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Wal-Mart's Entry Turns Spotlight On India's Retail Sector
Jun 24, 2007

Wal-Mart, the world's leading retailer, is implementing rock bottom prices in India with Bharti Enterprises in accordance with its global strategy.

In accordance with its global strategy, Wal-Mart, the world's leading retailer, is implementing rock bottom prices in India. Its proposed 50:50 joint venture with Bharti Enterprises targets up to 25 percent lower prices than wholesalers. The news on Rediff India reported that the signing of the new joint venture would be in the coming weeks (May-June 2007) and plans for the first store opening is for mid-2008 with expansion to 75 cities in 5 to 7 years.

The plans have been greeted with controversy turning into a contentious issue for concerns over potential income and job losses for traditional wholesalers and vendors who make the back bone ofcurrent retail trade in India.

Indian constraints on the foreign companies running multi-product retail chains in India have frustrated Wal-Mart for years. As per the current Indian rules, an equal partnership deal has been struck with Bharti Enterprises, the name behind Bharti Airtel Ltd., the largest cellular phone service provider in India with over 30 million users. Bharti, like Wal-Mart is flushed with cash and capable of quick scaling-up.

Eyeing the 30% annual growth in India's retail sector, global retail veterans like Wal-Mart have been pressurizing the Indian government for years. Global retail players find the Indian marketplace irresistible due to increasing middle class incomes and increasing demand for branded products.

Of greater significance is, India, the nation with the second largest population and fourth largest retail market being seen by Wal-Mart as a massive growth opportunity, particularly with an increasingly saturated home market. Modern retailers with branded professionally managed chain stores are expected to boost sales by over 15% annually over the next decade.

The belief of some industry experts is that with Wal-Mart's entry to India emphasizes the attraction in India's emerging retail sector. However the US giant is not alone among foreign companies eyeing India's surging retail market and even local companies find retail to be a prime investment opportunity.

According to a research analyst at
RNCOS, Bharti Enterprises is noted for its grocery expertise with a culture far removed from Wal-Mart's. The end result could spell disaster for Wal-Mart. For Indian companies such alien corporations act as nothing more than a stepping-stone to success.

Related Market Research Reports:
Booming Retail Sector in India
Opportunities in Asian C-store Market
Global Convenience Store Market Analysis