In recent news, the world’s second largest retailer, Carrefour, has elected to invest further in its international investment. Known for stringent regulations in the retail industry, India has traditionally protected the smaller, independent markets and local communities that run them. Carrefour’s entrance provides a great case study of the importance of understanding the international market where a firm expands. Lets take a brief look at the conditions in India that Carrefour became familiar with before “cracking the code."
In India the specific regulation, that has limited firms such as Carrefour from entering, states that “multi-brand companies” may not enter the market. However, companies termed “cash and carry” are allowed. Cash and carry firms are known as wholesalers in India. As an entrance strategy, Carrefour will start as a simple wholesaler and may expand operations from there. By understanding this, the company has found a way to get a foothold and expand in this new market.
Of course, starting out independently in a country can pose some major challenges. Over the last seven years this retailer has been exploring partnerships with other retailers that would give them entrance into the market. Even after a finding an entrance strategy that will permit them access to India, Carrefour is still pursuing partnerships which will allow them to continue expansion. Partnerships are common entrance strategies for firms large and small. This can come in the form of distributorships or can be much more complex.
All in all, the world retail environment has grown and consolidated over the past ten years. We see that expansion happening both within borders with companies such as WalMart, as well as internationally across borders. The power is now in the hands of the customer with increased assortment levels, faster service and cheaper prices. Take advantage!