Tilling Fields
Speaking about FDI in retail, the Indian Express writes:
Plenty has been said—and an awful lot written—about mom and pop shops shutting down and taking with them the friendly, smiling, simple shop assistants who apparently define a part of our culture. That’s what, with different details, America’s “liberal” and anti-free trade conservatives say about outsourcing to India. Do the Swadeshi Jagran Manch and its politically correct counterparts oppose outsourcing because the West is experiencing an economic-cultural hollowing out? So, hypocrisy is the first feature of those who oppose retail FDI; the second is history, or rather a lack of it. Over space and time, economic progress has involved job losses, job displacement, old skills dying out and new markets for new skills appearing. The transition is almost never seamless and is, therefore, almost always painful for some. But if that were the argument for stopping economic change, we would all still be tilling fields.
And then comes the killer punch:
In fact, rather a lot of Indians do till fields.
Think about it.
Indian Express the vanguard of the MNC’s hopping here? There can be enough reasons to “welcome” but I dont agree to a blanket statement that Swadeshi Jagran Manch are indulging in any kind of hypocrisy. The rightfully opposed Enron and entry of Coke and Pepsi. What right do they have to circumvent laws in India and get away with it?
FDI in retail is goin to get its own hassles. Wal Mart squeezes the suppliers (in the name of efficiency) and despite low prices, everyone routinely hates them.
Comment by Dr Abhishek Puri — December 15, 2005 @ 7:06 am
The issue is about government taking care of its citizens. If after proper anlaysis, conlcusion is that FDI in retail is going to benefit the society, then do it, else do not. The open market concept is to help people being more prosperous, and if a particular point is going to cause more pain than gain, probably it is not worth it. That is not to say retail FDI is a tabboo, but hypocrisy if something is considred not suitable for India is acceptable.
Comment by Arun Puri — December 15, 2005 @ 7:34 am
Abhishek, if “everyone routinely hates” Wal-Mart, why is it that they are so big and so successful? Clearly they perform a useful service to millions of consumers, and everyone who associates with them does so of their own free will. No one is forced to work with them or supply to them or buy from them. What’s the problem than?
Comment by Amit Varma — December 15, 2005 @ 5:23 pm
Amit, I think the question worth asking is (as Ila Pattnaik may have), is it ok for our ‘Mom & Pop’ stores to be consumed/displaced by Pantaloons/FoodWorld or other Indian retailers? If so, then why should foreign retailers be kept out, given that Indian retailers are expanding and have aggressive growth plans?
And what about the consumer? Ultimately, shouldn’t consumers be free to choose what they want?
In any case, we need hard facts, not some cockamamie theories based on fears and/or prejudices. As for the likes of the SJM, they’re just playing to appease their support base. No surprise there.
Comment by Nanda Kishore — December 15, 2005 @ 7:33 pm
Amit, you should atleast learn to mask your hypocrisy. Times Of India is also “so big and so successful”, yet you’ve time and again trashed them and opined for some (nonexistent, nonprofitable) serious journalism.
I think in general you favor people being employees of some large (so big and so successful) company, rather than individuals running their own (so small and so insignificant) dukaan.
eg. You wanted to abolish the independent Kolkata handcart puller so that he can become an employee of some large benign corporation that makes motorized carts. Ofcourse one could point to the freemarket capital of the planet, New York City, and ask
a. Why are there ZERO walmarts in NYC ?
b. Why don’t independent taxicab drivers in NYC form a company & go work as employees driving cabs instead of forming a (gulp!) UNION, a COMMIE OUTFIT, in this day and age ?
I recommend two books in this regard -
1. United States of Walmart
2. Taxi! Cabs & Capitalism in NYC
Disclaimer: the latter is written by a commie. An Indian commie, to boot.
Regardless, I still see Walmart entering India in 2006 in a VERY big way. Too much money has changed hands at this stage but certainly no MSM or Cobrapost will pick up this story.
Comment by kya yaar tu bhi — December 16, 2005 @ 12:58 am
No one is forced to work with them or supply to them or buy from them. What’s the problem than?
Please research your facts about Walmart before talking that no one is forced to work with them or supply to them. I am linking to these reputable news websites mind you, and not personal opinions.
