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Wal-Mart brings its ‘Best Price’ to India

Raymond Thibodeaux Jul 13, 2009

Wal-Mart brings its ‘Best Price’ to India

Raymond Thibodeaux Jul 13, 2009


KAI RYSSDAL: As Jeremy Hobson was telling us earlier, here in the states Wal-Mart’s fellow retailers are worried about what the company might do on health care. Elsewhere in the world they’re just plain worried about Wal-Mart. A couple of weeks ago the first Wal-Mart opened in India, the world’s second-largest consumer market. But big boxes are going to take some getting used to.

Raymond Thibodeaux reports from the northern India city of Amritsar.

Raymond Thibodeaux: This is the home electronics section of India’s first Wal-Mart. You won’t see the familiar white letters on a navy background anywhere. Here, the store is called Best Price Modern Wholesale. Not quite as snappy as Wal-Mart, but at these prices, who cares?

B.D. GOUR: People are getting attracted to this. The pricing is good, the commodities and the quality is fantastic.

That’s B.D. Gour, general manager for a local paper company and an enthusiastic customer. He’s been here three times since the store launched just weeks ago.

GOUR: The first two days when I came, it was a houseful. People were stopped outside. It was a fantastic site to see.

Big-box stores, with everything under one roof and rock bottom prices, are new to India. Most people shop at neighborhood kiosks, buying tiny packets of shampoo or laundry detergent. And as the name implies, Best Price Modern Wholesale isn’t officially geared toward the general public.

Economics professor Paramjit Kaur Dhindsa fears the average Indian shopper won’t benefit, just the store owners.

Paramjit Kaur Dhindsa: They may increase their sales, they may earn a profit, but how all these benefits are going to be percolated to the downtrodden? That’s more important, and that’s a real cause for concern.

For years politicians, activists and small retailers have resisted big-box stores. Now, the stores seem to be catching on. Some shoppers say Best Price isn’t too strict in checking who’s a wholesaler and who’s not. And certainly the shoppers perusing the aisles of flat-screen TVs and 50-pound sacks of chickpeas don’t all look like business people.

About a 10-minute drive from Best Price, Amritsar’s main street bazaar is hot, crowded and messy. Many smaller wholesalers and street merchants here don’t have Wal-Mart’s knack for squeezing efficiencies out of suppliers. They worry they’ll be squeezed. Some here say sales have dropped 20 percent since Best Price opened.

Raj Jain, president of Wal-Mart India, says in a country of more than 1.2 billion people, there’s enough business to go around.

RAJ JAIN: It will always be a combination of big boxes, which are outside the town and offer significant value. But it’ll also be a lot of convenience-related shopping which will happen within 10 to 15 minutes walking distance of people’s homes. I think it’ll be a combination of both.

Wal-Mart is in a joint venture with Indian retailer Bharti Enterprises. India wants to protect domestic companies from direct foreign competition. So the law requires that stores selling multiple brands must be majority owned by an Indian firm.

Analysts say Wal-Mart’s now paved the way for other foreign mass merchandisers to enter India’s nearly $380 billion-a-year retail market. Britain’s Tesco and France’s Carrefour are in talks with potential Indian partners.

In Amritsar, I’m Raymond Thibodeaux for Marketplace.

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