Wal-Mart to seek local sources for retail foray

Following the government's move to allow foreign direct investment in retail, US giant Wal-Mart is planning a series of partnerships with small and mid-level suppliers in India across product categories to create a big list of private label brands that will be priced 10-15 per cent lower than established products and brands, Raj Jain, managing director and chief executive of Bharti Walmart has said.

The move is part of the company's strategy to go deeper into the Indian market and create cost-effective and efficient models of local procurement to keep front-end retail prices low, Jain told The Times of India.

"We will find suppliers, and make it together. There are so many categories where brands are not important, but functionality is," Jain said about the front-end retail strategy of the company. Wal-Mart private labels will be present in both food and non-food categories, including fast moving consumer goods and apparel, Jain said.

Wal-Mart has a head start over other international retail chains like Carrefour because it is already in the wholesale (cash-and-carry) trade with local partner Bharti Enterprises, led by Sunil Mittal. The Indian company can be a "natural partner" for its front-end retail venture as well, Jain said.

Manufacturing and sourcing locally is one of the key models that Wal-Mart adopts globally to control costs and this is followed even in its wholesale business.

"Ninety-five per cent of what we sell is locally produced and sourced. We totally believe in sourcing more from within the country, which is a purely economic model," Jain said, adding that cost-effective models can be worked out for various types of products. "For example, what if our stores sell you clean drinking water for as low as Rs 2 a litre, provided you carry your own container or water bottle?"