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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 it’s a fallacy that in India it is
always about low price’. Companies like Tata, Birla and Reliance have all attempted to enter food-and-grocery
retailing in India with mixed success. Will Wal-Mart’s supply chain work in India?
Contents
3. About Wal-Mart
5. Wal-Mart – Timeline
15. Cost-Leadership Strategy- Wal-Mart’s core philosophy – EDLP (every day low prices)
"India is a price sensitive market and therefore we will be devising our strategy 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 easiest thing is to roll out stores, but the most difficult is to sustain and feed
"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
In December 2006, Wal-Mart Inc. believed that by the year 2015, 35% of India’s 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-Mart’s entry in India was clear – The Indian middle class . The world’s 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-Mart’s 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-Mart’s 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-Mart’s 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
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
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 presently does not allow foreign 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 entered into a joint venture and began cash & carry stores under the brand Best Price Modern
Wholesale.