WAL-MART - in India

Wal – Mart

Everyday Low Prices and Everyday low Cost – That’s exactly what every consumer needs, and Indian consumer is no exception. This opportunity will be provided by the joint venture of Bharti Enterprises, a leading Indian cell phone operator, and Wal- Mart the world's No. 1 retailer, when it opens hundreds of Wal-Mart-branded superstores across India over the next five years, starting in 2007.
Across the globe, Wal-Mart is trying to establish a large scale retail network with an integrated supply chain that gives it huge clout with suppliers and the high degree of efficiency that results in low price for its customer. The role of Wal-Mart in this joint venture is to focus on back end supply chain management, giving Bharati access to proprietary know how in logistics and retail chain management for which Wal–Mart is known worldwide and hence, this combination of retailing’s 800 pound gorilla Wal-Mart with Bharti group is feared, admired and closely watched.
Certain trends that we have identified that could have a bearing on Wal-Mart operations in India are as follows:

1. Increase in the Double income families:
With the advent of rising disposable income, consumers desire to purchase a variety of products has increased. Wal-Mart being a retail giant will form close association with large number of suppliers, and provide wide range of products, thereby adequately fulfilling the rising needs.

2. Change in the consumer behavior:
Across the globe, the customer expectation is rising with every passing day, shopping is no longer a need fulfilling activity. Customers want a “Shopping Experience” which they previously ignored. People now a days, do Shopping for entertainment, and to get away from their busy lifestyle. Imagine a bunch of friends, wanting to do some essential purchases during weekends. They will definitely opt for a place that has front desk staff, which is helpful and a place where there is vibrancy and cheerful faces around. For this they will be ready to pay something extra for an overall experience to get away from the routine not break the head with a general store owner trying to bargain for a commodity priced a bit higher, which u will readily and happily pay in a retail outlet.

3. Increase in Nuclear Families:
Today, most families comprises of parents and two children. No longer are grandparents, brothers, maternal uncles etc. included as a part of a family. With the increase in the number of families, more purchases will be made. Wal-Mart can be highly benefited by this trend.

4. One shop stop:

Wal-Mart being a retail giant will have excellent ambience, good parking space, and global food and entertainment outlets within its premise.
In this fast paced world, time is precious. The offer of A-Z products under one roof will reduce time for shopping considerably. Working women will be tremendously helped by it. They need not hop around the market and spend hours for buying a product. Thus, apart from getting a variety of products under one roof, customers will enjoy the added value.

5. Desire to be treated unique/special:
Customer Service encompasses two major components: Visual Merchandizing and availability of the products at the right time. Wal-Mart’s (handling the back end operation) excellent value chain set up would ensure a constant availability of products all the time. Technologies like RFID (Radio Frequency Identification) for managing replenished stocks and inventory level, and the handheld billing machines will play a major role in increasing customer delight and satisfaction. Also, shopping at Wal-Mart will be a status enhancer.

6. Fascination for Global Branded Products:
Indians have always been attracted towards international products. They sense foreign goods as one that possess excellent quality. Wal-Mart can provide these brands at a much competitive price on account of the strong contacts with the suppliers around the world and excellent value chain activities which will give them a competitive advantage. Also, the influence of western culture is increasing by the day. This will lure more and more people to make certain purchases which they previously would not.

7. Health consciousness:
People are getting concerned about their health. They want to consume foods that are eco-friendly. Wal-Mart can make use of this trend and provide fresh organic fruits and vegetables to the consumers. Think of a person who lives away from the local market place. He would always desire to get fresh food which is not always feasible. But if fresh food is available in the nearby Wal-Mart stores and at a reasonable price the health conscious need can be fulfilled.

Environmental Factors

MARKET

The retailing market is one of the fastest growing markets in India. Currently the contribution of organized retail to the total retail market is just around 3%. There is a high potential in the retailing market which is totally untapped. There is not only high current demand but the sector is also expecting a big leap in the future. So in such an environment Wal-Mart will need to get a grasp of the market through the knowledge of Bharti. They will have to constantly track down the changes in the market and change their strategies according to the current market scenarios.

THE CONSUMER

Indian society is known for shaping its own benefits, values and norms that largely define its peoples taste, preferences and their expectations about the service offered by a company. This factor will affect Wal-Mart, which is a foreign player in retail industry, when it enters the Indian market. The taste and preferences of people are constantly changing. So the market here for any new firm is very slippery, including the very high timers like Wal-Mart. Very consummate knowledge can only help Wal-Mart pass through this tough test, in which the help of Bharti is very consequential.


The other major factor about the Indian consumer is the high diversity in all the fields. Whether it is religion or it is language India has a very high variety. This is also a factor which Wal-Mart will have to take into consideration. It cannot run the same strategy all over India and in all the sections of the society. The strategy that will work in North India may not work in South India; the schemes that would influence one fragment of the society may not do so to the other segments. Wal-Mart will have to concentrate on its strategies in different areas of the society to hold the market properly.


INDUSTRY AND COMPETETION

Information about the industry and the existing and potential competitors is very important for any new firm launching into a new sector. Though the retailing sector of India is very promising a tough competition can simply ruin all the efforts by Wal-Mart. So Wal-Mart will need to concentrate on all the aspects of retailing in which it can be run down by its competitors. Major competitor ‘Reliance Retail’ is now concentrating on enhancing its Supply Chain to give Wal-Mart a good competition on its low price strategy. The other aspect of retailing is the service part in which firms like RPG and Reliance can give Wal-Mart tough time on the block.

GOVERNMENT POLICIES

One of the main reasons for Wal-Mart creating a conglomerate with Bharti is the Government regulation that bans FDI in the retail sector. Any foreign firm cannot directly invest into the retail sector in India; it can operate only through a franchisee, so Wal-Mart cannot have a direct entry into the booming sector of organized retail in India. The way Wal-Mart has chosen is to invest in the supply chain at the back end of the whole operation. The government allows a foreign investment of up to 51% in the wholesale business, so this is the only way through which Wal-Mart can invest.


SUPPLIER RELATED FACTORS

Suppliers form another part of the proximate environment of any firm. They have their own bargaining power in the industry, through which they can influence the cost of inputs for the firm. Since Wal-Mart is firm totally concentrated on providing the lowest prices, its interactions with the producers and the suppliers would be quite critical to the firms’ success in the future. This is one area which will have to be taken care of very precisely to ensure the implementation of the strategy which has made Wal-Mart the biggest retailer of the world.

Thus looking at the trends and the environmental factors that can affect Wal-Mart‘s entry into the Indian market it is obvious that it is not going to be a cake walk .But looking at its past performance and emergence in countries like China, along with its incredible satellite based value chain activities which have always given it a strong competitive advantage it is possible for Wal-Mart to succeed. However this would not be possible without the local expertise of Bharti. Thus together this joint venture will certainly be a force to reckon with. Also it will change the face of the Indian retail market and the way the ever changing Indian consumer shops.

-fahad jameel