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.

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