Although Walmart’s exit from its India joint venture has been hailed in some quarters as a ‘victory’ for those who had opposed the opening up of multi-brand retail to foreign investors, analysts say too much cannot be read into the decision, and that its decision to exit the partnership with Bharti does not mean it is abandoning its India plans.
Rachna Nath, leader retail and consumers, PwC India, said: “While the companies have announced separation, we are sure we will hear subsequent announcements soon for their future plans.”
That’s because the Bentonville-based big box retailer has in the past run into trouble in other countries it has entered – but has managed to revise its strategy to suit local needs and conditions and eventually managed to become a key player.
Walmart had failed to make a dent in Germany, for instance, where it ran into stiff competition from local retailers such as Aldi and Lidil. In other markets such as Korea, Brazil and Japan it learnt to do business the hard way. It has even changed its name to overcome the negatives attached with its brand. In Britain, it is knows as Asda, Seiyu in Japan and Bompreco (Brazil).
For the time being, Walmart has said it will focus on its wholesale cash-and-carry business. So even though Praveen Khandelwal of the Confederation of All India Traders (CAIT) claims that the ending of the joint venture was a “big blow” to advocates of FDI in retail, others refuse to read it that way.
“We do not read this in the larger perspective of the FDI story, which has other aspects that need to be addressed at a different scale," says PwC’s Nath. Consultancy BMR Advisors said in its report that while the overall feeling on India’s retail FDI policy was that it was 'tough', given the uncertain political environment, a cautious ‘wait and watch’ approach was wise in the current circumstances.
Walmart itself has not given any indication that it plans to exit India and has said that it will, for now, be concentrating on its cash-and- carry or wholesale business. However, with opponents having tasted blood, it may be in for a tough haul. “CAIT is aware of the practices being followed by global retailers in wholesale cash-and-carry format,” says Khandelwal, adding, “we have instances where global retailers have flouted norms and conditions laid down for wholesale cash-and-carry and are trying to use this format as a back door entry to retail trade.”