1. Abstract
International Retail industry has got a tremendous consumer pull since globalization.
Many Retail Stores evolved in a very different way from the traditional Stores. Many
multinational companies are transforming themselves to become global companies.
When it comes to selling in foreign lands, the strategies of retailers don't always simply
translate from one country to another.
This research discusses about whether the efforts of Retail Stores can hold the
customers and which factor will influence customer by Retail strategies.
Concept of RETAIL
The distribution of consumer products begins with the producer and ends at the
ultimate consumer. Between the producer and the consumer there is a middleman the
retailer,who links the producers and the ultimate consumers?
Retailing is defined as a conclusive set of activities or steps used to sell a product
or a service to consumers for their personal or family use. It is responsible for matching
individual demands of the consumer with supplies of all the manufacturers. The word
‘retail’ is derived from the French work retailer, meaning ‘to cut a piece off’ or ‘to break
bulk’.
It is defined as all activities involved in selling goods or services directly to the
final consumer for their personal, non-business use via shops, market, door-to-door
selling, and mail-order or over the internet where the buyer intends to consume the
product.
The retail industry can be divided into
1. organized large,
2. unorganized and
3. Informal sector enterprises.

2. The first category retailers comprise traders who possess legal permissions or
licenses to undertake the activity, are registered with sales tax/VAT etc. Such
enterprises are supermarkets, hypermarkets, retail chains, and also the privately-owned
large retail businesses.
Their presence on scene, though of a recent origin, is gradually gaining in
importance, and slowly eating into the business of second category of retailers. By
unorganized retail trade enterprises, we mean all those local kirana &general shops,
family managed –Own Account trade enterprises (Mom-Pop shops), registered under
the Shops and Establishment Act (s), administered by the local authorities.
The third category of retailers include small shops such as tiny grocery and vegetable
shops run from a room of a house, paan/beedi kiosks (often selling a variety of items,
like small toothpaste tubes, tooth brushes, soaps, pouches of shampoo, etc.), way-side
vendors, and hand carts operating without any licenses.
Indian retail sector
The retailing sector in India has undergone a significant transformation. Traditionally,
Indian retail sector has been characterized by the presence of a large number of small
unorganized retailers. However, in the past decade there has been development of
organized retailing, which has encouraged large private sector players to invest in this
sector.
The Indian trading sector, as it has developed over centuries, is very different
from that of the developed countries. In the developed countries, products and services
normally reach consumers from the manufacturer/producers through two different
channels: (a) via independent retailers (‘vertical separation’) and (b) directly from the
producer.

3. In India, however, the above two modes of operation are not very common.
Small and medium enterprises dominate the Indian retail scene. The trading sector is
highly fragmented, with a large number of intermediaries. So also, wholesale trade in
India is marked by the presence of thousands of small commission agents, stockiest and
distributors who operate at a strictly local level.
Most Indian shopping takes place in open markets or millions of small,
independent grocery and retail shops. Shoppers typically stand outside the retail shop,
ask for what they want, and cannot pick or examine a product from the shelf. Access to
the shelf or product storage area is limited. Once the shopper requests the food staple
or household product they are looking for, the shopkeeper goes to the container or
shelf or to the back of the store, brings it out and offers it for sale to the shopper. Often
the shopkeeper may substitute the product, claiming that it is similar or equivalent to
the product the consumer is asking for. The product typically has no price label in these
small retail shops; although some products do have a manufactured suggested retail
price (MSRP) pre-printed on the packaging. The shopkeeper prices the food staple and
household products arbitrarily, and two consumers may pay different prices for the
same product on the same day. Price is sometimes negotiated between the shopper and
shopkeeper. The shoppers do not have time to examine the product label, and do not
have a choice to make an informed decision between competitive products.
Indian market has high complexities in terms of a wide geographic spread and
distinct consumer preferences varying by each region necessitating a need for
localization even within the geographic zones. India has highest number of outlets per
person (7 per thousand) Indian retail space per capita at 2 sq ft (0.19 m2)/ person is
lowest in the world Indian retail density of 6 percent is highest in the world.1.8 million
households in India have an annual income of over 45 lakh (US$81,900).

