Nov 28, 2006

Walmart in India

Its confirmed now. Walmart is entering India in a big way. Tying up with Bharti Enterprises, Walmart plans to open nearly 100 stores in India. With a potential market of nearly $300 billion ready for exploitation , India is truly what Walmart's Chief of Foreign Operations described as The Final Frontier.

Economists are taking a critical view of it though. One of the major hurdles that Walmart faces in the Indian economy is to lure the common people away from their traditional retail stores; stores they have been a customer of for years, if not generations. In this context, urban cities obviously offer the first easy market segment, as the concept of a super store is more likely to be received with enthusiasm. Cities that already are swinging to the tunes of the IT industry will be the prime targets in Walmart's entering phase. The real difficulty will be in the next stage of expansion when Walmart sets sights on smaller cities. All small stores offer credit to their customers, and this is something that cannot be done by a super store. To attract customers who are used to and also depend upon credit offered by their stores, is a big task for Walmart.

Critics point out to the fact that popularization of the Walmart culture of shopping will result in people going to the stores in their own cars, causing increased traffic in cities, as opposed to the current trend of home delivery of purchases offered by most Indian stores. Introduction of a single multi-purpose store will also result in many small vendors going out of business, increasing unemployment. This was precisely the reason, why the Government was hesitant to allow foreign companies to establish direct outlets in India, unmindful of accusations that they were being over proctectionist. But they recently gave in, with a clause, that foreign companies can open their outlets as a franchisee to an Indian company. This is where Bharti Enterprises come in, as Walmart's franchisee.

Walmart's spokes person was quoted as saying that they are aware of these challenges, and are willing to bend to the requirements of the Indian economy. It should be interesting to see how the concept of Walmart is received by the Indian community, and how Walmart adapts to it, especially in the wake of their recent withdrawal from Germany.

1 comments:

Guhan November 28, 2006 at 7:19:00 PM EST  

your favorite store is now coming to india eh ? orey karuthukkalaa alli veesara machi blog la nee !

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