Why a partnership between Carrefour and Reliance Retail makes sound business sense?

After its decision to pull back from Indian market, Carrefour had planned entry with various partners such as DLF, Parsvnath and ADAG but nothing materialised till date. However after the Bharti-Wal-Mart deal, world’s third largest retailer would not have shyed away from the growing Indian market.

And in a change of events, The Economic Times recently reported that French retailer Carrefour is planning an Indian entry in partnership with none other than Reliance Retail.

For Reliance Retail, it may be a departure from its earlier strategies of going all alone without any partnerships. But owing to its growing concerns about managing scale in its retail business, Mukesh Ambani probably needed an experienced global partner to carry along.

In all likelihood, if indeed the deal happens, then Carrefour will open cash-and-carry outlets in India which would serve as the major source of supply for Reliance Retail stores across various formats. That would virtually mean that Carrefour won’t operate in front-end retail which would be worthy enough as FDI in retail is still not permitted.

Reliance Retail with its aggressive retail plans, huge investment targets and political clout makes for a desirable partner with Carrefour unlike real estate companies who only had prime land bank to boast off.

For Reliance Retail, the partnership can signal an end to its problems in back-end supply chain and would add another retail format of ‘cash and carry’ under its fold.

And considering Reliance’s global ambitions, Carrefour may indeed be a partner with Reliance Retail for starting off retail stores in other countries.

A Carrefour – Reliance Retail deal could further hasten the process of growth in Indian retail sector and it won’t be a while before Tesco makes it presence felt in India.