Japan’s Ryohin Keikaku Co Ltd, which operates household goods chain under the brand name Muji, has filed an application with the department of industrial policy and promotion for entering into the single brand retail segment in the country.
The company has proposed to “manufacture and sell various garments, furniture, household goods, cosmetics, stationery and other Muji brands” according to the application.
Muji brand of the company has over 700 stores across Japan, Asia, Europe, the US and Australia. Outside Japan, China is the largest international market for Muji where it has over 100 stores. The application comes on the back of clarification issued by the government that the single-brand retailers would be allowed to operate their own outlets, franchise and wholesale stores. Recently, Nike had approached the DIPP for a second time, proposing to open fully-owned stores following the clarification.
Last year, in August 2014, the American sportswear manufacturer’s subsidy, Nike India Pvt Ltd, had applied to the DIPP for 100 per cent FDI to undertake single-brand retail trading in India related to accessories, apparel accessories and equipment. Nike currently owns stores in India through franchisees. According to the existing policy, 100 per cent FDI is allowed in the single-brand retail segment — 49 per cent on automatic route and beyond that through the Foreign Investment Promotion Board (FIPB).
However, its proposal was turned down. Nike’s second application is from its subsidiary Nike European Operations Netherlands BV and was filed on July 31. Several investment proposals including H&M, Swarovski, Tommy Hilfiger, and Adidas have been stuck because the government did not allow them to run both company-owned direct retail outlets and franchise outlets.
Earlier this year, in abid to tap one of the largest consumer markets in the world, Ryohin Keikaku had announced a joint venture with Reliance Brands to open standalone stores, size ranging from 6,000-10,000 sq. ft., across major cities and sell a range of products like clothing for men and women, beauty items, furniture, kitchen tools, and stationary. According to the agreement, Ryohin Keikaku will invest a majority share in the joint venture.
Ever since the FDI policy was liberalised by the government in 2012, Swedish furniture-maker Ikea, French fashion brand Promod, crockery maker Le Creuset and sports giant Decathlon, Fossil Inc, British footwear retailer Pavers England, US luxury clothing retailer Brooks Brothers and Italian jewellery maker Damiani have already got a nod from the FIPB among others.
So far, the biggest single-brand retail proposal cleared by the government came from Ikea. The company will invest Rs 10,500 crore to open 25 stores in India in the next 10 years.
The NDA government, though opposed to FDI in the multi-brand retail segment, has been promoting and relaxing norms for sectors like defence, railway infrastructure, and construction.