Tuesday, Sep 23, 2014

Walmart to launch 50 stores in big India push

ENS Economic Bureau | New Delhi | Posted: April 9, 2014 10:33 am

US retail major Walmart on Tuesday said that it will open 50 cash-and carry-stores in the country in the next 4-5 years, a move that will strengthen the presence of the retail major in the wholesale segment.

The announcement comes a day after the BJP’s manifesto declared that the party will not allow foreign direct investment (FDI) in the multi-brand retail segment if it forms the next government. The BJP, in its manifesto unveiled Monday, said that it is not in favour of FDI in the multi-brand retail sector, though it was open to FDI in all other sectors if it led to job and asset creation.

With this development, Walmart has tried to skirt the speculations on its entry into the retail segment, which was opened for foreign investors in 2012 and has received only one application so far – from UK-based Tesco. It was widely speculated that the company, which broke off its joint venture with Indian partner Bharti Enterprise last year, would be the first foreign retailer to apply for bringing in FDI in the sector.

However, the company has refrained from entering the sector, citing stringent conditions related to mandatory 30 per cent local sourcing.
Given that 100 per cent FDI is allowed in the cash and carry segment, this sector presents an opportunity to the company to make in-roads in the vast Indian market.

In a statement, Walmart also said that it will launch business-to-business (B2B) e-commerce platform for members of its cash and carry ‘Best Price Modern Wholesale Stores’.

“Walmart is committed to India and we are excited about our growth plans. We will continue to focus on the cash and carry format as we are very happy with the way it has shaped up in the last few years. The format is also poised to grow in India and we would like to serve the growing customer base by opening 50 new cash and carry stores over the next four-five years and extend the e-commerce platform to our cash and carry members with a virtual shopping opportunity,” Scott Price, president and CEO, Walmart Asia, said, in the statement.

The retailer currently has 20 Best Price Modern Wholesale Stores in the country. The first store opened in Amritsar in May 2009.

Currently, 100 per cent FDI is allowed in single brand retail, and 51 per cent is allowed in the multi-brand retail sector. Also, 100 per cent FDI is allowed in B2B e-commerce, but not in B2C e-commerce.

Price also said that the company will take “a number of important steps to strengthen compliance so that we do the right thing everyday”.

“We are evaluating and reinforcing procedures and programs relating to all compliance areas… and responsible sourcing among others,” Price added.

The comments assume importance in wake of the alleged violations of the US Foreign Corrupt Practices Act and alleged bribery case in India that surfaced in 2012.

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