Wal-Mart Eyes India For Future Growth
Jim Prevor’s Perishable Pundit, July 25, 2007
Wal-Mart’s partner in India has set the opening of its first store for mid-2008, with 200 large stores in various formats to roll out by 2015. Expected annual sales in 2015 will be about $5 billion U.S.
Wal-Mart desperately wants into the Indian retail scene as the country transitions to western-style stores. Wal-Mart expects western-style retailing to account for 35% of the Indian trade by 2015, up from only 4% today. At the same time, the total retail market is growing rapidly. Wal-Mart’s problem: It is illegal in India for foreign companies to own their own stores unless they only sell one label.
So Wal-Mart is joint-venturing with the Bharti Group on a wholesale venture to supply Bharti’s new retail stores and local retailers. Wal-Mart’s bet: That India will relax its laws and allow Wal-Mart to buy the stores.
The mid-2008 date is a delay of six months from previously announced schedules. Part of it is that structuring the back-end supply change is a challenge in a country such as India, which is both vast and irregularly developed. Real estate is also a big problem as prime developments have to be built to accommodate these modern stores, and even labor — as we dealt with here — can be a challenge.
But high-ranking executives at Wal-Mart see India, along with China, as one of the few markets with both the scale and cultural affinity to offer Wal-Mart the potential for the kind of success it has had in the U.S.