Big Retailers Still Struggle in India
Most Indians continue to find big retail stores more interesting as cultural phenomena than as places to do their actual shopping
Just a few days before Diwali, the five-day Hindu, Sikh, and Jain festival that begins on Oct. 17, Rajlaxmi Pandit knew it was time to buy some gifts for family and friends. So she hopped on the Delhi Metro for a 45-minute ride across town to the closest Big Bazaar, a big-box wannabe offering everything from saris and neckties to corn flakes and frozen chapatis. The 34-year-old homemaker spent nearly an hour sifting through piles of children’s clothes, admiring watches, and trying out cell phones.
Then, without making a purchase, she hopped right back on the Metro and headed for the noisy street market in Bhogal, the working-class neighborhood where she lives with her husband and three children. There, shopkeepers called out to her by name as she made her way in and out of mom-and-pop stores clutching a list of prices from the Big Bazaar. She picked out a $120 phone for her sister; the price was about $5 less than at the Big Bazaar, and the shopkeeper had it delivered to her house three hours later, where her husband paid cash. “Big Bazaar was nice,” says Pandit. “But I just wanted to see all the prices. I don’t buy at those big shops.”
As Diwali fireworks light up the Indian skies, millions of people across the country buy new appliances, clothes, and gifts for the entire family. In the days leading up to the festival, markets in Delhi have been packed with shoppers weighing gold bangles
Tricky Laws for Foreign Retailers
But like Pandit, most Indians find big retailers more interesting as cultural phenomena than as places where they would actually buy anything. Indian regulations for foreign retailers are complicated; big-box stores such as Wal-Mart (WMT) or Carrefour are only allowed to partner with Indian companies in the wholesale sector, rather than selling directly to customers like Pandit. Meanwhile, single-brand retailers like Levi Strauss that primarily sell one manufacturer’s products are allowed to sell directly to customers, but they must also have a joint-venture partner.
That means that for foreign-owned retailers, much of India remains out of reach. Marks & Spencer, for instance, has just 15 stores through an alliance with Reliance Industries, although the British retailer on Oct. 13 said it plans to add another 50 outlets in India. Through a joint venture with Bharti Enterprises, Wal-Mart in May opened its first Indian store—called Best Price Modern Wholesale—in the Punjabi city of Amritsar, but it’s allowed only to sell to people who register by showing tax documents that prove they own a retail outlet, often called a kirana store. The joint venture hopes to open another 15 outlets.
source: businessweek
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