INDIA LETS STARBUCKS,IKEA OPEN STORES IN RETAIL REVERSAL

India abandoned a rule against foreign single-brand retailers operating stores without a local partner, paving the way for global companies including Starbucks Corp. (SBUX) and Ikea.

The government ratified a Nov. 24 cabinet decision to raise the ownership limit to 100 percent from 51 percent for single- brand, Trade Minister Anand Sharma said in a statement yesterday. The new rules take effect immediately and require the companies to use smaller Indian companies for at least 30 percent of procurement, he said.

WAL-MART LOOKS ABROAD FOR GROWTH

Photo Source: http://www.tmonews.com

Over the past several months,  Wal-Mart's (WMT) stock has not enjoyed the same momentum shared by many of its retail peers. Wal-Mart, which closed around $56 per share on January 21, is up 12.3% since the end of August. That performance pales in comparison to the S&P Retail Index's astonishing 27.1% jump during the same period. Sluggish U.S. results have certainly played a role in weighing down Wal-Mart's stock price, as a weakened basic-needs consumer, and increased competition from dollar stores, have led to six consecutive quarters of same-store sales declines and only nominal operating margin expansion. However, we believe Wal-Mart's domestic troubles may be distracting from what could be one of retailing's more significant international growth stories.

Although we anticipate U.S. issues will eventually be resolved through merchandise mix adjustments and new store formats, Wal-Mart's international operations will likely be the company's primary growth engine going forward. This segment represents approximately 25% of Wal-Mart's revenue, and 21% of its operating income, and we expect it to average nearly 9% revenue growth annually, and generate more than one third of overall revenue over the next decade, compared with just above inflationary growth domestically (combining Wal-Mart U.S. and Sam's Club). Additionally, these estimates could prove to be conservative, as Wal-Mart has established footholds in several rapidly developing economies across the globe.

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.

CARREFOUR CARTS INTO INDIA VIA DELHI BYLANES

Image via Wikipedia

NEW DELHI: Shahadara is an unlikely place for a multinational supermarket chain but the world's second largest retailer, Carrefour, has chosen the chaotic, not up-market but vibrant east Delhi neighbourhood as its entry point to the vast Indian wholesale retail market. The French retail group on Thursday announced the opening its first cash-andcarry or wholesale outlet in Shahadara.

Government regulations only allow foreign retailers in the wholesale segment and prohibits FDI in the multibrand retail. There is stiff opposition from small shop owners and kirana stores and political parties to further open up the retail sector to foreign players.

The Department of Industrial Policy and Promotion had recently floated a discussion paper on the issue of opening up of the retail sector and some policymakers have backed the idea of allowing greater foreign participation in the retail sector.

The worlds largest retailer, Wal-Mart, had entered into a joint venture agreement with Bharti Enterprises and opened its first wholesale store in Amritsar. It plans to open other stores in the next three years. Germany's Metro entered the country's wholesale retail segment in 2003 and has stores in Hyderabad, Bangalore, Mumbai and Kolkata.

Tesco reveals strong sales in Asia

Photo Source : http://www.newstatesman.com

Supermarket Tesco has revealed strong sales growth in South Korea, China and India as the chain continues its expansion in overseas markets.

The Cheshunt-based group now generates 31% of sales and 22% of profits from international operations, compared with 10% and 5% respectively 10 years ago.

In South Korea, which is Tesco's biggest market outside the UK, like-for-like sales growth in the nine weeks to October 31 accelerated to 6.7%, compared with 6% in the previous quarter and 0.6% in the period prior to that.

Sales from stores open more than year in China were up 8.3% in the nine weeks after rising 9.3% in the previous quarter.

INDIA MAY DECIDE ON WAL-MART, CARREFOUR IN 2 - 3 MONTHS

Fresh Food - Developing markets are the primary engine of growth

Sept. 18 (Bloomberg) -- India may decide in two to three months whether to allow companies including Wal-Mart Stores Inc. and Carrefour SA to open retail stores in Asia’s third-largest economy, an official said.

“In the next two to three months, you should expect some traction on the plans,” junior trade minister Jyotiraditya Scindia said in an interview in New Delhi. “We believe that it is an opportunity to multiply jobs. We need to weigh both sides of the issue.”

The government is reviewing feedback it sought in July from interested parties such as local and foreign retailers, and industry associations, Scindia said. The discussion paper prepared by the Department of Industrial Policy and Promotion said foreign direct investment in retail will help bring funds into farms, storage chains and reduce prices.

