Retail giant Wal-Mart is looking to open its first outlets in India within 12 to 18 months as it would seek permission from states that have already indicated their willingness to allow foreign retailers to set up shop in India, Scott Price, president and CEO for Asia, said in an interview with The Wall Street Journal.
“We will commit to retail in India,” Price told the Journal. “But this idea that the gates have been opened and there’s going to be a flood [of investment] is overwrought.”
The move comes after the UPA government last week agreed to allow megastore retailers to enter the country through joint ventures.
Wal-Mart, the world’s biggest retailer, has not yet decided where or how many stores it would like to have in India, Price told the newspaper. Price added that the company expects to continue its current partnership with Bharti Enterprises in a chain of 17 cash-and-carry stores, but it is not in discussions with any other companies for a potential retail partnership.
Meanwhile, Anshuman Magazine, CMD, CB Richard Ellis told the Business Standard that purchasing power and consumption will be the biggest hurdle for foreign retailers in India. “Is there purchasing power to absorb the supply form the big retailers? Despite all the restriction of 1million population, foreign brands may be confined to major metros only, at least in the initial years,” Magazine told the paper.
Moreover, Local sourcing from small-scale companies, which also caused IKEA some second thoughts about the Indian market, will probably be the hardest part for Walmart and others–whose business success depends on ultra-efficient management of a global supply chain to drive down prices.