Fastcompany’s => The Walmart you don’t know
Informationweek’s =>
Wal-Mart’s RFID Suppliers Are Resisting
NYtimes is hosting an internal Wal-mart (warning:PDF) memo here
Slate has something on wages here
Just start reading the second page in the Nytimes hosted memo. People are just ‘problems’ to corporations like Walmart, to be ‘managed’.
India is a big market, they want in.
And like ‘kya yaar tu bhi’ said, I would be very surprised if money has not changed hands.
Comment by Amit Kulkarni — December 16, 2005 @ 5:25 am
One thing I am noticing is that most frequent posters Amit Varma, Ravikiran Rao, Atanu Dey, on this website are ‘pro-market’ i.e for privatization. Hmmm.
Walmart doesn’t like unions. Walmart like most model capitalist companies doesn’t care about its workers.
People matter. Our environment matters.
What seems to have worked in the Western countries, the ‘capitalist company growth model’ is at work with other developing economies. It is a bell curve of growth, a confirmed peak, and then inevitable decline. Walmart is past the peak of growth in the most ‘developed’ countries. Walmart needs Indian market desperately to stem its inevitable decline, India doesn’t need Walmart as much. Oh, how I have started to appreciate our classics like Bhagwad Gita.
Companies in their zeal to maintain their profits will do anything to try and stem their decline. Witness the breaking up of the trams, the railway network that really made America by the American Car companies.
Companies think short term, they do not think long term. They do not understand the concept of time, maybe they understand, but they ignore it for short term benefits.
Please think of time in the decadal or century scale! Then all will be clear.
Peace
Comment by Amit Kulkarni — December 16, 2005 @ 5:44 am
For all the arguments you put forth, the one’s thats the most important is the loss of jobs. Small unorganised sector forms one of the largest employment sources. Small kirana stores are the means of earning livelihood for thousands of households. When large retail houses like Walmart arrive, they will under cut prices drastically. This will lead to decay and eventually death of these small stores. With them will go the livelihood of millions. As has been witnessed in the past, Walmart takes away jobs wherever it goes and also brings down the average income per head on account of the ridiculously low wages it pays to its workers. Think about it. Would you want that in India??
Comment by Puneet Saxena — December 16, 2005 @ 10:59 am
KYTB,
Regarding ToI and Wal-Mart, yes I criticise ToI, but I would never advocate them being pushed out of the market, or not being allowed to participate in it. I may not like them personally, but I wouldn’t restrict their freedom to do business here. That’s the point.
Amit K, if “Walmart like most model capitalist companies doesn’t care about its workers,” then why do they work there?
Also, I don’t understand what you mean by saying that “India doesn’t need Walmart.” What is “India” here? The Indian people? Cool, if they don’t want Wal-Mart, they won’t buy from it. Let them decide. Why should anyone else decide on their behalf?
Comment by Amit Varma — December 16, 2005 @ 11:00 am
Amit V,
Another reader of this site (and one other person) has told me privately that I am wasting my time talking about this on such an openly ‘privatization’ or ‘make everything private’ blog. I am realizing that I am expending a lot of energy, you all are set in your opinions, and nobody except you yourselves can change it. From now on I will try my hardest not to appear to be a spoilsport, but skim through the posts here to get a feel of what others are thinking. This is possibly my last effort here on this blog, I will respond to comments on this post though, till it dies a natural death. I will post elsewhere where my current way of thinking is more compatible with like-minded people (Birds of a feather and all that). I was drawn to this blog due to two people whose opinions I really respect (Nitin Pai and Atanu Dey) and thought they would be really posting about the Indian economy as they probably care about India. People care, but, differently, most of you posters care short term, i.e. 1-2 decades. Unfortunately, Nitin doesn’t post here much, I will just visit his blog for his thoughts.
