Walmart wants to enter the Indian retail market, which is worth $350 billion and growing at 15% annually. It is taking a two-pronged approach, entering wholesale as well as opening single-brand retail stores. India's retail sector has grown rapidly since the 1990s as organized retail has increased from less than 2% to around 10% currently. Walmart faces both opportunities and challenges in India, such as a large untapped market but also legal restrictions and cultural barriers. Based on its experiences in other markets like China and Brazil, Walmart understands it must adapt to local conditions to be successful in India.
2. INTRODUCTION
Indians who reside in
urban India are a
potential market
opportunity that cannot
be ignored for
consumer durables,
and electronics.
Walmart: $250 B
company with $500
B in revenues and
only $35 B in
revenues from
foreign countries.
Top on Wal-Mart’s list of
priorities is to gain access to
the Indian retail market, a
$350 billion industry that is
growing at 15% year-on-year.
Takeaway: Wal-Mart has set its sights on the Indian market, and has taken a 2 pronged approach
to enter, with wholesale as well as single-brand retail stores.
3. RETAIL SECTOR, INDEPENDENCE
TO1990S:
STORE AND BRAND PROLIFERATION
Reliance Fresh
Hand cart
Takeaway: India had less than 2% organized retail before the 1990s. Today, India is rapidly
approaching 10% organized retail.
4. RETAIL REFORM IN THE 2000S:
ENTRY OF THE GIANTS
Takeaway: The Indian retail sector has only recently been opened to single brand retail stores.
5. THE INDIAN OPPORTUNITY AND
CHALLENGE
The
opportunity
The
Challenge
• Retail market will grow to
$637 billion by 2015.
• Indian discretionary
spending will increase
dramatically.
• Organized retail holds only
10% of retail market
• Large investments
required
• Legal restrictions on
farmer sales directly to
retailers, middleman
system.
• Cultural barriers
Takeaway: The Indian market has many opportunities as well as challenges.
7. WAL-MART’S GLOBAL STRATEGY
Russia, like India, also challenges
foreign entrants with corruption at
the local level.
Wal-Mart built small “Todo Dia”
outlets in Brazil.
Wal-Mart faces the problem of
adapting to local tastes in China.
Wal-Mart used its market power to
lower prices and alters production
schedules altered to fit its need.
Takeaway: Wal-Mart has learned from its various experiences the importance of being locally
responsive to solve corruption, local product demands, size constraints, and union backlash.
8. WAL-MART IN INDIA
Takeaway: Given Wal-Mart’s extensive experience in India, it is well suited to open stores in
India.
9. WAL-MART’S RESPONSE TO INDIA’S
UNIQUE CHALLENGES
Logistical
Cultural
Political
Takeaway: Wal-Mart faces political, cultural and logistical barriers while in India.
10. RECOMMENDATIONS FOR WAL-MART
Wal-Mart has international
experience and knows how to
cater to developing world
needs.
Wal-Mart can hire
middlemen just like ITC to
help understand its
customers.
Wal-Mart can invest in educational institutions
in its community to get good talent.
Wal-Mart can invest in
smaller stores to satisfy
customer needs.
Wal-Mart can reduce costs
by creating better logistics
for its products.
Takeaway: Wal-Mart can be successful by applying a unique Indian spin on its values.
11. RECOMMENDATIONS FOR LOCAL
RESPONSE
Takeaway: Local Competitors can compete against Walmart using this 5 fold strategy.
• Local competitors have already
implemented a lot of these actions.
• In particular, they have to focus on
deploying the latest technology for
sourcing as well as training more of
their staff in-house.
• Walmart may be new to the market,
but it already has adopted several of
these strategies.
12. • All in all, India offers a dynamic and challenging opportunity for
Wal-Mart.
• There are competitive elements in the market that require
constant innovation to overcome.
• However, the Indian opportunity is so vast that Wal-Mart cannot
afford to give up. Whatever the outcome, India’s retail sector
will continue to offer opportunity for millions of entrepreneurs.
CONCLUSION