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Bharti Walmart


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Bharti Ma

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Bharti Walmart

  1. 1. BHARTI WALMART INDIA STRATEGY Strategic Management Prepared By Vikas Gupta General Management Program 2011-2012
  2. 2. Retail Market in India Total Retail Market Size Indian Retail market highly fragmented 637 Billion Estimated at $ 320 Billion (2006), $ 427 Billion(2010) and $ 637 Billion (2015) 427 Billion Mainly dominated by unorganized retail in the 320 Billionform of kirana stores, mom-and-pop stores, smallstores etc. Only 2% currently Organized v/s 98 %unorganized 2006 2010 2015Estimated Market size for Organized retail is $7.17Billion (2006) and $20 Billion (2010) Market Size Organized Retail Organized 2% 637 Billion 427 Billion 320 Billion Unorganized 98% 7.17 Billion 20 Billion 2006 2010 2015
  3. 3. Indian Consumer Behavior• US consumer – “Buy and Pay” whereas Indian consumer “Save and Buy”• Change from “Save and Buy” mentality to “Buy and Pay” mentality mainly observed since year 2000• Global brand flooding India and consumer demands better quality, variety and lifestyle products• Consumer disposable income and purchasing power increasing• Demand for Organized retail emerged
  4. 4. Indian DemographicsSince the economic liberalization, India has seen –• Increase in working youth• Increase in working women• Increase in nuclear families• Increase in opportunities in service sector• Enhancement of living conditions• All these leads to increase in consumer spending and purchasing power
  5. 5. Indian Govt Retail Policy and Regulations • As of 2006, 51% FDI in multibrand retailers • 100% FDI in wholesale cash-and-carry and backend logistics • Variation on policy at State Levels • Stringent labor laws
  6. 6. Social and Political environment• Dealing with India’s unique cultural sensitivity factors• Regional differences• 6000 caste, sub caste – vast diversity• Strong opposition from mom-and-pop stores, trade unions, women’s group and local communities• According to left wing and NGO’s, Walmart will destroy livelihood of 40 Million people in India
  7. 7. Porter Five Force Analysis POLITICALTEC • High Entry Barriers Threat of new entrantsH • High Capital MEDIUM • Regulations SN OO Intra Industry Suppliers Bargaining Buyers Bargaining CN Competition Power LOW Power HIGH IO HIGH AL • With stiff • Walmart has L competition fromO strong bargaining Reliance, RPG, Tata, power overG suppliers Threat of Substitutes Aditya Birla group, buyers getI MEDIUM higher bargainingC powerAL ENVIRONMENTAL
  8. 8. Walmart• Largest department store• Biggest public corp in the world• Corp Philosophy – Strengthening its relationship with employees, suppliers and customers (core competency)• Own transportation network• Low pricing strategy – cost leadership (core competency)• Robust and efficient Supply Chain network (core competency)• Cold chain logistics i.e. refrigerated trucks and distribution centers to reduce wastage• Leveraged IT to enhance their Supply chain.• Use of Technology for improved planning, accurate merchandizing, enhanced customer experience, improved workforce management, strengthened store operations (core competency)
  9. 9. Why Walmart did well in other International locations ?• Ability to apply its unique culture and successful retailing concept despite daunting business and cultural challenges• Involve in local communities and adapt to local cultures – Glocalization• Sourcing 90% products locally• Hiring locally and supporting local communities.
  10. 10. Bharti-WalmartWhy Bharti ?• Good history of partnering with overseas companies• Bharti attracted $1.2 billion in foreign equity – highest in India• No 1 in Telecom business in India• Bharti has deep knowledge of India’s fast growing consumer marketWalmart• Extensive global retail expertise• Ability to apply its unique culture and successful retailing concept.
  11. 11. Bharti-Walmart• Bharti to own retail shops under Walmart franchise• Bharti-Walmart to jointly operate (50:50) Wholesale Cash and Carry and backend logistics• Wholesale Cash and Carry means supplier to Retailers and Small business such as Hotels, restaurants, vendors, hos pitals etc• Walmart to invest $100-450 million
  12. 12. Bharti Walmart Challenging landscape Managing cultural diversity Managing Union and State level regulations Handling oppositions from Trade Unions, local kirana stores, left wing, NGO etc Under-developed infrastructure: quality of Roads, trucking Adoption of modern technology in india Want to cut middleman by linking suppliers directly with consumers. Facing strong opposition from trading community
  13. 13. Bharti Walmart stores• India is already a huge supplier to Walmart. India supplies goods worth $1.6 Billion to Walmart• First store opened in Amritsar, Punjab. This part of the country has sent many migrants to North America, we see a glimpse of NRI driven globalization• As of now 7 Bharti Walmart Cash and Carry stores in India• As of now, 117 Bharti Retail Supermarket stores in the states of Punjab, Haryana, Rajasthan, UP and Delhi• 10 Compact Hyper Market stores• Walmart’s office in Bangalore to serve as Global Procurement Hub
  14. 14. Bharti Walmart’s Store Location decision criteria• State Laws and Regulations• Ruling party in the state•Availability of goods locally• Political and Social Acceptance Factors• Consumer Behavior and Spending power•Demographics and Psychographics profile of consumer• Influence of Globalization culture. E.g. Places such asPunjab, Bangalore, Hyderabad, Mumbai has moreglobalization effect than places such as Kolkata• Quality of Infrastructure (Roadways, Trucking) to supporttheir supply chain operations
  15. 15. THANK YOU