And I am starting to think Atanu is too overzealous. He does make excellent points, as do some of the others. For eg. The other day Ravikiran observation about ‘product liberalization’ and not privatization. But Atanu is not being real when he is posting ’stop wasting money on arms’. Comparing US and Pakistan as being similar. Stating we should de-criminalize politics etc. Get real; it is never going to happen, it has always been like that throughout most of recorded history. I may not like it but I can understand why the leaders think as they think. If India did not have any serious arms capability, I wouldn’t blame a strong country if it attacks India. A rich merchant is powerless against a robber, being rich doesn’t help if your poorer and more martial neighbor is in need. Remembering, the US is fighting a war for diminishing resources, and further remembering that more such wars are going to be fought for water, for land, for clean air. Iraq also has one of the largest fresh water resources in the Middle East, after Libya I think. I perfectly understand the rationalization of why the leaders of the US are in Iraq, and why they want to go into Iran, and why they have stationed their military forces around the world. The resource wars of the future will lead to tremendous cataclysms. The climate is screwed. We have screwed the earth with our fertilizers, which is evident with increasing desertification. We have screwed the oceans with oil and plastic, the US alone dumps 6 billion tons of plastic year after year after year. And you guys talk about fancy market theories and taxation of plastic bags? We have screwed the air with our cars and need for electricity. Forget Carbon dioxide, can you honestly get a deep breathe of air in our cities without inhaling a lot of harmful suspended particulate matter? Nature is now starting the process of healing, melting the ice caps, and naturally trying to grow forests, to compensate, to inject fresh air, and clean the air. In our greed we would overlook that, I see us getting into the Arctic, Siberia and exploiting those resource rich regions. We are already screwing the Amazonian rainforest in South America. What the rich don’t get is that by walling themselves off in private properties, in expensive condos, with armed guards, their turn to suffer will come. Because our whole Earth is getting screwed before our very eyes, and we are not doing anything about it.
You all are not being real when you think that cheap cell phone prices in India are going to be sustained (Cheapest in the world!). When this Indian market saturates, they will start mergers, be monopolies, and start jacking prices. I have already posted my thoughts in a previous entry, and I don’t want to repeat it here.
Ok, back to your question:
You seem to be missing the point: the workers are working at Wal-Mart because they have no choice! When Wal-Mart comes to a rural place, they kill the competition, and where would those people who are displaced go for feeding themselves with a job but at the biggest employer around? I am not sure if you know, but Wal-Mart started in the South, in the rural places first. They still have their HQ in Bentonville, Arkansas. When you are in debt, have two kids, a nice house, a certain lifestyle to maintain, you want to survive, you swallow your thoughts, your prejudices, and go to work for anyone for anything they say to feed your family.
Does an addict need drugs or a drug needs an addict? India can do without somebody like Wal-Mart and get by with our undeveloped state, looking enviously at ‘developed’ economies, and wishing we joined them. If Wal-Mart same-store sales are almost constant and grow anemically, their stock price is hammered. Companies in the US keep their shareholders (i.e. the guys who pull the strings like the big investment banks, hedge funds) happy by growing constantly quarter after quarter after every quarter. If not, your stock price is hammered. That is the reason for the pressure to open new stores, sell more, earn more revenue, and get more profit. They face a lot of pressure to perform; hence they HAVE to have new markets. Or as in most of Silicon Valley they buy companies with promising products, to increase revenue. Microsoft is on the way out. So is Google. 99% people will think that I am crazy. But the day you have to depend on acquiring new companies to get new revenue, in my book, that company is on the way down. This happens because in our current culture we are not satisfied with whatever we have. What is the real use of throwing perfectly usable cell phones, computers, etc? And getting new toys, and throwing, and getting, and piling on debt so that at the end of the day you can say that I have a 4 bedroom house in the country with a 3 car garage, and I have this diamond necklace and I have more than that guy down the corner etc. It is a philosophical issue, which most cultures would understand, and to which we all would eventually be forced to return. The roots of Christianity and Islam are in Judaism, and Judaism is philosophical. The roots of other major religions in the Asian continent are also philosophical. The roots of pagan religions of the native people in N & S America are the same. I figure with the coming cataclysms, the world would discover more religion. I would hopefully be alive to witness that fact.
Peace
Comment by Amit Kulkarni — December 16, 2005 @ 12:36 pm
Puneet Saxena says
“When large retail houses like Walmart arrive, they will under cut prices drastically. This will lead to decay and eventually death of these small stores. With them will go the livelihood of millions.”
1) There’s a billion plus consumers in India.
2) And the lowered prices, which you seem to abhor, would help them all tremendously…. in a poor nation, the more value for money that I can get, the better.
