Wednesday, November 29, 2006

WalMart will be here

India's Bharti Group (yes, the same group that owns Airtel - the largest mobile service provider in India) struck a deal with US retail giant WalMart to launch the first mega-retail store joint venture in the country. The joint venture is apparently planning on several hundred stores across the country.
Other mega-retailers in the Indian market: Big Bazaar is a chain of super-stores in India currently with 29 outlets, owned by the Pantaloon Group. Reliance Fresh of Reliance Industries opened new retail stores in Hyderabad earlier this month. European-based Metro AG launched its wholesale Cash & Carry stores in Bangalore in 2003.

In a city like Bangalore, there really isn't the kind of space for a super-store within city-limits. That will push these stores to the periphery. The roads and the traffic make commute to and from anywhere a nightmare. That said, I am not sure how much of an effort a regular guy would make just to get to a WalMart. However, the current Big Bazaars are attracting a decent amount of crowd. People, I think, are making the extra effort to get to a Big Bazaar just for the novelty of it.

It is said that India has over 15 million small shops, the highest density of retail outlets in the world. The tie-up between WalMart and Bharti is meant to be a direct assault on these small shops. I don't see the super-stores completely taking over the small guys, only cause the small shops are such a part and parcel of everyday Indian life. People are used to just walking to the nearest mom-and-pop store to buy stuff. But if the retail giants do manage to uproot the smaller guys, that will change the Indian city scenario. I will definitely miss the India specific shopping experience if WalMarts become the norm. Ugh!

Regular small shops in Bangalore

The Bharti-WalMart venture promises low prices, especially for the estimated 300 million-strong middle class. It is reported that the regular shops are too small to offer the choice or discounts available to a major retailer that buys globally like WalMart. Yes, that maybe true. However, the personal feel of a small store can NEVER be got at a WalMart. It does look like the price and the novelty of a super-store is likely to decide the future of the Indian retail industry.

Big Plus: WalMart has been sourcing clothing and textiles worth billions of dollars from India. The continued exporting opportunity will definitely benefit India and Indians.

"The secret of successful retailing is to give your customers what they want" Sam Walton wrote in his autobiography. How much of that will hold true for the Indian consumer is to be seen!

11 comments:

Deeps said...

I had heard about Walmart coming to Bangalore, yeah but that kind of sheer space in Bangalore sort of boggles the mind. The whole point of walmart in US, as you know, is to make things available easily, cheaply everywhere. So there's no point if the store is outside the city..

BTW I finally get to know Ms.C is Chitra eh? Good :).

Chitra said...

Yep, that's me. LOL didnt see the point in the anonymity any longer.

G said...

Good blog.

It is true that they can't set up giant stores in the city. However, this could be quite valuable for folks who live in the up and coming areas around bangalore - where the traditional small retailers are absent.

It will be such a shame if the small retailers are put out of business.

-G

Chitra said...

Thanks, G!

You make a good point about the up and coming areas in Bangalore. Lets see what locations these super stores choose.

Laurie said...

I hope Wal-mart is kinder to its competitors and employees in India, than it is here in the U.S. BTW we have a Cash and Carry not far from here (Seattle metro). I had no idea it was a chain, much less a European one. You can get Very Large Quantities of things there. Makes Costco look a little wimpy sometimes.

Chitra said...

Never been to a Metro, Laurie. I don't think there's one in North Calif. But if Costco must look wimpy, wow!!!

Got to see how Walmart will function here. They can never be the sole owners 'coz of Govt stipulations. Wonder how the tie up with Bharti will work for them.

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Kanishka Mahadik said...

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www.dmartindia.com
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