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Landmark part ways with Auchan in retail venture, ties up with Spar again

Max Hypermarket India, part of Dubai-based retail giant Landmark Group, and French Firm Groupe Auchan have decided to part ways in their Indian retail alliance. Simultaneously Max Hypermarket has joined hands with previous partner Dutch food retailer Spar International, and now plans to open 20 stores as its licensee by 2019.

Max Hypermarket and Auchan had signed a licensing agreement in August 2012 as per which Max Hypermarkets was to operate the Auchan Hypermarket branded chain in India. At present, Auchan operates through 13 hypermarkets stores in Bangalore, Coimbatore, Gurgaon, Mangalore, Hyderabad, Delhi and Pune.

The two partners had planned to roll out 80 stores in the country by 2015, including cities like Chennai, Indore, Vishakhapatnam, Bhopal and Chandigarh.

“Max Hypermarket and Groupe Auchan continued deep into 2013 to look into the possibilities of creating a joint venture to facilitate Groupe Auchan investment in India, which could comply with Indian FDI (foreign direct investment) regulations. Despite their best efforts, the parties could not facilitate this proposition," as per a statement.

As a result, the 13 existing hypermarkets will no longer operate under the Auchan banner and will be rebranded under SPAR, the banner under which Spar International operates.

Max Hypermarkets and Spar would be looking to become second time lucky. It had earlier formed a partnership with the Dutch retailer but later opted for Auchan in 2012. Max had then rebranded its existing 'SPAR' stores in Bangalore and Mangalore to 'Auchan'.

Landmark Group operates other retail brands like Splash, Lifestyle and Max, among others.

Auchan’s move marks the exit of another foreign retailer from India after another French retailer Carrefour SA announced its plans to shut shop in the country by closing its all five cash & carry or wholesale stores which it has been operating for the last four years.

A number of global chains such as Walmart and Metro operate wholesale stores in India.

In September 2012, the government permitted foreign direct investment up to 49 per cent in multi brand retail, subject to mandatory local sourcing and approval of respective states.

Earlier, Walmart’s existing joint venture with Bharti Retail for wholesale retail came unstuck and now the two partners are running independent business with Walmart running its own cash & carry outlets while Bharti continues to separately operate Easyday retail stores.

The only foreign firm to have gone ahead and struck a deal in consumer retail side is British retailer Tesco, which has picked a stake in Tata Group's Star Bazaar.

(Edited by Joby Puthuparampil Johnson)

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