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LATEST NEWS UPDATES | US retail giant Walmart to source locally in India-Dipti Jain

US retail giant Walmart to source locally in India-Dipti Jain

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published Published on Oct 10, 2012   modified Modified on Oct 10, 2012
-The Times of India

GURGAON: US retail giant Walmart is planning a series of partnerships with small and mid-level suppliers in India across product categories to create a big list of private label brands that will be priced substantially lower - as much as 10-15% - than established products and brands. The move is part of the company's strategy to go deeper into the Indian market and create cost-effective and efficient models of local procurement to keep front-end retail prices low, Raj Jain, MD & CEO of Bharti Walmart, has said.

"We will find suppliers, and make it together. There are so many categories where brands are not important, but functionality is," Jain told TOI, while speaking about the front-end retail strategy of the company, days after the government's nod to allow foreign retailers in multi-brand retail.

The Bentonville, Arkansas-headquartered company, with revenues in excess of $400 billion, has a fat list of private label brands in the various countries it operates in, including home market US. Walmart private labels will be present in both food and non-food categories, including FMCG and apparels, Jain said.

 Walmart currently partners Sunil Mittal-led Bharti Enterprises for a wholesale (cash-and-carry) business and has said the Indian company can be a "natural partner" for its front-end retail venture as well.

Manufacturing and sourcing locally is one of the key models that Walmart adopts globally to control costs and this is followed even in its wholesale business. "If I give you a great-value product, you will trust me on that. And what if I give you that at one-third of the price offered by other brands?" Jain said, highlighting the benefits to the end-consumer.

The private label brands are already being sold in the cash-and-carry outlets 'Best Price Modern Wholesale Store' and also at Bharti's independently-owned front-end retail stores 'Easyday'. These include Great Value (for FMCG products like tea, snacks, ketchup, staples, dishwash bars, etc), Equate (personal care products), George (western clothing), Astitva (ethnic Indian wear), Home Trends (home furnishings and decor), Mainstays (home needs), Kid Connection (toys and other children's items) and Athletic Works (sporting goods).

"Ninety-five per cent of what we sell is locally produced and sourced. We totally believe in sourcing more from within the country, which is a purely economic model," Jain said, adding that cost-effective models can be worked out for various types of products. "For example, what if our stores sell you clean drinking water for as low as Rs 2 a litre, provided you carry your own container or water bottle?"

The model will also be very suitable for a large country like India with diverse tastes and needs. In a country where tastes change every 100-200 kms, Walmart's endeavour will be to source products locally and within a 100-km radius of a store. Also, such a model will save on unnecessary expenditures like transportation and plastic costs that a conventional beverage company would incur. "These are the models that we can evolve in India."

Walmart is in the process of finalizing business plans as it plans to make an application before the Foreign Investment Promotion Board within the next one-and-a-half month. The company is hopeful that its first multi-brand consumer retail store will come up in 16-18 months. "Once we get the approval, we will get cracking."

The Times of India, 10 October, 2012, http://timesofindia.indiatimes.com/business/india-business/US-retail-giant-Walmart-to-source-locally-in-India/articleshow/16746424.cms


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