4. For Indian retailing, things started to change slowly in the 1980s, when India first
began opening its economy. Textiles sector (which companies like Bombay Dyeing,
Raymond's, S Kumar's and Grasim) was the first to see the emergence of retail chains.
India is a land of retail democracy- hundreds of thousands of weekly haats and
bazaars are located across the length and breadth of our country by people‘s own self-
organizational capacities and interests.
India has the shop density of 11 outlets per 1000 people and number around 15
million, giving India the highest retail outlet density in the world. But only four per cent
of them have larger than 500 square feet area. India is one of the fastest growing retail
markets in the world, with 1.2 billion people.
Our retail democracy is characterized by
1. High levels of livelihood in retail with nearly 40 million employed which accounts for
8% of the employment and 4% of the entire population.
2. High levels of self - organization.
3. Low capital input
4. High levels of decentralization
The most noteworthy phase of the growth of the sector was between 2000-2006,
when the revenues increased by about 93.5 per cent. The estimated size of the retail
industry in our nation is approximately $470 billion with an annual compounded growth
rate of 11 per cent. Incidentally, the share of organized retail is relatively small at $26
billion which is just 6 per cent of the total market compared to a typical share of 70-80
per cent in North America and Western Europe and 20-30 per cent in the Far-East Asian
Markets.
AT Kearney, a global management consulting firm, rates India as the most attractive
nation for retail investment. The study, presented in the Global Retail Development

5. Index of 2009, is carried out annually for 30 emerging markets, and has rated India
highest four times in the last five years.
This report expresses even more optimism, and estimates that suggest that
India's retail market is expected to be about US$535 billion by 2013, with around 10 per
cent coming from organized retail. Other estimates are more conservative, though still
impressive. According to McKinsey, a research and consulting firm, organized retail in
India is expected to increase from 5 per cent of the total market in 2008 to 14-18 per
cent of the total retail market and reach US$ 450 billion by 2015.
Even if growth is more conservative than estimated, the spill-over effects of this
rapid expansion could be felt by many other sectors of the economy. A report published
by Knight Frank India in May 2010 looks at the question of land and available retail
space. It estimates that, during 2010-12, around 55 million square feet of retail space
will be ready in the major cities like Mumbai, the national capital region (NCR),
Bengaluru, Kolkata, Chennai, Hyderabad and Pune. Furthermore, between 2010 and
2012, the organized retail real estate stock is expected to grow from the existing 41
million square feet to 95 million square feet. Arguably, this could drive up real estate
prices, with consequent knock-on effects.
India is the second largest producer of fruits and vegetables in the world, but almost
30 per cent of these go waste for want of storage and processing facilities.It is generally
agreed that the bulk of the Indian economy would gain, significantly, from the
emergence of a well-capitalized retail industry. The organized retail industry is one of
the sunrise sectors with huge growth potential.
Total retail market in India which currently stood at USD 400 billion in 2009-10, is
estimated to attain USD 573 billion by 2012-13. Organized retail industry accounts for
only 5% of total retail industry but is expected to reach 10% by 2012.
An ASSOCHAM report states that India's overall retail sector is expected to rise to
USD 833 billion by 2013 and to USD 1.3 trillion by 2018, at a compounded annual

6. growth rate of 10% driven by the emergence of shopping centers and malls, and a
middle class of close to 300 million people that is growing at nearly 2% a year.The share
of organized retailing in India, at around 2%, is too low, compared to 80% in the USA,
40% in Thailand, or 20% in China, thus leaving the huge market potential largely
unexploited.
Mounting earning levels, education and an international revelation have contributed
to the progression of the Indian middle class purchasing and shopping practices are
burgeoning as an outcome. However, retailing through formats such as supermarkets,
hypermarkets, department stores and other forte chains are escalating.Top business
houses in the country are investing in the sector. This includes Food World, Shopper‘s
Stop, Crossroads, Globas, Pyramid and other such outlets.
Retail Market Categories (2011)
Category Estimates (in US $Bn)
Food and Grocery 325
Apparel 35
Jewelry and Watches 25.6
Consumer Electronics & IT 22.7
Pharmacy 13.9
Furnishings and Furniture 9.1
Restaurants & Food Joints 8.8
Footwear 4.5
Beauty Services 1.3
Health/Fitness Services 1
Others 23
Total (US $ Bn) 470

