Spar International, the Netherlands-based food retailer, has entered into a new franchising agreement with the Dubai-based Landmark Group for its Max hypermarkets and supermarkets. The agreement licenses Max hypermarkets to open Spar hypermarkets and supermarkets across the country.
“The group plans to open seven new stores over the next 24 months across the country with an initial outlay of Rs 200 crore. We will open the first branded Spar hypermarket (85,000 square feet) and the first supermarket (28,000 square feet) in Bangalore next month,” a Landmark official told Indiaretailing. The group is targeting revenue to the tune of Rs 600 crore in the next two years from its new venture.
According to the license agreement, Landmark Group will handle the backend and front-end. Based on a rental model, the hypermarkets will be typically spread across 70,000-100,000 square feet, while the supermarkets will be in an area of 20,000-30,000 square feet. Landmark Group will pay Spar an annual franchisee fee based on a quarterly basis, depending on various criteria. Even though they hold the license for food and grocery branding, Landmark will begin by using their private label Max.
Landmark Group believes the agreement with Spar International is a strategic way forward in developing the hypermarket concept in India. “Spar is a leading food retail brand operating in 33 countries across different formats – convenience stores, supermarkets and hypermarkets. We do believe that this association will help the group to expand into food retailing and bring in international standards and operations, at par with the rest of the food retailers globally,” said Micky Jagtiani, chairman, Landmark Group.
Gordon Campbell, managing director of Spar International, said, “Developing Spar hypermarkets in India is a key element in our strategic plan. India is a market with enormous potential and we are pleased to have found an excellent partner in Max hypermarkets.”
Earlier, Spar tried to enter India through Radhakrishna Foodland, but failed on various grounds. However, in its second innings, the 27 billion euro Spar International is learnt to be concentrating only on modern, organised retail. Spar’s international retail franchise is spread over 13,700 stores in 33 countries. It operates on a model similar to cooperative stores, bringing together many retailers under a single fold to facilitate bigger discounts on bulk deals and better supply chain management.
Landmark Group today has a retail presence of over 10 million square feet and plans to grow it to 15 million square feet in the next 3 years. It has over 60 stores in India, across different formats, with an annual growth rate in excess of 30 per cent.