Westside: The Indian Retailing Success Story


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Case Details:

Case Code : BSTR043
Case Length : 13 Pages
Period : 1990 - 2003
Organization : TATA, Westside
Pub Date : 2003
Teaching Note : Available
Countries : India
Industry : Retailing

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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Background Note

In 1952, the Tatas entered the cosmetics business through Lakme Ltd. By the 1990s, Lakme was the leading cosmetics brand in Indian as well as in international markets.

In 1996 Lakme entered into a joint venture with Hindustan Lever2 for the marketing and distribution of Lakme brands. In 1997, the Tatas sold their stake in Lakme to HLL for Rs 2 billion. After selling off their stake in Lakme, the Tatas scouted for business opportunities and decided to venture into retailing. Retailing was at a nascent stage in the late 1990s, and it was expected to be a booming business in India in the following decade (Refer Exhibit II for note on retailing industry). In 1998, the Tatas ventured into retailing, acquiring the Britain-based Littlewoods retail stores in Bangalore. The company was renamed, Trent Ltd., and the Littlewoods stores were renamed Westside. Along with the Littlewoods stores, the Tatas acquired the firm's warehouse and infrastructure.

These provided an established supply chain and trained personnel for Westside. By 1999, Westside had expanded its operations to Chennai, Mumbai and Hyderabad, and by 2001 it had a second store in Mumbai, and a store each in Pune, Kolkata and Delhi.

In 2001, Westside had average sales of just above Rs 5,000 per sq ft. in all its stores. By 2002, it had a store in Nagpur and a second store in Delhi. In 2002, Westside reported a net profit of Rs 102.2 million (Refer to Exhibit III) and it also reported cash break-even in the same year. Analysts felt that the surplus cash reserves from the sale of Lakme provided the financial back-up for Trent-Westside. With cash reserves of around Rs 1.61 billion (on 31st March 2000), Trent had the option of avoiding high interest debts for its expansion. The company planned to increase its retailing space to 0.3 million sq ft. by 2003, from 0.12 million sq ft. in 2001. The firm wanted to expand Westside's operations to other cities. Trent announced that it would enter food retailing by the end of 2003 with an estimated investment of Rs 400 million...

Excerpts >>

2] The Indian subsidiary of the FMCG major Unilever.

 

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