate houses have been announcing joint ventures hoping the demand slowdown will pass by the time they launch their brands and stores in the country by the end of the year and that the slump is just ‘incidental’.
While players such as Tatas (Trent), Reliance Brands and S Kumars’ Brandhouse Retails have already jumped into the fray, there are couple of other ventures on the anvil that are on the verge of a break-up…
Today, sharing risks through joint ventures is considered a safer option in times of a downturn. According to Nitin Kasliwal, Chairman, Brandhouse Retails, “There is definitely more commitment as the risks in the business are shared between the two parties who are now equal partners, compared to a standalone franchise. In fact, today foreign retailers prefer joint ventures as they perceive the franchisee relationship be too weak.â€
Brandhouse Retails recently announced a joint venture with Italy’s ‘fast fashion affordable’ brand Oviesse. It plans to set up 190 stores in the next five years. “We would be setting up our stores by the end of 2009 by which time India should be out of the downturn,†says Kasliwal, who believes lifestyle retailing too should pick up by then.
The Tatas (through Trent) announced a 49:51 venture with the Inditex Group of Spain to launch the Zara stores in India. After entering a franchise agreement with the Sisley brand last year, Trent decided to go the joint venture route. It intends opening the first few Zara stores in New Delhi and Mumbai by the beginning of 2010.