Wal-Mart entry into India: Good or Bad??

[sushantsaab]

I really dont understand why there is so much buzz about Wal-Mart coming to India. I agree that it'll bring a lot of moolah in terms of forign investment but try to look at the downside of it. Wal-mart all over the world is criticized for bringing the prices dangerously too low and destroying the local retailers. Think of your nieghborhood shopkeeper who's bread n butter depends on his small shop.

I am not saying that it'll be all bad. Wal-mart and the likes do bring a lot of benefits to the retail industry. Like one point sourcing of products, an organized structure for supply chain, but at the same time they kill the local shopkeepers and thier livlihood. think of the crisis that they will face.

(in my future posts, in the same thread, i'll try to bring some interesting points regarding the crisis for local shopkeepers and the opportunity that they can extract from Wal-Mart entry; but first would like to hear your comments, esp. arguments in favor and against Wal-Mart)

[rkumar]

I really dont understand why there is so much buzz about Wal-Mart coming to India. I agree that it'll bring a lot of moolah in terms of forign investment but try to look at the downside of it. Wal-mart all over the world is criticized for bringing the prices dangerously too low and destroying the local retailers. Think of your nieghborhood shopkeeper who's bread n butter depends on his small shop.

I am not saying that it'll be all bad. Wal-mart and the likes do bring a lot of benefits to the retail industry. Like one point sourcing of products, an organized structure for supply chain, but at the same time they kill the local shopkeepers and thier livlihood. think of the crisis that they will face.

(in my future posts, in the same thread, i'll try to bring some interesting points regarding the crisis for local shopkeepers and the opportunity that they can extract from Wal-Mart entry; but first would like to hear your comments, esp. arguments in favor and against Wal-Mart)

India is too big for wal Mart to invade with its retail chain. Why can't some of these shopkeepers take clue from Wal Mart operations and set the similar chains in smaller towns? Wal Mart story is not too old. If guy at Wal Mart can do all this, what stops our shopkeepers to compete? I personally feel that wal mart will trigger a mind set revolution among Indian players... It will do good ultimately...Indians work best only when faced with Crisis..be it China crisis of 1962 or food crisis of 1965...

RK^2

[sushantsaab]

U r right uncle, there r some chains like that but people have very little knowledge about them. like Ravji's stres in ahemedabad, apna bazar in delhi n near by areas. but since they r too small the manufacturers cant offer them competitive prices as they'd provide to WalMart. but there's a catch, recently i read an article in Financial Times about how small retailers can differentiate n still compete with chains like Wal-Mart. the in doing such thing is exploring the opportunities in the shops respective area n capitalising on that. For example, Walmart stores only the products which are considered as "mass consumption products". Hence, the shopkeeper can store those products which the costumer cant find in Walmart. But this strategy works best in only certain locations as such products are hard to find n r costly. Hence, this strategy is est for the shops in posh residential areas. Also, i think most of theretailers will b safe from the walmart as usually such supermarkets open in the outskirts of the city. therefore only the people who have car or other vehicles will generally shop there. Hence, a large population has to depend on their local shopkeeper. But those shops which are closer to Wal-Mart can still survive if they differentiate. But still, I would love to see an indian company doing the same thing as Wal-Mart n i believe this is very much likely coz indian market n consumers are highly complex. bade badon ke dimag kharab ho gaye indian-way of marketing ko samajhne main. ;) :)

[rkumar]

Dear Sushant,
Most of of our small town traders are are lazy and not willing to change. They are all following tradiational Baniya type sales policy with hardly any marketing involved. Most of them have lost contact with rural consumers like what their forefathers used to have. Last 30 years have divided not only the political parties along cast and communal lines, but even traders along the rural and urban lines. 90% of small town traders don't have a clue about nearby villages. Let us remember one thing very clearly that most farmers in India are hard working but lack marketing skills. Small town traders should have filled this gap, which they have not been able to. I would quote some examples;

1. India is one of the largest tea producer, but England is the world leader in tea processing and marketing.

2. England does not produce a grain of sugar but controls its processing and marketing. Most Indian sugar mills produce coarse grain sugar and hardly process a it package it for end consumer.

3. In today's health concious world there is great demand for health foods. One won't expect Indian farmers to know about such items. Its the job of trade to go and convince farmers to grow those items and if possible by making advance payments to farmers.

