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Wal-Mart to expand wholesale and e-commerce business in India

story by Kim Souza
ksouza@thecitywire.com

Moving beyond the dissolution of the Walmart Bharti venture in India, Wal-Mart said Tuesday (April 8) it plans to expand its footprint in that densely populated country with 50 Cash and Carry stores over the next four to five years. 

Officials with Wal-Mart India Private Ltd., a wholly owned subsidiary Wal-Mart Stores Inc., are pleased with the way the cash and carry — wholesale business — has grown in India which is why it plans to expand this format. In addition, the retailer plans to launch a business-to-business e-commerce platform for members of its Best Price Modern Wholesale Stores.

The e-commerce site will provide wholesale customers a convenient online shopping opportunity. This virtual store will offer a similar assortment of products as the physical stores and include special items, according to an email from Wal-Mart spokesman Kevin Gardner.

The first new outlets among the 50 would open soon in western and southern India, including the states of Maharashtra and Andhra Pradesh, an inside source told Reuters. Wal-Mart India now owns and operates 20 Best Price Modern Wholesale Stores in eight states across India. The first store opened in Amritsar in May 2009. Best Price stores are akin to Sam’s Clubs, in that they require membership to shop. These wholesale clubs cater to retailer resellers, offices and institutions, hotels, restaurants and caterers.

The executive, who declined to be identified, also told Reuters the online business would be started on a wholesale basis and goods will be sold to traders on a "very small" scale. India does not allow foreign retailers to sell goods online directly to consumers

Going it alone, Wal-Mart has no choice but to focus on the wholesale segment as Indian law does not allow direct foreign ownership of grocery. That was the reason Wal-Mart first partnered with Bharti Enterprises in hopes of reaching 1.2 billion consumers Indian consumers directly. Wal-Mart pulled out of the Bharti joint venture in October last year.

Wal-Mart has said it would wait for national elections to finish in May before applying to operate retail stores in India in case the rule allowing direct investment in supermarkets is overturned by a new government. This week, the political party expected to lead India's next government said it would bar foreign supermarkets from the $500 billion retail sector, according to Reuters.

Wal-Mart’s efforts to grow its Indian business have been hindered from government laws controlling ownership, a Foreign Corrupt Practice Act probe into the retailer’s business ventures there and several changes in top management on the ground in India.

The new CEO of India, Krish Iyer, was named in December. He replaced Ramnik Narsey, who had served in the interim since June 2013, after the departure of Raj Jain, who headed up Wal-Mart’s business venture with Bharti. Jain and others were suspended by the company in 2013 during the a probe alleging bribery.

“Along with our growth, we are taking 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, including licensing and permits, food safety, and responsible sourcing among others,” said Scott Price, president and CEO of Walmart Asia. 

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He said the retailer will also continue its investment in supply chain infrastructure and supplier development to better serve members and customers.

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