In 2007 Argos plan to franchise the Argos name in retail outlets in India. Strict regulations mean that no UK retailers can open their own stores in India, so a franchise deal is seen as the perfect opportunity to grow the Argos brand overseas. The two companies who Argos will franchise with are Shoppers Stop and Hypercity, and both of these already own many retail outlets in India. The new stores will be called Hypercity-Argos.
This could prove to be a very wise move as there are no catalogue retail businesses in India, so this is going to be a totally new concept for them. Argos will provide all its retail expertise such as IT, and a new website, and of course a new catalogue with around 4000 products to choose from. There will also be call centres as well as different sized stores. The Indian market is worth a whopping £170 billion per year, yet retail stores are usually family run businesses or small concerns, so the impact a big player like Argos could have is clear to see.
There is already a good infrastructure for delivery to other cities, and Argos say that delivery to home near the retail stores will be free. If only that were the case here. One of the main reasons that Argos could be successful in India is because of the way it operates, with its multi channel approach, ie, online, phone or in store, and its delivery network. Retail space is high in India, so just have a store may not be so profitable, but to have phone and website channels offers some hope for profit.
If this opening goes well then Argos plan to open more stores in other cities in India. The fact that Indian retail is dominated by small shops is one reason why the Indian government is wary of lifting any regulations for foreign retailers like Argos. These small businesses would just be eaten up and spat out, with the bulk buying power of Argos. Recent relaxation of regulations has seen the opportunity for foreign players to own 51% of their stores, but they are only able to sell single brand goods.
Whilst this will open the flood gates for international brands such as Adidas, Levi Jeans, Armani etc, it does not help Argos and Walmart because they sell multiple products, so i guess they will just have to wait for this regulation to be relaxed.