7. Major Indian Retailers
The low-intensity entry of the diversified Mahindra Group into retail is unique because it plans
to focus on lifestyle products. The Mahindra Group is the fourth largest Indian business group
to enter the business of retail after Reliance Industries Ltd, the Aditya Birla Group, and Bharti
Enterprises Ltd. The other three groups are focusing either on perishables and groceries, or a
range of products, or both.
Top 10 Retailers in India
 Pantaloon Retail
It is headquartered in Mumbai with 450 stores across the country employing more than
18,000 people. It can boast of launching the first hypermarket Big Bazaar in India in
2001. An all-India retail space of 5 million sq. ft. which is expected to reach 30 MN by
2010. It is not only the largest retailer in India with a turnover of over Rs. 20 billion but is
present across most retail segments - Food & grocery (Big bazaar, Food bazaar), Home
solutions (Hometown, furniture bazaar, collection-i), consumer electronics (e-zone),
shoes (shoe factory), Books: music & gifts (Depot), Health & Beauty care services
,entertainment (Bowling co.)
 K Raheja Group
They forayed into retail with Shopper’s Stop, India’s first departmental store in 2001. It
is the only retailer from India to become a member of the prestigious Intercontinental
Group of Departmental Stores (IGDS). They have signed a 50:50 joint venture with the
Nuance Group for Airport Retailing. Shoppers Stop has 7, 52, 00 sq.ft. of retail space
with a turnover of Rs 6.75 billion.The first Hypercity opened in Mumbai in 2006 with an
area of 1, 20,000 sq. ft. clocking gross sales of Rs. 1 bn in its first year.

8.  Tata group
Established in 1998, Trent - one of the subsidiaries of Tata Group - operates Westside, a
lifestyle retail chain and Star India Bazaar - a hypermarket with a large assortment of
products at the lowest prices. In 2005, it acquired Landmark, India's largest book and
music retailer. Trent has more than 4 lakh sq. ft. space across the country. Westside
registered a turnover of Rs 3.58 mn in 2006.
Tata’s has also formed a subsidiary named Infiniti retail which consists of Croma, a
consumer electronics chain. It is a 15000-17000 sq. ft. format with 8 stores as of
September 2007.Another subsidiary, Titan Industries, owns brands like “Titan”, the
watch of India has 200 exclusive outlets the country and Tanishq, the jewellery brand,
has 87 exclusive outlets. Their combined turnover is Rs 6.55 billion.
Trent plans to open 27 more stores across its retail formats adding 1.5 mn sq ft of space
in the next 12 DLF malls.
 RPG group
One of the first entrants into organised food & grocery retail with Foodworld stores in
1996 and then formed an alliance with Dairy farm International and launched health &
glow (pharmacy & beauty care) outlets. Now the alliance has dissolved and RPG has
Spencer’s Hyper, Super, Daily and Express formats and Music World stores across the
country.RPG has 6 lakh sq. ft. of retail space and has registered a turnover of Rs 4.5
billion in 2006.
It is planning to venture into books retail, with the launch of its own bookstores “Books
and Beyond” by the end of 2007. An IPO is also in the offering, with expansion to 450+
MusicWorld, 50+ Spencer's hyper outlets covering 4 million sq. ft. by 2010.

9.  Landmark group
were launched in 1998 in India. Lifestyle is spread across six cities, covering 4.6 lakh sq.
ft. with a turnover of Rs 3.5 billion in 2005. A new division named Lifestyle International
has emerged for their international brands business comprising Bossino, Kappa and
Springfield in their portfolio.
Their retail mix includes Home solutions (Home centre), fashion (lifestyle, landmark
International), value retailing (max retail), hypermarkets & supermarkets (Max), kids
entertainment (Funcity).
They plan to invest Rs. 300 crores in the next two years to expand on Max chain, and Rs
100 crores on Citymax 3 star hotel chain. They have already instituted a separate
company christened Citymax Hotels (India).
 Piramal Group
In September 1999, Piramal Enterprises announced their arrival into retail with the
launch of three retail concepts: India's first true shopping mall of international
standards, called Crossroads; a lifestyle department store named Piramyd Megastore;
and a family entertainment centre known as Jammin. Piramyd Megastore and Jammin
were anchor tenants for Crossroads (recently sold to Pantaloon for Rs 4 billion). In 2001,
the group entered the business of food & grocery retail with the launch of TruMart
supermarkets in Pune.
They have around 18 TruMart stores covering 1.90 lakh sq. ft. registering a turnover of
Rs 37.6 mn in 2005. Piraymd Megatsore’s contributes more than 70 % to their retail mix

10. with a turnover of Rs 112.8 mn. They plan to open 150 stores covering 75 mn sq ft of
retail space in the next 5 years.
 Subhiksha
Subhiksha is a Chennai-based, decade old, no frills, food, grocery, pharma and telecom,
discount retail chain. ICICI Venture Capital holds 24% in the equity capital of Subhiksha.
It has more than 500 stores across the country covering a retail space of more than 1
million sq ft with a registered turnover of Rs 3.34 bn in 2006. It has a planned
investment of Rs.300 crores to ramp up its operations to 1200 stores by 2008.
 Bharti-Wal-Mart
Their plans include US$ 7 bn investment in creating retail network in the country
including 100 hypermarkets and several hundred small stores. They have signed a 50:50
percent joint venture agreement with Wal-Mart. Wal-Mart will do the cash & carry
while Bharti will do the front-end.
 Reliance
India’s most ambitious retail plans are by reliance, with investments to the tune of Rs.
30,000 cr ($ 6.67 bn) to set up multiple formats with expected sales of Rs 90,000 crores
($20 bn) by 2009-10.
There are already more than 300 Reliance Fresh stores and the first Reliance Mart
Hypermart has opened in Ahmedabad. The next ones are slated to open at Jamnagar,
followed by marts in Delhi / NCR, Hyderabad, Vijaywada, Pune and Ludhiana.

11.  AV Birla Group
They have a strong presence in apparel retailing through Madura garments which is
subsidiary of Aditya Birla Nuvo Ltd. They own brands like Louis Phillipe, Van Heusen,
Allen Solly, Peter England, Trouser town.
In other segments of retail, AV Birla Group has announced investment plans of Rs 8000 -
9000 crores in the first 3 years till 2010.
The acquisition of Trinethra (food & grocery) chain in the south has moved their tally to
400 stores in the country. Their “More” range of 15 supermarkets are slated to open at
Nashik, Pune and other tier II cities in Western India in 2007.
Foreign Direct Investment (FDI)
The most important channel through which foreign capital flows into the country is
Foreign Direct Investment (FDI). FDI as defined in Dictionary of Economics (Graham
Bannock et.al) is “investment in a foreign country through the acquisition of a local
company or the establishment there of an operation on a new (Greenfield) site.
International Monetary Organization (IMF) and Organization for Economic Cooperation
and Development (OECD) define FDI as a category of cross border investment made by
a resident in one economy (the direct investor) with the objective of establishing a
‘lasting interest’ in an enterprise (the direct investment enterprise) that is resident in an
economy other than that of the direct investor. The motive of the direct investor is a
strategic long term relationship with the direct investment enterprise to ensure
significant degree of influence in the management of the direct investment enterprise
.Besides, International Bank for Reconstruction and Development (IBRD) and United
Nations Conference on Trade and Development (UNCTAD) also provide definition of

12. Foreign Direct Investment. To put in simple words, FDI refers to capital inflows from
abroad that is invested in or to enhance the production capacity of the economy. It is
preferred over other source of foreign capital because it is non-volatile, non-debt
creating and results in economic development, modernization and employment
generation in the economy.
Foreign Direct Investment under the Industrial Policy 1991 and thereafter under
different Foreign Trade Policies is being allowed in different sectors of the economy in
different proportion under either the Government route or Automatic Route. In
Retailing, presently 51 per cent FDI is allowed in single brand retail through the
Government Approval route while 100 per cent FDI is allowed in the cash-and-carry
(wholesale) formats under the Automatic route. Under the Government Approval route,
proposal for FDI in ‘Single Brand Product Retailing’ are received in the Department of
Industrial Policy and Promotion, Ministry of Commerce & Industry. Automatic route
dispenses with the need of multiple approvals from Government and/or regulatory
agencies (Government of India or the RBI). Investors are required only to notify the
concerned Regional offices of RBI within 30 days of receipt of inward remittances and
file required documents with that office within 30 days of the issue of shares to foreign
investors.
The legal regimes that controls FDI in India and to that extent FDI in retailing
includes Press Notes by Department of Industrial Policy and Promotion, Foreign
Exchange Management Act 1999, Guidelines of Reserve Bank of India(RBI) and Security
and Exchange Board of India, besides, of course, the Constitution of India.
One needs to be holistic in his assessment of the outcome of introducing FDI in
Retailing. One of the reasons as to why a vast swath of India’s population is suffering
poverty and depravation is that Agricultural sector of the country has not developed

