KOLKATA: Best Buy, the largest consumer electronics retailer in the US, appears to be setting its sights on India. The $36-billion Minneapolis-based retail giant is tracking the local retail space and is learnt to be in talks for an alliance.
A top-level delegation from Best Buy Co Inc was recently in India and met senior representatives of leading consumer electronic firms like LG, Samsung, Haier and Sony to gain first-hand knowledge of the Indian market. The meeting was arranged in Mumbai by Vivek Ltd which owns three consumer electronic retail formats - Viveks, Jainsons and Premier.
The buzz suggests that Best Buy may enter into a partnership with Vivek Ltd to enter India. Vivek operates one of the largest consumer electronics & home appliances retail chains in the country with more than 52 stores. In the event the deal comes through, it may be a technical and sourcing agreement along the lines of the Tata group's recent pact with Australian retail major Woolworths for its Croma retail chain.
Best Buy officials refused to comment on their India plans. “Our focus is on growing our business in Canada and China as well as our core US business. Our expansion into new countries will commence in Mexico and Turkey where we are recruiting leadership, assessing customer segments and property portfolios. I cannot speculate about expansion plans in India,” said Ms Susan Busch, director (corporate public relations), Best Buy Co Inc.
A senior official of a leading consumer electronics company, who was present in the Best Buy meeting in Mumbai, said Best Buy's senior vice-president (strategy & international market) Kal Patel conducted the session. “Apparently, Mr Patel is close to the promoters of Vivek Ltd and something concrete could emerge on Best Buy's India plans,” the official said.
When contacted, Vivek Ltd's chairman and managing director B A Kodandarama Setty declined to comment on a possible partnership with Best Buy. “Mr Patel was in India to understand the Indian retail environment in consumer electronics and home appliances segment. It was a routine business visit. Best Buy is indeed interested in India but they want to finalise plans once the government policies are more conducive,” Mr Setty said.
At present, up to 51% foreign ownership is permitted in single-brand retail. But Indian regulations do not allow any FDI in multi-branded retail. Since stores like Best Buy sell multi-brand products, they can develop a presence in India only through a collaboration with a local player.
Industry analysts believe at a time when the Indian retail FDI policies are not too conducive, collaborative deals between foreign and local players will benefit growth of modern retail. “Such partnerships could become preferred platform for global multi-brand retailers to enter India and also provide a good leap to the Indian partner,” said Gibson Vedamani, chief executive officer, the Retailers Association of India.
Incidentally, Best Buy operates more than 1,150 stores across the US, Canada and China. It recently created a new position of president & COO for Best Buy Asia and recruited Redmond Yeung for it. Mr Yeung has the mandate to grow the company's business in Asia.