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Blog August 9, 2013

Carrefour to Add Wholesale Stores in India

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Carrefour to locate two new stores in Bangalore, is seeking sites in states such as Haryana, Maharashtra, West Bengal.


French retailer Carrefour SA plans to open eight to 10 wholesale stores in India, doubling its network in the country, and is searching for potential locations, said a person familiar with the development.

The Indian arm of the €16.3 billion company will locate two of the new stores in Bangalore, where it has already identified a plot on Hosur Road to locate one of them, and is seeking sites in states such as Haryana, Maharashtra and even West Bengal, said the person, who didn’t want to be named.
“They are already looking at multiple options….as soon as they are able to get the right sites they will open” work on the construction, said the person, adding that Carrefour was trying to boost its presence in India, a market it entered four years ago.
A second person, a company executive who did not wish to be named, said Carrefour would be opening one store this year with two or three more coming up next year.
Carrefour has four wholesale or cash-and-carry stores in India—in Delhi, Jaipur, Agra and Meerut—under Carrefour WC and C India Pvt. Ltd. Such stores cater to other retailers and institutional buyers, who settle the bill on the spot and take away the merchandise themselves.
A wholesale store typically requires an investment of Rs.18-20 crore, including the cost of land, construction and furnishing.
The company is reinforcing its wholesale operation at a time when other retailers, including American rival Wal-Mart Stores Inc., are going slow in India, which until September last year only allowed foreign supermarket operators to run wholesale outlets. That month, the government allowed foreign direct investment (FDI) of up to 51% in so-called multi-brand retail, but left it to state administrations to decide whether they would allow foreign-owned supermarkets on their territory. It has recently eased other norms for FDI in supermarkets.
Policy constraints and political opposition to FDI in multi-brand retail have made foreign supermarket operators wary of investing in India, which heads for general elections next year. According to analysts, retailers are likely to wait until the election outcome before announcing any big investments.
“Investments will only be gradual and retailers will take time,” Anil Talreja, a partner at consulting firm Deloitte Haskins and Sells, said in an interview earlier this month. Big investments are not on the radar, he said.
In the meanwhile, a cash-and-carry network would help foreign retailers build assets and increase their footprint in the country, said Vivek Gupta, a partner at Gurgaon-based tax advisory firm BMR Advisors.
Carrefour’s India spokesperson declined to comment on the company’s expansion plans. The Frech retailer has had an office in India for over a decade to source material and merchandise for its operations in other countries.
Grocery trading in India is confined largely to clusters of unorganized wholesale markets in the cities where traders source products from company stockists and sell them to retailers.
Companies such as Carrefour, Germany’s Metro AG, which has opened 12 wholesale stores in the country since its entry in 2003, and Wal-Mart are attempting to organize wholesale trading while attempting to gain a sense of Indian customer preferences before they open front-end retail operations.
“There is also associated learning on what customers can buy in India,” said Debashsih Mukherjee, a partner at consulting firm A.T. Kearney.

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