There are many other agro products which have the similar fate. I would blame our traders for lack of vision.

Not only farmers need attention, our small town traders need it even more. There is virtual knowldge famine among small town traders and most of them are acting nothing more than like sales outlets for big town businesses. If India has to progress, these small town traders have to awake to the opportunities at the earliest.

Rajendra

[virmaramjyani]

india has deferent kind of scenrio as compare to western countries. india should learn from tiger economy countries...

[vivek]

The productivity of an Indian worker is still quite dismal, and this has to do with labor laws. Communist and Socialists in India will not let them change. There are also too many "office types" that don't do anything. I can understand keeping them employed, but there is bound to be a 'painful' period or the gap between the time they are let go, and a commercial entity that employs them. No one wants to administer that pain, and thus we keep trudging along with a 'desi' rate of growth.

[priti]

this is very interesting debate....WALMART...mother of all companies in price cutting and having worst reputation in terms of social responsbility...anyway, still people buy its stuff and invest in it....which shows money is the rule of thumb....

about the competitiveness of local retailers...i agree with some of the members that doing business in Indian markets is a completely different ballgame. The indian local shopkeepers do not have the capital or capability as compared to walmart...what they do have is a hold on their local residents...i dont know much about the towns but in Delhi a lot of shopkeepers do home deliveries....they come especially handy at times when things are needed most...like my mother could call the local shopkeeper and tell him that we have guests and she would need this and that and it would be delivered...I dont think walmart can do this...if it can like McDonalds (its only in India that McDonalds does home delivery...no where else in the world!!), i think nobody can stop walmart.....

Price is a big consideration when people buy stuff....everyone wants to buy good stuff at least prices...but Convenience of home might be a big factor for a lot of housewives....on the other hand many might find shopping at walmart a different experience....

Local considerations can mean a lot as has been shown in examples of McDonalds and M&S in India....I dont think Walmart will come and wipe out the local retailers....i think it will take a long time for it to be even competitive given the scale at which it operates....but as everything evolves its time for the local shopkeepers either to find new businesses or to think of strategies for the long term....I do not think they will go extinct!

what say??

[vickypanwar]

Walmart is an exmaple of a tighly regulated supply chain.
They are able to keep the prices so low by getting the manufacturing done in china (at least for the US market), automating the entire supply chain - so that when one item is sold at some walmart outlet another is produced in china, and employing cheap labour.

Indian competitors need to come up with a similar strategy to beat it.
Overall I think competition is good for the indian market. Indians are in a reactive mode by default - due to our customs, and upbringing. If they face staunch competition, they'll learn not only to survive but to beat it. A quick glance at the post 1991 economic reforms can ascertain that.

-Vikas

[sushantsaab]

first of all sorry for not writing anything in this thread of mine as i was busy in Berlin(n ofcourse having a good time :)). anyway, I think priti u r right. Wallmart faces a lot of problems in India but considering the operational costs they might succeed in pulling it off. But anyway, the points that Mr. Kulkhunde brought forward areworth considering and this baniya mentality in retail has to stop, if these retailers want to compete effectively. But the most important factor, which mr. Kulkhunde also brought, is getting closer to costumers n understanding thier needs. Most of the local retailers look only for thier personal gains n hence do not think of long term benefits of providing better services to clients.

Imagine Wall-Mart, u go to the counter n there's a nice looking girl (with her "close-up" smile), settling ur bill electronically. Now cut back to the local retailer, a pan chewing face (which looks like s**t and with crossed expresion), trying blandly to "sell" not "market" his products. Now ofcourse, anybody would like to shop in Wal-Mart.

But still, there are opportunities. By my analysis of the comments here I can suggest following points:

1) Getting closer to the costumers (Mr. Kulkhunde)
2) Strengthen the supply chain (Vikas)
3) uniform pricing structure (Priti)
4) Structuring the manufacturing sector (A good topic for next thread)- Vivek
5) Last but not the least............better faces on the counter ;)

And if these retailers cant do this then DIFFERENTIATE............

[rkumar]

There is lot of talent in India, but somehow we don't market it. Here are some examples;

1. Coke was invented in USA almost about 100 years back. It was not some industrial invention, but purely a home drink like lassi or shikanjee. Look how they have marketed it.. In comparision our drinks like ruh afza etc have remained purely local affairs.

