SlideShare utilise les cookies pour améliorer les fonctionnalités et les performances, et également pour vous montrer des publicités pertinentes. Si vous continuez à naviguer sur ce site, vous acceptez l’utilisation de cookies. Consultez nos Conditions d’utilisation et notre Politique de confidentialité.
SlideShare utilise les cookies pour améliorer les fonctionnalités et les performances, et également pour vous montrer des publicités pertinentes. Si vous continuez à naviguer sur ce site, vous acceptez l’utilisation de cookies. Consultez notre Politique de confidentialité et nos Conditions d’utilisation pour en savoir plus.
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
Key Findings With the opening up of Indian Retail sector for FDI up to 51% in multi-brand retail, India isset to become hub of Multinational Retailers from across the Globe. Increasing per capita income and changing consumption pattern are the key drivers of fastgrowing 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 efficientsupply chain and Information technology for Indian markets as well. Given the compliance with Regulatory norms and fast market penetration, Wal-Mart to gofor strategic alliance – joint venture. Success depends on implementation within time-limits. Wal-Mart should focus on local customer preferences, strategic locations, regionaldiversity & incorporating Indian values for building a sustainable business model for India.
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.
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 2014Industry size of $675 bn between 2010- Source Datamonitor India – Food Retail Industry Retail report dated June 20102014 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, Supermarhypermarket & 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.
Profitability Analysis: Porter’s 5 Forces Threat of New Entrants • Carrefour to enter market. • Walmart has first mover advantageBargaining 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.
SWOT Analysis: Wal-Mart Strengths Weakness1. Deal with Suppliers - Cost Leadership 1. Unable to adapt to different cultures/2. Efficient Supply Chain countries e.g. Germany3. Strategic Location/ Facilities at Stores 2. Heavily dependent on ‘bulk sales’4. Strong IT backup 3. Late entrants5. New Technology Implementation 4. No success beyond Americas Opportunities Threats1. New Economies - India/ China/ Brazil 1. Restriction on FDI e.g. India2. Rising disposable incomes 2. International law against dumping3. New channels – Marketing/ Internet 3. Regional competitors based models 4. Law against ‘Monopoly’– Anti-thrust4. 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.
Key Success Factors for Indian Markets1. Cost Leadership – Attracting Masses2. Strategic Retail Outlet Location3. Wide Range of Goods/ Variety - keeping ethnic & economic diversity in mind4. Sales Promotion/ Marketing Campaigns in Festive SeasonsStrategic Gaps in Indian Retail Sector1. Limited mainly to Metros, Tier-I cities. Huge potential lies in sub-urban, rural markets, Tier-II & Tier-III cities2. Geographical Gaps – Markets like North East are yet to be explored3. 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.
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 ClassShopper’s Stop Apparels, Accessories Mostly Upper Class Strong hold in Metros. Good (Corporate) presence in Target Segment LifeStyleGiven 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
Walmart Expansion: Past Track RecordCountry Mode Strategy ResultsCanada 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 TescoGermany 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 issuesSuccess & Failure mainly driven by adapting to local culture, consumer need gaps and tackling Government issues.
Key Challenges in India1. 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 protest3. 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’.