INTRODUCTIONIndians who reside inurban India are apotential marketopportunity that cannotbe ignored forconsumer durables,and electronics.Walmart: $250 Bcompany with $500B in revenues andonly $35 B inrevenues fromforeign countries.Top on Wal-Mart’s list ofpriorities is to gain access tothe Indian retail market, a$350 billion industry that isgrowing at 15% year-on-year.Takeaway: Wal-Mart has set its sights on the Indian market, and has taken a 2 pronged approachto enter, with wholesale as well as single-brand retail stores.
RETAIL SECTOR, INDEPENDENCETO1990S:STORE AND BRAND PROLIFERATIONReliance FreshHand cartTakeaway: India had less than 2% organized retail before the 1990s. Today, India is rapidlyapproaching 10% organized retail.
RETAIL REFORM IN THE 2000S:ENTRY OF THE GIANTSTakeaway: The Indian retail sector has only recently been opened to single brand retail stores.
THE INDIAN OPPORTUNITY ANDCHALLENGETheopportunityTheChallenge• Retail market will grow to$637 billion by 2015.• Indian discretionaryspending will increasedramatically.• Organized retail holds only10% of retail market• Large investmentsrequired• Legal restrictions onfarmer sales directly toretailers, middlemansystem.• Cultural barriersTakeaway: The Indian market has many opportunities as well as challenges.
MODERN GIANTSTakeaway: The entire ecosystem has adapted to Indian market conditions.
WAL-MART’S GLOBAL STRATEGYRussia, like India, also challengesforeign entrants with corruption atthe local level.Wal-Mart built small “Todo Dia”outlets in Brazil.Wal-Mart faces the problem ofadapting to local tastes in China.Wal-Mart used its market power tolower prices and alters productionschedules altered to fit its need.Takeaway: Wal-Mart has learned from its various experiences the importance of being locallyresponsive to solve corruption, local product demands, size constraints, and union backlash.
WAL-MART IN INDIATakeaway: Given Wal-Mart’s extensive experience in India, it is well suited to open stores inIndia.
WAL-MART’S RESPONSE TO INDIA’SUNIQUE CHALLENGESLogisticalCulturalPoliticalTakeaway: Wal-Mart faces political, cultural and logistical barriers while in India.
RECOMMENDATIONS FOR WAL-MARTWal-Mart has internationalexperience and knows how tocater to developing worldneeds.Wal-Mart can hiremiddlemen just like ITC tohelp understand itscustomers.Wal-Mart can invest in educational institutionsin its community to get good talent.Wal-Mart can invest insmaller stores to satisfycustomer needs.Wal-Mart can reduce costsby creating better logisticsfor its products.Takeaway: Wal-Mart can be successful by applying a unique Indian spin on its values.
RECOMMENDATIONS FOR LOCALRESPONSETakeaway: Local Competitors can compete against Walmart using this 5 fold strategy.• Local competitors have alreadyimplemented a lot of these actions.• In particular, they have to focus ondeploying the latest technology forsourcing as well as training more oftheir staff in-house.• Walmart may be new to the market,but it already has adopted several ofthese strategies.
• All in all, India offers a dynamic and challenging opportunity forWal-Mart.• There are competitive elements in the market that requireconstant innovation to overcome.• However, the Indian opportunity is so vast that Wal-Mart cannotafford to give up. Whatever the outcome, India’s retail sectorwill continue to offer opportunity for millions of entrepreneurs.CONCLUSION