3) Because of 1) and 2), the livelhood of hundreds of millions is improved.
Is there any part of this logic that you don’t agree with?
Comment by Prashant Kothari — December 16, 2005 @ 1:34 pm
Amit K
Firstly, you’re welcome to keep commenting here as long as you wish.
Secondly, I’m not going to respond to the off-topic stuff that you go into, especially the bits about “the coming cataclysms” and the world beginning to “discover more religion.” Fascinating, certainly, but we’re talkign FDI in retail here.
Now, on Wal-Mart, you say they “kill the competition.” Now, how do they do this? Do they use hitmen? Trained criminal gangs who bomb competitor’s warehouses? Or do they just deliver a better service to the customer at a better price. And you’re complaining about that?
Rather than go more into Wal-Mart, I’d recommend you just read the posts here. Scroll down, read everything, excellent stuff.
Comment by Amit Varma — December 16, 2005 @ 1:40 pm
Amit K, Puneet et al..
We love your input and definitely don’t want you to stop… we’d like to hear all sides of the coin,..
Re being “set in our opinions”. Not true. We’re swayed by empirical evidence & logic…
Read this for an insider’s perspective of how thinking evolved after seeing actual evidence.. http://divisionoflabour.com/archives/002015.php
Comment by Prashant Kothari — December 16, 2005 @ 1:44 pm
I wrote about Wal-Mart and whole culture of people being anti-top guy here
Comments made against Wal-Mart though true seem somewhat exaggerated. Lets think of McDonalds and if it has destroyed the Indian food stops. People go there for novelty and then it becomes one of the many options available, which sounds good. WalMart probably is going to go the same way. You are not going to travel 15 km on Indian roads to shop and save I do not know, 10 Rs. Unless whole of India changes on the same day and culture becomes identical to US or WalMart drastically changes their policies of big stores in rural areas, WalMart is going to make a dent in the Indian market. In India (elsewhere also actually) people are afraid of going to big shops cos they feel they are going to get looted and price of AC/Cleanliness/Staff Uniform is going to come from their pockets. And I do not even know how much percentage people shop for a week at one go and stock their fridges. Let backtrack, What is the percentage of the people who have fridges? Having said that, we all need to be conscious of everything that is going to affect the whole country, but probably within limits of exaggeration.
Comment by Arun Puri — December 16, 2005 @ 2:09 pm
If one were to subscribe to Amit K’s theories (for lack of a better word), there is no future for atheists like me. I’m sad and afraid.
Comment by Nanda Kishore — December 16, 2005 @ 3:09 pm
[Comment deleted because it is a) off topic, and b) gets personal. Please stick to the argument and avoid personal attacks if you’d like to comment here. A constructive discussion is not possible otherwise - Administrator]
Comment by akhilesh — December 17, 2005 @ 12:28 am
Amit K, Why do you focus on Nitin or Atanu or whoever as though they are icons & everybody should kowtow to them. Play the ball, not the man.
For the record, I completely agree with your views, but I can see why you’ll be labelled a kook. You are walking into an eco class & giving a lecture on geography - Students will wonder if you are in the right classroom! Ofcourse, if you employ TKS or any other Indian methodology, you can see the fallacy of separating any domain into unrelated multiple disciplines when in fact they are all related. But these are hopelessly Westernized folks, they don’t mix their eco with civics, they’ll simply label it “off-topic” & continue sucking Adam Smith’s genitals.
This is what I think will happen in 2006 -
1. FDI in retail = Walmart = will enter India in a huge way.
2. A few million dukaandars will go out of business.
3. Yes, billion plus Indian consumers will benefit from lower prices.
4. A huge employment opportunity for the youth - checkout clerks & “Walmart Managers” & stocking room help & truck drivers & so on. In the millions.
5. Shit’ll hit the fan sometime in 2020, but that’s a ways off.
What worries me is not the inability of Walmart workers to unionize or lack of healthcare or whatnot. I would agree with ACL on these - comnpanies have an obligation to maximize profit on behalf of shareholders, not get into philanthrophy & social engg.