2. Gud is another food item which has massive potential if marketed properly. But we are hardly doing anything when it comes to its packaging or marketing.

3. There are recepies in almost every town which die with the person. We are not taking stock of them to market further.

I am certainly planning to hold some local food comptetions and then encourage the people to go in mass production.

RK^2

[mit]

I think the main thing we should concentrate is consumer behaviour and than the list of competitors walmart gonna get in india i think there is no present competitor to walmart and by the time some one will come walmart will be well settle in india with knowing every thing about the buying behaviour of consumers in india well we all know indians are innovators. if it is in reach of a average indian he tries the new product atleast once than let it be a Daewoo matiz or bajaj eliminator or let it be canada dry just a softdrink but than its not certain that these brands can develope a brandloyalty towards there product coz quality and service does matter, but here the problem is at present there is no big competitor in india to walmart. to establish it's market in india it can sell it's product to marginal profit that will not be too high from the local bania shoaps and may be equivelant to them on the other hand the quality of products there presentation marketing and customer service which walmart can provide no way a bania corner shoap would ever be able to beat. the only way these local shoapkeepers can survive if they form a group and start a retail shoap in diff locations with the support of some gov authority or any indian business group(for whome this is the best time exploit current market scenario) coz they know the customer behaviour and will have definately better communication to a local customer coz no matter what still they have years experience of indian customer his need buying behaviour and ugencey which they can exploit only if they change there approach towards the way to do the business they should understand it's not only the product which customer buys it's the product+quality and on top customer service which make a customer not only buy the product but also develope a barnd loyalty which is the end goal of any business to develope brand loyalty with customer satisfaction in todays business world.

[shailendra]

...Hmmm, it is very difficult for local small mom n' pop' kinda shops that have tradionally held the market in India for providing their special services and products (we all have that special 'Mehtaji Saree waale' and/or a 'Ajmeri Laal Printing Press' in our Cities don't we?)....and these smaller scale shops would be butchered if Wal-mart arrives into the Indian market!

It has already created disfunctional (layout, planning wise) communities here in the US and is now thankfully very much on the decline here, as the consumers, planners and govts have woken up to the threat of the big box retail and see the better advantage in making more pedestrean friendly walkable...open Main streets that support all kind of smaller businesses that allow people to walk from their nearby homes and window shop and come back to with the need of a more personal attention from a specialized retailer (think coffeshops, Bakeries, Video Library, that ice-cream shop etc etc)!

While I think Wal-Mart entry in India should be opposed anyhow, but at the same time I have my doubts that it would be successful in the first place anyways!...
The one roof, shop-for-anything style may not neccessarily be what the Indian consumer wants!

[desijat]

The Question here is if the walmart entry in India is good or bad?

I feel What govt. needs to do is, to invite these firms but not to have 100% share in the market, what i mean is, they should be a minority stake holder, and let an Indian partner be the majority stake holder, This way we get the FDIs in India and we promote Indians in Indian market.

Else the potential Indian retail market, which is of 17,000 crores will be all dominated by foreign players.

[dahiyarules]

Walmart's entry in India is bad because:

Currently the retail secotor is dominated by small time retailers who save us on the sales taxes. Stores like walmart will contribute to the Government's treasury by charging us a "mandatory" sales tax on our purchases. More money for the government means more power for the government.

Walmart's entry in India is good because:

Allfree and fair competition is fair, because it is the consumers who ain at the end of the day.

However, Since walmart is coming to India with the government's blessings, we really do not know the little secrets.

[desijat]

Secret janne ho to thodi der intezar karo....

Chautala ki dhaal bera paat lega tawla hi:rolleyes:

[positivelook]

Walmart's entry in India is bad because:

Currently the retail secotor is dominated by small time retailers who save us on the sales taxes. Stores like walmart will contribute to the Government's treasury by charging us a "mandatory" sales tax on our purchases. More money for the government means more power for the government.

Walmart's entry in India is good because:

Allfree and fair competition is fair, because it is the consumers who ain at the end of the day.

However, Since walmart is coming to India with the government's blessings, we really do not know the little secrets.

Bhai Sumit
Dont u think u answered like a politician here !U are a wineer whether its head or tail.

Abhimanyu Phougat