Why Walmart Is Investing $100 Million in India Wholesale Operations
Walmart has unveiled an ambitious strategy to expand its presence in India, one that calls for the global retail giant to expand its wholesale outlet network there and invest in such key areas as sourcing, agricultural training and education, and logistics.
Late last year, the Arkansas-headquartered company invested more than $100 million in its Indian wholesale operations as part of a plan to have 50 additional wholesale stores open across the country within the next five years. Walmart, however, doesn’t operate retail stores in India. Through its Walmart India subsidiary, it owns and operates 20 Best Price wholesale stores, each of which measures about 50,000 square feet, in eight states across the country.
“India is an important market for us,” said Walmart CEO-International David Cheesewright during last week’s visit to India, his first. “We are committed to partnering in India’s economic growth by enabling the right ecosystem for B2B e-commerce through investments in people, technology and the supply chain.”
The company is planning to open four new stores in the major southern India city of Hyderabad, with others planned in currently undisclosed locations in the State of Andrha Pradesh.
INTERNET KEY TO SUCCESS IN INDIA; COMPANY EYES EVENTUAL RETAIL OPERATIONS
Walmart’s strategy in India also calls for the launch of a B2B e-commerce platform for regional suppliers to connect with the retailer’s buyers in an effort to “source agriculture commodities such as fruit, vegetables and spices from local farmers, increase productivity and improve capacity building in the agriculture sector,” said Cheesewright.
The company has wanted to open retail operations in India for some time, but it wasn’t until 2012 that the country started allowing foreign majority ownership in supermarkets and other consumer-facing, retail ventures that carry more than one brand.
Even so, strict restrictions on foreign retail operations are still in place, including a requirement that international retailers buy at least 30 percent of their products from small-and-medium-sized businesses in India.
Walmart is hoping that its recent investment in its wholesale operations will establish goodwill with the government in New Delhi and lead to an easing of the restrictions on non-Indian businesses looking to enter the country’s increasing lucrative retail market.