<b>Wal-Mart Applies to Open India Office</b><!--QuoteBegin-->QUOTE<!--QuoteEBegin-->The office proposed for Bangalore would be a separate entity, devoted to "market research and business development in relationship to the retail industry in India," Wal-Mart spokeswoman Beth Keck said Thursday.
Keck said Wal-Mart is optimistic that the rules will be changed, particularly in light of a move last week by the Indian government to let foreign brands open their own stores. That move would allow stores that sell Nike or other single brands open outlets but not companies that sell broader ranges of goods.
Wal-Mart has about 80 employees already in India to oversee purchasing. Keck said Wal-Mart bought $600 million worth of goods from India in the last year.
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Wal-Mart filed its application for the office last year. The Bangalore office would have one person, who would move from the Bentonville headquarters, Keck said.
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Wal-Mart's Ambitions in India
While the retail giant continues to explore market opportunities, government restrictions may keep it out
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Wal-Mart's experience in emerging markets is the crux of its battle plan. Bentonville has been down this path of limited investment in retail before. Not too long ago, it battled anti-FDI sentiment in Mexico. In S&P's view, Wal-Mart won that battle. It is now the biggest private employer in Mexico and operates more than 780 stores in that country. And even in communist China, Wal-Mart operates 56 joint-venture stores as of Jan. 31.<!--QuoteEnd--><!--QuoteEEnd-->
We need to research how Walmart fought the battle in Mexico and how it eventually got what it wanted and what effect it has had on the mom and pop stores..
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Ajit Dayal, CEO and chief investment officer at Quantum Advisors, an asset management company based in Bombay, says that foreign big-box retailers would have to surmount many operational challenges in India if they were to enter India directly or through an investment partner.
"We're not sure that what is considered a prime location for a retailer today is going to be defined as a central business district tomorrow. There is so much growth that centers of gravity within the time frames of available financing shift too quickly," he says.
Dayal believes that in addition to the pace of change that redefines business districts at an exponential pace, logistics on the size and scale that Wal-Mart is accustomed to would not be plausible to implement. He thinks that the current environment does not bode well for Wal-Mart or other big-box operations, based on the stark difference between the current benchmark for a typical retail store in India and Wal-Mart's traditional footprint. So while Bentonville remains positive on the subcontinent, its passage to India may be a difficult one. <!--QuoteEnd--><!--QuoteEEnd-->
I tend to agree with Shri Dayal. Interesting times ahead..
<!--QuoteBegin-rajesh_g+Feb 10 2006, 06:19 AM-->QUOTE(rajesh_g @ Feb 10 2006, 06:19 AM)<!--QuoteEBegin-->
<!--QuoteBegin--><div class='quotetop'>QUOTE<!--QuoteEBegin-->Wal-Mart's experience in emerging markets is the crux of its battle plan. Bentonville has been down this path of limited investment in retail before. Not too long ago, it battled anti-FDI sentiment in Mexico. In S&P's view, Wal-Mart won that battle. It is now the biggest private employer in Mexico and operates more than 780 stores in that country. And even in communist China, Wal-Mart operates 56 joint-venture stores as of Jan. 31.<!--QuoteEnd--><!--QuoteEEnd-->
We need to research how Walmart fought the battle in Mexico and how it eventually got what it wanted and what effect it has had on the mom and pop stores..
In Mexico the culture of hyper-markets already existed when Walmart went there. Plus Mexico is also a very diverse country like India. It also has different classes of people i.e. middle class (most have a car), rich class, and poor class.
Walmart was a hit mainly in the middle class, poor class any way could not afford anything, and rich didn't care. Pop and mom stores had a tough time in Mexico. With Mexican hypermarkets cleaned out whatever remained of pop & mom shops.
Plus, you have to understand being so close to USA and probably a big part of Mexican population working in USA , they are used to Hyper markets and Super markets. The consumer culture is just like any other western country.SOciologically the society was ready when Walmart struck.
Politically, Mexico was a democracy only in name. One political party ruled for over 80 years.....Yes..80 years and no change.
Most of the Presidents were easy game for multinationals. Mexico was also a very heavily dependent on imports as result the economy and currency collpased in 1994. Money speaks in Latin America and Mexico.
