After a two-year hiatus, Wal-Mart, the $476-billion Bentonville, Arkansas chain, is getting ready to open its 21st store in India. The new store will be located in Agra, home to the Taj Mahal, in November 2015, Bloomberg reported citing two people familiar with the matter. Wal-Mart is also considering opening a wholesale outlet in Jaipur, capital of the northern state of Rajasthan.
The cash-and-carry category in India is more popular with International retailers because of its easier rules and also since 100% FDI is allowed in this segment. The current central government, is opposed to foreign investment in multi-brand retailing. So international majors such as Wal-Mart are ensuring a foothold in India through cash-and-carry, while awaiting easier rules in multi-brand consumer stores.
Wal-Mart is launching an e-commerce Website designed to supply goods to India’s small retailers, and piloting it in its Best Price stores in Lucknow in the north and Hyderabad in south India. This B2B Website is available only to members of its 20-store Best Price Modern Wholesale cash-and-carry chain, a model similar to its Sam’s Club warehouse in the states (except that it is only available to small resellers and not to consumers).
Even with the expansion of the cash-and-carry business, Wal-Mart is unlikely to make India a big focus of this business model, because Wal-Mart and other similar retailers still need to have local partners if they want to focus on consumers. That requirement and other restrictions have discouraged companies from taking the plunge. Of the big foreign retailers, British chain Tesco (TSCO:LN) has plans to open supermarkets in India in partnership with India’s Tata Group. And Ikea of Sweden is going ahead with its expansion plans.
Wal-Mart is still hopeful, saying it has plans to open 50 wholesale stores in India in the medium term.