Reliance Retail Ltd, Tesco Plc, Metro AG and Bharti Walmart Pvt. Ltd
Companies such as Reliance Retail Ltd, Tesco Plc, Metro AG and Bharti Walmart Pvt. Ltd plan to open at least 20 cashand carry stores in 2011-nearly trebling the number of such outlets in the country.
India's nascent cash-and-carry business will grow substantially this year as companies look to gain a foothold in the market on expectations that the government will open up the lucrative multi-brand retail sector to foreign investment. Cash-and-carry wholesale stores sell only to other businesses rather than to end-consumer. While the government allows 100% foreign direct investment (FDI) in this segment, it is yet to allow global retailers to sell directly to end-consumers through multi-brand outlets. Last week, Carrefour SA, the world's second largest retailer, entered India by opening its first cash-and-carry store in New Delhi. Companies such as Reliance Retail Ltd, Tesco Plc, Metro AG and Bharti Walmart Pvt. Ltd plan to open at least 20 cashand carry stores in 2011-nearly trebling the number of such outlets in the country. Germany's Metro, the first global retailer to start a wholly owned subsidiary in India in 2003, currently runs five cashand- carry outlets in the country.
It is planning to open twofour more in Punjab this year. Bharti Walmart, an equal joint venture between New Delhi- based Bharti Enterprises Ltd and the world's largest retailer Wal-Mart Stores Inc., runs five Best Price Modern Wholesale stores in Punjab, Rajasthan and Madhya Pradesh. It plans to launch around a dozen such stores this year, said Arvind Mediratta, executive vice-president and head of cash-and-carry for Bharti Walmart. UK-based Tesco will open its first store in India this year in partnership with the Tata group's retail arm Trent Ltd. "It's the right format for a country like India because (the country) has a large number of mom-and-pop stores, hotels, restaurants and institutions," said Mediratta of Bharti Walmart. "It's a great model and we are bullish on this." He declined to share revenue and expected growth figures. India has an estimated 12 million mom-and-pop stores, or neighbourhood retail shops that are a target for most of the wholesale stores, along with hotels, restaurants and other businesses. In November, Mediratta had said India can potentially have around 500 wholesale stores.
"Every district can have one cash-and-carry," he had told a conference organized by the Confederation of Indian Industry, an industry lobby. Global retailers are also taking the wholesale route to be ready if the government opens multi-brand retail to FDI. After insisting for years that FDI in this segment would destroy local mom-and-pop stores, the government issued a discussion paper on it last year, raising expectations that multi-brand retail may soon be opened up. Asitava Sen, director of corporate advisory at consulting firm Apco Worldwide Inc., said global retailers are keen to open cash-and-carry stores as they are hopeful of eventually moving into multi-brand retail. "The first point is to get a foot in the market, understand the dynamics of the market, set up the supply chain and the sourcing base, which is the same for wholesale as well as (consumer) retailing," he said. The cash-and-carry business itself will be worth $22 billion ('98,340 crore today) in India by 2017, according to industry estimates-the reason Bharti Walmart and Metro say they will continue in this segment even if the government allows foreign retailers to run multibrand retail outlets. "It's a big business opportunity," said Sen of Apco Worldwide. "India has millions of (small) retailers and not all of them are serviced by distributions of national manufacturing companies. So there is a huge opportunity for the cash-andcarry (model)."