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Entry strategy of carrefour in India
Carrefour is a French multinational retailer aiming to expand its market share in the Indian retail industry through B2C channels and strategic joint ventures, notably with the Pantaloons Group. The company emphasizes localization and supply chain efficiency, sourcing locally and adapting store formats to meet regional demands. The Indian retail sector is projected to grow significantly, attracting international competition and investment, prompting Carrefour to implement competitive strategies that focus on brand loyalty and increased customer engagement.
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Entry strategy of carrefour in India
- 1. CARREFOUR PRESENTATION : GROUP 2 MANVICHOPRA ANUJ BUDHIRAJA SHAILENDRA TEWARI VEDA PRADA
- 2. CARREFOUR:THE MULTINATIONAL • French,multinational retailer headquartered Boulogne, Billancourt, France in Greater Paris • Second largest retail group in the world in terms of Revenue : €81.271 billion (2011) • One of the first to open a hypermarket – supermarket and departmental store under same roof
- 3. EVALUATION OF STRATEGY WHATWHY HOW
- 4. OBJECTIVE: DEFINING THE OPPORTUNITY Objectiveis 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 Assumptions: • Accomplishment of Joint Venture with Pantaloon group • Plans to open B2C stores in metro cities
- 5. GLOBAL STRATEGY OFCARREFOUR LOCALIZATION • Biggest strength of Carrefour in the countries it operates -from local tie-ups to hiring local executives to run stores, local sourcing to merchandising • Designed stores and launched private labels to suit Chinese consumers and each store ran independently SUPPLY CHAIN STRATEGIES • Mostly uses 'direct procurement strategy' in the markets it operates. • Currently works with about 90 suppliers/ farmers in Uttar Pradesh, Andhra Pradesh, Delhi, Punjab and Haryana; directly dealing with the farmers for quality production and effective supply chain management • Keeps its supply chain very economical and flexible - trucks to bikes depending on the need & cost • Integrated Composite Application Network (ICAN) software to integrate its stores, distribution centres and supply chain partners in various countries STORE OPENINGS • Decentralisation is another key strategy of Carrefour • Set up regional offices in each of the Chinese provinces and that office took care of shops in that particular region • Adapting stores to local needs
- 6. INDIAN RETAIL INDUSTRY Grownat a CAGR of 14.6% for the period FY07-12 Accounts 14 -15% of Indian GDP Indian Retail sector is the 5th largest global retail destination Expected to grow from US $ 353 billion in 2010 to US $ 543.2 billion by 2014 Ranked as the most attractive emerging market for investment in the retail sector (Source: AT Kearney's eighth annual Global Retail Development Index (GRDI), in 2009) Organised retail: Clothing & Footwear – 37% Food & Grocery – 24.2% Government permitted 51% FDI in multi brand retail and 100% FDI in single brand retail
- 7. Clothing & Footwear: •Pantaloon Retail • K Raheja Group • Tata group – Trent • Landmark group • AV Birla group Food & Grocery: • Pantaloons • Reliance • Subhiksha • Bharti –Walmart (Easyday) • RPG group - Foodworld INDIAN RETAIL INDUSTRY- CONT
- 8. INDIAN RETAIL INDUSTRY Internationalcompetitors in India: • Walmart - 17 stores largely in the West and North – Bharti group • Tesco – Helps manage wholesale operations of Star bazaar – Trent Ltd – Tata Group
- 9. INDIAN RETAIL INDUSTRY DisadvantagesAdvantages
- 10. APPROACHES • Joint venture– With Future group (Pantaloons) with 51% ownership • Franchises • Establish individual stores with Carrefour brand name – Not possible
- 11. ENTRY MODE OPTIONSIN INDIA JOINT VENTURE ADVANTAGES • 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. Strategy • Open storesin Tier 1 & 2 cities • Compete with local players like Reliance, Big bazaar etc • Localisation- Local tie ups to hiring local executives to run stores, local sourcing to merchandising • Build awareness and Brand Loyalty
- 13. Current,Present and futurestrategy • They currently operates two wholly owned subsidiaries in India, Carrefour Wholesale cash and carry India Ltd and Carrefour India Master Franchise Co. Pvt Ltd.
- 14. Differentiator • Insurance Plans •Travel Plans • Multiplex • Kids Zone • Food Court • Gaming Zone • Gas Station • Free home delivery
- 15. Financials and futureestimates Annual Income Statement Data Actuals in M € Estimates in M € Fiscal Period Dece mber 2009 2010 2011 2012 2013 2014 Sales 85 963 90 099 81 271 80 627 81 136 83 566 Operating income (EBIT DA) 4 656 4 894 3 883 3 841 3 895 4 115 Operating profit (EBIT) 2 777 2 972 2 182 2 137 2 236 2 372 Pre-Tax Profit (EBT) 1 095 1 179 -1 238 1 469 1 605 1 913 Net income 327 382 371 830 1 015 1 161 EPS ( €) 0,48 0,56 0,55 1,13 1,41 1,59 Dividend per Share ( €) 1,08 1,08 0,52 0,56 0,59 0,67 Yield 5,59% 5,59% 2,69% 2,88% 3,05% 3,45%
- 16. Stock Price • Stocklisted on Euronext • CMP -€ 19.61 • In one year it changed from € 17.83 to € 19.61 • Stock appreciated for 9.98% in one year’s time • We want the stock to appreciate to € 30 in 3- 4 years time (over 53% increase)
- 17. Local players inFY09-10 and 10-11 Combined losses increased by 8 % to Rs 987 cr ore during 2010-11
- 18. Marketing • Providing promotionaloffers to customers-giving coupons and 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. CARREFOUR : COMPETITIVESTRATEGY Local competition • Wider range of products under one roof • Better infrastructure , ambiance • Localization Foreign competition • Increased marketing • higher use of social networking • Decentralization • Localization
- 20.