4,000 employees may face closure blues as Walmart-Bharti JV breaks off

Oct 10 2013, 08:37 IST
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Best Price Modern Wholesale stores employed around 200 people and also provided indirect employment for a similar number of people. Best Price Modern Wholesale stores employed around 200 people and also provided indirect employment for a similar number of people.
SummaryWith the break up of Bharti and Wal-Mart’s joint venture in the cash-and-carry space

With the break up of Bharti and Wal-Mart’s joint venture in the cash-and-carry space, the future seems uncertain for Bharti Walmart’s 4,000 employees. Although, Wal-Mart has indicated it will continue to invest and expand its cash-and-carry business in India while seeking interested partners for a front-end venture, industry consultants say there could be some store closures or relocations.

Wal-Mart operated 20 stores in partnership with Bharti under the brand name ‘Best Price Modern Wholesale’. Each of these stores employed around 200 people and also provided indirect employment for a similar number of people.

“The locations of a lot of these stores were kept near Bharti’s ‘easyday’ stores as the front-end store sourced 25% of its goods from the cash-and-carry venture, but now whether Wal-Mart feels it will be feasible to continue with those locations remains to be seen,” said a consutlant with a global audit and consutlancy firm.

“For example in Zirakpur, the Best Price store is already seeing a lot of competition from Metro Cash-and-Carry which entered that market earlier,” the consultant added. “I don’t think easyday will continue to source as much from Wal-Mart’s cash-and-carry unless there is a significant advantage in pricing.”

“In the retail sector, whenever there has been a buyout or a merger or any such change in ownership, the thought process on the store locations completely changes as do the priorities,” said a management consultant with consultancy firm KPMG. “The new team, the new management will have its own priorities for the markets they want to be present in and where they want to exit from.”

In a statement Wal-Mart’s Asia president and CEO Scott Price said, “Through Wal-Mart’s investment in India, including our cash-and-carry business, supply chain infrastructure, direct farm programme and its people, we continue to make important social and environmental contributions to the country.”

While in the first five years of its India operations, Bharti Walmart opened 20 stores, in the last year the JV did not open any stores. The halt in the opening of stores coincided with allegations of corruption levied on Walmart’s Indian operations.

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