However with a per capita income of about $ 7000 , Mexicans have better purchasing power than India. You have to also consider that Walmart sells mostly cheap stuff,,,i.e. Chinese type. At $ 7000 mos tMexicans can hardly afford branded products , hence, the success of walmart. Being mainly a carnivore country cheap meat products were instant hit.
However, India cannot be compared with Mexican market. Indians are much more conservative and value conscious people. Indians are not that western consumer types. The purchasing power of Indians with per captal GDP of around $3000 is also much less.
I see limited success for Walmart in India unless they localise their shop format to suit Indian tastes i.e. a smaller hypermarket kind of format with more personal touch......more vernacular speaking salesman/woman.....and attractive discount schemes.
2 things that worry me most are the fate of the mom and pop stores and the ammount of money that will be funneled out of india.
on the good side, walmart may actually be able to reduce prices of products, add to the tax revenues, generate registered jobs, and most importantly if indian manufacturers are good enough and rise to the occasion, we may soon see indian goods competing for shelf space with chinese items in western countries, because walmart wont miss a good "supply chain" chance.
question remains, why does it take a foreign mnc like walmart to come and open a big chain of retail shops in a country that makes and sends its own satellites ??!!
<!--QuoteBegin-rajesh_g+Feb 10 2006, 06:19 AM-->QUOTE(rajesh_g @ Feb 10 2006, 06:19 AM)<!--QuoteEBegin-->We need to research how Walmart fought the battle in Mexico and how it eventually got what it wanted ..
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i guess in the same way it got what it wanted in india - using the carrot of a swiss bank account on ministers.
Its not about any other retail chain - its about Walmart. Walmart is affecting how other retail chains in the US do business. It has worked out an amazing supply chain and perhaps streamlined the entire retail cycle. About a year ago when Walmart announced its getting into groceries the other grocery chains were shivering and perhaps led to the strike in southern california. (PS : atleast at this moment it has not led to others going out of business.)
But then again Walmart will have to adopt a slightly different approach then it does in the US. For instance it cant launch the HUUGE stores as it does in the US. It will have to effectively build the warehouses and get the supply chains going ones that will feed this behemoth.
A little anecdote I heard from somewhere. When you approach the 99c store HO you have to go with a product which can be delivered on the US shores at 55 cts per unit. And the order you get is in 10s of containers or something. I forget the exact number of containers you have to promise and prove you can deliver. This volume is beyond what most people can promise. The chinese somehow have figured it out. This capability wil have to be built in India.
Thanks for th einfo. Any links on the mexico operations of Walmart will be great.
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Lower Tariffs, Retail Muscle Translate
Into Big Sales for Wal-Mart in Mexico
By DAVID LUHNOW
Staff Reporter of THE WALL STREET JOURNAL
MEXICO CITY -- Shopkeeper Carlos Huerta recently walked into a Sam's Club warehouse store here and bought $6,000 of Act II brand microwave popcorn. Then he trundled across the street to resell it at his stall in Latin America's biggest wholesale market.
Mr. Huerta used to buy the U.S.-made popcorn direct from the manufacturer's distributor here. But with the U.S.-Mexican border growing increasingly porous, Wal-Mart Stores Inc. now can deliver Act II to its Mexican Sam's Club outlets for only a few cents more than to its U.S. stores, undercutting the product's Mexican distributor.
<!--QuoteBegin-ben_ami+Oct 8 2005, 12:49 PM-->QUOTE(ben_ami @ Oct 8 2005, 12:49 PM)<!--QuoteEBegin-->no one has an opinion as to whether india should have her own retail compoanies or not <!--emo&--><img src='style_emoticons/<#EMO_DIR#>/sad.gif' border='0' style='vertical-align:middle' alt='sad.gif' /><!--endemo--> ??
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<span style='font-size:14pt;line-height:100%'> Change your id according to forum rule.
<!--QuoteBegin-br945+Feb 17 2006, 10:47 PM-->QUOTE(br945 @ Feb 17 2006, 10:47 PM)<!--QuoteEBegin--><!--QuoteBegin-ben_ami+Oct 8 2005, 12:49 PM--><div class='quotetop'>QUOTE(ben_ami @ Oct 8 2005, 12:49 PM)<!--QuoteEBegin-->no one has an opinion as to whether india should have her own retail compoanies or not <!--emo&--><img src='style_emoticons/<#EMO_DIR#>/sad.gif' border='0' style='vertical-align:middle' alt='sad.gif' /><!--endemo--> ??
