After two days of intense debate last September, Parliament voted down a measure prohibiting large foreign retailers who carry multiple brands, like Wal-Mart, from entering the country.
Well this is pretty great news for big box retailers that have long had their eyes on the Indian market.
The government hopes that this new legislature will stimulate a new economic boom in India, where once-brisk growth has slowed in recent years. They hope these new laws will benefit the rural economy and farmers, who should get better prices for products they produce. Local retailers aren’t so optimistic.
The Prime Minister tried to assure small retailers’ fears in late September, by saying that they “had nothing to fear from the impending arrival of giant Western retailers like Wal-Mart or Carrefour because there was a place for everyone, large or small, in a growing economy.”
India’s younger generation appear open and eager to try foreign brands and shopping experiences according to Vikas Bajaj, former correspondent for The Times in Mumbai, India.
About half of India’s 1.2 billion people are under the age of 25. How will the sudden influx of foreign multinationals effect this younger generation?
This reform is one that will affect the lives and livelihoods of the vast majority of Indian people. It will change consumers, farmers, traders, and retailers in the form of family-run kirana shops, or grocery stores, not to mention employment opportunities.
It’s a big deal!
Although the legislature at the federal level has passed, each state government in India will be allowed to decide whether to open its doors to FDI or not. In any case, the path to India is now clearer than ever in the past for large multinational retailers.
No doubt there’s a tremendous amount of retail potential in key cities and key trade zones, but capitalizing on it is going to be a tricky puzzle.
Hypermarkets and big box retailers, like Wal-Mart and Carrefour, will really have their hands full. Local partners will be critical in helping establish the infrastructure needed to support these retailers, and help to promote brand visibility into the future.
These giants will need accurate market planning data and analytics to help them make better site selection, assortment, and logistics decisions.