Wal-Mart To Open 50 More Wholesale Stores in India

Source: Getty Images

Source: Getty Images

Wal-Mart (NYSE:WMT) hasn’t given up on India yet, and now the retailer says that it is planning to open another fifty wholesale stores in the country over the next four or five years. The Financial Times reported Wal-Mart’s announcement Wednesday and highlighted that it came in the same week that the Hindu nationalist Bharatiya Janata party stated its disapproval of foreign direct investment in retail businesses as part of its pre-election campaign. In India’s upcoming elections, the Bharatiya Janata party is expected to win control of India’s government, and Wal-Mart India has closely been watching the developments. However, the country currently has a policy that permits 100 percent foreign ownership of wholesale businesses, and that ruling is not expected to be reversed under a new government.

Wal-Mart has faced significant pushback in India not only because of the country’s strict policies, but also because of its own struggles. The Bentonville, Arkansas-based company Wal-Mart has long been combating India’s current policy that keeps foreign retailers from holding more than 51 percent foreign direct investment, but even after the retailer was given the go-ahead to set up shop in September 2012 after lobbying for six years, its expansion has continued to sit at a standstill. In September 2012, Wal-Mart predicted that it would open its first retail store within two years, but now it’s clear that that goal won’t be realized.

What’s more, as highlighted by The Financial Times, Wal-Mart ended its join venture with New Delhi-based Bharti Enterprises last October when the retailer announced it was dissolving the partnership and buying out Bharti. That put Wal-Mart in full control of its wholesale chain, Best Price Modern Wholesale, but it still has not opened a single new store since then, and some still say that Bharti was fundamental to Wal-Mart India’s success. Over a three year period, the two parties opened twenty cash-and-carry stores in eight states starting in 2009, but once their progress slowed and Wal-Mart was charged again and again with attempt to skirt a ban on foreign direct investment in retail businesses, Bharti showed an interest in getting out of the partnership, and Wal-Mart indulged its wishes.

But now, Wal-Mart is back in black, and maintains that another fifty wholesale stores will crop up in India over the next four to five years. The Financial Times explained Wednesday that they will be wholesale cash-and-carry outlets, and provide bulk goods to small mom-and-pop stores, hotels, restaurants, offices, and other businesses. Scott Price, president and chief executive office of Wal-Mart Asia, maintained this week, “Wal-Mart is committed to India and we are excited about our growth plans. 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 past few years.”

In addition to opening new brick-and-mortar wholesale stores, The Financial Times also highlighted Wednesday that Wal-Mart is planning to launch a business-to-business ecommerce platform for the members of its Best Price Modern Wholesale Stores. In order to shop at Best Price stores, consumers will be asked to be apply to become members of the outlet, and that will likely require proof of a business license or other commercial documents.

Now, it’ll be interesting to see if Wal-Mart can actually meet all of its India targets, as the company has certainly made empty promises before. Wal-Mart India planned to open at least eight retail stores in 2013, and ended up breaking ground on zero of them, and that lack of progress on the expansion timeline was part of the reason that Bharti was ready to let go of the partnership. Now that a new government is ready to set up shop, Wal-Mart could see some new rules and policies that either hurt or help it, but until those become clear, it is sticking to its plan that it announced this week, and that is fifty new wholesale stores within the next four or five years.