Priyanka Anand Anirudh MaheshwariWAL-MART ENTERS

INDIA

INTRODUCTION

Indians who reside in urban India are a potential market opportunity that cannot be ignored for consumer durables, and electronics.

Walmart: $250 B company with $500 B in revenues and only $35 B in revenues from foreign countries.

Top on Wal-Mart’s list of priorities is to gain access to the Indian retail market, a $350 billion industry that is growing at 15% year-on-year.

Takeaway: Wal-Mart has set its sights on the Indian market, and has taken a 2 pronged approach to enter, with wholesale as well as single-brand retail stores.

RETAIL SECTOR, INDEPENDENCE TO1990S:

STORE AND BRAND PROLIFERATION

Reliance Fresh

Hand cart

Takeaway: India had less than 2% organized retail before the 1990s. Today, India is rapidly approaching 10% organized retail.

RETAIL REFORM IN THE 2000S: ENTRY OF THE GIANTS

Takeaway: The Indian retail sector has only recently been opened to single brand retail stores.

THE INDIAN OPPORTUNITY AND CHALLENGE

Th

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The

Challeng

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• Retail market will grow to $637 billion by 2015.

• Indian discretionary spending will increase dramatically.

• Organized retail holds only 10% of retail market

• Large investments required

• Legal restrictions on farmer sales directly to retailers, middleman system.

• Cultural barriers

Takeaway: The Indian market has many opportunities as well as challenges.

MODERN GIANTS

Takeaway: The entire ecosystem has adapted to Indian market conditions.

WAL-MART’S GLOBAL STRATEGY

Russia, like India, also challenges foreign entrants with corruption at the local level.

Wal-Mart built small “Todo Dia” outlets in Brazil.

Wal-Mart faces the problem of adapting to local tastes in China.

Wal-Mart used its market power to lower prices and alters production

schedules altered to fit its need.

Takeaway: Wal-Mart has learned from its various experiences the importance of being locally responsive to solve corruption, local product demands, size constraints, and union backlash.

WAL-MART IN INDIA

Takeaway: Given Wal-Mart’s extensive experience in India, it is well suited to open stores in India.

WAL-MART’S RESPONSE TO INDIA’S UNIQUE CHALLENGES

Logistical

Cultural

Political

Takeaway: Wal-Mart faces political, cultural and logistical barriers while in India.

RECOMMENDATIONS FOR WAL-MART

Wal-Mart has international experience and knows how to cater to developing world needs.

Wal-Mart can hire middlemen just like ITC to help understand its customers.

Wal-Mart can invest in educational institutions in its community to get good talent.

Wal-Mart can invest in smaller stores to satisfy customer needs.

Wal-Mart can reduce costs by creating better logistics for its products.

Takeaway: Wal-Mart can be successful by applying a unique Indian spin on its values.

RECOMMENDATIONS FOR LOCAL RESPONSE

Takeaway: Local Competitors can compete against Walmart using this 5 fold strategy.

• Local competitors have already implemented a lot of these actions.

• In particular, they have to focus on deploying the latest technology for sourcing as well as training more of their staff in-house.

• Walmart may be new to the market, but it already has adopted several of these strategies.

• All in all, India offers a dynamic and challenging opportunity for Wal-Mart.

• There are competitive elements in the market that require constant innovation to overcome.

• However, the Indian opportunity is so vast that Wal-Mart cannot afford to give up. Whatever the outcome, India’s retail sector will continue to offer opportunity for millions of entrepreneurs.

CONCLUSION

QUESTIONS