New York: Despite protests from small traders, Bharti Enterprises and Wal-Mart Stores Inc are confident their Indian joint venture is supported in the country and will help usher in the future of Indian retail.
“I think it’s a big change for India, the move from mom-and-pop to organized retail,” Raj Jain, head of Wal-Mart’s India operations, said in an interview on Monday. “I think most people understand that it is a necessary evolution which has to go through for everybody to benefit from and for the economy.
Bharti chairman Sunil Bharti Mittal echoed those comments.
“Farmers want this,” he said in a separate interview on Tuesday. “Customers want a better experience and to save money. They want it -- which means the country wants it.”
Mittal said the next generation’s perspective was not reflected in protests against change by mom-and-pop, or family-owned, stores.
“India is a young nation, and the son-and-daughter story has to take precedence over the mom-and-pop story,” he said.
In early August, Wal-Mart and Bharti announced an equal joint venture for a cash-and-carry, or wholesale, business and back-end supply chain management. Called Bharti Wal-Mart Private Limited, the joint venture is scheduled to open its first store by the end of 2008, selling groceries, consumer appliances and fruits and vegetables to retailers and small businesses.
Large retail companies make up just 3% of India’s $350 billion retail market. India allows foreign single-brand retailers to hold up to 51% in local joint ventures, while multiple-brand retailers like Wal-Mart are limited to cash-and-carry and franchise deals.
But opening up a fragmented Indian industry dominated by family-run shops has triggered political concerns and protests by small shop owners who fear millions will lose their jobs.
In August, Reliance Industries Ltd, the country’s biggest private company, delayed plans for hundreds of supermarkets in the north and east after India’s most-populous state shut 10 stores after protests from small traders.
Jain said some family-owned stores have been “embracing” cash-and-carry since it will give them more “buying leverage” for goods at similar prices paid by bigger players.
“A lot of mom-and-pops see this is a way for them to be able to compete with organized retail,” he said.
Vendors ranging from Unilever and Procter & Gamble Co who “know the game” to small suppliers that make only one product are eager to work with the joint venture, he said.
He said the venture was also working with medium-sized and small suppliers with learning what it takes to be a Wal-Mart supplier, from using bar codes to hooking up to the Internet.
Wal-Mart and Bharti have not disclosed how much money they are putting into their venture. Bharti has previously said its retail arm would spend $2.5 billion by 2015 on multiple-format retail stores across India.
Jain said Wal-Mart has not provided a figure largely because it does not yet know how much it will need to put into the venture, but he said: “We will invest whatever it takes.”