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<span style='font-size:14pt;line-height:100%'> Change your id according to forum rule.
Admin -</span>
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whats wrong with it???
and who are you???
As an aside, can the Amul experience be replicated on the retail side ?
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I have a hunch that internet retailing is a more likely outcome of globalisation than the high startup fixed costs model that WalMart and even indigenous Indian corporate retail chains will incur as a result of rapid expansion. Internet retailers will also be able to market services such as internet ISP and telecommunications/broadband etc.
Retailing of mainly consumable products could also become possible due to the ever lower costs of air freight.....basically the Amazon/Ebay computer ordering system but introducing a multi-level distributor/commission structure. The range of goods & services distributed by this newer method would also allow for much greater choice and all accessed from a computer terminal.
The earlier post regarding Mexican popcorn would be something of an exception due to its relatively short `shelf life'. Maybe the 20/80 rule applies here?......80% of popular products and services could be sold using this low cost networking system.
Cheers BS
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<b>CHANGE YOUR USR NAME AS PER FORUM RULES or RISK DELETION.</b></span>
<!--QuoteBegin-->QUOTE<!--QuoteEBegin--><b>Wal-Mart JV within framework: Mittal </b>
PTI | Kolkata
The tie-up between US retail giant Wal-Mart and Bharti Enterprises was within the existing policy framework, Bharti group chairman Sunil Mittal said on Saturday.
Responding to queries, Mittal told reporters that as per the MoU, Wal-Mart would provide the back-end support in terms of setting up cold chains, while Bharti would do the retailing under the cash-and-carry format.
Mittal it was a partnership of equals, adding that both the companies would make substantial investments. "The investments are being worked out," he said.
While India has not allowed FDI in multi-brand retail format, foreign investment is permitted in wholesale trade as well as logistics and back-end support.
Policy hurdles had earlier forced Wal-Mart to put its India plans on hold, but it has now settled for a collaborative venture.
Commerce minister Kamal Nath had said that the government would examine whether the agreement was within the rules and regulations. Mittal said the nationwide roll-out of their retail stores would begin from August 15, 2007.
The Left parties had earlier expressed reservation about Wal-Mart, saying this was a backdoor entry by the US firm.
When asked whether Bharti-Wal-Mart would be allowed to set up shop in the state, West Bengal Chief Minister Buddhadev Bhattacharjee said: "Let them firm up their plans first."
<b>Mittal said Bharti had already acquired 5,000 acres in Punjab to carry out contract farming for exports to European markets.</b>
<b>He said the group was also keen to enter horticulture. West Bengal was the best possible state in this regard and it would be the new platform for the Bharti group, he said.</b>
Referring to investments in West Bengal, he said Bharti had already invested Rs 1,200 crore in the state and was in the process of creating a huge R&D infrastructure facility
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It will create shortage in India, how this is different then East India company?
The question of allowing Foreign MNCâs and Indian big business houses like Reliance to allow entry into retail trade may or may not be harmful to the small businessmen or the supplier/producer. It will depend upon how the whole system is developed.
At present one of the main reasons of poor returns for agricultural products, particularly fresh fruits and vegetables grown my the small and marginal producers have been the poor marketing infrastructure. Even for medium size producers the dependence of the middleman and financer is a major financial burden as a large part of the profit is pocketed by them. The same is the case for milk, diary products ,poultry and goat meat as the actual producer has very few avenues to sell his product actually in the market.
In case the retail chains develop their own system of collecting farm products directly from the growers than it will eliminate the middleman and in the process the producer will get a much higher return. Since these will be in the private sector , the collection machinery will certainly be more effective than the government agencies and the co operatives that have been engaged in such activities without much success for several decades now. Whether it is Reliance Group or it is Wal Mert should not be of much concern if they are able to put in place an effective machinery to collect the products from the rural areas. This would go a long way in uplifting the economic conditions of the rural population , particularly that of the marginal farmers.
Ranchi, May 12
Petty traders and vegetable vendors today attacked three of the five Reliance Fresh food outlets here in the first such assault on a modern retail chain by those feeling threatened by it.
About 200 persons barged into the stores, which sell grocery, fruits and vegetables, smashed glass panes and pulled down shelves as Reliance Fresh staff ran for cover.
