Bharti Walmart


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This presentation gives a brief description of India's retail industry, focussing on organised and unorganised retail industry. then it details out the partnership between Bharti and Walmart. How a foreign player( best in the world) is making entry inot Indian market and why so?
What are the benefits out of it ?
What are the problems with indian retail industry that foreign players can resolve?
Why is the entry of foreign players difficult?

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Bharti Walmart

  1. 2. <ul><li>INDIA - Most attractive retail destination </li></ul><ul><li>$ 320 billion now -- $637 billion by 2015 </li></ul><ul><li>CAGR – 5% </li></ul><ul><li>Highly Fragmented – “A nation of shopkeepers” </li></ul><ul><li>14% to India’s national GDP </li></ul><ul><li>Jobs for 7% of workforce </li></ul>
  2. 3. <ul><li>Organized sector – officially licensed retailers Eg. Large privately owned retail company, retail chains etc. </li></ul><ul><li>Unorganized sector – hand cart vendors, convenience stores, paan/beedi shops, local kirana stores </li></ul>
  3. 4. <ul><ul><li>Large number of working youth (median age 24) </li></ul></ul><ul><ul><li>Growing number of working women </li></ul></ul><ul><ul><li>Nuclear families living in urban areas </li></ul></ul><ul><ul><li>Boom in services sector </li></ul></ul><ul><ul><li>Large number of working youth (median age 24) </li></ul></ul><ul><ul><li>Growing number of working women </li></ul></ul><ul><ul><li>Nuclear families living in urban areas </li></ul></ul><ul><ul><li>Boom in services sector </li></ul></ul>
  4. 5. <ul><li>Huge investment in retail infrastructure </li></ul><ul><li>Traditional markets replaced by new formats </li></ul><ul><li>Development of mall culture, supermarket, hypermarket, and departmental stores. </li></ul><ul><li>Food entertainment shopping under one roof </li></ul>
  5. 6. <ul><li>SPENCERS </li></ul><ul><li>RPG </li></ul><ul><li>Reliance </li></ul><ul><li>TATA </li></ul><ul><li>Future group </li></ul>
  6. 7. <ul><li>Lack of efficient supply chain </li></ul><ul><li>Inefficient Third part logistics services </li></ul><ul><li>Absence of proactive channels </li></ul><ul><ul><li>Cold chains </li></ul></ul><ul><ul><li>Logistics infrastructure </li></ul></ul><ul><ul><li>warehousing </li></ul></ul><ul><li>Lack of skilled employees </li></ul><ul><li>Inadequate quality control </li></ul><ul><li>Variation in policy regimes across different states </li></ul><ul><li>Stringent labour laws </li></ul><ul><li>Lack of status as an industry therefore difficult to raise capital for expansion </li></ul><ul><li>Violent protests by small retailers for closure over illegal shops </li></ul>
  7. 8. <ul><li>Established in 1969. Top of Fortune 500 list in 2007 </li></ul><ul><li>3 subsidiaries : </li></ul><ul><ul><li>Wal-Mart International </li></ul></ul><ul><ul><li>Sam’s Club </li></ul></ul><ul><ul><li>Wal-Mart Stores Division US </li></ul></ul><ul><li>9 Different retail formats </li></ul><ul><li>Pricing Strategy </li></ul><ul><ul><li>Low Pricing Strategy – ‘ Always low Prices’ </li></ul></ul><ul><ul><li>General merchandise prices – set after price checks of K-Mart and Target stores </li></ul></ul><ul><ul><li>Food Prices – set on basis of zones corresponding to food distribution centres </li></ul></ul>
  8. 10. <ul><li>IT in Supply Chain Management </li></ul><ul><ul><li>Bar codes for inventory tracking </li></ul></ul><ul><ul><li>Satellite communication for co-ordination </li></ul></ul><ul><ul><li>Electronically order placing to suppliers </li></ul></ul><ul><ul><li>Use of RFID tags </li></ul></ul><ul><li>Think Global Act Local </li></ul><ul><ul><li>Wal-Mart international : international operations </li></ul></ul><ul><ul><li>3000 stores in 13 countries </li></ul></ul><ul><ul><li>Succesful in North and South America but not in Germany and South Korea </li></ul></ul><ul><ul><li>Restricted International approach : discriminatory in entering international markets </li></ul></ul>
  9. 11. <ul><li>Why Bharti ? </li></ul><ul><ul><li>Market leader in Indian telecom market </li></ul></ul><ul><ul><li>Thorough understanding of distribution in Indian markets </li></ul></ul><ul><ul><li>Fully aware and capable to succeed in complex environment of Indian market </li></ul></ul><ul><ul><li>Capability to attract FDI </li></ul></ul><ul><li>Joint Venture </li></ul><ul><ul><li>2 different formats : franchised retail company & wholesale cash and carry joint venture </li></ul></ul>
  10. 12. <ul><ul><li>50-50 venture for back end SC management and wholesale cash and carry operations </li></ul></ul><ul><ul><li>Also different contract – Walmart sharing technology & expertise to support retail stores built by Bharti </li></ul></ul><ul><ul><li>Aim to link farmers directly to retailers </li></ul></ul><ul><ul><li>Strong back end infrastructure – Cold chain logistics </li></ul></ul>
  11. 13. <ul><li>Protests by small & medium local businesses </li></ul><ul><li>Criticised for not being socially responsible company </li></ul><ul><li>Widely criticised for practises such as : predatory pricing, discrimination against women, squeezing suppliers </li></ul><ul><li>Dealing with India’s unique cultural factors </li></ul><ul><li>Supply Chain Management challenges </li></ul><ul><ul><li>Underdeveloped physical infrastructure </li></ul></ul><ul><ul><li>Poor quality of roads, trucking, reluctance to adopt modern technology </li></ul></ul><ul><ul><li>Cutting out middleman would create more opposition </li></ul></ul>
  12. 14. <ul><li>Emergence of organised retail sector </li></ul><ul><li>Wal-Mart’s joint venture with Bharti aimed at capitalizing growing middle class </li></ul><ul><li>Bharti ideal partner for Wal-Mart </li></ul><ul><li>Many unique challenges in India to overcome </li></ul><ul><li>If challenges tackled , this partnership could transform Indian retail </li></ul>