Wal-Mart in India Feb 11, 2010 Tags: India, Retail, Wal-Mart In most countries, supermarket chains create and

manage well-oiled supply chains to offer consumers lower prices and dampen inflationary trends. Inflation in India is touching decade-highs. But then its a fallacy that in India it is always about low price. Companies like Tata, Birla and Reliance have all attempted to enter foodand-grocery retailing in India with mixed success. Will Wal-Marts supply chain work in India?

Contents

Introduction Wal-Marts first store in India Joint venture with Bharti Enterprises About Wal-Mart Wal-Mart Background Note Wal-Mart Timeline Wal-Mart Quick Facts The worlds largest retailer isnt new to India Indias first special skills training centre Exhibit Wal-Marts business model in India Mera Kirana programme Exhibit Foreign hypermarket chains in India Wal-Mart Internationally Exhibit Wal-Mart and Expansion into International Markets Wal-Marts imperfect success record in a foreign country Cost-Leadership Strategy- Wal-Marts core philosophy EDLP (every day low prices) Will Wal-Mart succeed in expanding outside the U.S.?

Best Practices and lessons from the International Markets Wal-Mart India Plans and Challenges Wal-Marts Strategy and Supply Chain tuning for India Physical and Regulatory Challenges The Indian Consumer Bringing private label suppliers to India Will the kirana store go out of business? Advantages of a small Indian shopkeeper The Kirana store Exhibit: Wal-Mart Store Formats Exhibit: Wal-Mart International operating formats Questions for Discussion Sample Page/Content

"India is a price sensitive market and therefore we will be devising our strategy for her very carefullyRetailing is like a game of three dimensional chess where we operate as a local, regional and global player, so depending on the needs of the market we shall change our format and adapt." John B Menzer, President and CEO, Wal-Mart International.

"India is not a homogeneous market, so ours is not a cookie-cutter approach from the U.S. Wal-Mart is in no hurry to unfurl the Wal-Mart flag nationally. The easiest thing is to roll out stores, but the most difficult is to sustain and feed them." -Raj Jain, President of Wal-Mart India in May 2009.

"Wal-Mart operates with multiple private brands around the world. In each market that we operate, we look to be local. We treat each market as unique and India, in this respect, is no different." -Arti Singh, vice-president of Corporate Affairs at Bharti Wal-Mart.

1. Introduction Wal-Marts first store in India

In December 2006, Wal-Mart Inc. believed that by the year 2015, 35% of Indias retail sales could be from chain stores . This was a radical increase from the prevailing 2%. In May 2009, Wal-Mart was ready to open its first store in India. The reason for Wal-Marts entry in India was clear The Indian middle class . The worlds biggest retailer had been silently working on its strategy for India for around two years. Mom-and-pop stores and traditional distribution networks dominated the $375 billion Indian retail market. Wal-Marts first outlet was set to launch in the city of Amritsar, Punjab in North India. The first store air-conditioned and built over 50,000 sq. ft. was on the outskirts of the city, Amritsar. The store employed 200 locals and was likely create 500 indirect jobs. In the first few weeks itself, the company had managed to sign on close to 35,000 members. However, the debut outlet was not to carry the familiar Wal-Mart brand. Did this mean Indian consumers could not benefit from Wal-Marts everyday low prices?

