Retail giant Wal-Mart Stores Inc.’s (WMT) lofty target to lead India’s retail segment by 2015 seems bleak.. Per media reports, Wal-Mart recently announced that the joint venture with Bharti Enterprises was ‘not tenable’ and it will discuss its future plans in India in Oct 2013.
Wal-Mart set foot in India when the country opened its doors to foreign direct investment (FDI) in the retail sector in an effort to shore up the sagging Indian currency. Wal-Mart embarked on a project called ‘Jai Ho,’ a Hindi phrase meaning 'let there be victory.'
It planned to open 22 outlets in the growing Indian market with a prosperous and burgeoning middle class.
However, things were not very rosy for the giant retailer. India made it mandatory for the foreign retailers to buy at least 30% of their goods from small-scale and medium-sized local enterprises that had a capex value of less than $2 million.
The international players, including Wal-Mart, however, felt that this barred them from being on a level playing ground with the local retailers and may hold them back from expanding into traditional retail in India.
Moreover, Wal-Mart had to suspend its chief executive officer of the India joint venture amid lobbying and bribing charges against the company.
These hurdles proved to be unfavorable for the company in carrying out business in India, and Wal-Mart was able to fulfill its store opening target in 2012.
However, Wal-Mart revealed that it had no plans of leaving India and instead plans to expand its wholesale business in the country.
Wal-Mart currently carries a Zacks Rank #4 (Sell). Other retail-wholesale stocks worth considering are Safeway Inc. (SWY), Spartan Stores Inc. (SPTN) and Whole Foods Market (WFM). All these stocks carry a Zacks Rank #2 (Buy).
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