By Nayanima Basu, IANS
New Delhi : India has humongous potential in the cash-and-carry wholesale business in the country’s booming retail segment, says the world’s largest retailer Wal-Mart Stores, Inc.
“The wholesale business in India typically would be 10-15 percent of the total sales. So, if the total consumption in India amounts to $350 billion then the size of the wholesale business would be approximately $50 billion. Thus, the potential is huge,” Raj Jain, country president for Wal-Mart operations in India, told IANS in an interview.
The US retail behemoth, which has presence in 13 countries, has added India as its 14th destination after Britain, Canada, Japan, China, Brazil, Mexico, Guatemala, Honduras, Costa Rica, El Salvador, Nicaragua, Argentina and Puerto Rico in the form of discount stores, supercenters, neighbourhood markets and Sam’s Club, based on the wholesale model.
In its aggressive efforts to gain a strong foothold in India’s billion-plus consumer marker, the company recently inked a 50:50 joint venture deal with Bharti Enterprises, India’s telecom-to-retail group.
The joint venture is likely to roll out 10 to 15 cash-and-carry facilities over seven years, employing about 5,000 people. The first such facility, which would be selling groceries, consumer appliances and fruits and vegetables to retailers, small manufacturers, local shops, is expected to open by end of 2008 in some of the smaller cities in northern India.
“Initially, we have decided not to enter the big metros because firstly, most of our business customers are not well-serviced and secondly, the quality of real estate is too high,” Jain, former head of Whirlpool India, added.
“We are focused on serving the unmet needs of the consumers in non-metros under one roof, a range of merchandise that customers in India have not seen so far,” he added.
In China, where it entered 11 years back in 1996, Wal-Mart currently has a whopping 88 stores. However, India would have to wait before it actually feels and experiences shopping in Wal-Mart as the country’s current FDI laws do not allow foreign multi-brand retail stores to set up shop.
“We are currently not focusing into and not worried about retail. However, as and when the laws open up we would definitely like to grab the opportunity and India is definitely a priority country for us,” said a visibly excited Jain.
“We understand in a democracy it takes time to change the laws and we have been making our pleas but we are not in any hurry as our perspective of India is long-term.”
“We had been looking at an opportunity to enter India which we got by partnering with a local player here. And we are already in talks with two other big retailers who would like source product from us,” he averred.
On the issue of traders, small merchants, farmers terming it as a “backdoor entry” Jain said: “People are currently ill-informed about our venture as they don’t understand concept. People are talking out of ignorance but with time I am sure they would understand.”
Indian retail industry, which is currently $328 billion, is likely to grow upto $427 billion by 2010, of which the share of organised retail could increase by upto 20-22 percent, according to global consultancy firm Technopak.