WAL-MART/BHARTI DEAL WILL LAUNCH IN NORTHERN INDIA NEXT YEAR
Bharti Wal-Mart JV to take off from Punjab [Financial Express (India)]
The joint venture Bharti Wal-Mart Private Limited is set to open 10-15 wholesale cash-and-carry facilities which will employ approximately 5,000 people over the next seven years. The first facility is expected to take off from Punjab by the first quarter of 2009. The JV has already set up a distribution centre spread over 1,00,000 sq ft in Banur from where goods will be supplied to the nearest facility.
Being tight-lipped over the selection of the place for first cash and carry facility Raj Jain, managing director and CEO, Bharti Wal-mart Private Limited just said the company would commence its operations from the north only.
Talking about the Wal-Mart economics in India, Raj Jain said, “Our aim is to provide best quality products at cheaper prices in India. Wholesale cash and carry operation will provide a wide range of products to small retailers and business owners. The JV will serve Kirana stores, fruit and vegetable resellers, restaurants. The venture will invest in setting up an efficient chain and will support farmers, small manufacturers who have limited infrastructure and distribution strength. We will also help our suppliers to get easy access to finance from banks. The supplier will get the certificate from Wal-Mart, which will help them to avail the loan. But we will not stand as a guarantee if a particular supplier fails to repay the loan”.
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Posted by Stephanie Lee on Tuesday, August 12 | 0 comments | Permalink
Interview With Raj Jain, President of Wal-Mart India
Wal-Mart, the world’s largest retailer, finds itself in a curious situation in India. Barred by government restrictions, it cannot directly operate as a retailer. As a result, the company’s strategy has been to develop what Raj Jain, Wal-Mart India’s president, calls a business-to-business wholesale cash-and-carry operation. In addition, Wal-Mart India is playing a leading role in helping develop modern supply chains in India. In an interview with India Knowledge@Wharton in Washington, D.C., at the 33rd annual meeting of the U.S. India Business Council, Jain spoke about Wal-Mart’s operations and strategy in India.
An edited transcript of the conversation appears below.
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Posted by Vasudha Desikan on Tuesday, July 15 | 0 comments | Permalink
The Behemoth Retailer That Could
Today, the Financial Times reported that Wal-Mart is expanding its overseas expansion. Well color me surprised! Currently, international sales constitute 26% of the company’s net sales and this is while Wal-Mart is lowering its capital expenditures. In layman’s terms, this means that they’re slowing growth- or rather, they are being forced to by the market. So in order to sustain the company, Wal-Mart is looking to conquer new markets abroad. Thankfully, Asia and Eastern Europe are still up for grabs!
Wal-Mart readies for overseas expansion
Wal-Mart, the world’s largest retailer, is embarking on a further round of international expansion on the back of a systematic overhaul of the way it runs its business, which is expected to deliver more than $100bn in sales this year.
The retailer is actively exploring a first move into Russia and neighbouring countries, while preparing to open its first wholesale warehouse stores in India next year in a joint venture with Bharti Enterprises.
Wal-Mart already has operations in 13 countries, which accounted for 26 per cent of its net sales last year.
Wal-Mart’s international square footage growth rate is now above that in the US, where it has now slowed the expansion of its profitable Supercenter format in the face of market saturation.
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Posted by Vasudha Desikan on Wednesday, June 18 | 7 comments | Permalink
India FDI Watch’s Battle with Wal-Mart
A Q&A session with the head of India FDI Watch, Dharmendra Kumar, about the successes of the campaign and the many obstacles they have faced along the way.
How did India FDI Watch first begin?
The India FDI Watch Campaign started in March of 2005 with the mission to prevent the opening of Foreign Direct Investment (FDI) in the retail sector in India. However, during the course of the past three years as large domestic corporations, like Reliance, have also entered the retail sector, the India FDI Watch Campaign has broadened its scope to address the rise of corporate retail in general.
Specifically, the campaign seeks to prevent the insertion of multi-national retailers from entering the Indian market, and stunt the growth of domestic retailers, unless these companies make satisfactory guarantees that would protect communities; protect the environment; insure the livelihoods of existing small retailers, hawkers and farmers; guarantee fair wages and working conditions for their own employees and source employees along with union protection and agreements; and insure that a significant percentage of sourcing derives from the Indian market.
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Posted by Vasudha Desikan on Friday, June 13 | 21 comments | Permalink
Setting Up Shop
Just because something is legal or legitimate, does not mean that is right. The best example of this is Wal-Mart’s backdoor entry into India by virtue of its JV with Bharti Retail. For those who believe that Wal-Mart is solely interested in wholesale retail are completely oblivious to the company’s expansionist tendencies across the world. Contrary to their statement in this article, Wal-Mart is in a JV and pursuing cash-and-carry out of compulsion not choice. If Indian FDI laws were more flexible, Wal-Mart would set its sights to conquer the surging Indian retail market same as it did in Mexico or Central America.
Let’s not kid ourselves: Wal-Mart is doing wholesale in India because they have to. And really, they probably won’t be doing much business with kirana owners like they claim they will. As the director of India FDI Watch said: “Here Wal-Mart is coming as a wholesaler, and Wal-Mart is only selling to Bharti.” There is nothing in it for the small vendors or farmers.
Cash-and-carry: the Wal-Mart way [India Business Law Journal]
Like it or not, Wal-Mart is coming to India. But the retail giant won’t be setting up the air-conditioned, consumer friendly superstores visible in so many other countries. Instead, in order to comply with Indian laws, Wal-Mart is establishing with Bharti Enterprises a business-to-business wholesale retailing company called Bharti Wal-Mart. The venture is a 50-50 joint venture between the two companies, though Indian law would have allowed Wal-Mart 100% FDI in such a back-end business.
