RETAIL GIANT WAL-MART
Launches its First Store in Amritsar

The world's number one retailer Wal-Mart opened its first sales venture called the Best Price Modern Wholesale in India recently with a view to establishing a foothold in India's vast consumer market. The location of this new wholesale outlet, a joint venture between India's Bharti Enterprises, parent of India's biggest mobile firm Bharti Airtel, and Wal-Mart Stores Inc. is Amritsar in the wheat bowl northern state of Punjab.

"We have put in a lot of planning and preparation over the past 12 months and are delighted all the hard work will now bear fruit as we open the doors of our first cash-and-carry store in India," said Wal- Mart India head Raj Jain.

The opening of Wal-Mart's first "big box" outlet is a high-stakes one for the US retailer which has been expanding internationally to grow its revenues. "India is first of all a country with close to 1.2 billion people and a strongly growing economy which is driven by personal consumption," said Jain. "There's a need to start out on a learning curve with the Indian consumer and this is the first significant step in that direction," he said.

The Best Price Modern Wholesale will offer 6,000 food and non-food items at "competitive wholesale prices," a Wal- Mart statement said. Best Price will not be open to retail shoppers but will serve small stores, fruit and vegetable sellers, restaurants, hotels and other business outlets.

Under India's tight foreign investment rules, no overseas chains are permitted in the retail sector — except for single-brand outlets such as Nokia or Reebok — to protect local retail players.

Foreign groups such as Wal-Mart can only be wholesalers and must partner with domestic companies to enter the retail market, valued at 400 billion US dollars and forecast to grow rapidly in the coming years.

According to Raj, the company plans to invest $100 million over the next three years to open 10 to 15 more wholesale outlets, which would employ 5,000 people across India. "We have put in a lot of planning and preparation over the past 12 months and are delighted that all the hard work will now bear fruit as we open the doors of our first cash-and-carry store in India."

Jain also said that "We will generate
significant job opportunities ... and we have been working closely with local suppliers to develop a sustainable and efficient supply chain."

The opening comes at a politically crucial time for foreign firms eager to tap India's $430 billion retail market. The entry of big-box players in India has been controversial because small, mom-and-pop "kirana" shops are such an important part of the local economy. Many fear they'd be decimated if big players like Wal-Mart are allowed unfettered access to the Indian market.

In the past, officials from the ruling Congress party have said they wanted to allow foreign firms to sell directly to consumers, but couldn't push through that liberalization because of opposition from India's once-powerful communist parties — who were swept from power in justconcluded national elections.

According to Arvind Singhal, chairman of retail consulting firm Technopak Advisors Pvt. Ltd. in New Delhi, a successful opening of Wal-Mart, which sparked protests in India in 2007 and has attracted controversy in other parts of the world, "will send a very positive signal out" to global firms. "If their stores are allowed to open in India and there is no agitation it should reassure other retailers." No reports of protests at the opening surfaced, but Bharti Wal-Mart had to delay the launch by nearly a week because of riots in the area sparked by the killing of a Sikh cleric in Austria.

Foreign firms are also watching India closely to see if economic growth picks up enough to justify major investment, Singhal added.

If India can return to 8 percent annual GDP growth, the retail market could hit $750 billion in five years — $90 billion more than if GDP stutters along at 6 percent a year, he said. "That makes it much more attractive. Multibillion dollar retailers want significant revenues from India."

Britain's Tesco PLC teamed up with India's Tata Group last year to launch a wholesale business in India. France's Carrefour SA has also said it wants to expand into India. Neither has yet opened stores. Germany's Metro Group has opened five wholesale outlets in India since 2003, according to its Web site.

In the meantime, the fact that Wal-Mart made its grand India entry minus its popular name has raised quite a few eyebrows. It is believed that this was done to avoid political controversies but a few believe that Wal-Mart is conveying its brand's value proposition loud and clear with its new name Best Price Modern Wholesale.

In this regard, Jain had earlier stated, "When we started out we did an intense branding research. We also did a lot of research on the price and realized that the store has to be given a name which conveys its philosophy by its name alone. Best Price Modern Wholesale was conveying the perfect brand philosophy."

[ BY GAURI KUMAR ]