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Issue #588

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Intermodalism

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Wal-Mart plans 50 more India wholesale outlets, e-commerce launch

By: | at 04:20 PM | International Trade  

Wal-Mart Stores Inc plans to open 50 more wholesale outlets in India and launch online operations to sell to small traders after calling off a joint venture last year and shelving plans to open its own retail stores in the country.

The world’s largest retailer will open the stores over four to five years, it said in a statement. Wal-Mart already runs 20 such stores in India, which sell directly to retailers as opposed to consumers.

Wal-Mart’s growth in India has been slowed by an internal bribery probe, uncertainty over regulations on foreign investment in the country, and in October, the severing of its partnership with New Delhi-based Bharti Enterprises.

India allows full foreign ownership in wholesale stores and under a 2012 law change allows up to 51 percent foreign ownership in supermarkets. Wal-Mart, which had been the most vocal foreign advocate for opening up India’s large but fragmented retail industry, has not yet applied to open retail stores in the country.

In 2013, Wal-Mart did not open a single wholesale outlet in India despite plans to open eight during the year.

“We are taking a number of important steps to strengthen compliance so that we do the right thing everyday,” Scott Price, Wal-Mart’s Asia chief executive, said in a statement announcing the rollout.

“We are evaluating and reinforcing procedures and programs relating to all compliance areas, including licensing and permits, food safety, and responsible sourcing among others.”

A company executive in India said the first new outlets among the 50 would open soon in western and southern India, including the states of Maharashtra and Andhra Pradesh.

The executive, who declined to be identified because he was not authorised to speak to the media, said the online business would be started on a wholesale basis and goods will be sold to traders on a “very small” scale.

India does not allow foreign retailers to sell goods online directly to consumers.

Wal-Mart named a new India head in December and said then that its focus in the country would be on opening wholesale stores and building its supply chain.

Sources at Wal-Mart have said they are waiting for national elections to finish in May before applying to operate retail stores in India in case the rule allowing direct investment in supermarkets is overturned by a new government.

On Monday, the political party expected to lead India’s next government said it would bar foreign supermarkets from the $500 billion retail sector. (Reuters)