Odd-shaped buildings in India peeve WalMart

Written by P. Vaidyanathan Iyer | Davos | Updated: Jan 28 2011, 14:32pm hrs
It might sound odd and a bit funny too, but a big hurdle that WalMart faces in India is the awkward shape of buildings constructed by developers. Prohibitive real estate prices in the big cities too have forced the worlds largest multi-brand retail company to open all its cash and carry stores in smaller cities.

Doug McMillon, president and CEO, Walmart International, said the company was keen to invest in India, but it will have to wait till the government allows foreign direct investment in multi-brand retail. But the hurdles we face now are odd-shaped buildings and high real estate prices, he said.

We are happy with square and rectangular-shaped buildings, but developers come with triangles and all other shapes, McMillon said. In India, developers are new to the large format concept and do not understand the space requirements for big grocery stores. While Walmart can always work with developers in advance to custom-make buildings that suit its needs, the fact of the matter is normal construction cycle is about 3-4 years.

Rising real estate prices too is a great challenge for Walmart which has five Best Price Modern Wholesale cash and carry stores in India. The cash and carry format requires at least 50,000 sq ft space. Not surprising then, all the stores are in smaller cities. The Bharti-Walmart joint venture opened its first store in Amritsar in May 2009 and two other stores in Zirakpur, near Chandigarh in April 2010 and Jalandhar in Punjab a few months later in August. The other two are in Kota in Rajasthan and Bhopal in Madhya Pradesh. Besides the five cash and carry stores, Walmart provides logistics and backend support to about 100 Easy Day outlets that are run by its joint venture partner Bharti.

McMillon also said fears of organised retail wiping out the mom and pop stores across the world were unfounded. For instance, in Mexico, where Walmart opened shop in 1991, informal stores still account for 50 per cent of the total retail market. But, Montek Singh Ahluwalia, said even in the US, the National Bureau of Economic Research in its working papers talks why Walmart existence was distorting the local labour market.

While the Planning Commission has publicly supported allowing FDI in multi-brand retail, the government is yet to take a decision. The issue will cetainly be discussed in the Union Cabinet given the political sensitivities involved.

Meanwhile, a small blast shattered two windows but caused no injuries at a hotel near World Economic Forum venue.