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Author Topic: Wal-Mart comes to India  (Read 6557 times)
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« on: July 15, 2009, 10:31:49 AM »

But it operates more like Sam's Club - members only - under orders from the Indian government, so as not to upset the current economy.

What do you think?

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« Reply #1 on: July 15, 2009, 01:57:22 PM »

Interesting!  I'd definitely check it out if I were living nearby.  But I don't know how well it will catch on overall. Time will tell!  Grin
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« Reply #2 on: July 16, 2009, 08:08:09 AM »

I've talked about Indian Wal-mart with my husband.  We both think it's a bad idea.  India just doesn't have the same sort of shopping (and car/driving) culture that we have here.  It doesn't make sense there to have a big store that you have to drive a ways to get to.  The smaller, neighborhood shops are more practical.  The only people who will be able to shop at Wal-mart in India will be people who can afford it, and people who have cars. 

Also, I've shopped at a Reliance mart that is sort of like a Wal-Mart, and I hated it.  Sure, it was big and bright and clean, but the quality of the stuff for sale there was not as good as it should have been for the price. 

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« Reply #3 on: July 16, 2009, 09:09:56 AM »

I actually just read a really interesting article related to small + big retail in India:

Where small is beautiful and bountiful

By Shilpa Kannan
Business reporter, BBC News, Delhi

Shopkeeper Gulshan Rai
Gulshan Rai's store has been a feature of the neighbourhood for decades

Rows of large glass jars holding myriad different Indian spices and dry fruits are being cleaned and polished to prepare for the first customers of the day.

This has been the ritual everyday for over 50 years in Shivaji stores - a brightly lit corner shop located in the central Delhi.

Over 95% of the Indian retail market is made up of small, family run businesses like this one, that has been run by Gulshan Rai's family for generations.

Here the shopkeeper is the friendly confidante, counsellor and even family, for some. He understands the local tastes and customises the products on offer.

"Despite the new malls, our customers keep coming back to us," he beams.

"We provide them with good quality products and people put their trust in us.

"We have been here for over 50 years and are always going to be right here, so they can hold us responsible for anything they are not satisfied with," Gulshan Rai says.

His store is not an exception. Most local shopping markets are bustling with people.

Chaos and credit

At another market nearby, shopkeepers are putting their wares on display on rows of clothes lines.
Women sorting lentils for Shivaji stores
Indian shoppers appreciate the added value they get from small shops

There are long strips of hair clips, colourful bands and other hair accessories.

Most of the shopkeepers cry out to attract the shoppers, who in turn start haggling loudly over the prices.

The sounds, the colours and the smells, along with the chaos, are an integral part of the shopping trip.

Though they seem disorganised, they are generating good business.

These tiny shops stock just what the consumers want and constantly change the products to match the demand.

Shopkeepers here know most of their customers by name, offer credit and will deliver to their doorsteps.

This is an experience that can't be matched by modern retail giants.

Revolution revving

But just over a year ago, the country was all set for a retail revolution.

A number of Indian companies set up western-style supermarkets.
Pinakiranjan Mishra
In the next 20 years, I can't foresee modern retail being any threat to traditional shops in India
Pinakiranjan Mishra, heads of Ernst & Young's retail and consumer practice

They rented or bought thousands of square feet of retail space to sell everything from vegetables, electronic goods, jewellery and books under one roof.

People thronged these stores for the new experience of shopping in large air-conditioned stores and to get away from the heat outside.

There were even protests by millions of people in the unorganised trade who felt threatened by this growth and feared job losses.

However, two years down the line, some of these big chain stores have had to scale down operations.

Trying to provide the frills of modern retailing, these shops had to bear the burden of sky-high rents in shopping malls, electricity bills and paying the salaries of a large workforce.

Some simply couldn't cope. Many have started to pull down their shutters.

Empty stores looted

The worst-hit among them is Subhiksha - the south Indian retail chain that opened over 1,600 stores in less than two years.

They couldn't sustain the pace at which they expanded and the stores have now been mothballed.
Rajan Verma
We are investing significantly in personal care and health care products, which cater to rural markets
Rajan Verma, chief financial officer, Dabur India

From over 5,000 employees they have been reduced to less than 50. Unable to pay for security agencies and staff, their stores and warehouses were looted across the country.

Now a group of banks are working on a corporate debt restructuring plan to try and revive the company.

Experts say it's not easy to change Indian shopping habits.

"In the next 20 years, I can't foresee modern retail being any threat to traditional shops in India," says Pinakiranjan Mishra, heads of Ernst & Young's retail and consumer practice.

"If you look at the places where [modern retailing] has a large share of the market, they have good infrastructure, everyone has a vehicle.

"They have the propensity to buy rations for the month and store them - how many people in India have cars to cart such huge rations or refrigerators to store them?"

Indian consumption patterns are not like western patterns, he argues. Here, people shop daily or at the most weekly, not for longer periods.

Rural focus

This is something that Dabur India knows all too well.

In a large research lab outside Delhi, their scientists are working on new and improved shampoos, herbal tonics and health drinks.

Despite the downturn, the company found an increase in sales of products in neighbourhood stores.

So they have turned their focus back onto the smaller outlets for their growth.

As a result, this year, the company has delivered its best growth in nearly a decade.

"Initially when the modern formats were launched, we made an effort to put our products there and they did sell," says Rajan Verma, Dabur's chief financial officer.

"But in the long-run our focus remains neighbourhood shopkeepers... In fact this year ,we are also increasing our focus toward the semi-rural and rural end of our portfolio by investing significantly in personal care and health care products, which cater to rural markets."

Dabur is now looking for acquisitions and recently bought a controlling stake in Fem Care Pharma to enter the skincare market.

The potential is huge. US-based management consultancy AT Kearney has named India as the most attractive retail destination for investors among 30 emerging markets.

Back at the Shivaji store, women in bright sarees are sitting outside in the sun cleaning and packing the lentils and grain.

Whether it's in service or in products, many consumers think these shops give added value.

Both small and large shopkeepers agree that the retail business in India is booming.

But in the fight between traditional practises and modern business, it seems the first round has gone to the small Indian shopkeeper.
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