Wal-Mart Expansion Blues Are Growing
Wal-Mart Stores Inc. (NYSE:WMT) may be the world’s largest retailer, but that doesn’t mean it’s warmly received in every country. India, especially, has proven to be a challenge for the retail giant, as Wal-Mart had to lobby for almost six years before global supermarket operators were given the go-ahead last September to set up 51 percent-owned retail outlets there.
But Wal-Mart has failed to make the progress it forecasted: it planned to open eight wholesale stores in India in 2013 but hasn’t opened one since October. And now, the head of its India company, Raj Jain, has left.
Despite its rank as Asia’s third-largest economy, India continues to be one of the last major untapped markets for global supermarket chains, highlighted by this statistic from Reuters: 90 percent of India’s $500 billion in retail sales come from informal or stand-alone stores. So if Wal-Mart can’t manage to tap in, who can?
Despite India’s September decision in allowing global operations to set up retail outlets, no international chain has yet applied for the license that the ever-evolving rules demand. Though other global supermarket chains like Tesco PLC (NASDAQ:TESO) and Carrefour SA are undoubtedly anxious to break into the market, the regulations seem insurmountable, especially since recent rules mandate foreign supermarkets to open their own warehouses and stores in India.