Wal-Mart has a breakthrough in Indian retail

The word is finally out. Putting an end to months of speculation, Bharti Enterprises chairman Sunil Mittal (not related to Lakshmi Mittal) has finally announced a partnership with the world’s biggest retailer Wal-Mart to jointly open supermarkets across India. As per the agreement, Bharti Group will manage the front-end of the retail business while Wal-Mart will look into logistics, the supply chain etc. In other words, Bharti will be Wal-Mart’s India franchisee.

This partnerhsip is a huge achievement for the US behemoth that has outdone UK’s Tesco and France’s Carrefour in a race to break into one of the world’s biggest consumer markets. Both Tesco and Carrefour were also in talks with Bharti, since direct entry into the multi-brand retail sector in India is not yet open to foreign players.

Now Bharti has a challenge on its hands. Being the visible partner of the two in the Indian market, it will have to bear the direct impacts of any consumer action against possible mismanagement of supply chain issues by Wal-Mart that get public. Not only will then the retail stores bear the brunt of consumer rage, Bharti’s other products (Bharti Airtel is one of the biggest players in the Indian telecommunications market) could also face diminishing consumer loyalty.

On the other hand, in case of any supply chain related scandal with regard to Wal-Mart, Indians may not be quick to relate the company as being associated with Bharti due to its lack of visibility in the partnership. This is not to say of course that Wal-Mart’s many critics have succeeded in translating all the lack of health programme, absence of unions, lack of fair wages issues into depreciating sales for the company in the US or elsewhere, but making such an assumption wouldnt be pushing it too far either.

So, the partnership can work either way for Bharti. For now it needs to take each step very cautiously – the international press is watching already (http://www.ft.com/cms/s/4a4dcbbc-7dee-11db-84bb-0000779e2340.html). This partnership has brought Bharti under the media spotlight in a way none of its other global ventures have done.

Bharti and Wal-Mart plan to roll out their first stores in August 2007.

Poulomi Saha, India Editori{content: normal !important}

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