The flipside is that Wal-Mart happens to be among the most hated organisations in the world for its monopsony powers. Its phenomenal growth and ruthless sourcing strategies have America debating whether its time to break up Wal-Mart. Monopsony powers allow buyers to dictate pricing to suppliers who have little choice but to acquiesce because of their dependence on the buyer as well as the buyers clout in the market. Nearly 20% of all retail sales in the US are at Wal-Mart. Globally, Wal-Mart is four times the size of the second largest retailer by revenue. Wal-Mart reported revenues of $312.4 billion in 2005-06, while Indias total retail market is estimated to be only around $300 billion.
Against this backdrop, many domestic retailers debate whether India has created a Frankenstein. But in a fast globalising economy that question must be given a respectable burial. Progressive elements must welcome the tie-up for its potential to dramatically transform the domestic retail landscape. Theres a case for consolidation in the Indian market given that India has the highest number of retail outlets8-10 million as against 1 million in the US. The race among the top five or six players for marketshare promises a wave of job opportunities across the country. Only 8% of our population is engaged in retailits over 20% in the US, the worlds largest retail market. In India, per capita retail space is just 5 square feet. In the US, its 13 square feet. Nearly all parameters indicate a coming retail wave. This is the time to ride it, not kill it.