Eighteen months hence, Reliance Retail is a 600-store chain, while Wal-Mart, which had planned to start operations by the year-end, has deferred the launch to 2009.
"Our August announcement (to start by 2008-end) was a statement of intent," said a Bharti Wal-Mart spokesperson. "As we get closer to execution, we are investing significant resources to better understand the nuances of the market and closely studying the existing supply chain infrastructure."
In fact, Wal-Mart showed extreme alacrity when it overtook British supermarket chain Tesco Plc, which was earlier in talks with Bharti. In November 2006, the US retailer was able to clinch the deal with the Indian business house in a record three months, rendering Tesco's over a year-long talks futile.
Nonetheless, it took the two companies 10 months just to decide the formats in which the joint venture would roll out the operations. Ambani opened its first retail store five months after the initial announcement.
Ending the speculation of Bharti being the franchisee for Wal-Mart's front end operations, the companies signed an agreement to establish Bharti Wal-Mart Private Ltd, an equal joint venture for wholesale cash-and-carry and back end supply chain management operations in India in August 2007.
"In the case of one or two clients, we saw that it takes a long time in such joint ventures to even synchronise the calendar for every one for discussions," said Arvind K Singhal, chairman of Technopak, a business consulting firm. "These international retailers are also facing some degree of crisis in some of their markets, which would take away their attention," he added.
Wal-Mart argues that the delay is because India is the first market that it is entering organically in the last 10 years. "It took us time to understand the nuances of the market through customer research and get our agreements in place," said the Bharti Wal-Mart spokesperson.
However, analysts have a different opinion about the slow pace of Bharti Wal-Mart's rollout plan. "It took time because Wal-Mart was evaluating if it could be brought to the front end," said an analyst with a leading domestic brokerage.
Wal-Mart inked the pact with Bharti when the industry was expecting some amount of foreign direct investment (FDI) in multi-brand retailing and Tesco was seen taking the lead from Wal-Mart.
The government allowed 51 per cent FDI in single brand retail stores in 2006 and some amount of FDI was also expected in multi-brand retail. However, FDI in multi-brand retailing was not allowed amidst opposition from political parties expressing concern of negative impact on small kirana shops.
However, 100 per cent FDI in the wholesale cash-and-carry model remained intact. This left only one route for multi-brand international retailers, such as Wal-Mart, Tesco, and Carrefour, to open its stores under own brand name: to find a franchise. The franchise route has been open for the foreign retailers.
However, it did not attract Wal-Mart and it chose to partner Bharti for the cash-and-carry operation, which it could have gone alone under government guidelines. However, Wal-Mart insists that its India joint venture is out of choice and not compulsion.
Bharti Enterprises, through a separate subsidiary, also moved into front end retailing under the brand name Easy Day, which opened its first store only last month in Ludhiana. It has got three stores now and more will follow.
The Bharti group looks little behind conglomerates A V Birla Group and Reliance Industries.
A V Birla group started its retail operation with the acquisition of south India-based Trinethra Super Retail in January 2007 and followed it up with its own retail store under the brand name More in the next four months.
To be continued with the efforts of Carrefour and Tesco...
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