Wholesale expansion

12 August 2008 By Rachel Sanderson

Tesco has finally announced a deal to open shop in India. That s good news for a retailer with global ambitions. The UK supermarket giant needs to be in India s $350bn market. But it s a longterm game. More important for now is Tesco s quiet progress in countries such as Turkey.

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Tesco, the world's third largest food retailer by revenues, announced on August 12 that it will start a wholesale cashandcarry business in India. It will make an initial investment of up to £60m in the next two years. Tesco also said it was entering into an exclusive franchise agreement with Trent, the retail arm of the Tata Group. Under the terms of the agreement, for which Tesco will receive a fee, Trent will use Tesco's experience to develop Star Bazaar, its hypermarket chain. Tesco's wholesale business will supply Star Bazaar.

India's retail market is valued at $350bn and is forecast to double by 2015, according to Technopak Advisory, an Indian retail consultancy.

Tesco opened its first store in Turkish city Istanbul last week. The UK company's revenues from Turkey grew 69% in the financial year ending February 2008. Tesco's Turkish retail chain Kipa will invest $1.5 billion over the next five years as it establishes 100 stores. Kipa has said it expects revenues to reach $5bn once the new stores are operational. Tesco has opened 28 hypermarkets in Turkey and 57 Express stores in the last five years.

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