Wal-Mart, the world’s largest retailer, today gave a vote of confidence in the booming Indian economy with plans to roll out a network of cash-and-carry superstores across the country.
The venture, with Indian conglomerate Bharti, will see 10 to 15 wholesale stores in the next seven years beginning in 2008. The companies will each have an equal stake in the venture, which will be branded Bharti Wal-Mart and will employ at least 5,000 people.
Rather than targeting Delhi, Kolkata, Mumbai or Chennai – India’s four main cities – the joint venture is placing its bets on fast-growing smaller urban centres.
“India has 12m pop-and-mom stores and less than 1m are catered for at the moment,” said Raj Jain, India country president of Wal-Mart.
A company spokesman denied the venture would end up like Sam’s Club, a successful US wholesale exercise by Wal-Mart that became virtually a retail operation.
No foreign direct investment is allowed in the retail sector, except for single-brand stores such as Nike. By entering the wholesale market, Wal-Mart will gain a foothold ahead of its many competitors should the government allow foreign retailers to expand. But it is years behind German retailer Metro, which has a presence in five Indian states and last month offered to spend 6.5bn rupees (£82m) on a wholesale operation in north India.
“The wholesale model is poised for big success in India,” said Arvind Singhal of KSA Technopack, a retail consultancy. Mr Singhal said sales through store chains were projected to increase eightfold to £49bn in five years.
Bharti, which owns India’s largest mobile phone network and has a farm business, has the reach and distribution but not the technical know-how to run a large retail business. “I think by improving the cold-chain technology and getting the logistics right, Wal-Mart could help India become an agribusiness exporter,” said Mr Singhal. Source: guardian
