1. Theme: New Market Entry
Wal-Mart Entering India
Presented by Group – 5 (Section: B)
Akash Jauhari; Raghav Agarwal; Karan Verma; Alok Mishra; Lokesh Chaudhari; Varun Sehgal

2. Key Findings
 With the opening up of Indian Retail sector for FDI up to 51% in multi-brand retail, India is
set to become hub of Multinational Retailers from across the Globe.
 Increasing per capita income and changing consumption pattern are the key drivers of fast
growing Retail sector in India.
 Organized retail are expected to increase its market share from 5.7% in 2011 to about 12%
by 2016. Major gainers are expected to be the new entrants like Wal-Mart and Carrefour.
Recommendations
 Wal-Mart should apply its ‘Repeatable formula’ of Lowest price - supported with efficient
supply chain and Information technology for Indian markets as well.
 Given the compliance with Regulatory norms and fast market penetration, Wal-Mart to go
for strategic alliance – joint venture. Success depends on implementation within time-limits.
 Wal-Mart should focus on local customer preferences, strategic locations, regional
diversity & incorporating Indian values for building a sustainable business model for India.

3. The Corporate Level Decision: Entering India
Should Walmart Enter India?
No Yes
More Downside Risk Growth Opportunities
Acquiring a local
Player Joint
Venture
Organic Start
Growth Greenfield
Operational & Cultural
Issues - Not Recommended Recommended
Regulation Issues – Too risky – Not
Not Recommended Recommended
Considering various Regulatory & Risk vs. Return aspects, it is recommended that Walmart
should enter India with a strategic Joint Venture, at least to start with.

4. Indian Retail Market - Growth & Opportunities
Indian Retail Food Industry Market Value
• Indian Retail Industry had total Revenues (Billion USD)
of $470 bn in 2011. 500
400
300
• CACG between 2007-11 stands at 10.7%. 200
100
• Data Monitor Research estimates a 0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Industry size of $675 bn between 2010-
Source Datamonitor India – Food Retail Industry Retail report dated June 2010
2014 with a CAGR of 14.7%.
Indian Food Retail Segmentation 2009 (% by Value)
• Fast Urbanization & Young demographics 1.3% 0.1% 0.3%
Convenience Stores &
are key drivers. Gas Stations
32.9% Food and Drinks
• Changing preference will boost 65.4%
Hypermart, Supermar
hypermarket & super markets in India. t & Discounters
Cash & Carries &
Warehouse Clubs
With rising per capita income & changing consumption pattern, retail industry to become
massive in next 5 years. Organized retail & hypermarkets to have a even higher proportionate
growth.

5. Profitability Analysis:
Porter’s 5 Forces
Threat of New Entrants
• Carrefour to enter market.
• Walmart has first mover
advantage
Bargaining Power of Suppliers Competitive Rivalry Bargaining Power of Customers
• With ‘high volume’ model of • Large unorganized sector • Present Organized/
Walmart, suppliers have low • Moderate to high organized Unorganized sector unable to
bargaining power sector e.g. Big Bazaar give low price deals
Threat of substitute products
• No immediate substitutes
possible to Retail
With fast increasing demand & proposed model of cost leadership, Indian Retail Industry looks
substantially PROFITABLE.

6. SWOT Analysis: Wal-Mart
Strengths Weakness
1. Deal with Suppliers - Cost Leadership 1. Unable to adapt to different cultures/
2. Efficient Supply Chain countries e.g. Germany
3. Strategic Location/ Facilities at Stores 2. Heavily dependent on ‘bulk sales’
4. Strong IT backup 3. Late entrants
5. New Technology Implementation 4. No success beyond Americas
Opportunities Threats
1. New Economies - India/ China/ Brazil 1. Restriction on FDI e.g. India
2. Rising disposable incomes 2. International law against dumping
3. New channels – Marketing/ Internet 3. Regional competitors
based models 4. Law against ‘Monopoly’– Anti-thrust
4. J.V. with some leading players policies
Opportunities look impressive. The key to success lies in how Walmart tackles local laws/
regulations & makes its ‘repeatable formulas’ work in new markets.

7. Key Success Factors for Indian Markets
1. Cost Leadership – Attracting Masses
2. Strategic Retail Outlet Location
3. Wide Range of Goods/ Variety - keeping ethnic & economic diversity in mind
4. Sales Promotion/ Marketing Campaigns in Festive Seasons
Strategic Gaps in Indian Retail Sector
1. Limited mainly to Metros, Tier-I cities. Huge potential lies in sub-urban, rural
markets, Tier-II & Tier-III cities
2. Geographical Gaps – Markets like North East are yet to be explored
3. Truly Global Shopping Experience missing in Indian Retail Stores
Wal-Mart has to incorporate Indian Values & preferences while designing the business
model. Focus on strategic gaps critical for its eventual success.

8. Competitors in India
Name Category Target Segments Comments Rating
Big Bazaar Merchandize Diversified Middle Class
(Future Group)
The main competitors
Pantaloons Apparels, Accessories Upper Middle Class +
(Future Group) Lower Upper Class
Star Bazaar Merchandize Upper Middle Class + String Backing by Tata,
(Tata Group) (Diversified) Lower Upper Class Limited Reach
Spencer’s
Smaller outlets, Limited
More
Merchandize Middle/Upper Middle Growth
D.Mart Class
Shopper’s Stop Apparels, Accessories Mostly Upper Class Strong hold in Metros. Good
(Corporate) presence in Target Segment
LifeStyle
Given bargaining power (with FMCG companies) along with its Logistic& IT support, Walmart is
expected to tackle its competitors. Key lies in capturing new geographies & finding strategic
locations

9. Walmart Expansion: Past Track Record
Country Mode Strategy Results
Canada Acquired a Weak Player • Operating in markets which Very Successful
required minimum adaptation
• High Brand Recognition
Segment
UK Acquired ASDA M&A Synergies Successful-
Competition from
Tesco
Germany Acquired a Big Player Leveraged Acquired Network Failed –
‘Werkauf’ cultural &
operational issues
China Greenfield Operations Sourced from Chinese suppliers; Neutral-
focused on need gaps Labour Union and
Law Suit issues
Success & Failure mainly driven by adapting to local culture, consumer need gaps and tackling
Government issues.

10. Key Challenges in India
1. FDI Restrictions
- FDI Restrictions of 51% on Multi-brand Retail. Proposal for increasing the
cap to be discussed in winter session, but chances are low.
2. Social & Political Resistance
- A strong opposition from certain political parties is certainly expected in
some pockets of society – local retailers, dealers would protest
3. Countering deep penetration of ‘Mom & Pop’ Stores
- Especially in Tier-II & III cities, the network of ‘ Kirana Stores’ is extensive.
Also sales on credit facility is available which Walmart cannot do.
4. Poor Infrastructure will cause friction
- Indian standards of roads, ports & freight facilities are way below global
benchmark. It will lead to inefficiency in the value chain.
5. Regional Diversity
- Challenge to have tactics according to regional/ ethical requirements
Wal-Mart need to appreciate & accommodate each of the above challenges into its strategy- in
order to reap Benefits from the ‘Indian Retail Growth Story’.