Thursday, April 10, 2008

Wal-Mart learning from P&G in India

Back in August of last year the Wall Street Journal had an interesting and insightful article about the predominant shopping styles in India, and in particular how many preferred the "controlled chaos" of traditional markets and stalls to the sometimes antiseptic Western approach to the task.

While it's still a bit too early to point out lots of success stories from big Western chains finding their way in the subcontinent, the biggest of them all -- Wal-Mart -- has already decided that they're going to have to enlist some pretty serious help if they want to stand a chance in the fiercely-competitive retail landscape. That's why, according to this article from The Economic Times, they're studying longtime-partner P&G's data on the Indian market while revising their own strategy:
Globally, the relationship between [Wal-Mart and P&G] goes well beyond a vendor-retailer relationship and P&G has offered to share its understanding of the Indian market to help Wal-Mart in building efficiencies in supply chain and merchandising for its cash-and-carry business.

Senior officials at P&G told ET that its India unit has shipped its first consignment of personal-care products to Bharti-Wal Mart, a joint venture for the cash-and-carry and logistics initiatives.

While the joint venture will focus on B2B business, the Bharti group plans to launch small-format retail stores shortly. The officials said P&G India is helping Wal-Mart understand the nuances of doing business in India. Wal-Mart’s India exposure has been so far restricted to sourcing from the country for its global operations.
Considering that something like 95% of all trade falls outside of what's considered "organized retail" in India, it's clear that even Wal-Mart would have a pretty hard time trying to move into the market with their large- or super-sized stores. Taking a page from Indian retail entrepreneur Kishore Biyani's playbook, a focus on hyperlocal markets might be the best way for the retailer to establish a foothold with the core population in that country.

Tags: ,

No comments: