Business Case Analysis
March 17, 2011
Carrefour, the second largest multi-brand retailer in the world behind Walmart, has been trying for years to become a major player in India’s retail market. India is one of the largest retail markets in the world. It is the second most populous country in the world with one billion people, and over 200 million of those people are considered middle class, and the household income continues to rise. The overall attractiveness for the current market and potential is high, but there are some problems that Carrefour and other large, foreign, retailers face when attempting to enter the Indian market.
Even though the retail industry is huge in India, it is very unorganized and made up almost entirely of small, mom and pop type stores. Most of the time this would be good for a large retailer and it is in this case too, but Carrefour needs to proceed with caution when attempting to introduce hypermarkets to the Indian culture. Carrefour experienced a huge failure when they tried to build stores in Japan and they were completely ignorant to Japan’s retail culture. Aside from some trust issues, some mishaps that damaged their image, and trouble finding retail space, Carrefour failed to realize that the Japanese culture had little to no interest in these hypermarkets. This failure in Japan cost Carrefour close to 300 million dollars.
After years of searching, Carrefour is having trouble finding a local partner to go into business with. Obviously after their failure in Japan, it would be wise to enter unfamiliar territory with someone who knows the culture and can help Carrefour find real-estate. Not only would it be wise to enter the Indian market with a local partner, but it is also required by their laws on entering the retail market, and that leads us to our first major problem. Problems
By law, foreign retailers are not allowed to just enter...