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: india, retail

In India, chaos equals retail sales

The Wall Street Journal published a really fascinating article about Pantaloon Retail (India) Ltd., India's largest retailer, and their discoveries that western retail innovations don't always translate neatly to other countries with different ideologies and histories. In fact, even simple, seemingly common-sense features like quiet stores, wide, straight aisles and fresh, clean produce (basically the hallmark of a good supermarket here in the US) take on decidedly different meanings in India. Says Kishore Biyani, president of the firm, "The shouting, the untidiness, the chaos is part of the design." The WSJ provides some further explanation:

[When] Mr. Biyani tried that in Western-style
supermarkets he opened in India six years ago, too many customers
walked down the wide aisles, past neatly stocked shelves and out the
door without buying.
Mr. Biyani says he soon figured out what he was doing
wrong. Shopping in such a sterile environment didn't appeal to the
lower middle-class shoppers he was targeting. They were more
comfortable in the tiny, cramped stores -- often filled with haggling
customers -- that typify Indian shopping. Most Indians buy their fresh
produce from vendors who keep vegetables under burlap sacks. Even the dirty, black-spotted onions serve a function. For the average
Indian, dusty and dirty produce means fresh from the farm, he says.

Yet while he has worked hard to de-westernize the customer-facing portion of his operation, Biyani has adopted many high-tech innovations to optimize things behind-the-scenes, using fancy ERP software and just-in-time inventorying to maximize profitability and ensure that his company runs as efficiently as possible.

Interestingly, Biyani notes that while the market-style approach of his grocery stores is designed to appeal to lower- and middle-income Indians (who make up the vast majority of the population), he has had success introducing Western-style stores (with clean floors, air conditioning, and well-merchandised goods) catering to more affluent Indians, so exposure to other cultures -- and probably the "brand image" that those cultures carry -- does seem to play some role in shoppers' expectations of how a store should look, feel and function.

Tags: retail advertising, merchandising, India