India’s fledgling cash and carry sector is predicted to flourish in 2011 as foreign companies race to establish a foothold in the market with the expectation the government may ease restrictions on foreign investment in multi-brand retail.
According to a report on Indian website Livemint.com the number of cash and carry outlets in the country is set to triple with companies such as Reliance Retail, Tesco, Metro and Bharti Walmart indicating they would open at least 20 cash and carry stores this year.
Last week UK-based retailer Tesco signalled its arrival on the scene opening its first cash and carry outlet in New Delhi.
Bharti Walmart executive vice-president Arvind Mediratta said the joint venture company was committed to growing its presence this year with plans to open a dozen wholesale outlets in India.
“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,” he told Livemint.com. “It’s a great model and we are bullish on this.”
India has around 12m mom-and-pop stores at present, which are a target for wholesale operations, along with restaurants, hotels and other businesses, reported the website.
The development of cash and carry outlets would also position foreign companies to develop multi-brand retail outlets should the government decide to remove current restrictions on foreign in ownership in the sector.
Apco Worldwide director of corporate advisory Asitava Sen told the website global retailers were keen to open cash and carry outlets in preparation for developing multi-brand retail outlets should the government remove restrictions on this.
“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.
“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 and carry (model).”
The Economic Times reported an upsurge in consumer demand over the past year had also made India an appealing option for foreign retailers.
'2010 has been a comeback year for the retail sector, especially during the festive season. Retailers saw healthy sales as compared to earlier years. Consumers are coming back to the stores and feel secure while spending money,' said Future Group chairman Kishore Biyani.
The newspaper reported most modern retailers saw double-digit growth in 2010, while the traditional retail sector saw growth of about seven to 10 per cent.
“Same store growth for most retailers has been in the range of 15-20 per cent. Big retailers have done really well after realigning their businesses in the last two years,” Ernst and Young partner for retail and consumer product services Pinakiranjan Mishra told the newspaper.
