Wal-Mart In India

Group Members:

Abdul Wahab ParachaHareemMariaSarim

Introduction OF The Case

Case study is from the year 2006. Wal-Mart in partnership with Bharti. Here we will discus the challenges that could be faced by Wal-mart while

penetrating Into Indian retail Industry. Wal–mart is a Hyper-mart . Case is divided into: 1 Cash and Carry 4 Consumer Behavior 2 Rites of Passage 5 Party Spoilers 3 Coping with Oversupply

Why to collaborate with bharti?

FDI was not permitted till 2006. Facing resistance from Indian retailers. Bharti will take care of running and owning the stores. Wal-mart will take care of the supply chain related operation. Store will be co-branded. The terms of the deal were not disclosed at the time. As per media reports investment on venture was supposed to be $100

million initially and will rise to $450 million in the coming years.

India a Broader Prospective

YEAR In $ (GDP) FACTS2015 2095.40 billion represents 3.38 percent of

the world economy. Highest GDP

1960 37.68 Billion Lowest GDP

YEAR INR ( Consumer Spending)

FACTS

2016 16256.19 Billion highest2004 4469.88 billion lowest

YEAR INR ( Disposible Income)

FACTS

2015 138192890 Million highest1950 91540.00 Million lowest

Indian Retail industry and SEC classes

Divided into organized and un organized sectors: 1 Organized includes Hypermarkets, Retail chains, supermarket and Retail outlets etc.

2 Unorganized includes Local Kirana shops, general T stores, street vendors etc

The Number of Supermarkets expected to increased by 8,500 in 2016 from 500 in 2006.

By 2020, retail market in India Is projected to reach USD1.3 Trillion from USD672 billion in 2016.

Cumulative FDI inflow in retail for September 2016 stood at USD909.12 million Exchange rate: 1$ = 66.65 INR Indian urban part is divided into SEC-A till SEC-E.

Annex ASocio –Economic Class (A-E)

%age population

Profiles

A 2 .7% Purchase high value goods.

B 15.2% These people been to collage but have not got graduated.

C 24.1 %+27.1%

Skilled workers 

D 17.8% Unskilled workers 

E 13.1% Show less interest in high value consumer goods

Socio –Economic Class( house hold)

Profiles

1 Single income household

2 Two or more income household

3 Own house

4 Separate kitchen household

Potential in Indian Retail

Potential in Indian Retail

Potential in Indian Retail

Drivers of Organized Retails

Cash and Carry ( concept)

In india tesco, carrefour, shoprite is already entered in the market with a cash and carry in which they supplies to retailers, restaurants, and business houses and walmart is entering in indian market.

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The annual revenue of indian retail industry this year is $320 billion.(2006) And the global sales of walmart is $315.6 billion and that was the entire

sales of India retail industry (2006)

Cash and Carry

India consumer class with rising disposable income at 400 million. The rising income and increased consumerism urban areas along with

uprising in rural consumption will increase the growth around 7% to 8 %. All the above points shows the potential for cash and carry. The main problem is that the concept of that big warehouse store that the

bigger store have the high price and the smaller shops have lower prices but in abroad its totally opposite, thats why the positioning will be the issue for them because the perception which indian market consumer have is different from the others.

Consumer behavior

Wal-Mart Business Model: 1 Everyday low prices for consumer. 2 Squeezing cost out of the system. 3 Customer service with friendly people who greet you This model might not be appropriate for India because: 1 In India bigger the place for shopping higher the price of goods perceived

by Indian consumers.

Consumer behavior

They should avoid discrimination (Ethnic and gender )as a part of employment practice.

Location based issues: 1 In case of having stores on the outskirts of urban center then people who

travel by train might not be able to purchase in bulk. Consumer will buy less.

2 They need place close to where their potential customer lives. 3 people don’t like to travel 6-7 km. To overcome this issues do offer E-retailing.

Consumer behavior

Consumer behavior (why should they travel when they can buy it from karyana stores)

Collaborate with karyana stores to fill the gap. karyana store offers more or less similar thing.

Take care of the religious affiliation, As Consumer preference changes from religion to religion.(eg in gujrat alcohal is ban and hindu don’t eat meat).

Do give promotional offers to attract consumers.

Rights of the Passage

Biyani ( Big bazaar) says he works differently. “We are not like Wal-Mart; we believe in a situation of win, win and win,” he says. “The supplier should win, we should win and the customer should win. In Wal-Mart’s strategy, and maybe that of other international retailers, the company wins and the customer wins. Somebody has to lose for those two to win.”

One advantage Wal-mart can have is bharti’s presence in the market and their in-depth knowledge of consumer behavior.

Biyani and other retailers were against the opening of walmart in india because Competitions from both unorganized and organized sector have effect on probability. Higher the competition lowers the profits.

Party Spoiler (supply chain)

Infrastructure issues lies India By keeping the karyana stores included to minimize the challenges in

logistics infrastructure.

Copying with oversupply

Wal-Mart, has more than 10,000 stores in every U.S state and 27 countries. Wal-Mart combined with Bharti Enterprises and established about 20

wholesale stores throughout India by the name best price modern wholesale.

Do take in account that India is planning to build more malls in future. So build a mall after analyzing proper demand for mall in particular area

and city.