Walmart Group - the Indian Retail Scenario

DECISION SHEET: WALMART GROUP D 04

THE INDIAN RETAIL SCENARIO

With drastic change in consumer behavior and favorable demographics, it is poised to become a high potential business (valued at $320 billion) with high future growth.

Highly fragmented with unorganized small players accounting for 98% of trade.

POTENTIAL IMPACT OF WAL-MART ON INDIAN RETAIL MARKET

1. Better margins for producers and retailers by eliminating middlemen.

2. Wal-Mart's ability to blend with the Indian culture is critical for its success. This is where its partnership with Bharti, one of the top Indian companies, will be extremely useful.

3. Know how in food retail logistics and removal of intermediaries can affect significant reduction in spoilage.

4. Positive trend in government policies like 51% FDI in multi brand retailers and 100% FDI in cash and carry encourages foreign investment.

5. Wal-Mart already sources resources from Indian suppliers who are familiar with its mode of operation. This will enable establishing supplier relationships.

CHALLENGES FACED

a. Lack of adequate infrastructure might impede effective implementation of logistics chain.

b. Opposition from small scale retailers and left wing might cause adverse government policies.

c. Government policies on foreign investment.

d. State to state regulations causing transportation delays

DECISIONS

Wal-Mart should operate in franchisee mode. In this mode, it can establish a strong integrated supply chain which is crucial in providing competitive advantage. It can maintain a closer control on store operations.

Using the initial investment of $100 million, Wal-Mart should focus initially on large cities with adequate infrastructure to ensure effective implementation. In this way, the producers and retailers can be informed about the benefits being offered.

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