The Hindu Business Line : Bharti-Wal-Mart foray into retail

Wal-Mart Stores, whose revenue equals the size of the Indian retail market, has circumvented foreign investment restrictions in the sector through its franchise agreement with the Bharti Group. Even as the Left cries foul, the new partners are beginning to get their operation together. Wal-Mart is to invest in the supply chain and logistics of the venture; Bharti Enterprises will handle the front-end. The first store is expected to open by August next year. Within that time, existing retailers will have to get their act together. The market is witnessing a new wave of expansion among early entrants, prompted by the forays of Reliance and Bharti-Wal-Mart. The pressure on resources for smaller players could see them tapping the market for funds or making private placements. Players such as Pantaloon Retail are counting on their understanding of Indian buying habits to work in their favour when competing with the likes of Wal-Mart. Wal-Mart has been slow to adapt its stores to local tastes in its other international forays; this has proved costly in markets such as Korea and Germany, from where it exited earlier this year. The retailer is expected to be more open to modifying its format to suit Indian customers this time around with the help of its domestic partner. In the near term, however, it is the actions of existing retailers that merit close attention. The entry of Wal-Mart and its unique low-cost proposition might finally force retailers to compete on price.

Shanthi Venkataraman