The Hindu Business Line : ‘Wal-Mart will improve quality, service’

Retail consultant John Williams is certainly not carried away by the whole big Wal-Mart phenomenon. The retailer is no doubt known for its successful best practices, but there have been episodes which have put the brakes on Wal-Mart’s success story, he says.

Williams does have a word of caution for the retailer, especially on what to expect in India. He believes Wal-Mart will see success in the country provided it learns from its past mistakes (Wal-Mart had to pull out of Korea and Germany after it failed there) and adapt to local needs, says Williams, Founder, J. C. Williams Group, a retail consultancy firm based in Toronto. He was in Bangalore recently in connection with a retail seminar organised by Bangalore-based retail consultants RAMMS. (RAMMS and J.C. Williams are joint venture partners.)

Addressing a packed gathering, Williams, who has worked for five years with Wal-Mart in the past, explains that Wal-Mart has several challenges to face in India, such as huge diversity in culture, logistics and density of traffic. “India will be the most complex market it will enter. The structure and culture of the market place is enormously diverse. The market changes every 100 miles. India needs its own solutions. In India, Wal-Mart has to follow a different format because what works in Mexico or Canada will not work here, as political and cultural contexts are different in India,” cautions the retail consultant.

The entry of Wal-Mart does not have to be viewed as something evil, says Williams, as the company will improve overall “efficiency.” Brand Line caught up with Williams, who shares his thoughts on how the giant retailer will impact the retail scene in India, when it eventually does set up shop here. He also talks about the trends of the future such as private branding and in-store media. Excerpts from the interview:

How will the entry of Wal-Mart affect retailing in India?

Wal-Mart has a very hard-driving, hard-working culture. When Wal-Mart comes into India, it will lower prices. People will have to compete more aggressively. Wal-Mart will also raise efficiency and improve service.

Wal-Mart is known for changing the rules of the game. It will insist that manufacturers do business its way. You have to have a standard quality, bar code, competitive prices, back-up stock, good sales and service and marketing campaign. Wal-Mart will also create jobs, particularly on the manufacturing side. It will be an anchor for the whole community.

The model the retailer could adopt in India, apart from the cash-and-carry format ... What will work in India?

It’s cash-and-carry now. But with a growing Indian middle-class, there is room for different formats – big wholesale, super centres, discount stores, mini-marts, neighbourhood stores and other smaller formats. They will look at everything. They will put a store on the suburb, the highway and in the city. They will do a lot of different things.

Wal-Mart will hopefully hire Indians to run the business. If it’s smart and listens, it will adapt to local needs. I hope for Wal-Mart’s sake and the customers’ sake that it’s smart enough to learn from past mistakes.

What should local retailers watch out for? Are the protests against entry of large private players justified?

Although it may take away some business from everybody, it’s not going to affect the local vendors all that much. They will always have their steady stream of buyers. People will protest but competition is something they will have to deal with sooner or later. But this is good for the Indian consumer. And that is what the government should be interested in.

Indian retailers should study the best Western retailers like Target, Wal-Mart, Toys ’r Us and Staples and use them as business and logistics and purchasing models and follow what they are doing.

What is your take on private branding?

More and more stores are interested in private branding. It is led by companies like Tesco, Target and Wal-Mart. This is a way of getting better margins and differentiating from competitors. In fact, Canada-based Loblaws has such a powerful brand that it sells its food brand even to other stores in the US.

How important is in-store merchandising and television?

In-store merchandising is the most important element of marketing. That’s where most of the purchase decisions are made. And that’s where more and more retailers are spending their money, and spending lesser and lesser on mass media. There are great advances in in-store media. But while they relieve the clutter, if there is too much distraction, consumers leave the environment because it’s not comfortable. If it’s well done, it works. If it’s not well done, it’s a nuisance … it can become annoying.

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