Wal-Mart India Stores to Have Local Flavor, Partner Bharti Says
By Saikat Chatterjee and Paul Gordon
Nov. 29 (Bloomberg) -- Bharti Group, which is forming a retail venture with Wal-Mart Stores Inc., plans to offer an Indian ``flavor'' in its stores, learning from the U.S. retailer's failure in Germany and South Korea.
``The Indian flavor needs to be incorporated,'' Bharti Enterprises Pvt. Joint Managing Director Rajan Mittal said in an interview today. ``That's why we have this partnership.''
Bharti and Wal-Mart may design their stores keeping in mind Indian preferences and shopping habits and learning from the experiences of rivals such as Pantaloon Retail India Ltd. Retailers in India are trying to tap a market where sales store- chains sales are forecast to rise 15-fold to $60 billion by 2015. Wal-Mart exited from South Korea, Asia's third-biggest economy, after its warehouse stores that focused on frozen foods and spartan ambience failed to entice buyers.
Pantaloon, the nation's biggest publicly-traded retailer, had to change their shop design after sales in its Big Bazaar stores fell after it arranged the products in a tidy manner.
``Shoppers just walked past without buying when the merchandise was arranged in neat rows and clearly demarcated sections,'' Pantaloon Retail Managing Director Kishore Biyani said in an interview on Nov. 15. Pantaloon reverted back to its old style of what it calls ``designed chaos'' in its Big Bazaar stores. Indian consumers are more comfortable with the haphazard arrangement of merchandise in the stores, Biyani said.
Rival Reliance
Similarly, Reliance Industries Ltd., which has opened its first grocery store in the southern city of Hyderabad is selling flowers that are used everyday in Indian homes for worship. The company's stores have a separate section for flowers given as offering to deities in local households. Reliance also plans to have separate supply chain and sales sections for meat and other non-vegetarian products keeping in mind sensibilities of a large part of India's population that don't consume meat, fish and eggs for religious reasons.
Learnings such as these will be critical for the success of Wal-Mart in India where diversity in food habits, language and weather differ across regions unlike in the U.S., the company's biggest market.
Wal-Mart retreated from 16 stores in South Korea in May after two years of losses, underlining the perils of transplanting its U.S. model overseas. Two months later, Wal- Mart withdrew from Germany by selling its 85 stores to Metro AG at a $1 billion loss.
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