The uncontestable fact which troubles me is waste generation & management. eg. I own a $500 DVD player purchased some 10 years ago. Still works. I also purchased half dozen Walmart DVD players, usually $30, the last one I paid $20. In each case, they lasted 6+ months & failed. They were extremely hot items on sale - every household got them, especially in rural areas. When it fails you simply throw it in the dumpster - disposable $30 players can’t be salvaged. In essence, I’m throwing out a box of electronics every 6 months. So you multiply that by the other disposable electronics I buy & then multiply that by the population of the USA & so on…that’s a huge mountain of AVOIDABLE waste. That’s just in electronics. You bring in produce - places like Sam’s Club you can’t buy anything less than 5 pounds. No human family can eat that much beans. So you are throwing out food literally every week because it spoils. And whole countries are starving in Africa. By making 1 pound beans unavailable & selling 5 pound beans for 2 dollars, you attract & lock in consumers. Of course there’s no gun to my head - why don’t I exercise caution & choose not to shop at Walmart ? Well, by the same token I guess all of India should stop staring at Page 3 ladies & stop buying ToI because they value serious journalism. And therein lies the rub. Nobody has reached that Zen stage yet. Consumers all over the world love bargains just as they love nipples & navels. The average consumer will always choose a Playboy over an Atlantic Monthly, & they will always choose 5 pounds of beans at $2 over 1 pound at $1.50 in some pop-and-mom store. The marketer is simply pandering to this basic psycology. Yes, consumers benefit. HUGE Benefit, in fact. I love to have 5 pounds of beans at $2. And 5 pound carrot. Potato. Tomato. So on. But I can’t eat all that. I don’t have that biological capability. So it just goes out in the trash.
Have you ever looked into a dumpster in any American suburban locality ? Or talk to the guy who drives the garbage truck ? Huge mountains of food. The waste is appalling. Walmart’s response is equally appalling - we create 6 jobs in Landfill & garbage disposal per 10K ton of waste! I guess GWB can claim credit for creating jobs in Iraqi burial sites & morgues - somebody has to handle those 100,000 corpses.
Placing consumer convenience/choice above environmental good creates rather perverse incentives. Yes, more Americans are watching DVDs today on $30 players than if the players were $500. But the mountain of cheap broken DVD players is not going to vanish. Indians will flock to Walmart when it opens, & the stock will go through the roof. But sooner or later you have to deal with the waste. Saying I don’t want to mess with the freedom of ToI to operate is too easy. America doesn’t want to mess with the freedom of consumers to buy 29 cent 600 calorie burgers at MickieDee’s, or smoke their Marlboro’s or buy their handguns ( which incidentally are also available at Walmart at $200 a piece ). The consumers will fight tooth & nail for this perceived freedom. Then when they grow obese & fall prey to a combination of cancer, street violence & cardiac arrest, they’ll blame the govt - hey why did you not stop ToI in the first place? I could have been some super elite rocket scientist if I had read theoretical physics instead of masturbating to ToI beauties. But you could have done just that, ToI is not putting gun to your head. Yeah ok, but aren’t I human ?
Comment by Kya yaar tu bhi — December 17, 2005 @ 1:11 am
Amit V,
I quickly skimmed the site you pointed, nice viewpoint, will take some time to digest over the weekend. But I hope you did read the articles I pointed to before you responded “do they use hitmen”… Please let’s agree to disagree, no harm was intended. And please, my sincere request to you and Ravikiran, you do not agree with me, okay, do not attack me (or anybody) personally. I try hard to keep the sarcasm level down myself, I know its hard sometimes but I try. Would you like to argue more about the off-topic things I posted?
Prashant,
I read the article quickly, will you point to more such articles if you know offhand or have bookmarked them? I am trying to find out more such articles myself…
I hope you think of the time scale. All the changes we benefit from are excellent for a decade or a few. I don’t argue with that, the changes are visible. But the environmental destruction that all countries are doing when they ‘develop’ is coming at a horrendous cost. This is not development but a fundamental regression which will force us back several hundred years. Everything is going in a circle. Why, mainframe computers were old news, and what do you see Rajesh Jain posting about? Mainframe computers in another guise, the idea is the same, the implementation is a bit different.
Peace
Comment by Amit Kulkarni — December 17, 2005 @ 1:16 am
Kya yaar tu bhi,
I do not respect anybody just because they have fancy sounding titles or are ‘icons’ as you put it. But because some of their writings make sense to me, they are on the same mental wavelength in some particular writings.
