Carrefour eyes India expansion via organic route, acquisitions

Greater Noida: French retail major Carrefour, which has re-entered the Indian market after a decade through a partnership with Dubai-based Apparel Group, has plans to add multiple stores in the coming months across Delhi-NCR, enter the western region by next summer, and is also open to acquisitions to expedite growth.

The Apparel Group, which opened its over 50,000-sq ft Carrefour store in Greater Noida, Delhi-NCR, will add another store in the next four weeks, as part of its plan to roll out 50 food and grocery stores in the first phase of expansion over the next five years.

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This is Carrefour's second inning in India, after it entered in 2010 through the wholesale cash-and-carry business and exited in 2014 by closing its five stores, citing poor performance and inability to find a local partner for expansion.

When asked about the expansion strategy, Apparel Group owner and chairman Nilesh Ved told PTI that it will take a calibrated, controlled speed and not a mass rollout. It will also be open to an acquisition route to accelerate growth alongside organic expansion.

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"We want to grow fast, but at the same time we want to make sure we are in control. You need a strategy - can we open five, ten, fifteen stores at one time, and then move forward. So we are opening one, we are opening a second one very soon, and looking at another in NCR. By next summer we will be ready for the western region," he said.

Carrefour, in India, as per its plan, will initially focus on the hypermarket format carrying around 50,000 stock-keeping units (SKUs), before rolling out other formats such as Carrefour Express, Carrefour Premium and Carrefour Gourmet in markets like Mumbai and Delhi, Ved said.

"We are also looking at M&As - if there is an opportunity for us to acquire, we are looking at that, to see if we can grow with acquisition also," he added.

On e-commerce and quick-commerce, Ved said the company will first focus on its physical stores rather than build dark stores in the initial phase, while it works out its supply chain.

Ved said Carrefour will move into e-commerce and quick commerce once its supply chain is ready, drawing on the pattern seen in Europe, the Gulf and India, where growth in brick-and-mortar retail and online retail are happening simultaneously.

"We will try to use our stores to do that, instead of doing dark stores in the early stages. Then we will change the strategy according to what India needs," he said, adding that India, given its scale and diversity, cannot be treated as a single market and is comparable in size to Europe.

As per its growth strategy, the company will prioritise "profitable growth" over an investment-led, cash-burn model, Ved said, adding that Apparel Group, as a privately held group, remains focused on generating profit as it scales.

"As a parent group, we are very careful about how much profit we make and how we grow from it. We will grow smartly, and the smart way for us to do it is to see how much profit we generate. It's important to think in that format. One of the values for us is that we have the engine of Carrefour, but do we have the profit for it to grow and multiply? We will do the investments, and we want to be profitable," he said.

On being asked as a late entrant in the Indian retail sector, which is projected to touch Rs 190 lakh crore (approx. USD 1.6-1.8 trillion) by 2030, Ved said India is among those markets where new shopping malls are coming.

"So, it gives opportunities for people like Carrefour and Apparel Group to go and take more market share in that shop. India is growing. So, the market will grow on its own. We will grow with India," he said.

About sourcing, Ved said the recent Free Trade Agreement (FTA) by India with the UK, UAE and some other countries, along with the prospect of a similar trade pact between India and the European Union could pave the way for two-way product flows and provide an additional boost with French Carrefour merchandise entering India, and Indian products being sold across Carrefour's global network.

"I think both ways. Indian products will go... our aim is also to see how we can ship the main India product outside to Carrefour, which has 15,000 stores globally in 40 countries - and see how we can get French products also here. It is just the beginning. I think the journey is going to be amazing," he added.

Patrick Lasfargues, Executive Director - International Partnerships, Carrefour Group, said the company is entering India this time with a business-to-consumer (B2C) hypermarket model, a departure from its earlier five-year stint about 12 years ago, which was based on a cash-and-carry, B2B format backed by direct investment.

On store format, Lasfargues said Carrefour has adopted a "hypermarket compact" format for India, in the range of 35,000 to 50,000 square feet, smaller than its legacy hypermarkets in France that have historically run much larger.

The company is also considering smaller supermarket-format stores of about 10,000 square feet focused on convenience, in addition to slightly larger hypermarkets than the Noida store, going forward, he said.

Based in Dubai, UAE, Apparel Group is a global fashion and lifestyle retail conglomerate which operates over 2,600 retail stores and 85 brands on all platforms. It has a strong presence in the Gulf region and has expanded to market in India, South Africa, Singapore, Indonesia, Thailand, Malaysia, and Egypt.