NEW DELHI (AFP) – Indian telecom firm Bharti Enterprises and US-based retail giant Wal-Mart on Monday announced a 50:50 joint venture for a new chain of wholesale stores in India to serve small retail shops.
The “partnership of equals” would be named Bharti, Wal-Mart Private Ltd., said Rajan Bharti Mittal, managing director of Bharti Retail.
“We have signed the joint venture which will be a cash and carry to serve small retailers,” Mittal told a press conference in the capital New Delhi.
Eight to 15 initial stores are planned with the first expected in late 2008, said Raj Jain, president of Wal-Mart operations in India.
The new stores will be similar in style to the Maxxi stores Wal-Mart has in Brazil, said Beth Keck, senior director of international corporate affairs for the Arkansas-based firm.
“A typical facility will stand between 50,000 to 100,000 square feet (up to 9,293 square metres) and sell a wide range of fruits, vegetables, groceries, footwear, clothing and consumer durables and other general merchandise items,” said a press release from Bharti and Wal-Mart.
“Wholesale cash and carry operations provide small retailers and business owners a wide range of quality products at competitive whole sale prices that help them enhance their business and profitability,” the statement said.
“The wholesale cash-and-carry venture will invest in setting up an efficient supply chain that will link farmers and small manufacturers directly.”
Mittal did not say whether the Bharti, Wal-Mart retail stores would sport the US retailer’s well known logo or not.
“When we unveil the branding strategy later, we will come to that. We have the options of using the Bharti label, the Wal-Mart label, or a combination of both,” he added.
Wal-Mart’s Jain said the first store would be open by late 2008 or early 2009. Germany’s Metro AG already operates several wholesale stores aimed at small retailers in India, including in the southern high-tech hub of Bangalore.
India does not allow foreign investment in the retail sector except for single-brand stores such as Nokia or Nike and foreign groups including Wal-Mart have to sign franchise deals with local companies to enter the market.
Key communist allies of the Congress party-led coalition government object to major overseas retailers entering India, saying it would wipe out millions of mom-and-pop shops across the country.
A rapidly-growing affluent middle class estimated to make up as much as a third of India’s 1.1 billion population spends an estimated 300 billion dollars annually on shopping.
That figure is expected to double by 2015, according to consultants PriceWaterhouseCoopers.
The Bharti, Wal-Mart stores are not open to retail shoppers but will serve small shops, fruit and vegetable sellers, restaurants and other business owners, the press statement said.
Bharti’s own plans to open retail stores offering food and other consumer items would not clash with its joint venture with Wal-Mart as they were “two clearly different entities,” Mittal said.
The Bharti, Wal-Mart venture would “clearly be a source for us (Bharti Retail) to procure goods from,” he said.