Now that Walmart has finally gained access to the Indian market, in partnership with the Sunil Bharti Mittal group, the question is how would they tailor their strategy based on local Indian conditions. Walmart has mixed results in diversifying outside the United States – they have done well in China by all accounts. But they initially failed in Japan, the United Kingdom and Mexico – mostly because they failed to understand and appreciate the driving force behind local shopping habits and compulsions.
Just as an example, my parents buy their daily vegetables from the local sabziwaala who comes in his local cycle rickshaw laden with vegetables, fresh, straight from the farmers. And all my mom has to do is to stand outside our first floor apartment and tell him how much of what she wants – and bingo – he’ll select it, measure it, bag it and deliver it to our door. For non-perishable items, my parents will call the local baniya. He will note it, pack the order and have it delivered to our door again. Most times, if there is no ready cash available – it goes into his little ledger and he will send us the bill at the end of the month. Because he knows all of us. And we know him, his wife, his little baby, his father and a lot of his life history.
Now, my parents are upper middle class, live in New Delhi. They have traveled all over the world and are no strangers to mass retail. But would they go to the neighbourhood Walmart – if one opened up. Maybe once a month, for the novelty. But for daily supplies? For Washing Powder? For cooking spices? No. Even if there is a little price differential. For them, the convenience overrides any price undercutting that Walmart can potentially provide.
So, what does Walmart offer as a differentiation? First its important to understand who are they differentiating against? Against the swanky malls that dot the New Delhi landscape? Maybe to a certain extent – especially in the “impromptu” consumer shopping like clothes, novelty household goods, sundry consumer items like watches, cheap jewellery, electronics etc. But the “experience” of the mall? No. Are they offering differentiation against the kirana shop? Possibly – especially for DINK families – where time is of the essence, there is disposable income and where shopping is not necessarily a daily event but something that’s done over the weekend. Where food consumption habits revolve more heavily around frozen items – similar to the west. Given that, I think Walmart, given its extremely lean operational model, will do well in offering choices to the Indian consumer in non-perishable goods at highly discounted prices. But where Walmart will not have an easy time will be retail of the perishable items – which is the space the bulk of the neighbourhood kirana shops specialize in.
Walmart can be very successful in India. India, afterall, is a fragmented $600 billion retail market that is growing leaps and bounds and begging for consolidation. But they would need to be cognizant of local shopping habits and adapt accordingly.
Whatever it is, it will be interesting to follow. And I’ll be very kicked to see a Walmart with a 1-800 ordering number and free home delivery:)
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