13. appropriately, and the main stumbling block in this regard has been that of inadequate
logistics and direct access for farmers to vast markets. FDI in retailing can to a large
extent ameliorate these deficiencies. If FDI in front end retailing is allowed, the
international retailing giants will be motivated to invest capital, bring in knowhow and
global capacity on a colossal scale and as a result a world class back end infrastructure
would be built the like of which may take the government years to make (Though FDI is
permitted in backend infrastructure to the extent of 100% through the automatic route,
in the absence of FDI in retailing, investment in backend infrastructure has not been so
forthcoming) . The foremost beneficiary of such a development would be the farmers,
especially those engaged in Horticulture. Though India is the second largest producer of
fruits and vegetables, lack of storage facilities cause heavy losses to farmers. Availability
of adequate post-harvest and cold chain infrastructure would enable the farmers to
avoid wastage and distress sales. The retailers would engage the farmers directly
through the contract farming programmers as also resort to direct buying from the
farmers which will dilute the role of profit siphoning intermediaries, enhance the
income of the farmers and give them direct access to markets. The resultant rural
prosperity may open up market for other industrial goods and help bring about a more
balanced regional development.
The Medium and Small Enterprise that plays a critical role in country’s overall
manufacturing scenario has lagged and suffered due to lack of branding and avenues to
reach out to the vast world market. The international retailers can buy from them not
only for the domestic market but for their stores outside the country also and in the
process provide the small and medium enterprises of the country a brand name and a
window to the international market. In fact, it is estimated that FDI in retailing can
significantly increase export from the country. If the domestic organized retailers are
allowed to grow to the exclusion of FDI, it may bring about other above mentioned

14. developments but not increase the exports.FDI can, in fact, spur competition among the
organized retailers. The ultimate beneficiary of these competitions would be the
consumers. An example of how the consumer benefit from the competition is the
automobile industry in India. The intense competition among the automobile industries
has resulted in a situation where the consumer has been able to purchase cars for as
low a price as rupees one lakh. CRIER in its research has found that all income groups
save through organized retail purchase, but the lower income groups save more. Thus,
organized retail is relatively more beneficial to the less well-off consumers.
A growing and mushrooming retail sector means that its contribution to GDP would
grow. It would thus help in expanding the economy, generate employment and result in
more tax income.
In the light of all that have been discussed above it can be said without any dispute that
the time for allowing FDI in Multi –Brand Retailing has come and as Victor Hugo has said
“Nothing can stop an idea whose time has come”. FDI in Retailing started with FDI in
cash and carry wholesale trading first permitted in 1997 to the extent of 100% under the
Government approval route and thereafter in 2006 brought under the automatic route.
In 2006 again FDI in Single Brand Retailing was permitted to the extent of 51%. From
here it is but natural and logical that FDI would now proliferate to multi-brand retailing.
But the progression to FDI in multi-brand retailing cannot take place at the cost of vital
concerns raised in connection with this possible change by different groups; viz, the
question of adaptability of the retailers in the unorganized sector, the question as to
how the FDI in retailing can be harnessed for the benefits of Indian agriculture and
Medium and Small Enterprise and above all how to impart into the economy a degree of
resilience to withstand the changes that would be ushered in the wake of introduction
of FDI in retailing. All these concerns have to be addressed not because the Left wing
political parties and the media through their campaign have necessitated such attention

15. but because we are constitutionally bound to do so .The Preamble of the Constitution
resolves to constitute India into a Sovereign, Socialist, Secular, Democratic, Republic and
to secure to all its citizens JUSTICE, social, economic and political EQUALITY of status and
opportunity.Directive Principles ofState Policy similarly exhorts the state to establish
just, equitable and fair order. Article 39(c) states that the state should ensure that the
operation of the economic system does not result in the concentration of wealth and
means of production to the common detriment. Though both these features are not
enforceable, the Executive and the Apex Court in particular have time and again
reiterated the sacrosanct nature of these features.
Unlike FDI in single brand retailing which pertains to brand loyal and a relatively
small high income clientele, FDI in multi-brand retailing would have direct impact on a
vast spectrum of population and thus a sensitive issue. Left alone foreign capital will
seek ways through which it can only multiply itself, and unthinking application of capital
for profit, given our peculiar socio-economic conditions, may spell doom and deepen
the hiatus between the rich and the poor. Thus the proliferation of foreign capital into
multi-brand retailing needs to be anchored in such a way that it results in a win-win
situation for India. This can be done by integrating into the rules and regulations for FDI
in multi-brand retailing certain inbuilt safety valves. For example FDI in multi –brand
retailing can be allowed in a calibrated manner with social safeguards so that the effect
of possible labor dislocation can be analyzed and policy fine tuned accordingly. To
ensure that the foreign investors make a genuine contribution to the development of
infrastructure and logistics, it can be stipulated that a percentage of FDI should be spent
towards building up of back end infrastructure, logistics or agro processing units. One of
the justifications for introducing FDI in multi-brand retailing is to transform the poverty
stricken and stagnating rural sphere into a forward moving and prosperous rural sphere.
To actualize this goal it can be stipulated that at least 50% of the jobs in the retail outlet

