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First Wal-Mart opens in India - but not to retail shoppers
By Erika Kinetz |
June 1, 2009, Monday
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Print Edition
Print Edition
INDIA just got its first Wal-Mart. Bharti Wal-Mart Private Ltd, a joint venture between India's Bharti Enterprises and Wal-Mart Stores Inc, opened its first wholesale outlet called "Best Price Modern Wholesale," in Amritsar in the northern state of Punjab on Saturday.
The company plans to invest US$100 million over the next three years to open 10 to 15 more wholesale outlets, which would employ 5,000 people across India.
"We have put in a lot of planning and preparation over the past 12 months," Chief Executive Raj Jain said. "We will generate significant job opportunities."
The opening comes at a politically crucial time for foreign firms eager to tap India's US$430 billion retail market. The entry of big-box players in India has been controversial because small, mom-and-pop "kirana" shops are such an important part of the local economy. Many fear they'd be decimated if big players such as Wal-Mart are allowed unfettered access to the Indian market.
For now, Bharti Wal-Mart's Best Price shops can only sell their 6,000 items to other businesses because Indian law prohibits foreign companies from selling direct to customers in multi-brand retail outlets. Single-brand retailers, such as Reebok, can run shops.
But Arvind Singhal, chairman of retail consulting firm Technopak Advisors Pvt Ltd in New Delhi, is hopeful the controversial investment ban will be eased within a year. Singhal said a successful opening of Wal-Mart "will send a very positive signal out" to global firms. "If their stores are allowed to open in India and there is no agitation it should reassure other retailers," he said.
Foreign firms are also watching India closely to see if economic growth picks up enough to justify major investment, Singhal added.
If India can return to 8 percent annual GDP growth, the retail market could hit US$750 billion in five years - US$90 billion more than if GDP stutters along at 6 percent a year, he said.
Britain's Tesco PLC teamed up with India's Tata Group last year to launch a wholesale business in India. France's Carrefour SA has also said it wants to expand into India.
Neither has yet opened stores.
The company plans to invest US$100 million over the next three years to open 10 to 15 more wholesale outlets, which would employ 5,000 people across India.
"We have put in a lot of planning and preparation over the past 12 months," Chief Executive Raj Jain said. "We will generate significant job opportunities."
The opening comes at a politically crucial time for foreign firms eager to tap India's US$430 billion retail market. The entry of big-box players in India has been controversial because small, mom-and-pop "kirana" shops are such an important part of the local economy. Many fear they'd be decimated if big players such as Wal-Mart are allowed unfettered access to the Indian market.
For now, Bharti Wal-Mart's Best Price shops can only sell their 6,000 items to other businesses because Indian law prohibits foreign companies from selling direct to customers in multi-brand retail outlets. Single-brand retailers, such as Reebok, can run shops.
But Arvind Singhal, chairman of retail consulting firm Technopak Advisors Pvt Ltd in New Delhi, is hopeful the controversial investment ban will be eased within a year. Singhal said a successful opening of Wal-Mart "will send a very positive signal out" to global firms. "If their stores are allowed to open in India and there is no agitation it should reassure other retailers," he said.
Foreign firms are also watching India closely to see if economic growth picks up enough to justify major investment, Singhal added.
If India can return to 8 percent annual GDP growth, the retail market could hit US$750 billion in five years - US$90 billion more than if GDP stutters along at 6 percent a year, he said.
Britain's Tesco PLC teamed up with India's Tata Group last year to launch a wholesale business in India. France's Carrefour SA has also said it wants to expand into India.
Neither has yet opened stores.
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