AMRITSAR, India -- Wal-Mart Stores
Inc. on Saturday rolls out its deep-discount retailing formula in
India, targeted at a more than $350 billion a year retail industry made
up almost entirely of small merchants such as Ranjit Singh.
Mr. Singh, 18 years old, sells cookies, chewing tobacco and soft
drinks from a wooden cart across the street from the construction site
of Wal-Mart's first Indian store. Under Indian rules governing foreign
retailers, Wal-Mart and its joint venture partner, Bharti Enterprises
Ltd., can't sell directly to consumers but instead will operate a
cash-and-carry business selling 10,000 products to licensed store
owners, schools, hospitals, hotels and other institutions.
Even before it opened, the Wal-Mart store, operating under the name
Best Price Modern Wholesale, has been a boon for Mr. Singh, he said.
Most of his customers are the dozens of construction workers building
the giant new edifice.
"I've never seen a store so big, never even heard of Wal-Mart," he said. "I hope it will bring those high-society people here."
Mr. Singh and the more than 10 million other tiny retailers in India
are Wal-Mart's greatest challenge and greatest opportunity. If it can
win them over, they are likely to become its biggest customers. Anger
them and they could use their political power to block expansion.
After opening their first store here in Amritsar, in the
northwestern state of Punjab, Wal-Mart and Bharti plan to open as many
as 15 stores nationwide in the next three years, said Raj Jain,
president of Wal-Mart India.
Wal-Mart has been preparing Amritsar for its arrival, said Mr. Jain.
It handed out more than 30,000 free memberships, spoke to small
business associations and surveyed shop keepers. It prepared a video in
the local language to introduce Wal-Mart and its business style.
"People are beginning to understand that there is a place for modern
retailing and a place for traditional stores," said Mr. Jain.
India is part of Wal-Mart's rapid global expansion under Mike Duke,
the former head of the company's international division who in February
became CEO. In his previous job, he recruited native-born managers in
international markets who understood local customs. Mr. Jain, for
example, had worked more than 20 years here for Unilever PLC and Whirlpool Corp. Wal-Mart's 3,400 international stores generate close to one quarter of the company's revenue.
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The arrival of big-box wholesalers and retailers in India was a
major political issue a couple of years ago, with widespread protests
from small merchants. But as the Indian economy has slowed, the furor
has eased. Shoppers became accustom to larger stores from local
retailers such as Pantaloon Retail India Ltd.
"People appreciate that they are clean, that they are organized and
you have everything in one place," says Rakhee Mehta, a Mumbai-based
retailing consultant.
There have been no protests around the building of Wal-Mart's new
store. The 50,000-square foot Best Price store is slightly larger than
a typical U.S. grocery store and is the biggest building for miles
along an old highway. It is surrounded by a huge parking lot, a rarity
in India.
The state government welcomed the investment and the jobs it will
create though some fear the effect it will have on small merchants.
Representatives from the new store in Amritsar have reached out to
local merchants in the neighborhood to let them know Wal-Mart intends
to supply small shop owners not compete with them.
They handed out cards explaining in English that merchants had only
to present their business license to become members of the store.
Unfortunately, few of the nearby retailers read English or have
government businesses licenses. Rather, they operate informally.
—Sonya Misquitta in Mumbai contributed to this article.
Such a shameful act where girls had to reportedly undergo tests to prove their chastity to avail the government's financial aid were sinful
