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Review 2009 / Retail Ahoy : Finally, Carrefour makes it

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Even as the government sat over the issue of FDI in modern retail trade—despite the government-constituted Icrier study gave a green signal for the same—forcing many a leading players such a Starbucks to dump their India plans, more and more international players such as Carrefour, Louis Vuitton and Marks & Spencer came in drove to the country’s red hot modern trade, while giants like Tesco, Target and Woolworths among others are firming up their India plan.

The largest French retailer Carrefour, which is also the world’s second largest retailer,  has decided to enter the country late October. To begin with, the company is setting up shops in Delhi, Mumbai, Bangalore and Chennai. The company has set up two business entities for this one for its cash-and-carry business and the other, a master franchisee which will lend its banner, technical services and know-how to a local company for direct-to-consumer retail. The cash-and-carry venture, Carrefour WC&C India and the direct-to-consumer retail company, Carre four India Master Franchise Company, have already set up their offices.

Carrefour has also zeroed in on three ‘large and powerful’ prospective local companies that could be its possible partner for the direct-to-consumer business. “We hope to start rolling out the outlets in both formats by the second half of the next financial year,” Carrefour India managing director Herve Clec’h announcing the deal. However, unlike the Bharti-Wal-Mart model that will not use the Wal-Mart brand for its business, the $130-billion French retailer would be franchising its Carrefour banner to its domestic partner. It would also franchise its know-how and technical services to the partner along with back-end supply. Also, majority of the merchandise for the franchise model, whose front end will have 100 percent Indian ownership, will have to be sourced from the wholesale venture. “Though we will not be very strict about it, this will be reflected in the agreement we make with our Indian partner,” said Carrefour India project general manager Gerard Freiszmuth. “It is also only logical that the brand name is that of Carrefour’s. It is like that across the world. Even the three firms we are talking to here want it,” added Clec’h.

With most retail chains betting on the discount model and Wal-Mart claiming to provide the cheapest prices, competition has heated up on the pricing front. “Starting a price war is not our way in Asia. But we always try to be the cheapest. It may take time, but we will adjust to the market conditions,” said Clec’h. The wholesale business would be spread across a built up area of over 5,000 sqmt and over 80 percent of the merchandise would be locally sourced. Carrefour already sources products such as footwear, garments, accessories and house decorations worth $450 million from the country. “We will use the current bunch of manufacturers from whom we source and are meeting with several new suppliers. Also, we will do private labelling ere, but it will depend on the market maturity,” said Clec’h.

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Neeta Nair

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