Following in the footsteps of its global rivals, Carrefour has finally entered the Indian market with its first cash and carry store

Following in the footsteps of its global rivals, Carrefour has finally entered the Indian market with its first cash and carry store. Located east of New Delhi in the Shahdara neighbourhood, the 56,000 sq ft store trades under the Carrefour Wholesale Cash & Carry banner. The store offers more than 10,000 SKUs in food and general merchandise in a bid to cater for professional businesses, restaurants and local retailers.

Carrefour has been eyeing India for some time. Its entry is unique in that it has not teamed up with a local company, despite being linked to India’s largest retailer Future Group. Foreign direct investment (FDI) rules only allow single-brand retailers to operate in the country; multibrand retailers must enter via the cash and carry format, therefore servicing other retailers rather than consumers, or link with a local player.

Tesco and Walmart opted for a combination of the two, having formed partnerships with Tata and Bharti respectively. Walmart now provides support including logistics and private label sourcing for Bharti’s retail operations while also trading through a handful of BestPrice Modern Wholesale units. Unlike Carrefour, the stores do not bear the Walmart name. Tesco, meanwhile, continues to solely provide back-end support, although its first cash and carry store is expected to open in March. Striking relationships with domestic retailers has enabled Walmart and Tesco to benefit from local knowledge and introduce their own brands to Indian consumers so that if the government decides to relax FDI rules, they will be well-positioned to build their store networks on their own. It is likely that Carrefour will continue to look for a local partner, and Future Group remains a strong candidate.

In the meantime, growth will be slow and steady with the cash and carry format. Germany’s Metro was among the first foreign retailers to enter India in 2003, and the only big food retailer to go down the solo route. Despite its status as the world’s largest cash and carry retailer, Metro has opened fewer than one store each year in India. Carrefour chief executive Lars Olofsson believes the Shahdara opening will be “followed shortly by the opening of other cash and carry stores” but it’s fair to say that growth will be slow and steady.

After Carrefour’s failure in Russia and continued uncertainty about its ability to turn around its domestic operations, all eyes will be on India.

Natalie Berg, global research director, Planet Retail.

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