So, are you ready to Wal-Mart?

New Delhi: So, are you ready to Wal-Mart?

When the UPA Government, after much dithering, made an announcement earlier this year to allow 51 per cent FDI in single-brand retail, it was only a matter of time before Wal-Mart tiptoed into India's retail space.

Why so? Simply because Wal-Mart is under tremendous pressure to expand and explore greener pastures in order to keep its books ticking.

The retail biggie has been eyeing Asia for quite sometime now and it has already entrenched itself deeply in the Chinese market by acquiring a controlling stake in home appliance manufacturer Elec-Tech International Co Ltd.

If market rumours are anything to go by, the retail chain is already witnessing a drop in sales in the American market. Its November same-store sales are estimated to have dropped by 0.1 per cent, the first such decline in 10 years.

Its international operations are earning it only about 20 per cent of its total sales as on date. That being so, Wal-Mart's India entry, sooner or later, was a foregone conclusion.

The size of the Indian retail market at Rs 8,00,000 crore, which is growing at over 20 per cent, is indeed the biggest lure. On the flip side, it's a demand of India's free economy, irrespective of what the Left says or when the Right wants.

As for the worries, while Wal-Mart's 50:50 partnership deal with Bharti Enterprises has already raised suspicion that the retail chain may have smartly skirted the ban on FDI, the even bigger concern is the impact the Wal-Mart entry is likely to have on the Indian retail market, more specifically on the local economies of towns in which they will operate.

For, in the markets of Mexico, United Kingdom, Japan, Argentina, Brazil, Canada and other countries where Wal-Mart is today operating either as a wholly-owned or subsidiary business, it has been notorious for causing massive closure of small stores and 'pauperisation' of poor communities.

This has happened even in the United States.

This happens mainly due to Wal-Mart's business policies like extensive foreign product sourcing and the use of public subsidies.

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While India could be a different scenario altogether when it comes to product sourcing given the availability of cheap labour and low production costs in the country, there are some genuine apprehensions that local stores will take a big hit thanks to Wal-Mart's low-pricing policy, which they say, is aimed at "becoming an ally of the middle class and poor."

The broad array of goods that it provides and its fabled supply efficiency is bound to draw customers away from established businesses. Critics of Wal-Mart also cite its notority in treatment of employees and product suppliers and also bad environmental practices against it and they suspect that India could become an open field for them to exploit cheap labour of poor sections.

On the positive side, Wal-Mart entry could have a huge disciplining effect on the Indian retail space. Even though India is estimated to have over 5 million retail outlets of all sizes and styles, the country sorely lacks anything that can resemble a retailing industry in the modern sense of the term.

As for the threat perception for local businesses and neighbourhood stores in Indian towns, they are already facing a similar threat from home-grown retail chains like the ones being launched by Reliance, Tatas and others.

The Bharti-Wal-Mart venture is also expected to create numerous job opportunities at different levels and also spawn a downstream chain of small enterprises.

Also, given the fact that it will be the very India Bharti Enterprises, which would wholly control the front-end stores and their management, the Indian experience of Wal-Mart could turn out to be an altogether different story.

As per the pact, the US retail chains will be partners only in back-end operations like logistics, supply chain, technology support and sourcing as well as in the cash-and-carry formats.

And from the consumer point of view, she stands to win big time as the competition builds up. Till then, keep counting the days for discounts and freebies to become an everyday affair; customer care to turn a market buzzword and shopping to be a real great west-side experience.