Blog: India drops hint on FDI
Dean Best | 6 July 2009
Last week, ahead of today's (6 July) budget in India, came a piece of news that would have brought some cheer to the world's largest food retailers.
A key government report, drawn up ahead of each annual budget by Indian's finance ministry, has given the likes of Wal-Mart, Tesco, Metro Group and Carrefour hope that one of the world's most attractive retail markets could – one day soon – open up to more foreign investment.
At present, non-Indian firms are forbidden from owning multi-brand retail outlets, although the likes of Wal-Mart and Tesco have formed wholesale cash-and-carry ventures with local players. Of course, one report is not, on its own, going to signal the start of a true, retail gold-rush into India – local opposition to further foreign inroads into India will not be eradicated by a few dozen pages of government proposals – but those at world retail's top table would be correct to feel that, at last, there is some real hope the market could truly open up.
For Carrefour, however, India is the least of its problems. Last week, Carrefour CEO Lars Olofsson outlined how he plans to revitalise the French retail giant. Europe's largest retailer has lost its edge – especially in France and other developed European markets. This has resulted in declining market share, lacklustre growth and unsatisfactory profit margins. Olofsson hopes his significant top-to-bottom re-evaluation of Carrefour will bear fruit but some not-inconsequential questions remain unanswered. Olofsson will have to grapple with these before he can truly be said to have mastered his road-map to recovery.
Sir Stuart Rose, the embattled executive chairman of UK retailer Marks and Spencer, has faced criticism for losing his way as he navigates the recession. This Wednesday will see Sir Stuart face questions at the latest M&S AGM and, once again, there promises to be fresh calls for the M&S boss's dual role to be split in two.
Last week, M&S reported a fall its quarterly sales – but the result was an improvement on the retailer's previous three months. Sir Stuart claimed the numbers demonstrated the initiatives brought in by his management were “working”. Indeed, analysts gave the figures a cautious welcome.
Whether the M&S investors meeting at London's Royal Festival Hall on Wednesday will give Sir Stuart a similar reception remains uncertain.
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