Wal-mart enters India

Hot news is that Wal-mart enters India. Differences of opinion surround the air on the benefits and harms of Wal-mart entering India. Let me also join this issue.

Wal-mart is a failure in South Korea and West Germany but what about India? I would be submitting my views rathers pros and cons and might not be giving a conclusion. i would prefer your comments and expects further discussion as to ascertain for a conclusion.

Before all the arguments one puts forth, the one that’s most important factor to be discussed is the loss of jobs. Small unorganized sector forms one of the largest employment sources in India. Small kirana stores are the means of earning livelihood for thousands of households. When large retail houses like Wal-mart arrive, they will under cut prices drastically. This will lead to decay and eventually death of these small stores. With them will go the livelihood of millions. Let us not discuss the wages part now though Wal-mart is notorious for being a poor pay-master!

"Time and again, economic progress has involved job losses, job displacement, old skills dying out and new markets for new skills appearing. The transition is almost always painful for some. But if that were the argument for stopping economic change, we would all still be toiling fields. But the irony is a lot of Indians do till fields." These were words from a daily magazine. The issue is about government taking care of its citizens.

We have observed that certain Multi-nationals with their muscle had flexed the arms of the governance. FDI in retail will have its own hassles.

Walmart is past the peak of growth in the most ‘developed’ countries. Walmart needs Indian market desperately to stem its inevitable decline; India doesn’t need Walmart as much.

Wal Mart squeezes the suppliers (in the name of efficiency). Walmart is known to be a ‘bully’. When you are an FMCG brand’s LARGEST single buyer, you have a leverage you can use to control the SKU’s [product sizing], packaging, delivery, carton size; you name it, to your specifications due to sheer bargaining power.

There has been and will continue to be a certain amount of resentment that entire product lines or brands have either disappeared or quality declined due to Walmart. Wal-Mart not only dictates delivery schedules and inventory levels but also heavily influences product specifications. In the end, many suppliers have to choose between designing goods their way or the Wal-Mart way.

they have uncanny knack of squeezing the balls of their customers and leaving them without even a fig-leaf. As to meet their demands, many manufacturers comprise on quality. In the name of so-called well-laid systems, they indirectly add your manufacturing cost. But i am sure those who cater Wal-mart with Orange and Green channels (as they call it) must be cheating Wal-mart and Wal-mart is aware of the same.

Similarly, Walmart has bargaining power in transportation - railways are building lines for them, to their warehouses, can negotiate the heck out of any damn thing that is supplied to them for this reason.

Another problem Wal-mart has to think over is Indians don’t shop the way Americans do. They had the very same issues in Korea and China due to ignoring socio cultural differences in shopping.

Walmart is geared towards bulk shopping; in large sizes that allow for cheaper unit cost i.e. it’s cheaper per roll of toilet paper to buy a 48 piece package than one single roll. Same applies to items from shampoo to Nirma.

They have to change each and every aspect of their systems to adapt as Ramu doing the daily subzi shopping for memsahib, or Amit Average picking up something on the way home from work - again they’re pattern is LARGE stores with parking lots the size of Bangalore Airport. Taking Delhi or Bombay as an example, the closest they can come to would be somewhere in New Bombay or Gurgaon.

Again, it would be a great day trip like Esselworld or some such thing but feasible replacement to change the behavior of the indian housewife? I doubt it - perishable foods need to preserved, while households may have fridges India has variability of environment - power supply, water supply, quality of roads, traffic that would make someone balk at the thought of making Walmart their regular store rather than the convenient kirana down the road!

If Walmart were to enter India they would have to redesign their entire business model, supply chain, inventory and transportation systems.

They decide not to enter perishable foodstuffs just consumer goods and non perishable groceries - fine - to a degree but again

1. buying in bulk, where one cab store in his little apartment in Bombay?
2. How can one bring it back if he doesn’t have a car?
3. Will the price differential be worth it as a regular activitiy as opposed to an occasional outing 4. Prices - it sounds as though they are expected to keep the low prices that have elsewhere in the world

We have seen enough MNC’s enter the Indian market since liberalization and fail spectacularly as they did not realized the INdian buying pattern.

In the US, average credit card consumer debt (at rates like 17 to 21% interest) per household is $8000 dollars. They (MNC’s) can advertise, encourage and incentivize all they like, and they have been doing so in India for the past 10 years in order to create a consuming class but it won’t happen beyond a point. We’re not going to end up carrying so much debt for consumer goods OUTSIDE of dowry or marriage.

Walmart will need to understand the Indian retail culture and redesign their strategy and business model if they are looking for any kind of foothold in India.