Carrefour plans franchise concept

Carrefour, the world’s second-largest retailer, will open its first cash & carry wholesale outlet in India in Seelampur, New Delhi, over the next 2-3 months.

The French retailer has been trying to find its feet in the country for many years now, but with little success. Following unsuccessful talks with several potential Indian partners over the last two years, Carrefour appears to have opted for the only possible solution - begin with wholesale retailing since 100% foreign investment is allowed in this form of retail trade - and continue to scout for suitable partners to also enter front-end trade.

Carrefour is widely expected to announce a partnership with the Future Group for front-end retail trading in the near future.

Speaking to reporters near Delhi today, the general manager of Carrefour India Master Franchisee Company, Jean Noel Bironneau, said, “Our first wholesale cash-and-carry outlet will be opened in Seelampur in Delhi within 2-3 months. It will have an area of 55,000 sq ft and will have over 30,000 SKUs or products varieties.”

Bironneau said his company was working towards the launch of a franchise concept as well but did not give any further details. He said in the wholesale format, locally sourced and imported items will be stocked side by side for potential B2B customers.

Wholesale trade mandates sale to only businesses, completely barring any sale to end customers.

The French retailer is already sourcing goods such as fruits and vegetables, decor items etc worth over $150 million from India.
“We intend to increase purchase for both our operations both within and outside the country. When we start having our own wholesale business in the country, our suppliers will increase and so will our product portfolio,” Bironneau said.

He said that the Indian government was giving out positive signals on foreign investments for businesses, perhaps in reference to a long standing proposal of the industry to open up front-end retail trade to FDI.

Asked if the company will be ready to take a plunge into the multi-brand retail segment in case government opens it up for FDI, Bironneau said: “Of course, we will enter. There is so much potential. But it is still early to say much with regard to it.”

Under existing law, FDI is prohibited in multi-brand retail, while foreign companies can have up to 51% stake in single-brand retailing. There is, however, no investment limit in the wholesale cash-and-carry segment.

While supporting further opening up of FDI norms in retail, Bironneau said the company has not so far given any suggestions to the government. About the company’s long term plans, he said: “With 50 million kiranas, we have an immense possibility. However, it will take us time to be where we are now currently in Indonesia where organised segment has 56% share of the retail market.”

Wal-Mart, the worlds’ largest retailer, has already taken the wholesale retail route in partnership with Bharti Group and is waiting in the wings for a liberalisation in the FDI policy.