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Wal-Mart in India

‘In most countries, supermarket chains create and manage well-oiled supply chains
to offer consumers lower prices and dampen inflationary trends. Inflation in Ind
ia is touching decade-highs. But then it’s a fallacy that in India it is always ab
out low price’. Companies like Tata, Birla and Reliance have all attempted to ente
r food-and-grocery retailing in India with mixed success. Will Wal-Mart’s supply c
hain work in India?
Contents
Introduction – Wal-Mart’s first store in India
Joint venture with Bharti Enterprises
About Wal-Mart
Wal-Mart – Background Note
Wal-Mart – Timeline
Wal-Mart – Quick Facts
The world’s largest retailer isn’t new to India
India’s first special skills training centre
Exhibit – Wal-Mart’s 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-Mart’s imperfect success record in a foreign country
Cost-Leadership Strategy- Wal-Mart’s 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-Mart’s 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 strateg
y for her very carefully…Retailing 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 eas
iest 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 Aff
airs at Bharti Wal-Mart.
1. Introduction – Wal-Mart’s first store in India
In December 2006, Wal-Mart Inc. believed that by the year 2015, 35% of India’s ret
ail sales could be from chain stores . This was a radical increase from the prev
ailing 2%. In May 2009, Wal-Mart was ready to open its first store in India. The
reason for Wal-Mart’s entry in India was clear – The Indian middle class . The worl
d’s biggest retailer had been silently working on its strategy for India for aroun
d two years. Mom-and-pop stores and traditional distribution networks dominated
the $375 billion Indian retail market. Wal-Mart’s first outlet was set to launch i
n the city of Amritsar, Punjab in North India. The first store air-conditioned a
nd built over 50,000 sq. ft. was on the outskirts of the city, Amritsar. The sto
re 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. Howev
er, the debut outlet was not to carry the familiar Wal-Mart brand. Did this mean
Indian consumers could not benefit from Wal-Mart’s everyday low prices?
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Case Updates/Snippets
50:50 joint venture: In India, Wal-Mart has a 50:50 joint venture with Bharti En
terprises in the wholesale cash-and-carry segment.
Direct Farm Program: Multinational retail giant, Wal-Mart’s Direct Farm Program in
India is a partnership with 110 small and marginal farmers near Ludhiana in Pun
jab 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 h
arvest and post-harvest practices.
Wal-Mart India in 2010: In 2010, Bharti-Wal-Mart plans to launch seven Best Pric
e 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 earl
y 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 f
or 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 m
alls. Smaller stores also offered more variety and affordable options with susta
inable 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 presently does not allow foreig
n investment in multi-brand retail. It allows 51% FDI in single-brand retail and
100% in wholesale venture. In 2007, Walmart Stores and Bharti Enterprises enter
ed 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 off
ers 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 mark
et in the self-service wholesale category. By early 2011, it had six wholesale d
istribution centers in four major cities (Bangalore, Hyderabad, Mumbai and Kolka
ta). The company caters to business customers (hotels, offices and small retaile
rs) and sources a large part of its products locally from local suppliers, co-op
eratives and self-help groups.
Tags: India, Retail, Wal-Mart