Kroger to run realty check before retail

In a first-of-its-kind move, top US grocery retailer Kroger is entering the real estate business in India. Representatives of the $66-billion company have already met 3-4 prominent real estate companies of India for joint ventures.
“They are mainly interested in jointly developing new FDI-compliant commercial projects or buying into existing ones,” said a senior figure in the real estate industry on condition of anonymity. Interestingly, America No. 3 general retailer behind Wal-Mart and The Home Depot runs all its nearly 2,500 supermarket stores in the US.
Considering India’s rapidly expanding market vis a vis the almost stagnated US market, it’s no surprise that Kroger wants to enter India. But what makes it look into the Indian realty sector and not retail? For one, Kroger can hold a majority stake in a commercial real estate project in India, while it’s not possible in the multi-brand retail space.
Another reason could be the backlash on organised retail. “It’s quite possible that Kroger has decided to refrain from retail due to the political sensitivities involved,” the source said.
Most of all, sources say, Kroger’s key objective behind entering Indian realty space is to gain a holistic understanding of the Indian consumer market. That is why, they add, the US major is likely to get into JVs with local partners even though 100% FDI is allowed in commercial real estate. According to them, being in the business of commercial real estate would give Kroger a good exposure to the retail market as well.
For retailers, setting up shops at the right place and at the right price is going to be the biggest challenge. If Kroger is able to block sufficient real estate, it would have an edge over competition when it enters the retail business. Of late, unavailability of viable property has made retailers put on hold their expansion in top cities.

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