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!

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

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.

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?

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.

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 ;-)

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

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

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 ?