NEW DELHI: Office Depot, the world's leading stationery and office goods retailer, plans to enter India via the franchisee route. A high-level delegation from the US-based retailer's international division was in India recently to initiate talks with possible partners.
Sources say that Office Depot is interested in setting up shops in India and has been studying the market for the past three years with the hope that the government would let it come with its wholly-owned subsidiary. Last year, when the government announced that it would allow 51% foreign direct investment (FDI) in retail of stationery goods, there was a buzz that Office Depot might take the joint venture (JV) route.
However, the government did not implement the policy due to strong political objection to FDI in retail. "Though Office Depot would have preferred to bring equity into the Indian market, its priority now is to at least register a presence here so that it can start cashing in on the Indian consumer boom," said a source close to the development.
In the past few years, many global retailers have shown interest in stationery retailing. In July last year, European stationery retailer Office1 tied up with Indian polyster company, Indo Rama, and already has about 10 stores in various parts of the country. Earlier this year, in January, Kishore Biyani's Pantaloon Retail tied up with US-based office goods retailer, Staples.
However, like every other retail business in India, the major chunk of office goods retail falls in the unorganised sector. Perhaps, this is one reason why the government, despite having made initial announcements, has refrained from allowing FDI in the sector.
In addition to stationery, there were talks of allowing up to 51% FDI in retail of building equipment, sports goods and consumer durables. All these sectors are dominated by local unorganised retailers who form a major votebank. At present, the office products market in India is estimated to be over $10 billion and likely to grow by about 20% every year.
"Businesses are getting organised and there is a growing demand for end-to-end office products and services. This will lead to a major growth in the stationery retailing market," says AT Kearney principal Raman Mangalorkar. The $15-billion Office Depot is a global supplier of office products and services. The company was incorporated in 1986 and its first retail store was opened in Fort Lauderdale, Florida.
The company sells a broad assortment of merchandise, including branded as well as private labeloffice supplies, business machines and computers, computer software, office furniture among others. At present, the company operates in 42 countries, with 1200 stores in North America and 360 in other parts of the world.