Debenhams looks to India and Russia for expansion

Debenhams is the latest UK retailer set for major expansion in the high-growth Indian and Russian markets, as part of the group's plans to more than double international sales over the coming four years.

The department store's 39 international outlets, which are operated by franchise partners, are on track to hit the £280m sales target for the financial year to August. Four years on, Debenhams wants the sales at the £600m-mark from 90 department stores, said Francis Mc-Auley, the company's international director. "We have a strong pipeline through to 2012," he said.

Despite half-year figures to March showing the chain's pre-tax profits down 12.8 per cent to £92m and like-for-like sales down 0.7 per cent, Debenhams has ambitious plans. Mainland China, Pakistan, Brazil and Canada are all options in the longer term. But the focus in the near future will be India and Russia, alongside central and southern European countries such as Greece and Poland, and the Baltics.

The company opened its first Indian store in October 2007 in Delhi's Gurgaon district, with partner Planet Retail. Another two shops are due to open in the country before the end of the year, followed by significant acceleration over the coming decade. "I would be disappointed if we do not have 30 stores in India in 10 years' time and that is proper department stores," said Mr McAuley. "The Indian market has a real appetite for Western brands and the education and understanding of the young people is second to none."

The sub-continent's demographic is particularly suited to Debenhams' strategy. India has one of the fastest-growing consumer markets in the world and its middle class is expected to balloon to 350 million people by 2015. Debenhams is targeting the country's upper and middle- class shoppers. Its biggest-selling own brands in India are Red Herring and Maine New England. The Designers at Debenhams ranges, such as Jasper Conran and Rocha, are also popular. However, the poor condition of the transport infrastructure is a potentially major hurdle.

Russia is the group's other major growth target. Debenhams is in "serious negotiations" with a potential partner and the company hopes the talks will be concluded by September with a view to opening a first Russian store in September 2009.

Debenhams opened its first international store in Bahrain in 1997, in partnership with Alshaya, the leading Middle Eastern retail group. Since then, it has expanded into countries as diverse as Indonesia, Iceland and Turkey. "For British retailers, international retailing is an absolute must," Mr McAuley said.

Debenhams is not the only major UK retailer to be focusing on international growth, particularly in emerging markets. Last week, Mothercare announced that it is about to open its first Chinese store. It also plans to open another 100 outlets in India over the coming five years.

Meanwhile Tesco, alongside its US expansion with the Fresh & Easy brand, bought the 36-strong E-Land Group in South Korea this month for just under £1bn. The deal is the supermarket group's largest international acquisition to date, and is part of its strategy to take the top spot in Korea, which is already its biggest market after the UK.

Marks & Spencer is also looking hard at India. In April, it announced a joint venture with Reliance Industries, the country's biggest company, with plans to open 50 stores on the sub-continent over the next five years. The deal is central to the target set by Sir Stuart Rose, the M&S chief executive, to take between 15 and 20 per cent of the company's sales from international stores.