16. should be reserved for rural youth and that a certain amount of farm produce be
procured from the poor farmers. Similarly to develop our small and medium enterprise,
it can also be stipulated that a minimum percentage of manufactured products be
sourced from the SME sector in India. Public Distribution System is still in many ways the
life line of the people living below the poverty line. To ensure that the system is not
weakened the government may reserve the right to procure a certain amount of food
grains for replenishing the buffer. The government may also put in place an exclusive
regulatory framework to protect the interest of small retailers. It will ensure that the
retailing giants do resort to predatory pricing or acquire monopolistic tendencies.
Besides, the government and RBI need to evolve suitable policies to enable the retailers
in the unorganized sector to expand and improve their efficiencies
The Industrial policy 1991 had crafted a trajectory of change whereby every sectors of
Indian economy at one point of time or the other would be embraced by liberalization,
privatization and globalization.FDI in multi-brand retailing is in that sense a steady
progression of that trajectory. But the government has by far cushioned the adverse
impact of the change that has ensued in the wake of the implementation of Industrial
Policy 1991 through safety nets and social safeguards. But the change that the
movement of retailing sector into the FDI regime would bring about will require more
involved and informed support from the government. One hopes that the government
would stand up to its responsibility, because what is at stake is the stability of the vital
pillars of the economy- retailing, agriculture, and manufacturing. In short, the socio
economic equilibrium of the entire country.
The Initial research revealed four major bodies that have been constituted and could
provide data pertaining to FDI
1991 Foreign Investment Promotion Board FIPB

17. • consider and recommend Foreign Direct Investment (FDI) proposals, which do not
come under the automatic route. It is chaired by Secretary Industry (Department of
Industrial Policy & Promotion).
1996 Foreign Investment Promotion Council FIPC
• constituted under the chairmanship of Chairman ICICI, to undertake vigorous
investment promotion and marketing activities. The Presidents of the three apex
business associations such as ASSOCHAM, CII and FICCI are members of the Council
.
1999 Foreign Investment Implementation Authority FIIA
• Functions for assisting the FDI approval holders in obtaining various approvals and
resolving their operational difficulties. FIIA has been interacting periodically with the FDI
approval holders and following up their difficulties for resolution with the concerned
Administrative Ministries and State Governments.
2004 Investment Commission
• Headed by Ratan Tata, this commission seeks meetings and visits industrial groups and
houses in India and large companies abroad in sectors where there was dire need for
investment.
Attempting to research directives and results of the above bodies resulted in no direct
contact but instead a list of various other sub bodies.
• Project Approval Board (PAB) for approving foreign technology transfer proposals not
falling under the automatic route.

18. • Licensing Committee (LC) for considering and recommending proposals for grant of
industrial license.
• In addition, concerned Ministries/ Departments issue various approvals as per the
allocation of business and various Acts being administered by them.
• At the State level, State Investment Promotion Agency and, at the district level,
• District Industries Centers generally look after projects.
• Concerned departments of the State Government handle sectoral projects.
• Fast Track Committees (FTCs) have been set up in 30 Ministries/Departments for close
monitoring of projects with estimated investment of Rs. 100 crores and above and for
resolution of issues hampering implementation.
• “Investment Promotion and Infrastructure Development Cell” gives further impetus to
facilitation and monitoring of investment, as well as for better coordination of
infrastructural requirements for industry
• SIA has been set up by the Government of India in the Department of Industrial Policy
and Promotion in the Ministry of Commerce and Industry to provide a single window for
entrepreneurial assistance, investor facilitation, receiving and processing all applications
which require Government approval, conveying Government decisions on applications
filed, assisting entrepreneurs and investors in setting up projects, (including liaison with
other organizations and State Governments) and in monitoring implementation of
projects.

19. • CCFI Cabinet Committee on Foreign Investment- meets at the ministerial level and is
guided by the prime Minister, considers foreign investment exceeding Rs 3 billion as
requiring special political attention.
• Indian Missions Abroad- can also receive project proposal and will forward tem to the
institutions in New Delhi.
• Indian Investment Centre- (This was supposed to be closed after the Planning
Commission was established but still continues to operate) established as an
autonomous organization in 1960 with the objective of doing promotional work abroad
to attract foreign private investment into India and establishment of joint ventures,
technical collaborations and third country ventures between Indian and foreign
entrepreneurs.
The major competitors of Wal-Mart include Costco, Target Corp., and K-Mart.
Wal-Mart leads the industry and sector in market cap, employees, revenue, EBITDA, net
income, and earnings per share. Target and Costco have surpassed Wal-Mart in Revenue
Growth by quite a margin. Target also leads Wal-Mart in gross margin. K-Mart has
shown a decline over the past years and is dropping out of the major competitor
category.
Impact of Wal-Mart on Small retailer
In global business world, only larger size cannot imply that Wal-Mart is better and
successful. In fact, Wal-Mart also came under criticism for its impact on small retail
businesses. Independent small shops have to went out of business after this giant chain
stores come into play. Some research said that after Wal-Mart has been in town for
eight to ten years, that town is just a ghost town. This phenomenon is not happening
only in the United States, but it also has the same consequence in everywhere that this

