Wal-Mart's entry to impact home grown retailers

Wal-Mart's entry into India may impact homegrown retailers reports CNBC-TV18.

"I think the retail space is one of the most exciting spaces and there is space for at least six to eight large players," Mukesh Ambani, CMD, Reliance Industries, was quoted as having said yesterday.

Wal-Mart's entry to India was earlier than expected. But what must make Reliance Retail sit up and take note is the fact that Wal-Mart's biggest strength is Reliance's USP — Wal-Mart is known to drive down prices through sourcing and back-end efficiencies and processes.

For all their strengths, Wal-Mart and Bharti will have to create a land bank to set up its stores. The competition has already amassed much land. Kishore Biyani's Future Group holds 1.5-crore square feet of retail property and Reliance holds 20-lakh square feet. The demand for space has pushed up prices, which are bound to go up further. Sources say Wal-Mart and Bharti might take the acquisition route.

Wal-Mart's entry is expected to speed up store openings. Reliance expects to have 1,000 stores up and running by early next year and Pantaloon aims at 50 Big Bazaars by January.

"For them to scale up operations and open quite a few stores is one of the big challenges and it depends on speed, because everyone is in a tearing hurry. Speed will determine quite a few things, in terms of getting everything right.Lot of people will need to do both at the same time," thinks Biyani.

After the land it's people that Wal-Mart and Bharti will have to chase. Reliance Retail's entry a year ago had caused almost 50 per cent churn in the top and middle management. Now the poaching is bound to intensify.

With these challenges ahead Wal-Mart might be in for a tough time. But then Wal-Mart is also known to do its homework well and probably has a trick or two up its sleeve.