“It is a joint venture out of choice, not compulsion,” a Wal-Mart spokesman tells India Business Law Journal. “We recognize the importance of having a local partner based on our excellent experiences working with partners around the world in places like Mexico, Central America and China.”
“Bharti is a great company,” the spokesman continues, “with a strong understanding of the market in India, and makes for a winning partnership.”
Wal-Mart sees the potential for its wholesale cashand-carry business in India as immense, and is eyeing the country’s 12 million neighbourhood shops – 90% of which the company says are not directly served by fast moving consumer goods companies – as its customers.
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Posted by Research Team on Friday, May 16 | 1 comments | Permalink
Bharti Retail Works to Consolidate Stores in North India
Bharti Retail aims to consolidate presence in northern India [Economic Times]
Bharti Retail, a recent entrant in the organised retail market, on Tuesday said before launching pan-India operations, it will focus on Punjab and then move on to consolidate its position in northern India.
“Our focus right now is Punjab and we will first consolidate our presence in North India,” Bharti Retail President and CEO Vinod Sawhney told reporters on the sidelines of a CII organised retail conference.
The company has recently announced the launched of its first three food and grocery stores under the brand name ‘Easy Days’ in Ludhiana, Punjab.
Easy Day is a neighbourhood format store, which has been launched first. The company also plans to have bigger formats like compact medium and hypermarkets.
Asked when the other formats were expected to be rolled out, Sawhney said, the company was at present learning from the experiences of the new stores and was thus concentrating on smaller formats.
Easy Day stores offer a wide range of products ranging from items for daily usage such as personal care products to groceries such as processed foods, staples, bakery, dairy products, meat and poultry.
Sawhney said the company would also focus on private labels at the stores. “As somebody who is entering the retail market we will be looking at private labels also,” he said.
The company, which has a JV with Wal-Mart for cash-and- carry operations and a franchisee agreement for front-end retail, aims to spend USD 2.5 billion by 2015 for opening multiple format stores.
The company is expected to open its first cash-and-carry stores by the end of 2008.
Posted by Vasudha Desikan on Thursday, May 15 | 0 comments | Permalink
Wal-Mart’s 2008 Shareholder Resolutions: Human Rights Committee
This is the third in a series of posts on Wal-Mart’s 2008 shareholder resolutions. The full list of resolutions - and Wal-Mart’s statements regarding them - can be found in the company’s 2008 proxy here (PDF).
Resolution #7 on this year’s proxy proposes the establishment of a human rights committee at Wal-Mart. Below, the details of the proposition, why Wal-Mart’s shareholders would benefit and how the company has reacted to the proposal.
Wal-Mart’s Public Image Problem
Reports of human rights violations have dogged Wal-Mart for years - particularly in the company’s supplier factories, most of which are overseas. These violations have thoroughly damaged Wal-Mart’s reputation, with everyone from U.S Senators to Wal-Mart employees to factory workers themselves speaking out about the inhumane conditions in Wal-Mart’s supplier factories. Bama Athreya, director of the International Labor Rights Forum, testified before Congress on the issue of toy safety, explaining that “Wal-Mart bears a lion share of responsibility for pushing the toy industry to a place where worker health and safety are basically nonexistent.”
Wal-Mart also holds the ignominious title of being the only company investigated by Human Rights Watch for its domestic labor practices. The group’s 2007 report labeled Wal-Mart’s union-busting policies a violation of basic human rights, saying:
It pursues its anti-union agenda relentlessly, often from the day a new worker is hired, devoting considerable time and resources at all levels of the company to the anti-union drumbeat.
The constant stream of allegations have damaged Wal-Mart’s reputation and in turn, its profits. In 2007, a Bank of America analyst’ report found that Wal-Mart’s profits had suffered as a result of organized labor’s opposition to the company and its unethical labor practices. The report noted that the union’s campaign “has cost WMT [Wal-Mart] real estate sites in key locations, adversely impacted comp store sales to some degree, and has distracted m management from focusing on its retail strategy. Additionally, Lee Scott now spends a large amount of time improving WMT’s image domestically and abroad, and WMT has been forced to focus advertising dollars on defending their brand.”
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Posted by Research Team on Tuesday, May 13 | 3 comments | Permalink
Wal-Mart Continues to Focus on Expansion Abroad
In this article from the Arkansas Democrat-Gazette, author Steve Painter makes the important correlation between Wal-Mart’s increasing international expansion and the company’s difficulty expanding in the U.S. Just last week the company lost a 2-year-long site fight on the south side of Chicago, a crucial city in the company’s urban expansion plans. Wal-Mart has met opposition to its international plans as well, including protests in India which have stymied the company’s plans there. Were all international markets aware of Wal-Mart’s business practices, we’re pretty sure the company’s expansion efforts abroad wouldn’t be going so well.
Foreign markets fertile for Wal-Mart [Arkansas Democrat-Gazette]
In Brazil, Wal-Mart Stores Inc. is counting on its small format Todo Dia neighborhood grocery stores to drive sales among low-income customers.
In Canada, Wal-Mart continues to add supercenters to its traditional base of discount stores, gaining market share.
In India, Wal-Mart partner Bharti Enterprises recently opened the first of its new Easy Day stores in a nation teeming with potential customers.
Deploying formats ranging from convenience store-sized markets to U.S.-sized supercenters, the world’s largest retailer is expanding its international operations at several times the rate of its stores in the United States, where it scaled back growth last year.
As Wal-Mart increasingly encounters opposition to its stores in U.S. cities it has yet to penetrate, it has mostly found open doors overseas, especially in developing economies where incomes are rising. In the past year, Wal-Mart’s international selling space grew 18 percent while U.S. space was up 4.6 percent.
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Posted by Alex Goldschmidt on Monday, May 12 | 53 comments | Permalink
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