20. giant chain store comes into play. In some countries, Wal-Mart has banned from local
communities because it obliterates local business. In short run Wal-Mart is like a
custodian but when look cautiously, it is a killer.
Though Wal-Mart is the world's largest retailer and consumer center and a principle
source in boosting up the American economy but it is resulting into negative impacts
over the local small business economies. The very policies of Wal-Mart from controlling
their suppliers to managing the working environment and low wages strategy along a
policy to provide products related to every filed of life under one single roof with a
cheaper rate then any other shopping center. This is affecting the local market
tremendously.
Basically Wal-Mart is a very large business company, which primarily focuses on
developing and expanding Wal-Mart while maintaining its standard of products and
presenting a healthy shopping environment. Therefore, it offers incentives like
partnership to the suppliers, sharing profits with the staff as well as assuring a friendly
customer care service with everyday low prices.
However, the small local business companies cannot earn a large amount
of profit from a minimum cost of production as compared to big shopping centers and
specifically Wal-Mart, which is the world's largest chain of shopping centers. Another
aspect that affects the small town business companies is the low wages labors with
extra facilities. Since small town business companies do not have ample potential and
capacity to earn maximum profits with minimum cost production and minimum lose,
workers are also not interested to work with these companies as they find no charm and
attraction in the working environment.
The small local business merchants lose economic strength and diversity
ofvarious products, as they do not have the potential to compete the giant retailers like
Wal-Mart.

21. Nature of retailing in china
China’s retail industry has extensive room for market growth. Favorable macro conditions,
changes in consumption patterns and the new demographic structure will be the driving forces
of the growth of the retail industry.
Favorable macro conditions to the retail industry include China’s relatively low
percentage of consumption / GDP compared with other developed countries, rapid
urbanization, a bigger middle class, supportive government policies and inflation pressures.
Micro changes include the teens and 20s become the dominant group in the retail markets.
These consumers have higher tendency for consumption and more aggressive consumption
patterns.
China’s retail market is more fragmented than that of other developed countries or
other industries in China. There will be more opportunities for investors to look for future
leaders with strong growth potential in the retail industry.
Sales channel plays a significant role in the selling process of the retail industries. It also
has a big impact on the investment returns of consumer products manufacturers. However,
sales channel resources (such as supermarketsand department stores) are scarce and scattered
in China. The characteristics of sales channels also bring risks andlimitations to the
development of the retail industry.
The risks and limitations brought by different sales channels to the consumer goods
manufacturers explain the fragmented nature of China’s retail industry.
The growth rate of consumption ofChina is 6.9% from 1998‐2006 which is the highest in the
world.
The following factors will continue to contribute to the growth of the retail industry in China:
1.) Rapid urbanization and increasing disposable income
2.) A bigger middle‐class and an improving social security system
3.) Inflation pressure is beneficial to retail sales growth
4.) Supportive government policies to boost internal consumption

22. Wal-Mart in china
Local adaption is a key reason for Carrefour’s success, and Wal-Mart has also adapted its
modal to the Chinese Market. In the grocery section of its stores, Wal-Mart originally
offered meat and seafood American-style, in plastic wrapped, freshness-dated
containers. To Chinese consumers, however, “fresh” means that you can pick it out
yourself and watch it wriggle so they took a pass. In response, Wal-Mart brought
Chinese wet markets indoors, allowing consumer to pick out their own dinner. Now
when opening stores in a new city, Wal-Mart teams arrive five months early in order to
research local consumption habits and to fine-tune store merchandise.
In China, Wal-Mart executives have their eyes squarely on the growing middle class, not
on China’s large poor population who cannot afford Wal-Mart good As a result, Wal-
Mart merchandise is more upscale and aligned with middle class materialism then in the
United States.
Prices in China are high, in part, because there is a VAT of 13% on most things.
More important, retailing in China is not nearly as efficient as it is in the US. While Wal-
Mart is successful in China, it doesn’t enjoy anything like the market share it does in the
US. Smaller, but my guess is, far more profitable. Wal-Mart faces very limited low-price
competition in China. Most stores are of the Mom-and-Pop variety, which keeps overall
prices high. Urban real estate is also expensive, and that also has an underlying impact
on consumer prices.
According to a recent McKinsey study, China currently boasts more than one
million wealthy urban households and more ten 42 million middle class households are
expected by 2015,which will give China a more sizeable middle class than found in either
America or Europe.

