Walmart has chosen roads with fewer regulatory obstacles

Retail giant no longer talks about multi-brand retail and has decided to stick on with cash and carry, where policy roadblocks are easier to handle

Twenty-first store may seem like just another number in a market where retail business has crossed the $600-billion mark. Even so, the world’s largest retail chain Walmart has reason to celebrate opening of its 21st store in India, eight years after it set up shop here and six years after its first outlet rolled out in Amritsar.

The biggest reason for Walmart to feel good is that the Agra store signifies a break from the past. It has come after three years of no expansion in compliance with the US anti-graft law -- Foreign Corrupt Practices Act (FCPA) — over possible violations in Mexico, China, India, Brazil among others. Its last store came up in Bhopal in November 2012.

The Agra outlet, which incidentally is the second in the city, is also significant because this one is the first standalone brick and mortar expansion for Walmart India. It broke off with Sunil Mittal-led Bharti Enterprises two years ago as the partnership signed in 2007 ran into trouble.

The latest expansion is a beginning for its plan to have 50 stores in five years, and such a plan indicates that Walmart is a long term player and is here to stay in India. That’s because the group has faced policy hurdles and drawn political flak besides breakup pangs and corporate issues, but it has not made an exit from the India market. 

Indeed, Walmart had entered India with the aim to capture the fast growing Indian retail market and is even believed to have lobbied hard in the US and India for opening up the multi-brand retail sector to international investors. In 2012, the UPA government allowed 51% FDI in multi-brand retail but Walmart made it clear to the establishment that conditions attached to the policy, primarily sourcing norms, were not feasible.

"FDI policy has passed…..", then Asia head Scott Price had famously said, triggering speculation on a partnership breakup. Soon after the US chain broke off with Bharti as India partner is needed for multi-brand, not for cash and carry or wholesale business.

Walmart does not even talk of multi-brand retail any more, whatever may be its real plans. For now, it has decided to stick on with cash and carry, where policy roadblocks are fewer and easier to handle. Its e-commerce foray has also been restricted to B2B till now. 

For sure, it’s waiting for things to get better.