Summary
Wal-Mart: Made in India
After negotiating with Tesco, Bharti hops into bed with the US retailer.See the full content of this document
Extract
Current News
Pallavi Srivastava
Till the last lap, it was in distinct second position. But in true champion style, Wal-Mart, the largest grocery retailer in the us, pipped its counterpart in the UK, Tesco, at the proverbial post to earn the right to partner the Bharti Group, and thereby, to flag off its India retail game plan. Bharti and Tesco, which had been huddled with the Mittals for four long months-periodic speculation of a joint venture, which would be duly denied, made that period seem longer-couldn't agree on a few fronts, paving the way for Wal- Mart to close a deal in double-quick time. "We have signed a Memorandum of Understanding under which we will jointly explore and identify retail market opportunities in India," says Rajan Mittal, Joint Managing Director, Bharti. Under the terms of the collaboration pact, Bharti and Wal-Mart have signed up a master franchise agreement for front-end retailing. Both the companies will be equal stakes partners in the venture. The stores will be branded with a combination of both Bharti and Wal-Mart. The joint venture will not invest in real estate and will look at third-party investors to partner them in infrastructure creation.So, at which point exactly did the trail go cold in the Bharti- Tesco negotiations? The UK retailer's talks with the Mittals screeched to a halt when the issue of shopping formats came up for discussion. Bharti apparently was (and obviously still is) in a mood to launch aggressively, with a flurry of formats in tow-cash-and- carry, hypermarket, supermarket, neighbourhood stores, online stores, et al. "Whichever way the Indian consumer wants to shop, we want to be ready for that," avers Mittal. Tesco, it is learnt, preferred a somber kick-off, perhaps preferring to first gauge consumer response (although in the UK it has a combination of formats, including out-of-town hypermarkets, supermarkets, metro stores-in city-centres-and one-stop small stores). But Bharti might have had other (mega) plans as Mukesh Ambani's retail juggernaut, Reliance Retail, promises to rock with multiple formats, and has already begun to roll."The retail battle between Bharti and Reliance will not be fought in the metros. The strategy will be to focus on customer reach and the speed with which they do it will matter," says Arvind Singhal, Chairman, Technopak Advisors, a Delhi-based retail consultancy. Wal- Mart, which opened its first retail store in 1962 in the US, had confined its operations to small towns for many years and moved on to expand its presence in the big cities only after it had...See the full content of this document
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