A decision to allow FDI in multi brand retail will open up the world’s second-most populous country for Bentonville, Arkansas-based Wal-Mart that has struggled to revive sales back home following the worst U.S. recession since the 1930s. Retail sales in India, where economic growth averaged 8.7 percent in the last two quarters, are estimated to grow 53 percent to 25 trillion rupees ($545 billion) by 2014, according to a May report by Business Monitor International.

CARREFOUR STILL SEEKING PARTNER IN INDIA

Thierry Garnier, Carrefour's executive director 

(Reuters) - French retailer Carrefour is still seeking a local partner to enable it to set up hypermarkets in India and expects to open its first cash-and-carry store in the country in the coming months.

The new store will be in New Delhi and will have a surface area of 5,000 square metres, Thierry Garnier, Carrefour's executive director for growth markets, told Reuters on the sidelines of an investor day on Thursday.

"Today we are continuing to review all opportunities of sealing partnerships with Indian companies," Garnier said.

CARREFOUR'S ASSETS SALE GENERATES INTERESTS IN US

NEW YORK: The move by French hypermarket chain, Carrefour, to sell its stores in Malaysia, Singapore and Thailand has generated interests in the US.


US institutions involved in merger and acquisition activities are closely monitoring the developments. Almost all major US dailies, including some local provincial newspapers, have been carrying reports about it.


“Carrefour’s move is of interest for businesses here because many, like the French retailer, are also eyeing the emerging markets of China and India for further growth,” a Wall Street analyst told Bernama. Carrefour is keen to move to India where it sees a huge middle-class consumer base with big purchasing power and appetite for foreign consumer goods.

The analyst said major US stores, which were interested to enter India, were trying to “learn” from the experiences of Carrefour’s bid to penetrate the Indian market.

Foreign retailers have devised a way to circumvent the restrictive regulations that do not allow retailing by foreign companies.

They have to set up wholesale operations to comply with the maze of Indian regulations.

The offers for Carrefour’s 69 outlets in Malaysia, Singapore and Thailand were supposed to have been received last Wednesday.

Among those bidding were reportedly Japanese rival Aeon, Britain’s Tesco and France’s Casino Gulchard-Perrachon SA.

Aeon’s bid has not surprised US analysts who said that the Japanese firm had previously acquired Carrefour’s assets in Japan in 2005. Also in the race are Singaporean firms – NTUC FairPrice and the Dairy Farm International Ltd. — Bernama

Wal-Mart, Tesco May Be Welcomed by India Consumers, Survey Says

Left: People taking pictures of the inauguration function of the first Wal-Mart store in Amritsar

India’s consumers will probably welcome the entry of overseas retailers such as Wal-Mart Stores Inc. and Tesco Plc, according to a survey conducted by a management school.

Eighty four percent of respondents in a survey conducted in New Delhi by the Birla Institute of Management Technology said they supported allowing foreign direct investment in India’s retail industry. The Noida, Uttar Pradesh-based institute said it surveyed 660 people. It didn’t provide a margin of error.The findings were submitted to the trade ministry, which had invited views. Bentonville, Arkansas-based Wal-Mart is urging India’s government to lift curbs on the retail industry’s operations in the world’s second-most populous country. Total retail sales in India will grow from 16.3 trillion rupees ($350 billion) this year to 25 trillion rupees in 2014, Business Monitor International estimates.

“Customers are definitely going to benefit on price, and better quality of service,” said Kartik Dave, an associate professor at the management school.

Overseas companies are restricted to 51 percent ownership in single-brand outlets or 100 percent ownership in wholesale stores in India.

Wal-Mart may open “hundreds of stores” in India once the government allows foreign direct investment in the South Asian country’s retail industry, Raj Jain, managing director of the Bharti Group’s wholesale venture with Wal-Mart, said last month. The world’s biggest company has also said India’s inflation would slow by at least two percentage points should the government permit increased foreign investment in retail.

Carrefour SA has said it may opt for a franchise model in India.

To contact the reporter on this story: Malavika Sharma in New Delhi at msharma52@bloomberg.net.

Top retailers seek 51 per cent FDI in multi-brand retail

Left: Bharti Wal-Mart’s first cash-and-carry outlet, BestPrice Modern Wholesale, sets up shop in Amritsar


NEW DELHI: Two of the world's top retailers, Walmart and Carrefour, vying for a cut in India's organised retail pie, have asked the government to
allow up to 51 per cent foreign investment in multi-brand retail.

