A New Retail Makeover

Even till four years ago, retail was the most happening sector in the country. Large Indian corporate groups like Reliance, A.V. Birla, the Tatas and the RPG group were jostling to get in as were a bunch of enthusiastic entrepreneurs. Everyone seemed to be in a tearing hurry to open new stores and formats around the country at a fast clip.

Today, there is suddenly a new-found humility. The retail chains are shutting down unviable stores, laying off people and pulling the plug on a range of overly ambitious roll-out plans. The nascent industry may have reached a nadir with the Subhiksha saga earlier this year. But clearly, the bloodletting isn’t quite over yet.

Around the world, the organised retail industry thrives on superior customer value. And in discount retailing, the biggest segment in organised retail, it starts with fixing the supply chain. And that means working closely with suppliers and farmers and making the entire chain much more efficient, so that they can compete with the hugely efficient kirana store just round the corner.

It needs plenty of back-breaking work and patience to upgrade the supply chain and offer better prices and higher quality to the customer. Not too many Indian retailers have shown the willingness to hunker down for this long slog ahead. So, the more stores they open, the more money they seem to lose. I’d wager, therefore, that the backend will have to be the next frontier for retailers who hope to break through this vicious cycle.

The Forbes India 23 October issue cover story on Walmart is instructive for a variety of reasons. The Giant from Bentonville, Arkansas, is on a critical mission to build scale in India — and also overturn many of its embarrassing setbacks in markets outside the US. It is also the retailer to watch out for, thanks to its legendary skills in supply chain management. Through its tie-up with the Bharti group, it is slowly but surely putting in place a template for an efficient supply chain model that this country has not yet seen.

But that’s not what our story is about. In Amritsar, Walmart has also discovered a new model that sidesteps some of the problems of our creaky supply chain. Its early success has given it the confidence to build a $1 billion business around it in the next four years. It is, for the most part, a well-kept secret. Along with my colleague and Associate Editor Malini Goyal, I made a trip to Amritsar to see what the retail behemoth had achieved. Both of us came back impressed.

Our story takes you inside the new Walmart that is rising in India, a multinational that is learning to combine its global strengths with local insights. It is a story that stands out amidst all the gloom and doom of the retail industry.