Carrefour to open 50 food stores in Delhi-NCR in 5 years as it returns to India

New Delhi: Carrefour will open 50 food and grocery stores in the Delhi-NCR region in the first leg of expansion spread over five years, as the French retailer marks its re-entry in India’s fresh and packaged foods market.

"We have decided to start with Delhi-NCR and work on three formats—supermarket, compact hypermarkets and gourmet stores. This, I would say, is the recipe of our future success; smaller format, more formats, differentiation in the offering, and of course e-commerce. We will be starting with Delhi before extending to other regions of India," Patrick Lasfargues, executive director, international partnership at Carrefour, said in an interview with Mint on Tuesday.

Carrefour will open stores selling fresh produce as well packaged foods such as staples and vegetables, besides cold cuts.

Last month, Carrefour, which operates hypermarkets and grocery stores in several countries, announced its return to India through a franchise partnership with Dubai’s Apparel Group.

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The company first entered India in 2010 through the wholesale cash-and-carry format, for which foreign direct investment (FDI) rules are more lenient, allowing overseas companies to invest directly in India's retail market. This is different from FDI in multi-brand retail, where foreign retailers are expected to partner with local companies.

Carrefour shut its five stores here and exited the market in July 2014, citing a lack of business and an inability to find a partner to expand into multi-brand retail.

The plan to re-enter India

The plan to re-enter India’s $600-billion food and grocery market is part of Carrefour's International Partnership 2026 development plan that focuses on the retailer’s strategy to expand into over 10 new countries by 2026.

“In this strategy, we had decided to look very carefully at India due to the population, the GDP per capita, due to the growth of the country, malls coming up, more e-commerce than before. This is a very strong India now,” he said.

Investments in setting up stores will be made by the Apparel Group. Nilesh Ved, owner of Apparel Group and chairman of AppCorp Holding, declined to share investment numbers.

Globally, while Carrefour does sell some general merchandise and other non-food items such as small appliances and personal care products in stores—in India the focus will be largely on food with a “small part” of non-food.

"Non-food will be quite limited in this market because of the size of the stores. Indeed, mostly food, of course manufactured in India. A very small part of it may be imported food. We have an option that we're going to consider to locally manufacture some Carrefour private labels in the market,” he said.

Stores will be a combination of smaller supermarkets of about 8,000 sq ft and compact hypermarkets in the range of 25,000 to 30,000 sq ft.

The first store is set to come up in the second half of next year; with plans to open 50 stores in Delhi-NCR over the next five years.

“We are opening in 2025 with the first target of about five stores. So, India is definitely on the Carrefour road map,” he said.

Ved, whose company operates stores for brands such as Charles & Keith, Victoria's Secret, Aldo, Bath and Body Works in India, said the market has few organized players operating in the food retail market in India.

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Reliance operates food stores under its Reliance Fresh brand. Spencer’s, part of RP-Sanjiv Goenka Group, operates multi-brand stores selling food, personal care, fashion, home essentials, electrical and electronics. Online retailer Amazon has a stake in offline food and grocery retailer More that operates over 800 supermarkets apart from hypermarkets in India.

To be sure, Carrefour operates 14,930 stores in 40 countries worldwide. Of these, 8,865 are franchised stores in the eight countries in which it directly operates (5,336 in France) and 2,543 are managed by international partners, which means a total of 11,408 stores are operated by a third party.

Lasfargues said limitations in India’s multi-brand retail policy that do not permit brands such as Carrefour to operate in the country directly are “not a challenge”. “We do not invest in any other country outside of our eight core countries,” he said.