India allows 51 per cent foreign direct investment (FDI) in single-brand retail and 100 per cent FDI in cash-and-carry or wholesale trading. It has not allowed foreign companies to run multi-brand stores in India.

Walmart has partnered with the Bharti group to operate cash-and-carry wholesale stores and intends to continue the tie-up for multi-brand retailing.
"Bharti Walmart believes that FDI in multi-brand retail should absolutely be permitted, and ideally without any restrictions (i.e. fully open at 100 per cent)," the company said in a letter to the commerce ministry.

"Full opening of FDI in retail will create the conditions for the greatest flow of investment to the back-end with the related benefits for farmers, small businesses and consumers," it added.

Carrefour, which is also drawing up plans to roll out such wholesale formats, also supports a more relaxed foreign investment policy.

"Any cap or restrictions on FDI in this sector may result in potential loss of opportunities and avenues of inclusive growth of the retail sector," said Carrefour.

The Walmart and Carrefour views were in response to the the commerce ministry's recent move to solicit feedback on the subject.

"Should the government be of the view for staggered opening of the sector to FDI, the cap should be kept such that a foreign retailer is entitled to make a minimum of 51 per cent investment with rights to manage the company and bring about efficiency in the operations and induct the best industry practices," said Carrefour.

Both retailers recognised the fact that political pressure existed for not opening up the sector, but said the move would help tame inflation, build the back-end infrastructure and result in better prices for farmers.

Bharti Walmart said it was not in favour of having a fixed per centage of investment in back-end operations, one of the suggestions put forth by the government in the discussion paper, as it could turn out to be counter-productive.

"Given the state of the supply chain in India, much of the investment in the back-end will be up-front, particularly in the initial years. A fixed per centage of investment on the back-end could therefore lead to a misallocation of resources and take away from where they are most needed to create efficient supply chains," said Bharti Walmart.

"Any stipulation for minimum investment of any fixed per centage in the back end infrastructure, beyond what the foreign retailers are planning to do, will put undue and additional pressure on the profitability margin expected from the retail operations and negatively influence the viability of the operations," said Carrefour.

Allow 100 pc FDI in multi-brand retail: Carrefour to Govt

NEW DELHI: Promising to create a strong infrastructure and thousands of jobs in India, French retail major Carrefour has called for allowing 100 per cent FDI in multi-brand stores, and said that the move would ease inflationary pressures.

The government has taken a tentative step to open the politically sensitive sector, which employs 34 million people, to global players with the Department of Industrial Policy and Promotion (DIPP) releasing a discussion paper on the issue.

"Any cap or restriction on FDI in this sector may result in potential loss of opportunities and avenues of inclusive growth of the retail sector," Carrefour has said in its suggestions recently to the industry ministry. It, however, said if the government wants staggered opening of the sector, the FDI cap should be kept such that a foreign retailer is "entitled to make a minimum of 51 per cent investment with rights to manage the company...".

The firm said each store of 50,000-60,000 sq ft sales area could provide about 200 direct and 250 indirect jobs.

"As per our estimates, if Carrefour starts its retail operations in India, in about 10 years, we would provide direct and indirect employment opportunities to approximately 20,000 people in the stores itself," the firm said.

While global players like USA's WalMart and German-Metro want the government to completely open the sector to foreign investments, Indian business chambers like Ficci and Assocham favour calibrated liberalisation.

India allows foreign investment only in single-brand retail, with FDI cap of 51 per cent.

Carrefour said, "(FDI in multi-brand retail) will help in controlling the inflation rate by offering more competitive and rationalised prices of products to consumers and reduction of wastage across India's farm-to-fork supply chain," it said.

Inflation in India is hovering at about 10 per cent. The French firm said that improving supply chain and logistics will enable retailers to enhance overall competitiveness, decrease the prices offered to consumers and reduce wastage.

"Carrefour has plans to built appropriate back-end infrastructure to support the retail operations," it said.

The back-end infrastructure includes contract farming, local sourcing, cold chains and other logistic supports.

As per estimates, India loses fruits and vegetables worth thousands of crore rupees annually due to lack of proper cold chains and back-end infrastructure.

