Thursday, December 30, 2010

Carrefour enters India, sets up first cash-and-carry store

The world's second-largest retailer, Carrefour, on Thursday announced that it has opened its first 'cash-and-carry' outlet in the country in New Delhi."The opening of this first store marks Carrefour's entry into the Indian market and will be followed shortly by the opening of other cash-and-carry stores," Carrefour CEO Lars Olofsson said in a statement.Carrefour has made its intent to enter the multi-brand retail segment in the country known and is understood to be at an advanced stage of talks with home-grown retail giant, Future Group.However, the existing policy of the Indian government does not permit FDI in multi-brand retail, as it is feared that traditional kirana ('mom-and-pop') outlets would be wiped out.Nevertheless, it is understood the two companies could sign a deal as early as next year for a partnership in India.Olafsson said opening of the first store was essential to allow Carrefour's teams to fully understand the modalities of doing business in the India market before building the company's presence in other formats. The company however, did not disclose investment details.The new store -- Carrefour Wholesale Cash&Carry – in Seelampur area of New Delhi is spread across 5,200 square meter and will house over 10,000 stock-keeping units to cater to professional businesses, institutions, restaurants and local retailers.Since the FDI policy in India does not allow foreign companies to open multi-brand retail stores in the country, global retailers have opted for the cash-and-carry route to establish their presence here.India currently allows 51 per cent foreign direct investment (FDI) in single-brand retail and 100 per cent in the cash-and-carry segment, but none in multi-brand retail.The world's largest retailer, Wal-Mart, announced a joint venture with Bharti Enterprises in 2007 and set up the 'Best Price Modern Wholesale' cash-and-carry store in Amritsar in May, 2009.The Bharti Wal-Mart joint venture operates four such stores in Amritsar, Zirakpur, Jalandhar and Kota and is expected to open up to 15 more wholesale cash-and-carry stores over the next three years.German company Metro made an entry into the India market even earlier, in 2003. It currently operates six cash-and-carry stores in Hyderabad, Bangalore, Mumbai and Koltata.Even Mukesh Ambani-led Reliance Industries Ltd's retail arm, Reliance Retail, is understood to be chalking out plans to enter the cash-and-carry business by opening at least three outlets next year.