Wal-Mart model and the retail sector in India

Abstract

Wal-Mart is the largest retailer in the world with 8970 stores across 15 countries and revenue of $418 Bn in 2011. Wal-Mart has diversified into numerous retail formats - supercenters, general merchandise stores, bodegas, cash and carry stores, warehouse clubs, soft discount stores and restaurants. Each format is targeted a particular customer segment. Currently 26% of Wal-Mart’s revenue is realized from markets outside United States. The study looked at the key elements of the Wal-Mart model and identified the resources that are a source of competitive advantage for Wal-Mart. These included the highly developed supply chain and extensive use of technology. The future point of contentions that might pose a threat to the existing Wal-Mart model we studied. The key drivers of the Wal-Mart model in developing countries like Mexico, Brazil, Chile, and China and also in Germany where it failed were analyzed. It also emerged that Wal-Mart has mostly adopted an acquisition strategies to make in-roads while entering a new market. The economic scenario, demographic structure and population profile across the countries gave insights regarding the successful implementation of the Wal-Mart model and causes of failure in some cases. The study then looked at the retail sector in India; its evolution and its key drivers. The organized retail sector is India is driven by rising disposable incomes, changing consumption patterns and changes in social structure. Key success factors and challenges for Indian retailers were also studied. Comparison of the Wal-Mart model and present state of Indian retail sector revealed that while market factors and technology related factors are in favor of this model, several inhibitors such as poor infrastructure, under-developed supply chain and an unfriendly regulatory framework pose difficulties in successful implementation of Wal-Mart model in India.