A retail outlet at Lalupur Chowk became the first target, followed by one near Tagore hill and another near Plaza cinema here.
City superintendent of police Richard Lakra said the protesters pelted stones, injuring a constable as the police tried to stop them near the Tagore hill shop. They also attacked and damaged passing vehicles.
Reliance Retail officials, however, declined to comment.
The police had to use âmild forceâ to quell the mob, which was joined by people from the weekly haat at Tagore hill, as it began looting the shops, Lakra said.
According to unofficial reports, about six persons were injured. All five Reliance Fresh stores downed shutters with the police standing guard.
Recently, vegetable vendors and small retail shop owners had demonstrated against the opening of Reliance Fresh outlets in Jharkhand, accusing the private sector of directly hitting their business. â PTI
Rajasthan farmers take to Reliance, dump mandis
MAYUR SHEKHAR JHA
TNN[ SATURDAY, JULY 07, 2007 02:43:02 AM]
NEW DELHI: This is how the cookie crumbles with organised retail. Farmers get a better deal, produce gets diverted from traditional markets and the retail major procures the supply it wants.
This script is being acted out in Rajasthan, where Reliance Industries has been allowed to buy produce directly from the farmer. The state Agricultural Produce Marketing Committeeâs (APMC) Jaipur centre (Chomu mandi) has reported a significant 15-20% decline in trading during June. Farmers are lining up at the Reliance collection centres (CCs) to offer their tomatoes, peas and other vegetables.
The company is now in talks with the state governments of Uttar Pradesh, Bihar and West Bengal. Eventually, these would be the most important states as far as procurement of agricultural produce for the companyâs retail venture is concerned.
The most important reason attributed to the sales decline at Chomu mandi is the better deals that farmers are being able to extract while selling to RIL. Note that there is not much difference in the price being offered by RIL to farmers on various products. â
For instance, price per kg of tomato at Chomu mandi as well as at RILâs collection centre was about Rs 10 all through June,â says a spokesperson for International Food Policy Research Institute (IFPRI), which has conducted a study on the subject. â
One significant difference is in terms of transport and off-loading costs. When farmers sell to RIL, they spend Rs 5 for a bag of 50 kg. On the other hand, in the mandi it comes to Rs 10 for a bag of 50 kg plus Rs 2-to-4 per kg for off-loading for a bag of 50 kg,â the spokesperson said.
According to him, RIL paying direct cash is also perceived as a major advantage by farmers. âIn the mandis, this might or might not be the case. At times, farmers have to wait for a couple of days or a week before receiving the money,â he said.
According to a study conducted on modern retail and marketing channels in India by agri economist Bart Minten of IFPRI, farmers also think that they save a lot of time while doing transaction at RILâs collection centres. âFarmers estimate that they save 3-4 hours in every sales transaction in CC compared to a traditional mandi. Time needed for a transaction between leaving home and getting back is about 1-3 hours in CC and 4-7 hours in mandi, where they have to wait for auction, traders, clients, better price and so on,â the study says.
<b>RPG to open one store a day in the next one year </b>
Pioneer.com
PTI | Mumbai
RPG Group, which owns the Spencer's brand of retail stores, will invest Rs 1,000 crore for opening nearly 365 supermarkets in the next one year.
Ruling out any tie-up with global retail chains, RPG Enterprises Chairman, Harsh Goenka said the group had the necessary wherewithal to conduct the business on its own.
"We have 200 stores presently and are expanding very fast. We will be opening from now on almost one store everyday in the next one year. Last week, we had opened 40 stores," Goenka said here.
Spencer's Retail offers a complete gamut of products and durables ranging from bread to bed.
"We see no need to bring in a strategic partner as we have the knowledge about Indian customers, a large database as well as the IT backbone to run the business on our own steam."
In fact, RPG's IT arm, Zensar, was providing the software to global retail majors including Marks & Spencer's, Target and Dubai-based Landmark.
RPG Group is the second largest retail chain in the country despite several major industrial houses, including the Mukesh Ambani led Reliance, Sunil Mittal's Bharti Group and Kumar Mangalam Birla Group, having entered the fast-growing sector recently.
Goenka also plans to tap the capital market for his retail business within the next 12 months but nothing has been confirmed so far.
RPG Group took over the century-old Spencer's, a Chennai- based retailer in the 1990s, and has gradually been expanding its retail business pan-India under this well-known brand.
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