The first Bharti-Wal-Mart convenience store is slated to open in Ludhiana in April 2008 and would be modelled on the lines of French retailer Carrefour?s stores rather than the international Wal-Mart format.
Following the Carrefour format, the store would focus on food & beverage (F&B) rather than non-food segments, as is the case with Wal-Mart stores globally. The moves mark a strategic shift from Wal-Mart?s conventional strategy of building loyalty for non-food items.
Wal-Mart believes in focussing on non-food items, which have higher margins and yield higher billing than F&B items, sources told FE. However, an internal study by the Wal-Mart team revealed that a Carrefour approach is better suited to the Indian market, where all sections would be distinctly segregated.
Bharti Retail, which will be operating the stores, plans to roll them out only in Punjab, Haryana and NCR for the first two years. The Bharti-Wal-Mart alliance is structured in a manner whereby the two are in 50:50 joint venture for back-end cash & carry wholesale stores, while front-end retail stores would be entirely Bharti Retail owned. Wal-Mart, through its wholly owned subsidiary, would provide the expertise to Bharti Retail for a fixed fee.
Though Wal-Mart will provide the expertise on how to run and manage small stores, internationally the company doesn?t even operate in this segment. The small stores will have an area of 1,800-3,000 sq ft. Bharti Retail, which will be operating three formats?convenience store, supermarket and hypermarket?will source its merchandise from the separate Bharti-Wal-Mart joint venture.
In India, Wal-Mart is hoping that Bharti Retail stores would register a growth of as much as 15% in the first two years. In China, where Wal-Mart operates around 200 stores, records the highest growth of 20%. Sources said Wal-Mart has suggested a cautious strategy to Bharti, wherein the first two years focuses on strengthening the back-end before ramping up the store count.