Bharti Wal-Mart to invest $100 mn in 3-4 years

Bharti Wal-Mart Pvt Ltd, the joint venture between Bharti Enterprises and retail giant Wal-Mart, opened its first cash-and-carry (wholesale) store in India at Amritsar in Punjab on Sunday. The launch was delayed by a few days due to the riots in the state last week.

Speaking at the launch, Bharti Enterprises Vice-Chairman and MD Rajan Mittal said the joint venture would invest over $100 million (about Rs 470 crore) in setting up 15 more such outlets in the next three-four years.

"Investment in each store will be about $6-7 million without land and building ... I am only talking about the inside of the store," Mittal said.

The stores will come up in states like Punjab, Haryana, NCR and Uttar Pradesh, before eventually going pan-India. Named 'Price Modern Wholesale', the store is trying to position itself on offering best price, quality and assortment of products.

"Foodgrain and cereals are 2-5 per cent cheaper, FMCG products are cheaper by 10 per cent, while apparels and general merchandise cost 25 per cent lesser," Bharti Wal-Mart MD and CEO Raj Jain said, while spelling out the JV's pricing plans.

The store is not open for retail customers. It would cater to the needs of resellers like kirana outlets, hotels, restaurants and caterers, offices and institutions. It has already enrolled 30,000 members through a membership drive that began in November 2008.

These customers need to have a valid business licence like VAT certificate, sales tax certificate, liquor licences, or a shop licence from the local municipal authorities. The store will also supply fresh produce to the Panther Canteen in the Army Cantonment area in Amritsar.

"Our focus will be on listening to our members and we will partner with them as their needs and businesses grow," Mittal said, while pointing out that there's a crying need for cash-and-carry/wholesale business.

Jain said there's a lot of wastage in the traditional supply chain (over 40 per cent of fruits and vegetables go waste).

"What we are trying to do is to reduce the wastage and pass on the benefits to our customers," Jain said.

Bharti Wal-Mart's Cash & Carry business head Arvind Mediratta claimed that a consumer can save anywhere between 3-10 per cent on the total shopping basket vis-à-vis buying from traditional trade channels, while getting all items under one-roof.

Spread over 50,000 sq ft, the store offers an assortment of 6,000 products, including fish, meat and fresh produce - all targeted at bulk-customers like hoteliers. The store is located on the outskirts of Amritsar, 6 km from the city centre, on the Jalandhar road. The JV chose Amritsar for its first store as it thinks the town offers good wholesale potential.

"It's a large wholesale market, and a large feeder market," said Jain. High real estate prices in the last few years also forced the JV to target Tier II & III towns.

The store has tied up with over 800 suppliers and farmers, 80 per cent of whom are from Punjab. The Amritsar store will employ 200 people directly and over 500 people indirectly.