News: Wal-Mart may increase sourcing from India

(BL 11/05/2007) New Delhi - Wal-Mart, the world's largest retailer with a turnover of over $330 billion, said that it was looking at foraying into private labels in its Indian cash 'n carry retail business, as well as increase sourcing from the country.

"Private labels are an important part of the business. In fact, we have several private labels being retailed across our other international stores worldwide. And, as is the case with retailers in India, our private labels are also our growth drivers in the international scenario. We will try and leverage that in India as well," said Beth Keck, Director, Corporate Affairs, Wal-Mart.

"Our motto is to think global, but act local. So keeping that in mind, we will definitely look at the possibility of bringing into operation private labels in India as well. However, it will depend on the appropriateness of the label, since with our cash 'n carry model we will be targeting the small businessmen and retailers who are a very different community as compared to the consumers," said Keck.

She also said that the US-based retail chain could look at the possibility of developing India-specific private labels, but only after negotiations with Bharti, for its joint venture, are officially over. Wal-Mart and Bharti are in negotiations for a 50:50 joint venture for Wal-Mart's cash 'n carry business.

Strategic market

On increasing sourcing from India, Keck said, "India is a strategic and important sourcing market for us. And we are constantly expanding in the categories that we deal in, in India. In fact, with Wal-Mart's foray into cash 'n carry, a whole new world of suppliers will open up for us, since we will be sourcing almost 90 per cent of the products for the venture locally," said Keck.

Keck also said that Wal-Mart in India will follow a system that was similar to the country's wholesale mandi system, where a particular cash 'n carry hub will service around two to five locations. In total, Wal-Mart hopes to provide services to around 75 locations/townships in the country.

Wal-Mart currently sources products such as jewellery, handicrafts, metal ware, and home furnishings from India, which amount to around $600 million.

The Union Minister of Commerce and Industry, Kamal Nath, had in February, during the company's global CEO, Mike Duke's visit to India, asked the company to increase sourcing from India by 25 per cent.

Besides, the company also plans to set up a full-fledged cold chain system, for effective transport of products from farm to outlet.

While the system will be run by Wal-Mart, for the basic infrastructure the company will be talking to players such as Carrier and Voltas, which provide cold chain infrastructure to other retail chains as well.