Staples JV opens first store in India as Depot’s preferred partner decides to go it alone.
Staples has won the race to India and its $10 billion office products market after its first licensed store in the country opened its doors last month in Bangalore.
The new 15,000ft2 site officially opened in December marking the end of an extremely complex series of negotiations, planning and delicate political lobbying.
The news will be a double blow for Office Depot as its preferred retail partner Reliance Retail announced in the same week it was embarking on its own format of stationery, music and book stores
Reliance Retail confirmed the launch of its new specialty chain Reliance TimeOut, also in Bangalore. Spread over 21,000ft2 – the store’s stationery section stocks 7,000 products. Reliance TimeOut also offers the customers an extensive range of books, CDs and DVDs.
At one stage, Reliance and Depot were themselves discussing a wholesale joint venture with the aim of opening 250 standalone office supplies’ stores across India by 2010.
But it is clear Reliance has decided to leverage its influence as India’s largest private sector company with a turnover of US$ 27.23 billion and go it alone. Last year, Depot CEO Steve Odland described the Indian market as a "big hole for us" and insisted they would aggressively seek to expand into the massive emerging market.
But the first to cross the winning line is Future Group, the licensee of ‘Staples’ for India and part of Pantaloon Retail. Following the first store opening it expects the venture to reach revenues of $135 million within the next 5 years and will add 50 standalone stores and 100 shop-in-shop outlets across India.
"The office products business in India presents tremendous opportunities for growth," said Rakesh Biyani, CEO, Future Retail, "We are excited to embark on Staples’ journey to India, venturing for the first time into areas such as office products and stationery in a big way.
"Through our partnership with Staples, the industry leader globally, we expect to leverage their sourcing and supply chain strength and create a strong value proposition of ease and convenience to our customer.
"We have tied up with companies like Accenture and Citibank to supply office products to them. Through stores like this companies can actually bring down the cost of procurement of office products as they have a one-stop solution instead of buying from several vendors. This is the first of its kind store opened in India exclusively for office supplies."
Shailesh Karwa, co-CEO of Staples Future, added in a statement: "We are pleased to have Future group as our retail licensee in the country and are looking to dominate the office products market both in the corporate and the retail space.
"Our delivery business to large corporates through our eProcurement platform has met with a tremendous response"
The Staples store already boasts one of the widest ranges of laptops and printers available in India, aside from marketing over 7,000 SKUs, the country’s largest assortment of stationery, business machines and office furniture.
Additionally, the store features a ‘Make your PC zone’ – options to build and customise your PC and the ‘Easytech’ section, which will provide customers maintenance and repair services for PCs.
Another new concept for India is the introduction within the store of a Staples Print Centre, a facility that allows customers to print instant visiting cards, letter heads, customised calendars, invites and other documents on a pay-per-use basis.
Staples store also features an exclusive Apple Store, being the authorised reseller for the complete range of Apple products including Macs, iPods and accessories.
The Indian government is currently considering whether to relax its rules and allow foreign-direct investment. This would allow the likes of Depot to enter the market without the need of a joint venture with an Indian-based company.
Currently, foreign companies cannot undertake multi-brand retailing in India. However, the Government is treading cautiously as retail is one of the country’s biggest employers, second only to agriculture.