Wal-Mart to shrink stores for India

Plans to open 12-18 stores in the first 18 months.

Wal-Mart, the world's largest retailer, has chalked out the look and size of the stores it will open in India as it awaits laws allowing foreign direct investment in the country's retail sector.

Speaking about its India strategy to Reuters, Wal-Mart Asia's Chief Executive Officer Joe Hatfield said the company was interested in cities, both large and small. His strategy will be to make a big splash early on, opening 12-18 stores in the first 18 months, to show consumers that Wal-Mart was committed to India.

The stores, he said, would probably be smaller than they were in China "" no more than 140,000 sq ft ""instead of the 200,000 sq ft supercentres in China and the US. The stores will also have an expansive spice section, where employees can custom grind orders while shoppers wait. They will also boast a large bakery section.

The US-based $312.43-billion retail giant has zeroed in on China and India, which topped AT Kearney's list of top markets for international retail expansion in 2005, to drive growth as it faces sluggish sales growth back home. "China and India really represent the future of Wal-Mart," Hatfield told Reuters in Shenzhen, the retailer's China headquarters.

Wal-Mart has been present in China for about a decade and has set up 56 stores. India, on the other hand, has only allowed 51 per cent foreign direct investment in single brand retail so far. Ninety-seven per cent of its retail trade is unorganised.

While a major expansion is on the cards for China, Wal-Mart also has definite plans for India, a booming economy with a burgeoning middle-class with rising disposable incomes.

The retailer has already applied for a liaison office in Bangalore to study the market, and recently hired a head of Asian strategy who will oversee expansion in India, among other things. Wal-Mart Vice-Chairman Mike Duke met Indian officials earlier in March, marking the retailer's second round of high-level talks in less than a year.

Wal-Mart believes India, like China before it, will embrace Western retailers. The key is to show an understanding of local tastes, whether that means stocking popular spices, the right baked goods, or just the top-selling brand of soap.

Wall Street is eager for signs that Wal-Mart is making progress in China and India at a time when it is witnessing plummeting stock prices and is being outpaced by rivals in terms of sales growth. The US accounts for about 80 per cent of Wal-Mart's annual sales.