A Presentation

on

JOINT VENTURES IN RETAIL

INDUSTRY AROUND THE
WORLD
Contents:

• Brief overview on Retail Industry

• Understanding Joint Venture
• Types & Benefits of Joint Ventures
• Quick Examples on Joint Ventures
• Conclusion
• Queries
Brief overview on Retail Industry

What is Retail Industry / Retailing?

Retailing consists of the sale of
goods or merchandise from a very
fixed location, such as a 
department-store, boutique or kiosk,
or by mail, in small or individual lots
for direct consumption by the
purchaser

Retail industry is the largest in India,

with an employment of around 8%
and contributing to over 10% of the
country's GDP.
Continued…

The Indian retail sector can be broadly classified into –

•Food retailers
•Health and beauty products
•Clothing and footwear
•Home furnishing and household goods
•Durable good
•Leisure and personal goods

Different forms of retailing

•Hyper-marts
•Large supermarkets, typically (3,500 - 5,000 sq. ft)
•Mini supermarkets, typically (1,000 - 2,000 sq. ft)
•Convenience store, typically (7,50 - 1,000 sq. ft)
•Discount/shopping list grocer
•Traditional retailers trying to reinvent by introducing self-service formats as well as
value-added services such as credit, free home delivery etc.
Retail Trade in India
Understanding Joint Venture

Joint Ventures
•A joint venture (JV, sometimes 'J-V') is a legal entity formed between
two or more parties to undertake an economic activity together.

Objectives for Joint Ventures (around the world)

•Joint ventures involve sharing the risks and rewards in an enterprise
or project co-owned and operated for mutual benefit by two or more
business partners.
Types of JV’s

Distribution Analysis of JV in Industry

Type JV 2000 2001 2002 2003 2004 (3Qr)
WFOE 46.9 50.3 60.2 62.4 66.8
EJV,% 35.8 34.7 20.4 29.6 26.9
CJV,% 15.9 12.9 9.6 7.2 5.2
Misc. JV 1.4 2.1 1.8 1.8 1.1

CJVs 1735 1589 1595 1547 996

Joint Venture (Acc. to Laws of China)

•Wholly Foreign Owned Enterprises (WFOEs)

•Co-operative Joint Ventures
•Equity JVs
Benefits of Joint Ventures
Reasons for Forming a Joint Venture
•Internal Reasons
•Build on company's strengths / Brand Equity
•Spreading costs and risks (Limited Liability)
•Improving access to financial resources
•Economies of scale and advantages of size
•Access to new technologies and customers
•Access to innovative managerial practices
•Competitive Goals
•Influencing structural evolution of the industry
•Avoid the situation of saturation
•Speed to market (Expansion with Increasing Rate)
•Transfer of technology/skills
•Diversification
Examples of JV’s

• Mothercare enters JV with DLF

• Future Group & Clarks in JV for Footwear Retail

• Devyani International in JV with GMR

• Bharti Wal-Mart Pvt. Ltd.; JV between Bharti & Wal-mart

 Mothercare enters JV with DLF

• Global retail player Mothercare has entered into a joint venture with realty major
DLF's retail management firm, DLF Brands, to open standalone stores of the UK
based company in the country on October 16, 2009.

• While Mothercare holds 30 per cent stake in the JV, DLF Brands have control
over the remaining 70 per cent. This is Mothercare's first venture into exclusive
retail chain business in the country.

• "The joint venture rolls out standalone stores in DLF's shopping malls and other
similar locations across the country," Mothercare said in a statement.

• Mothercare will have an option to increase its shareholding in the JV to 51 per

cent in future.
 Future Group & Clarks in JV for
Footwear Retail
• Future Group has entered into a 50:50 joint venture deal with UK-based footwear
retail player Clarks on October 14, 2009 and plans to launch the British brand in
India by 2011.

• While retail forms the core business activity of Future Group, group subsidiaries
are present in consumer finance, capital, insurance, leisure and entertainment,
brand development, retail real estate development, retail media and logistics.

• The iconic brand, Clarks which started in 1825 in the Somerset village of Street,
the UK, sells more than 40 million pairs of shoes in over 50 countries through its
own and franchise stores as well as multi-brand outlets. The retailer offers a range
of footwear, boots, casual, work-wear, sports, slippers, for men, women and kids. 

• The two partners are putting in place a strong sourcing infrastructure. 

 Devyani International in JV with
GMR
• Devyani International (DIL) has inked a 60:40 joint venture with GMR on
September 30, 2009 to set up multiple food retail outlets at the Delhi International
Airport. The details of the JV are still being worked out.

• The INR 250-Crore DIL, which is the Indian franchisee of global food retail chains
Pizza Hut, KFC and coffee chain Costa Coffee, is also venturing into the
restaurant retail chain space under its own brands.

• GMR Group is one of the fastest growing infrastructure organizations in the

country with interests in Airports, Energy, Highways and Urban Infrastructure
(including SEZ). Employing the Public Private Partnership model, the Group has
successfully implemented several infrastructure projects in India. 

• This JV is setting up a chain of restaurants under three different brands —

Southern Spirit, Curry Republic and Oriental Cuisine. According to sources, the
company plans to set up 100 Southern Spirit restaurants over the next four to five
years, starting with Delhi-NCR.
JV between Bharti & Wal-mart

• Bharti Wal-Mart Pvt. Ltd is the 50:50 joint venture between Wal-Mart Stores –the
world’s largest retailer– and Bharti Enterprises– India’s largest mobile service
provider.

• Wal-mart, though known for its big-box format stores, has been forced to begin its
operations in India with ‘cash and carry’ format as the current government policy
guidelines do not allow setting up of front-end, multi-brand, retail stores by MNC
retailers in India.

• This joint venture is looking at either the West or the South zone for expansion of
its ‘Cash and Carry’ wholesale centers.
Conclusion

Study explains that being into Joint venture was not

been easy for the examples mentioned above. It’s the
fact that joint ventures are the number one, fastest
growing, most profitable form of marketing strategy in
the world, however building joint venture alliances can
be time consuming and unproductive if you don't know
what to do or where to find them. More importantly
though, is the ingredient that makes a joint venture
become profitable and work and that is to actually have
a joint venture partner to create a joint venture alliance
with.
JOINT VENTURES IN RETAIL INDUSTRY AROUND
THE WORLD

Queries
JOINT VENTURES IN RETAIL INDUSTRY AROUND
THE WORLD

Thank You