Case Updates/Snippets 50:50 joint venture: In India, Wal-Mart has a 50:50 joint venture with Bharti Enterprises in the wholesale cash-and-carry segment. Direct Farm Program: Multinational retail giant, Wal-Marts Direct Farm Program in India is a partnership with 110 small and marginal farmers near Ludhiana in Punjab where it encourages cultivation of safe, high-quality, seasonal vegetables. Farmers are advised at every stage of cultivation by field agronomists. Farmers learn about nursery management, transplanting, nutrient management, as well as harvest and post-harvest practices. Wal-Mart India in 2010: In 2010, Bharti-Wal-Mart plans to launch seven Best Price Modern Wholesale Cash-And-Carry stores across India. These stores will be 100,000 sq ft in size and each store will involve an investment of $6-7 million. Sourcing from India: Wal-Mart has a large sourcing business in India. The retail major sources goods worth $125 million a year from Punjab. In 2010, Wal-Mart is planning to increase sourcing from India to strengthen its global business. Preference for Kirana/local retailers: According to a survey by ASSOCHAM in early 2010 in which it interviewed 5000 shoppers in various cities in India, kirana stores (mom and pop stores) and local retailers were the preferred destination for shoppers as compared to shopping malls. The survey found that goods were less expensive (as much as 25%) in local kirana stores as compared to big shopping malls. Smaller stores also offered more variety and affordable options with sustainable quality at a negotiable price (reduced margins). Training centers: Inheriting a model from its U.S. parent, Bharti-WalMart (Best Price

Modern Wholesale) intends to set up its own training centers to train less-privileged youth to work in retail stores. FDI in retail in India: In India, the Government did not allow foreign investment in multi-brand retail. It allows 51% FDI in single-brand retail and 100% in wholesale venture. (Update: The Indian Govt. has changed its policy towards multi-brand retail in Nov 2011) In 2007, Walmart Stores and Bharti Enterprises entered into a joint venture and began cash & carry stores under the brand Best Price Modern Wholesale. Carrefour in India Carrefour Wholesale Cash & Carry: In December 2010, Carrefour, the French international chain, launched its first cash & carry store in India (in the capital in New Delhi). The store with an area of 5200 square meters offers about 10,000 SKUs in food and non-food to local businesses, restaurants and local mom and pop stores. METRO Cash & Carry in India: In 2003, METRO Cash & Carry entered the Indian market in the self-service wholesale category. By early 2011, it had six wholesale distribution centers in four major cities (Bangalore, Hyderabad, Mumbai and Kolkata). The company caters to business customers (hotels, offices and small retailers) and sources a large part of its products locally from local suppliers, cooperatives and self-help groups. WalmartLabs in Bangalore : In addition to its R&D centre in the Silicon Valley, WalMart plans to set up another facility in Bangalore, India (expected to be set up by Dec 2011) with about 100 developers to work on technologies and solutions for WalMarts global e-commerce business.

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Wal-Mart in Japan Tesco takes on US Wal-mart Introduction: Wal- Mart is the worlds largest corporation and it is one among the biggest private employer of America. Wal- Mart retail store was established in the year 1962 by Sam Walton Wal-Mart also has doing international operation in United Kingdom, Mexico, Canada and many countries throughout the world. In 1970, a Wal-Mart has listed in New York stock exchange. The first Sam club membership warehouse opened in 1983. Wal-Mart has different types super stores, super markets, and Wal-Mart discount stores. In the year, 2009 the sale of Wal-Mart employs is $401 billion. The Wal-Mart is world first retail store in the world. (www.walmartstores.com)

Effects of the Wal-Mart Entry: Negative effect on the Indian small scale industry Since many of the small scale department stores in India are the major contributors to the Indian economy, the entry of Wal- Mart into Indian market creates a lot of negative effect on the Indian small scale industry. This may lead to loose the business to many of the middle and small scale people. Local traders: Local traders from the major of the cities were opposed the entry of retail giant Wal-Mart especially in Delhi because it will affect the local traders or business man and also for small retail shop. They have the issue of domestic traders will be totally neglected. Low price products Wal- Mart in order to capture the Indian market is trying to introduce low price strategy on their products which inturn affect the other local businesses. Local traders later also should implement this pricing strategy which may affect their profit margin. But in return the consumers may benefit a lot from this. Creates excess competition Due to the entry of Wal Mart into the Indian market the competition may increase between local retailing businesses like Pantaloon, Reliance etc. we can see a tough competition between these business units in future .

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