Opening the floodgates

Updated: Nov 30 2006, 08:27am hrs
Those who have shopped at Wal-Mart Stores in various cities across the US would be looking forward to the launch of Bharti-Wal-Mart retail stores (actual brand name yet to be finalised) in August 2007 in India. The success of Bhartis venture will depend mainly on whether it is able to bring to consumers the experience that the largest retailer in the world offers across the globe.

To begin with, shopping at Wal-Mart is quite a global experience. You can buy things that have been sourced from across the worldfine cotton shirts and trousers made in Pakistan, Thailand and Philippines; games and toys from China; PCs, laptops and other electronic gadgets made in Taiwan, Malaysia and so on. Yes, you can also find Made in India good as welljewellery, textiles, leather products, you name it.

In fact, Wal-Martwith $315 billion in revenues, which is more than the GDP of several smaller countries (and about half that of Indias)moves across 2.5 billion boxes of goods sourced from across the globe. Consumers thus find quite a collection of Made in labels under one roof. More importantly, these things can be bought at the most competitive prices. That is USP of the company: globally sourced products at the cheapest possible prices.

Wal-Marts power to bargain best deals globallycourtesy the huge volumes and an efficient mechanism that tracks every piece of merchandise on its retail shelves, so that they can be replaced 24X7keeps its suppliers on the tenterhooks. Products must be available round the clock, at the right price and in right quantities.

Will you and I get that much vaunted shopping experience when we enter Bharti Wal-Mart stores next year Only time will tell. Of course, expectations are high as is the excitement. Bharti has not yet given out details on how things will take shape. Early indications are that up to 80% of the products available at the Bharti-Wal-Mart retail stores will be made in India at least to begin with.

The second part of the Bharti-Wal-Mart tie-up will be equally exciting, but it will be at the back-end: a joint venture between the two to act as wholesellers. The JV will source from Indian as well as global suppliers everything that the Indian consumer wantssoaps, shampoos, linen, gadgets and so on.

This cash-and-carry JV business is going to be a tough call for Indian suppliers. This business is expected to grow too big, too soon and transform supply chain management India in a big way. Suppliers will face ruthless squeezing of margins on the one hand and exacting quality standards on the other. Those already supplying to Wal-Mart know this and would be ready. Others will have to start acting on best practices now.