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Walmart Stores Inc is expected to firm up its plans for India retail foray in 30-45 days. The company said it was considering various options with regard to a local partner, including Bharti, its existing joint venture partner of the wholesale cash-and-carry format Best Price.
“We have lots of options and there are lots of things, which we need to discuss. We will have our plans ready in the next 30-45 days,” Raj Jain, president — Walmart India and managing director and CEO of Bharti Walmart, said in response to whether the existing JV would also take the upcoming multi-brand retail plans along. Overseas companies have to make an application to the Foreign Investment Promotion Board (FIPB) to enter multi-brand retail and also need a separate company for this. Walmart is studying these aspects, including the equity structure of the new company, according to him.
Jain said it would take 12-18 months to launch the first retail store after planning and said the present eight states that had welcomed FDI in multi-brand retail were good enough to start the business. The government on September 14 had approved 51 per cent FDI in multi-brand retail.
He said the Centre’s decision to make it a prerogative of the states to allow FDI in multi-brand retail was a right and calibrated approach. “It is a good way to start. Once we demonstrate what difference we make in the lives of consumers, small shopkeepers and farmers, other states would also join.”
Jain said they were happy with the government’s condition of bringing $100 million fresh FDI in the first three years, half of it into back-end infrastructure. On the fears of adverse impact of FDI on small shopkeepers, he said there would be a healthy competition among all the existing retail formats and would continue for several decades.
However, he listed out real estate as a challenge to the upcoming retail foray in terms of availability and cost.
Best Price expansion
The expansion of Best Price wholesale stores would continue with at least 10 stores every year in the next three years, according to Jain. The company opened its 18th store in the country, in Hyderabad on Wednesday. It is planning to set up 5-6 such stores in the current year, he said after inaugurating the third wholesale store in Andhra Pradesh. It already has a store each in Guntur and Vijayawada.
Bharti Walmart Pvt Ltd, a 50:50 joint venture between Bharti and Walmart, is investing Rs 35-40 crore in establishing Best Price stores, according to him. It currently has a customer base of 550,000-600,000. The new store in Hyderabad has already registered the biggest-ever customer base of 60,000 members. The wholesale format caters to three categories of customers — small shopkeepers, offices and institutions including hospitals and hotels, restaurants and food caterers.
Launches full range of private labels
Bharti Walmart also launched a full range of private label products featuring 400 items, which according to the company, would have a double digit share in the overall business. Besides the value for money items, the private labels would also feature brand equivalent quality items at a 15-30 per cent lower price, according to officials.
The company, engaged with close to 6,000 farmers for direct sourcing of food items, is planning to expand the network to 35,000 farmers in three years.