Yum! Opens First Taco Bell in India

Image via Wikipedia

[PRESS RELEASE] LOUISVILLE, Ky.--(BUSINESS WIRE)--Yum! Brands, Inc. (NYSE: YUM) announces the grand opening of the first Taco Bell in India by its international division, Yum! Restaurants International (YRI). Yum! is the leading restaurant company in India with its KFC and Pizza Hut brands. The introduction of the first Taco Bell in India reflects the Company's strategy of creating a third global brand.

"We're delighted to be offering Taco Bell to consumers in India, a key growth market in our global portfolio," said Graham Allan, president, Yum! Restaurants International. "Based on customer feedback so far, we expect it will become extremely popular, just as it is in the United States. The Mexican-style food is perfect for the Indian taste palate and we will be offering a variety of vegetarian meals as well so that everyone can enjoy it."

Yum!'s new Taco Bell international restaurant, located in Bangalore, India, is the country's first experience with the Mexican-inspired quick-service restaurant brand. Taco Bell's "Think Outside the Bun" positioning and brand essence is expected to resonate extremely well with India's young population. The new Taco Bell India menu features tacos, burritos, nachos, quesadillas and Crunchwraps, including spicier products tailored to the Indian market. The menu offers breakthrough value priced items starting at 35 cents. In addition, fifty percent of the menu features a vegetarian range of products specially created for Indian consumers including potato paneer burritos and crunchy potato tacos, among others.

"We are confident that Taco Bell will redefine the eating-out market in India with incredible taste catering to many consumer segments, day parts and occasions at an unmatched price," said Niren Chaudhary, managing director, Yum! Restaurants International India. "We are excited to be opening the first Taco Bell in India and we plan to expand it nationally as an incredibly vibrant and youthful brand."

Yum! Brands is focused on developing Taco Bell into its third global brand after KFC and Pizza Hut. Taco Bell is the second most profitable brand in the United States. Over the past few years, the Company has expanded Taco Bell beyond Canada and Puerto Rico to other markets including Guatemala, Costa Rica, Panama, Dominican Republic, Guam, Iceland, Philippines, Dubai, Spain and Cyprus. Yum! is optimistic about the long-term potential of growing Taco Bell internationally. As of year-end 2009, there are more than 250 Taco Bell restaurants outside of the United States.

India is a key growth market for Yum! Brands due to its extremely young and large population of 1.1 billion people, growing middle class and emerging economy. Over the past 12 years, Yum! has become the largest and fastest growing restaurant company in India by successfully developing a strong infrastructure, highly-skilled workforce focused on providing outstanding customer service and innovative, localized menus offering value options. By 2015, the Company expects to have at least 1,000 restaurants in India, up from 230 restaurants as of year-end 2009.

KFC is the fastest growing quick-service restaurant brand in India with 72 restaurants in 13 cities as of year-end 2009. Yum! opened 27 new KFC restaurants in India in 2009, which is among the highest number of store openings in the country's quick-service restaurant industry. KFC is a young, vibrant brand in India from its contemporary restaurant designs featuring bold colors, open seating areas for large groups and flat-panel televisions to innovative marketing programs to unique signature products, including vegetarian items. Last year, the Company opened its first KFC Krushers beverage bar and store design in India highlighting YRI's popular new line of yogurt and fruit smoothies, dairy-based and soda-based drinks and teas.

Pizza Hut has been named the "Most Trusted Food Service Brand" in India for the fifth year by The Economic Times (India), ahead of all other Indian and global brands, demonstrating its popularity in the country. As of year-end 2009, there are 158 Pizza Huts in 34 cities offering a range of localized products including masala pizza, chicken tikka appetizers and spicy Indian drinks.

YRI is the largest division of Yum! Brands with more than 13,000 restaurants outside the U.S. and China Division. One of Yum! Brands' four key business strategies is to drive aggressive international expansion and build strong brands everywhere. In 2009, operating profit for YRI was $491 million. The year 2009 also marked the tenth year that YRI has opened more than 700 new restaurants outside the U.S. and China.

Yum! Brands, Inc., based in Louisville, Ky., is the world's largest restaurant company in terms of system restaurants with more than 37,000 restaurants in more than 110 countries and territories. The company is ranked #239 on the Fortune 500 List, with revenues of nearly $11 billion in 2009. Four of the company's restaurant brands - KFC, Pizza Hut, Long John Silver's and Taco Bell - are the global leaders of the chicken, quick-service seafood, pizza and Mexican-style food categories. A&W Restaurants is the longest running quick-service franchise chain in America. Outside the United States, Yum! Brands system opened more than four new restaurants each day of the year, making it a leader in international retail development.