By IANS
New Delhi : Wal-Mart, the world’s largest retailer with presence in 13 countries, is finally entering India but only as a wholesaler.
India’s Bharti Enterprises, that has interests from telecom to retail, and Wal-Mart Stores, Inc. Monday announced the establishment of their joint venture Bharti Wal-Mart Private Ltd. for wholesale cash-and-carry and back-end supply chain management operations in India.
The new entity targets the opening of the first wholesale store by end of next year. It has plans to open 10 to 15 such stores over the next seven years. The sites have not yet been confirmed but, according to the officials, they will come up in smaller towns in northern India.
The joint venture is expected to employ over 5,000 people spread over seven to eight years, officials said.
Bharti Wal-Mart Private Ltd. will source products from local neighbourhood stores, fruit and vegetable resellers, restaurants and other small manufacturers.
The joint venture will serve kirana stores (corner shops), fruit and vegetable resellers, restaurants and other business owners. It will also serve a chain of retail stores owned and operated by Bharti, which has entered into a franchise agreement with Wal-Mart, which will provide technical support.
“Wal-Mart’s global expertise in supply chain and logistics will bring enhanced efficiencies across the retail ecosystem. This venture promises to bring great value to million of farmers, artisans, small manufacturers and retailer across India,” said Sunil Bharti Mittal, chairman and group CEO, Bharti Enterprises.
Wholesale cash-and-carry operations provide small retailers and business owners with products at wholesale prices.
The partners, however, refused to comment on the financial details and the revenue sharing model in this 50:50 joint venture. According to Bharti Enterprises’ managing director Rajan Bharti Mittal, “This is a scalable business and there has been a substantial amount of investment that has gone into this venture and it would grow as the business grows.”
The wholesale cash-and-carry operations of Wal-Mart, which is quintessentially based on a business-to-business (B2B) and business-to-commerce (B2C) model, is globally carried on by the firm under different models such as Maxi and Sam’s Club.
“Through our wholesale cash-and-carry joint venture, we will help drive efficiencies across the supply chain and work towards the betterment of India’s farmers, small manufacturers and retailers, in line with our global vision of saving people money so they can live better,” said Mike Duke, vice chairman, Wal-Mart Stores, Inc.
“We would like to leverage our global scale to transform some of these suppliers into exporters with access to our global markets over time,” Duke added.
According to Raj Jain, country president for Wal-Mart’s India operations: “One of the key reasons for Wal-Mart’s international success is the fact that in every location we operate, we are local. We source local products from local suppliers that appeal to local tastes, needs and fashion.”
Wal-Mart will have to wait for sometime before the Indian government is able to change it law that presently does not allow foreign multi-brand retail stores to set up shop as they are seen as a threat to the small, neighbourhood retailers that dot the country’s retail scene and given employment to tens of thousands.
The retail industry in India is expected to be worth $427 billion by 2010 from the current $328 billion, with the share of organised retail going as high as 20-22 percent, according consultancy firm Technopak Advisors.
Global retailers such as Tesco and Carrefour have also expressed their desire to enter India’s booming retail industry but are being stopped from doing so due to the country’s stringent foreign investment restrictions, which do not apply to the wholesale market.