FAQ on Cash & Carry stores

Can ordinary consumers buy from the cash-and-carry stores to be set up by Bharti Enterprises and Wal-Mart?

No, ordinary consumers cannot buy from these outlets. Cash-and-carry outlets are business-to-business suppliers, meaning only wholesale traders with sales tax certificates can shop from them. The joint venture is looking to sell to neighbourhood stores, fruit and vegetable resellers, hotels and restaurants.

So, do consumers get anything out of this deal?

Wal-Mart's global strategy is to sell at rock-bottom prices. Cutting prices to wholesalers will, therefore, yield some benefits to the consumer. Also, with retail gaining momentum, all retailers (large and small) are looking to retain/increase market share by offering the cheapest possible prices, so consumers stand to gain from the competition too.

How does the franchise agreement with Bharti Retail work? Does it mean Bharti will source all its products from Wal-Mart and get a price advantage over others?

In addition to the cash-and-carry joint venture with Bharti Enterprises, Wal-Mart has also signed a franchise agreement with Bharti Retail, a 100 per cent subsidiary of Bharti Enterprises, for technical collaboration and training staff. Bharti Retail stores are for the ordinary consumers and are expected to roll out early next year. Wal-Mart's expertise lies in leveraging the world's most sophisticated retail management technology to offer competitive cost efficiencies. Bharti Retail will, for instance, have access to Wal-Mart's online inventory technology to optimise inventory planning, which in turn will allow them to offer competitive prices to consumers.

Will they also source from Wal-Mart?

Bharti Retail will source from the cash-and-carry outlets that Bharti Enterprises and Wal-Mart are setting up in equal partnership.

Is the franchise route compatible with the foreign direct investment (FDI) norms in retail?

There are many examples of foreign retailers operating in India through franchise agreements. The Body Shop, Mac and Tommy Hilfiger are just a few examples of single-brand retailers that have forayed into India under franchise arrangements. Royal Sporting House and Debenhams are examples of multi-brand retailers that have entered India under franchise arrangements. Till now, there is no law against franchises. However, there have been speculation that the government may review this option as many consider it to be a "loophole" exploited by foreign retailers for entering India. Current regulations permit 100 per cent FDI for back-end activities.

What does Wal-Mart currently do in India?

Wal-Mart has been sourcing from India for six years now. Last year the world's largest retailer imported goods worth $600 million from India.