Wal-Mart to expand wholesale outlets in India
NEW YORK (AP) — Wal-Mart Stores Inc. says it will open 50 more wholesale stores in India over the next four to five years, adding to the current total of 20 in the country.
These stores, known as cash-and-carry outlets, cater to retailers, rather than to individuals.
Wal-Mart also said Tuesday it plans to launch an online operation for cash-and-carry customers in India.
The world’s largest retailer announced last October that it was splitting from its Indian business partner Bharti Enterprises and said it couldn’t go forward with plans for its own retail stores in India because strict government regulations on sourcing from local small businesses make it impossible. Wal-Mart’s growth in India has also been hampered because of an internal bribery investigation that’s making the discounter evaluate its practices abroad.
“Wal-Mart is committed to India and we are excited about our growth plans,” said Scott Price, president and CEO of Wal-Mart Asia, in a statement. “We will continue to focus on the cash-and-carry format as we are very happy with the way it has shaped up in the last few years.”
Price said that Wal-Mart, based in Bentonville, Arkansas, is making a number of important steps to strengthen controls and is evaluating and reinforcing procedures related to all compliance areas including licensing and permits, food safety and responsible sourcing among others.
India has a potential market of 1.2 billion people. But no large foreign retailers have formally applied to open supermarkets and other multibrand stores in India since the government changed the law in 2012 to permit them to invest more in the sector previously reserved mostly for Indian companies. The new law allows international companies to open multibrand retail outlets with a 51 percent stake and an Indian minority partner. India allows foreign companies to run 100 percent-owned wholesale chains.
Welcoming foreign retailers like Carrefour and Tesco was very controversial in India. Opponents argued it could hurt millions of small traders and family-run shops where most Indians now buy their products. To lessen the blow, the new law requires foreign retailers to source 30 percent of the products they sell from small and medium-sized Indian businesses.
Wal-Mart opened its first wholesale outlet store in India through the joint venture in 2009.
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