Could Wal-Mart succeed in India?

Posted By P.J. Aroon Wednesday, February 21, 2007 - 4:36 PM Share

Wal-Mart recently announced that much of the mega-retailer's future growth will come from expanding internationally, especially in emerging markets such as India and China. That's risky business. Last year, Wal-Mart had to close up shop in South Korea and Germany. In fact, less than a third of international retail expansions succeed, according to the consulting firm Bain & Co.

If Wal-Mart in India were anything like Wal-Mart in the United States, there are some obvious reasons why its operations just wouldn't fly:

Lack of huge parking lots. Americans tend to go to Wal-Mart once a week and buy a ton of stuff. Hauling the loot home requires cars and parking lots. In India, expansive parking lots don't exist, and it's unlikely that Wal-Mart could find enough land to build one in India's dense cities. (And Wal-Mart would have to target urbanites; the rural folk are too poor.)
Lack of cars. Most Indians don't have cars, much less ones with capacious trunks to hold a week's worth of purchases. Instead they walk or bike to a nearby corner shop or open-air market, and make small purchases on a nearly daily basis. Plus, vegetable sellers wheel their carts through neighborhoods (sort of like ice-cream trucks in the United States), so an Indian homemaker often doesn't even have to leave her doorstep to get the ingredients for that evening's dinner.
Lack of large fridges. Buying a week's worth of fruit, veggies, and milk won't work because Indians lack American-sized refrigerators to store large quantities of perishable foods. Plus, electricity in many places is sporadic.
Protests from mom-and-pop grocers. In a nation with a tiny shop or kiosk on every corner, Wal-Mart would easily invoke the wrath of small-business owners, just as it has in small-town America.

Granted, if Wal-Mart adopts a different business model in emerging markets, it could succeed. Competition could even make Indian-owned stores provide better customer service. So, I'll remain open-minded to the idea of Wal-Mart in India.

But, I'll also remain skeptical.

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