Entry strategy of carrefour in India


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Objective is to reach the market share by 2 % in Indian retail industry through B2C channels and break even

Initiatives taken by Carrefour in India:
Before FDI:
Expand B2B stores in other parts of India, mainly Pune & Bangalore (May 2012)
Talks with Pantaloons group for Joint Venture

Accomplishment of Joint Venture with Pantaloon group
Plans to open B2C stores in metro cities

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Entry strategy of carrefour in India

  2. 2. CARREFOUR:THE MULTINATIONAL• French, multinational retailer headquarteredBoulogne, Billancourt, France in Greater Paris• Second largest retail group in the world in terms ofRevenue : €81.271 billion (2011)• One of the first to open a hypermarket –supermarket and departmental store under sameroof
  4. 4. OBJECTIVE: DEFINING THEOPPORTUNITYObjective is to reach the market share by 2 % in Indianretail industry through B2C channels and break evenInitiatives taken by Carrefour in India:Before FDI:• Expand B2B stores in other parts of India, mainly Pune& Bangalore (May 2012)• Talks with Pantaloons group for Joint VentureAssumptions:• Accomplishment of Joint Venture with Pantaloon group• Plans to open B2C stores in metro cities
  5. 5. GLOBAL STRATEGY OF CARREFOURLOCALIZATION• Biggest strength of Carrefour in the countries it operates -from local tie-upsto hiring local executives to run stores, local sourcing to merchandising• Designed stores and launched private labels to suit Chinese consumers andeach store ran independentlySUPPLY CHAIN STRATEGIES• Mostly uses direct procurement strategy in the markets it operates.• Currently works with about 90 suppliers/ farmers in Uttar Pradesh, AndhraPradesh, Delhi, Punjab and Haryana; directly dealing with the farmers forquality production and effective supply chain management• Keeps its supply chain very economical and flexible - trucks to bikesdepending on the need & cost• Integrated Composite Application Network (ICAN) software to integrate itsstores, distribution centres and supply chain partners in various countriesSTORE OPENINGS• Decentralisation is another key strategy of Carrefour• Set up regional offices in each of the Chinese provinces and that office tookcare of shops in that particular region• Adapting stores to local needs
  6. 6. INDIAN RETAIL INDUSTRYGrown at a CAGRof 14.6% for theperiod FY07-12Accounts 14 -15%of Indian GDPIndian Retailsector is the 5thlargest globalretail destinationExpected to growfrom US $ 353billion in 2010 toUS $ 543.2 billionby 2014Ranked as themost attractiveemerging marketfor investment inthe retail sector(Source: AT Kearneyseighth annual GlobalRetail DevelopmentIndex (GRDI), in 2009)Organised retail:Clothing &Footwear – 37%Food & Grocery –24.2%Governmentpermitted 51%FDI in multibrand retail and100% FDI insingle brandretail
  7. 7. Clothing & Footwear:• Pantaloon Retail• K Raheja Group• Tata group – Trent• Landmark group• AV Birla groupFood & Grocery:• Pantaloons• Reliance• Subhiksha• Bharti –Walmart (Easyday)• RPG group - FoodworldINDIAN RETAIL INDUSTRY- CONT
  8. 8. INDIAN RETAIL INDUSTRYInternational competitors in India:• Walmart - 17 stores largely in the West and North –Bharti group• Tesco – Helps manage wholesale operations of Starbazaar – Trent Ltd – Tata Group
  9. 9. INDIAN RETAIL INDUSTRYDisadvantages Advantages
  10. 10. APPROACHES• Joint venture – With Future group (Pantaloons) with51% ownership• Franchises• Establish individual stores with Carrefour brandname – Not possible
  11. 11. ENTRY MODE OPTIONS IN INDIAJOINT VENTUREADVANTAGES• Establish distribution and marketing channels• Increased financial resources• Diversify risk by sharing liabilities• Increases synergies ( low labor, rent )DI SADVANTAGES• Delays decision making• increase risk of conflicts• Limited life
  12. 12. Strategy• Open stores in Tier 1 & 2 cities• Compete with local players like Reliance, Bigbazaar etc• Localisation- Local tie ups to hiring localexecutives to run stores, local sourcing tomerchandising• Build awareness and Brand Loyalty
  13. 13. Current,Present and future strategy• They currently operates two wholly ownedsubsidiaries in India, Carrefour Wholesale cashand carry India Ltd and Carrefour India MasterFranchise Co. Pvt Ltd.
  14. 14. Differentiator• Insurance Plans• Travel Plans• Multiplex• Kids Zone• Food Court• Gaming Zone• Gas Station• Free home delivery
  15. 15. Financials and future estimatesAnnual IncomeStatement DataActuals in M € Estimates in M €FiscalPeriod December2009 2010 2011 2012 2013 2014Sales 85 963 90 099 81 271 80 627 81 136 83 566Operatingincome (EBITDA)4 656 4 894 3 883 3 841 3 895 4 115Operatingprofit (EBIT)2 777 2 972 2 182 2 137 2 236 2 372Pre-TaxProfit (EBT)1 095 1 179 -1 238 1 469 1 605 1 913Net income 327 382 371 830 1 015 1 161EPS ( €) 0,48 0,56 0,55 1,13 1,41 1,59Dividend perShare ( €)1,08 1,08 0,52 0,56 0,59 0,67Yield 5,59% 5,59% 2,69% 2,88% 3,05% 3,45%
  16. 16. Stock Price• Stock listed on Euronext• CMP -€ 19.61• In one year it changed from € 17.83 to € 19.61• Stock appreciated for 9.98% in one year’stime• We want the stock to appreciate to € 30 in 3-4 years time (over 53% increase)
  17. 17. Local players in FY09-10 and 10-11Combined losses increased by 8 % to Rs 987 cr ore during 2010-11
  18. 18. Marketing• Providing promotional offers to customers-giving couponsand gifts• Free home deliveries up to 5000 Rs of buying• Provide extra services- Giving movie tickets for shopping of 2000 Rs Customer will be experiencing the gaming zone Parking free on a purchase of 1000 and above Creating strong online presence ( offer Customized deals)
  19. 19. CARREFOUR : COMPETITIVE STRATEGYLocal competition• Wider range of products under one roof• Better infrastructure , ambiance• LocalizationForeign competition• Increased marketing• higher use of social networking• Decentralization• Localization
  20. 20. THANK YOU