Saturday February 20, 2010

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By Sam Devraj  ( Assistant Editor )

Carrefour: A French super market is likely to open shop in India

FRENCH retailer Carrefour, which has been looking to crack the restrictive India market for seven years, plans to kick off its operations in India this year by setting up a wholesale business. The company also said that it was in talks with local firms as potential partners, but declined to name them. Global retail chains have long been frustrated in their efforts to set up shop in the world’s second-fastest growing major economy, where organised retail accounts for just 6 per cent of industry sales and incomes are rising quickly. Carrefour, the world’s second-largest retailer, will join mega retailers such as top-ranked Wal-Mart and Germany’s Metro AG in operating so-called cash-and-carry ventures in India. Foreign firms are prohibited from owning multi-brand retail chains in India, a rule that is not expected to be relaxed in the near term. “Carrefour will develop its activities in India with the start of cash & carry activities in 2010,” the company said in an email statement.  Indian regulations allow foreign multi-brand retailers only through franchise agreements with local players, and Carrefour has held talks over the years with various Indian firms to enter the retail market. “Carrefour and some Indian companies have been discussing partnerships,’ the company said, but would not to comment on which firms it had spoken with. India’s Future Group, the country’s largest retail operator with brands such as Pantaloon Retail and Big Bazaar, has been the subject of media speculation as a possible partner for Carrefour. Earlier this week, Future Group CEO Kishore Biyani told reporters that he was in talks with several overseas retailers but did not specify which. Foreign retailers may own up to 51 per cent in single-brand retail and 100 per cent in cash-and-carry ventures. The restrictions are intended to protect the small single-shop operators that dominate retail in India. “Starting off with a cash-and-carry business gives them the opportunity to get a first-hand feel of the Indian market and allows them to build a brand name,” said Hemant Kalbag, partner with consultancy firm AT Kearney. India’s robust economic growth - at more than 7 per cent it trails only China among major economies - and a burgeoning middle-class with rising spending power are magnets for foreign retailers facing declining demand in their home markets. On Friday (February 19), Carrefour said profit for 2009 fell nearly 70 per cent as sales languished in Europe. The Indian retail market is estimated to be currently worth about $450bn (£291bn), of which organised retail with a share of 6 per cent is growing at more than 20 per cent a year. Carrefour said it has been meeting local vendors and suppliers to finalise sourcing arrangements for food and non-food items. The company already sources supplies worth about $2bn (£1.29bn) from India, according to industry estimates.

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