New Delhi: After years of unsuccessful lobbying with the government to open India’s retail market to foreign investors, US-based Wal-Mart Stores Inc. opened its first wholesale store in Amritsar in May. Wal-Mart, which has tied up with Bharti Enterprises Ltd for a 50:50 cash-and-carry joint venture, plans to open up to 15 such stores in three years. Raj Jain, chief executive of Bharti Wal-Mart Pvt. Ltd, spoke about his plans. Edited excerpts:
How has been the response to your first store in Amritsar?
We are very pleased. It’s better than what we had expected, but not overwhelming.
What have been the surprise learnings?
Road ahead: Bharti Wal-Mart chief executive Raj Jain says the firm’s supply chain is most under-developed in India and needs to be worked upon. Harikrishna Katragadda / Mint
It has taught us a lot of lessons and we are still learning. So far, the Indian consumers have been driven a lot by promotional merchandise—one free on buying one and that kind of stuff. We didn’t want to do that. We said you buy whenever you want to buy and you buy it at the lowest prices. Our customers have been very happy and they are rewarding us by saying, “Hey, there’s a store where you can go anytime and get the cheapest prices.” It’s not that there’s a Nestle promotion today and you can attack the store and that there’ll be no promotional activity tomorrow.
The second thing we are realizing is that although a lot of FMCG (fast-moving consumer goods) companies such as HUL (Hindustan Unilever Ltd), ITC, Colgate have developed a very evolved distribution system, the customers (read trade) are still very much under-served. There is a shortage of products sometimes and some things are not available. The supply chain is very erratic. But we have been able to supply consistently and at good prices.
How do you manage the supply chain?
It really starts with the suppliers. First is to have an open discussion with the suppliers. The second thing is having intricate and global IT systems in place, which are able to leverage your planning and execution. Third, we have a distribution centre we have invested in upfront. We are able to run this very effectively and we also do a good job of getting the merchandise time and time again to the right place and getting them to the store and so on. Fourth, we are working with our suppliers who are not able to meet our deadlines and commitments. I have to say that it has taken some time.
I would bifurcate suppliers into four buckets. There are the multinational suppliers, which are the Unilevers, the P&Gs of the world, who essentially know what modern retail is. They have not been geared to cater to modern retail in India and as we work with them, they are raising their standards and (we’re) getting them to supply to the modern wholesale.