Please don’t swear and disrespect anybody in a discussion. (I refer to your use of ’s–king’ and ‘g–itals’) I guess somebody would take it personally. We cannot get our point across if we do things which make it easy for people to dismiss our arguments. I would probably dismiss your arguments outright if you attacked me as you have attacked the others who do not agree with you.
Re being “set in our opinions”. Not true. We’re swayed by empirical evidence & logic…
Hi Prashant,
I have noticed that sometimes Amit V. and Ravikiran are getting too sarcastic in their responses to posters. I can point to specific comments (multiple) if you all are really interested. Amit V committed that offense right here in this ’tilling fields’ post. Is accelerating the destruction of the environment (social and natural) in India totally unrelated to the appearance of FDI in retail sector?
Ideally, free intellectual discussion revolves around arguing about something without getting too heated up. Practically, it is not the case, but I try, all I ask is the same from the guys who run the show. If somebody responds with too much sarcasm, do you think the person at the other end would feel the response was open minded? If I don’t know exactly the train of thoughts somebody is going through I would assume something, state that assumption, and then proceed. If my assumption is wrong the other person would correct it. With email, blogging, writing you sometimes cannot communicate fully, what you can communicate in person, or even over the phone.
Peace
Comment by Amit Kulkarni — December 17, 2005 @ 5:13 am
Kya yaar tu bhi…
Your comments are in a class of their own :-) Only trouble: they tell us more about yourself than they do about the post. You sure have mastered the art of the bon mot…. NOT!
To all else: we’re open to hearing all sides of the coin, and welcome all opinions. However, think some of the commenters (if such a word exists) would be better served by editing their comments (use Word for this and then do a C&P) rather than pouring it all out here.
Anyone reading these rambling posts is going to wonder if the authors in question have had a few too many churan-ki-goli, if you know what I mean ;-)
Comment by Prashant Kothari — December 17, 2005 @ 11:10 am
The same person who gave the very good advise to stop posting long comments on this blog has sent me a email. That email points to Chetan’s post on Shivam Vij’s blog about the comment policy on Amit Varma’s and Gaurav Sabnis blogs.
That post is on-topic to this post, and the point I and the others have been making on this website.
If different people can independently reach the same conclusions, you got to look at your hole cards.
Enough said.
Comment by Amit Kulkarni — December 18, 2005 @ 9:30 am
This editorialist avers:
Do the Swadeshi Jagran Manch and its politically correct counterparts oppose outsourcing because the West is experiencing an economic-cultural hollowing out? So, hypocrisy is the first feature of those who oppose retail FDI
The decision to allow or disallow FDI in retail eventaully rests on the Cabinet Committee for Economic Affairs, and more narrowly, on people calling shots in the government like Sonia Gandhi, Manmohan Singh and Chidambaram. Why is then this editorialist, instead of taking the decision-makers to task, making a bogeyman out of toothless entities like SJM? Could an establishment mouthpiece’s own hyprocrisy have something to do with this covenient buck-passing?
Comment by RR — December 18, 2005 @ 11:53 am
My two rupees on Walmart entering India w.r.t to some issues brought up in the comments and overview -
1. Walmart is known to be a ‘bully’ not because it uses hitmen as someone put it, but close enough. When you are an FMCG brand’s LARGEST single buyer, you have a leverage you can use to control the SKU’s [product sizing], packaging, delivery, carton size, you name it, to your specifications due to sheer bargaining power. There has been and will continue to be a certain amount of resentment that entire product lines or brands have either disapeared or quality declined due to Walmart. Similarly, Walmart has bargaining power in transportation - railways are building lines for them, to their warehouses, can negotiate the heck out of any damn thing that is supplied to them for this reason. Here is one such article as back up for this assertion - http://www.businessweek.com/magazine/content/03_40/b3852001_mz001.htm
“In return, though, Wal-Mart not only dictates delivery schedules and inventory levels but also heavily influences product specifications. In the end, many suppliers have to choose between designing goods their way or the Wal-Mart way. “Wal-Mart really is about driving the cost of a product down,” says James A. Wier, CEO of Simplicity Manufacturing, a lawn-mower maker that decided to stop selling to Wal-Mart last fall. “When you drive the cost of a product down, you really can’t deliver the high-quality product like we have.”
