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Slump may delay Carrefour’s India retail plan by one year

Posted by retailigence on November 26, 2008

Carrefour SA, the world’s second-largest retailer, will take at least a year to tie up with an Indian partner to start retail operations in the country as its prospective partners grapple with the ongoing financial crunch and slowing sales. The French retailer is also delaying its retail plans to focus on launching cash & carry (wholesale) operations next year, according to a top company source.

“We are making thorough due diligence and understanding the finer details of retailing in India, which is why we are taking some time. We are still in talks with two-three Indian companies,’’ a company official said.

An e-mail sent to the company’s headquarters in France did not elicit any response. Carrefour is in talks with more than six Indian companies that include diversified business groups, retailers and mall owners to find a retail partner, the company had said earlier. Foreign retailers are opening wholesale stores in the world’s second-most populous country, because the Indian rules bar them from setting up or owning stake in local retail chains. The ban does not apply to wholesale stores.

The name of the wholesale stores could be ‘Carrefour Cash & Carry’ depending on getting the regulatory approvals, the official said. Another key reason delaying Carrefour’s entry into the retail segment is the French giant’s tough bargaining stance. “Many of the companies do not like this bargaining,” a retail consultant said, who declined to be named. In November 2007, the Paris-based company announced that it may start operations from metros such as New Delhi, Mumbai, Bangalore and Chennai. The company will be setting up cash & carry outlets under the brand ‘Carrefour’ in the suburbs of these cities.

Carrefour has held talks with Bharti Enterprises, the Wadia Group, Delhi-based realty companies such as Parsvnath and DLF for potential tie-up, according to reports. The size of the franchise stores and cash & carry outlets will range from 32,000 sq ft to 86,000 sq ft. Barring the cost of the real estate, the fit-ins may cost $5-10 million per outlet, Carrefour said earlier.

Though their home markets are passing through recession, US and European retail chains such as Wal-Mart, Tesco and Carrefour are betting on emerging markets such as India due to its high economic growth and large organised retail opportunity.

Sources :- Business Standred


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