Magazines Archives - 2007 January

Wal-Mart beats Tesco to retail tie-up in India
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WAL-MART STORES has inked a deal with Indian telecommunications giant Bharti Enterprises for its retail venture, beating the UK’s Tesco to it.

The highly-anticipated joint venture, with undisclosed financial details, is expected to open stores starting this year, with several hundred more across the country over the next four to five years.

Under the deal, procurement, inventories and logistics will be managed under a joint venture, with stores set up under a franchise agreement, said reports in the local newspapers.

Wal-Mart, which has been mulling over its entrance into the vast Indian market for some time, last May appointed Raj Jain pre-sident of Wal-Mart Emerging Markets to gear up for its entry.

Jain, who is also CEO designate of the US retailer’s Indian operation, has been leading a small liaison team in preparation for the foray.

IGD’s senior business analyst international, Fiona McTavish, said the tie-up was “typical” of Wal-Mart’s targeting of “developing markets with large-scale growth opportunities”, observing that the US giant’s latest move “follows its rapid growth in China and Brazil”.

“Wal-Mart, however, only operates a very small number of franchised stores in its global portfolio. Today’s news suggests that [it] has accepted the need to divert from its preferred operating model to establish operations in India.

“[The retailer] will, however, benefit from Bharti’s knowledge of the Indian market and the Indian consumer, to enable it to success-fully tailor its proposition.”

The Indian economy has been estimated at more than US$200 billion, pegged at 8% annual growth. It is currently 95% domi-nated by more than 12 million mom-and-pop shops