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Why are we scared of Wal-Mart?

The Government policies for opening retail stores in India are restrictive and only single-brand retail stores are currently allowed. Due to this, companies like Wal-Mart, Carrefour and Tesco have been trying to get into partnerships with Indian companies to tap into the market. Most of India’s retail sector is family run and politicians fear that a Wal-Mart could shut down these Mom & Pop stores.

These politicians under estimate the trading skills of Indians and believe that we are not capable of dealing with home grown competition. Two months back Wal-Mart got out of South Korea and this week out of Germany. The company, it seems was not able to generate profits after operating 85 stores for eight years in Germany

German shoppers are accustomed to buying merchandise strictly based on price, German retail consultants say. They are willing to buy laundry detergent at one store and then go to another to get a better price on paper towels. That behavior is called “basket splitting.” It is the antithesis of what American shoppers like: one-stop shopping. A big plank of Wal-Mart’s strategy in the U.S. and elsewhere is getting shoppers to turn to it for an increasingly wide array of goods.[With Profits Elusive, Wal-Mart to Exit Germany (subscription reqd.)]

When President Bush visited India, Charlie Rose had a series of interviews with business leaders and one point Ratan Tata made was that Indians are similarly price and value conscious. They could give Wal-Mart a run for their money.

2 Responses to Why are we scared of Wal-Mart?

  1. Hari August 2, 2006 at 9:27 pm #

    If at all Wal-Mart does open stores in India, they should market it as a high end superstore and open stores in posh localities, taking a lead from Pizza Hut and KFC. That is one way for them to succeed!

  2. varnam August 22, 2006 at 2:12 pm #

    Surviving in a Globalized World

    Often it is said that due to globalization, American companies will enter countries and create conditions in which local businesses cannot survive. This is not always true. Recently Wal-Mart pulled out of Germany since they could not adapt to German…

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