The Hindu Business Line : Namaste, Wal-Mart?

So India is going to be the next playground for retail giant Wal-Mart! But rather than cry foul and demand protection for our local dukaandaars, why not take a positive approach and welcome them with open arms? After all, didn't our own "businessmen in blue" Laxmi Mittal and Ratan Tata swoop down on foreign lands to buy out rivals much to the consternation of the local governments and public alike?

If the spirit of WTO is "do unto others as you would have them do unto you", then this should be a sign of moving forward towards further integration with the global economy.

Of course, the entry of Wal-Mart partnered by Bharti does not imply that they're necessarily going to succeed.

Compared to 20 years ago, when everything foreign was vigorously sought after, the loosening of restrictions over the past decade means that the Indian consumer is far more savvy and demanding of the best, and does not necessarily equate a foreign label as better than an Indian one. Moreover, many foreign labels are in fact made in India these days, so the boundaries are getting blurred.

Changing the attitudes of Indian consumers is also going to be a challenge. A good example is that of KFC, which entered the fast food market in the mid 1990s amidst much ruckus and rioting.

Of course, McDonald's, Pizza Hut, Domino's, etc followed and have done well. But has Nirula's closed shop? Far from it. The same will hold true of the retail-shopping sector.

Trouble elsewhere

Anyway, Wal-Mart is not having a very good run at the moment. It shut its stores in Germany and South Korea, and has faced several lawsuits in the US for encouraging employees to obtain government health insurance that provides the bare minimum, and for alleged discrimination against women employees.

Couple that with the popular belief that Wal-Mart drives local stores out of business using unethical tactics, and you have a company with a fair share of problems. The last thing on its mind would be to stir up more trouble for itself in this part of the world.

Demand for land

Assuming that Wal-Mart/Bharti adopts the US-centric model for retail, a significant amount of land would change hands to make way for the regular, giant and mega-stores that now dot the American landscape. Compared to the average neighbourhood store of a few hundred sq ft in India, Wal-Mart stores range from 42,000 to nearly 200,000 sq ft (4.5 acres), with 20 ft or higher ceilings. Any reduction in size is clearly going to hurt its economics, so how it goes about the task of acquiring land will be keenly watched. It would also be worthwhile to compare the "Always Low Prices" policy of Wal-Mart to the "name your own price" policy in India. While prices are certainly at rock bottom (to match the quality of the merchandise), they are not dynamic. The classic example from the movie The Inscrutable Americans from several years ago is worth citing, where the newly arrived Indian, Gopal, attempts to haggle at a store, and actually succeeds thanks to his tenacity. In fact, our love of bargaining puts Priceline.com to shame!

The lesson is not to cower before a mega-corporation, but to embrace it. If we do that, then history will not record the Wal-Martisation of India, but the Indianisation of Wal-Mart!