India is huge long-term growth opportunity for Wal-Mart4 min read . Updated: 13 Apr 2010, 10:35 PM IST
India is huge long-term growth opportunity for Wal-Mart
Zirakpur (Punjab): The joint venture between Bharti Enterprises Ltd and Wal-Mart Stores Inc. for wholesale business in India, Bharti Wal-Mart Pvt. Ltd, opened its second Best Price Modern Wholesale cash-and-carry store at Zirakpur, Punjab, on Tuesday. This is Bharti’s second cash-and-carry store in the state with the first one inaugurated in Amritsar last year. Scott Price, president and chief executive officer of Wal-Mart Asia, flew in from Hong Kong for the event. He spoke in an interview about the importance of the Indian market. Edited excerpts:
You have been focusing on India since you assumed office as Asia chief six months ago.
I have probably come here six-seven times, about once a month on an average. That tells you how important India is to us. It’s a huge growth opportunity for us in the long term. If you look at our business in the US, it’s a $300 billion (Rs13.4 trillion) market. You have three times the population (of the US). You can only imagine the value of the retail industry in India in the next 40-50 years from now.
It’s an underserved market in terms of modern trade. There are a lot of benefits modern trade brings and that’s one of the reasons it is being discussed by the government. Today, agriculture has higher than acceptable levels of wastage from the farm to the ultimate consumer. Through our direct farm programme, we reduce that wastage significantly. We improve the quality (of produce) and the standard of living of the farmers because they make more money.
India is a focus market despite the limitations you have as a foreign retailer not allowed to sell directly to consumers.
Today, we are in the business of wholesaling. I think the traditional kirana (grocery) trade will be around for decades to come, and we believe that through Best Price, we could serve that particular channel. Also, we are supplying to hotels, restaurants, small catering businesses as you would have seen from our products at the Best Price store. Wholesale is very important and we can build a good business on that. But we are very interested in retailing (selling directly to consumers).
Opening multi-brand retailing to foreign investment would be advantageous to the Indian economy in sectors like agriculture. I am very pleased that it is being discussed today and support the government’s initiative to look at opening it. There are enough examples around the world that show the benefits it brings.
Wal-Mart has been advocating FDI (foreign direct investment) in retail, but there are some concerns regarding mom-and-pop stores. If you were to suggest a model for the retail sector in India, what would it be?
I think it’s up to the Indian people and the Indian government to decide. Every country is different, each economic situation is different. The model is really up to them to decide. So I really have no point of view. I just know that a level of FDI is beneficial. I think there is a big opportunity that comes along with it as I said, and is seen in many countries.
Your cash-and-carry venture in India is almost a year old. What has the experience been like?
We are told about the differences between Amritsar and here (in Zirakpur, near Chandigarh). Today, when I was taking a round of our new store, they were telling me all the things they learnt in the Amritsar store that we reflected here in this new store. And we would continue to improve on that. Retail is a local business and the consumer in the north is very different from the consumer in the south. We will be carrying a lot of different products that are only going to be available in certain regions and they would be relevant to those certain regions.
I think the one-size-fits-all approach to retail is just nonsense. I don’t care what market you are in, retail is a local business and you have to be locally relevant with local products.
What are the local products you have introduced in Amritsar and in Zirakpur?
I can’t remember the Indian word but it’s a mixed spice that’s usually already pre-ground. We have now, under the Best Price label, put it without grinding. So wholesalers, local hawkers or restaurant owners can buy that sack and do the grinding themselves and save some money. We don’t do that anywhere else in the world. That’s just one example that sticks with me and I know there are hundreds of them.
Wal-Mart had initially said that its focus would be to get the supply chain right first in and then feed as many stores as it can.
In fact, we have a separate supply chain project that is looking at what our national supply chain network will look like in India over the next, say, 10 years. We are bringing expertise from our overseas offices where we have gone through this before and they are working with our team here. We can only satisfy our customers if they get the same quality in products. I would be disappointed if in the next 10 years we didn’t have a good supply chain in all the tier I and tier II cities across the country.