Tesco plans to beat Wal-Mart's first mover advantage in India
16 Aug 2008
The world's biggest retailer Wal-Mart may have been the first mover in noouncing the roll out its retail operations in India tie up with Indian partner Bharti Group, who had earlier been in talks with the UK's retail giant, Tesco.
However, Tesco, the world's third-larges has announced plans to beat the world's leading retailer hollow in its time to market in India.
India would be the third-largest market for the UK-based retail chain after China and Japan, and it already has an agreement with Tata group's supermarket chain Star Bazaar as its franchise partner and customer.
If Tesco's plans stay on track, it would open its first cash-and-carry store in India by December 2009, 16 months after its announcement to enter India. Rival Wal-Mart on the other hand has announced that it will open its maiden store in India in March 2009, taking 28 months to start operations after its announcement.
Tesco's ability for a faster time to market is also because of the model it has chosen, where it will go it alone for the wholesale cash-and-carry business. Its arrangement with Tata's Star Bazaar is just a franchise arrangement, which will provide fee-based technology and marketing support.
Tesco is widely considered to be the more deliberate and methodical retail chain, having opted for growth via the organic route. Wal-Mart is seen as the more aggressive player, who takes the organic route wherever possible, but is more inclined to joint ventures and acquisitions.
Sources say Tesco's plans are a better strategic fit in view of India's reluctance to allow foreign direct investment (FDI) in multi-brand organised retail businesses. As per existing Indian regulations, there are no restrictions on foreign direct investment in the wholesale cash-and-carry retail operations.
Around the end of 2007, Tesco entered the US home market of Wal-Mart, and is challenging the retail biggie in India, China and Japan, the three biggest retail markets in the world.
Tesco is now looking to open an office in Chicago, ahead of rolling out its 'Fresh & Easy' convenience stores as it expands the chain beyond the US west coast. Reports in the media indicate that Tesco has a team of real estate executives waiting to identify potential locations for its distribution centre and store locations in and around the Midwest city with 'Fresh & Easy' real estate director Matthew Price heading the property acquisition team.
Adverse reports in the media about Wal-Mart generally highlight its policies that shrink farmer margins and employee salaries to support its marketing strategy of rolling back prices. Tesco has a better public image built on customer relationships.
