Wal-Mart and the Indian Retail Sector

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Case Details:

Case Code : BSTR257
Case Length : 15 Pages
Period : 2006
Pub Date : 2007
Teaching Note : Available
Organization : Wal-Mart Stores Inc., Bharti Enterprises
Industry : Retail
Countries : India

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Will It, Won't It… Contd...

Wal-Mart, one of the most successful retailers in the world, was known for its low prices, which it achieved through its sourcing and supply chain efficiencies. Bharti had no presence in retail, but expected to grow in the Indian retail sector by partnering with a major global company.
The retail sector in India, which had hitherto been dominated by small local players and mom-and-pop stores, witnessed a boom in the early 2000s, with several large companies entering into organized retail.

Analysts said that the growing disposable incomes of the large Indian middle class and their increased exposure to western shopping habits, in addition to the availability of a greater variety of products, were responsible for the Indian retail boom.

Business Strategy | Case Study in Management, Operations, Strategies, Business Strategy, Case Studies

By 2006-2007, several Indian corporate houses like the Reliance Group (Reliance), the ITC Group, the Tata Group, and the Aditya Birla Group (Aditya Birla) among others, had invested in, or were planning to invest in the retail sector.

This was in addition to the Future Group, the RPG Group (RPG), and others, who already had a strong presence in Indian retail.

However, the entry of Wal-Mart was expected to significantly change the Indian retail sector. Because of the expected effect of Wal-Mart on the sector, the company's proposed entry met with vehement opposition from the Communist Parties and retail groups in India. However, as of early 2007, Wal-Mart and Bharti continued to maintain that Wal-Mart was definitely coming to India. But analysts wondered whether political pressures would prove to be an insurmountable impediment to the company's plans.

Background Note - Wal-Mart

Wal-Mart was set up in 1962 in the US state of Arkansas by Sam Walton (Walton). Before opening Wal-Mart, Walton operated a franchise of the Ben Franklin variety store5 in Newport, and later, another franchise called Walton's 5 & 10. His retail ventures proved quite successful, and most of the success came from his innovative business ideas. He bought products in bulk directly from manufacturers and offered them at lower prices to customers, which allowed him to gain a significant advantage over the competition. Walton also kept the stores open for longer hours than his competitors...

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5] Ben Franklin was a franchise of Butler Brothers, which ran Federated departmental stores and Ben Franklin variety stores. Butler Brothers Incorporated was the pioneer of the departmental store setup in the US.


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