The Hindu Business Line : Retail India waits for Wal-Mart to get going

Most of the retailers and industry people that Business Line spoke to were of the opinion that the Bharti-Wal-Mart could impact Indian retailing in a big way, but the coming of the world's biggest retailer did not scare many as they say that the Indian market could prove to be a different kettle of fish.

Says Mr Bipin Gurnani, CEO, Piramyd Megastore, "Wal-Mart has tremendous sourcing efficiencies for large volumes, which will bring about economies of scale from day one. It has strong systems and processes, which it will bring to the table. As for Bharti, apart from being a recognised telecom player, it understands the Indian market conditions and being an established player, it will attach Wal-Mart with an Indian identity.

Mr Raghu Pillai, President and CEO, Retail Operations, Reliance Retail, says the deal will hasten the growth of organised retail but will put pressure on real estate and HR. "We will have to wait for the contours of the deal," he added.

Mr Rajeev Karwal, formerly of Reliance Retail, says, "Bharti has the ability to attract and retain talent through its telecom business. Besides, it has tremendous resources through its real estate operations with builders and can also get private equity. Wal-Mart will bring about cost efficiencies with its sourcing base spread all over the world. India is opening up and there is enough room for everybody.''

Foreign investment

As Mr Arvind Singhal of retail consultancy Technopak says, in the next five years 1,000 hyper stores and 3,000 supermarkets are expected to come up across the country. Total foreign investment expected in the retail sector over the next few years could be in the region of $25 billion.

Commenting on the deal, Mr R. Subramaniam, Managing Director of discount retail chain Subhiksha, said: "Wal-Mart can scale up its sourcing from China whereas sourcing by players like Reliance will have to be absorbed by the Indian company."

As he points out Wal-Mart moving with speed is a competitive reaction to Reliance beginning to scale up. "Two years ago, it did not matter as no foreign player was allowed in and Indian retailers were not expanding."

However, several retailers are not too worried about Wal-Mart's entry, saying that the Indian market has its own peculiarities. They point out to Wal-Mart's pullout in the past one year from the German and South Korean markets where it suffered losses.

Other analysts feel that if a third party in the form of renowned builder gets involved; it would change the dynamics of the business. "Considering the demand for built-up retail space would go up, the Bharti-Wal-Mart deal would get a boost if it were to tie up with builders. Having a third party in the form of a builder would give it a huge advantage in the business,'' observe retail analysts.

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