2. Indians don’t shop the way Americans do. It’s basic differences that Walmart will have to observe and overcome if they are to enter India with any amount of success. They has the very same issues in Korea and China due to ignoring socio cultural differences in shopping. Example, Walmart is geared towards bulk shopping, in large sizes that allow for cheaper unit cost i.e. it’s cheaper per roll of toilet paper to buy a 48 piece package than one single roll. Same applies to items from shampoo to Nirma. This assumes basement storage or laundry rooms, pantries in US suburban homes, SUV’s or station wagons to do the bulk shopping for a month and freezers and huge refrigerators to store perishables. They are going to have to change each and every aspect of their systems to adapt to Ramu doing the daily subzi shopping for memsahib, or Amit Average picking up something on the way home from work - again they’re pattern is LARGE stores with parking lots the size of Bangalore Airport. Taking Delhi or Bombay as an example, the closest they can come to would be somewhere in New Bombay or Gurgaon. Again, it would be a great day trip like Esselworld or some such thing but feasible replacement to change the behaviour of the indian housewife? I doubt it - perishable foods need to preserved, while households may have fridges (some one said above that they didn’t but keep in mind that they won’t be walmart customers anyway, they’ll buy half a cabbage from the thela wallah) India has variability of environment - power supply, water supply, quality of roads, traffic that would make someone balk at the thought of making Walmart their regular store rather than the convenient kirana down the road. If Walmart were to enter India - note the silence on the topic since the big noise in the summer of 2005 - they would have to redesign their entire business model, supply chain, inventory and transportation systems.
3. They decide not to enter perishable foodstuffs just consumer goods and non perishable groceries - fine - to a degree but again 1. buying in bulk, where will you store in your little apartment in Bombay? 2. How will you bring it back if you don’t have a car? 3. Will the price differential be worth it as a regular activitiy as opposed to an occasional outing - the model mentioned above regarding McDonalds as one more option for khana 4. Prices - it sounds as though they are expected to keep the low prices that have elsewhere in the world but I’ve seen enough MNC’s enter the Indian market since liberalization (launched a few meself) and fail spectacularly due to a focus on the wrong things i.e. “Oh wow, a $300Billion retail sector, Oh wow 80 million families in the same category” without the realization that it is NOT equivalent to the US market or the US purchasing pattern. In the US, average credit card consumer debt (at rates like 17 to 21% interest) per household is $8000 dollars. They (MNC’s) can advertise, encourage and incentivize all they like, and they have been doing so in India for the past 10 years in order to create a consuming class but it won’t happen beyond a point. We’re not going to end up carrying so much debt for consumer goods OUTSIDE of dowry or marriage.
Walmart will need to understand the Indian retail culture and redesign their strategy and business model if they are looking for any kind of foothold in India. Else their entry will be with a bang and I’ll bet on a whimpering retreat.
Imho.
Comment by niti bhan — January 7, 2006 @ 7:45 pm
It was a great treat to read through the site.
The most valuable point that is emerging is the waste management and tackling an issues of complete utilisation of items purchased.
Our culture is not like that of them use and throw thus bulk buying concepts will need to be tested cautiously.
Further we need to think if at al they should come in as retailers in the first place, they could bring in a lot of knowledeg about the logistic outsourcing and supplychain management.
Our caution and due diligence about complete opening up of FDI in retail is well founded.
Thanks
Comment by Disha Banerjee — March 9, 2006 @ 4:21 pm
Wal-mart generally would squeeze you off and leave you without even a fig-leaf to protect!
We have been doing business with them but never made realizations. We prefer for the tag it bears and we go with them only when our market is dull (specific months) since the volume keeps my fixed cost bearable.
Another tactic of Walmart (to increase our manufacturing cost) is their so-called well-laid systems and audits. i am aware those companies who had got orange or green cards from them must be cheating them.
it is too early to say whehter it will be good to us or not but Walmart would certainly be a beneficiary of course at the cost of small local players!
Comment by Gopalakrishnan — November 30, 2006 @ 1:44 pm