23. China remains a crucial location for sourcing the good that Wal-Mart sells
worldwide. Wal-Mart Global procurement Center moved from Hong Kong to Shenzhen
in 2002, and the retailer’s supplier networks are heavily concentrated in China. Wal-
Mart’s global sourcing strategies are forcing changes in the way that Chines suppliers
operate.
Logistics and distribution are serious problems for Wal-Mart too. In China,
however, Wal-Mart faces several difficulties. The first is China’s infrastructure while
more efficient than most developing countries; there are still plenty of bottlenecks.
Some of these are physical, relating to roads, ports, and so on. Wal-Mart operations in
China are not yet large enough to reap efficiencies from its logistics system.
In China, however, labor unions are vastly different from their western
counterparts, both in structure and in practice. Unions are officially run by the
Government and tend to be more pro management than in other country, while
financially supporting the community party structure and helping to secure social order.

24. Factor Affecting FDI In Retailing (CHINA)
factor Impact Advantage Disadvantage
Culture To Chinese consumers, It cerate customer believe
however, “fresh” means on store.
that you can pick it out
yourself and watch it
wriggle so they took a pass
Price policy Prices in China are high, in Wal-Mart faces very it can’t enjoy
part, because there is a VAT limited low-price anything like the
of 13% on most things. competition in China. market share.
Government and Labor Unions are officially Wal-Mart tread unions Government can
labor issue run by the Government compete with interfere in
government trade union. management practices
Supply chain and China’s infrastructure while It can provide competitive It creates new and
distribution more efficient than most and long term advantage costly distribution
developing countries; there in market. systems Which
are still plenty of influence to price of
bottlenecks. product.
Income group China a more sizeable Demand and Sale will be
middle class than found in improved with the
either America or Europe growth of middle class.
and its par capita income of
person will be grow in a
future

25. Nature of U S A Retail Industry
The retail industry business has been around for centuries in the United States. It allstarted
with a community general shop where people of the community would shop foritems of
necessity. Single general stores by local residents were the most common because specialty
stores were not really necessary due to limited population within the city and dissconnectivity
of people. As societies advanced with population increase leading to expanded cities, and new
advanced technologies gave rise to interconnectivity as well easy communication between
distanced cities or societies, opportunity for specialty stores was formed. But before the
specialty stores formed into a business the function of the general store was most essential
because they provided the varied needs of the local community.
Also the reason for the striving success of these general stores then was "necessity".
People around had no other options but to go for the general store. In the current scenario, the
US retail industry is thriving and booming. With the exponential growth of the retail business
across the whole of the United States, it is more likely to predict that this industry will very soon
come in to the category of the infrastructure industry. Managing customer relations and
attending their needs is a very important issue in business-to-business markets Customer is the
prime focus in retail business and only they matter because they are the ones who buy the
retailer products.
Retail chainsin the U.S. are publicly traded on the stock exchange and privately owned.
An estimatedtwo-thirds of the U.S. gross domestic product (GDP) comes from retail
consumption.Retail industry is a good indicator of the well-being of the U.S. economy.
According to thelatest annual report from the U.S. Census Bureau (2009), the total amount of
sales for theU.S. Retail Industry (including food service and automotive) was $4.13 trillion. Of
theworld’s 10 largest retail companies in the world, five of them are from the US and five are
from Europe. The top ten global retailers had combined sales of $1.15 trillion in 2008,according
to international consulting group, Deloitte. According to the U.S. Bureau ofLabor Statistics,
around 14.4 million people were employed in the U.S. Retail Industry asof April, 2010. Although
retail employment was increasing every month at the beginningof 2010, due to the recent
recession of the economy, the retail employment numbers werestill the lowest they've been for

26. the past decade. Due to the decline in retail jobs and theincrease in overall unemployment, the
retail job market in 2010 is extremely competitive atall levels.
Wal-Mart in U S A
Wal-Mart is primarily a discount retailer because they sell their products at the lowest
possible prices.Byselling at the lowest price.The essence of successful discount retailing
to cut the price on an item as much as possible, lowering the markup, and earn profit on
the increased volume of sales.Wal-Mart’s key slogan was around offering the lowest
prices in the market all year around, making an emphasis on cutting down any
competitors’ offer, averaging around 20% less than their competition.
The company has three "Basic Beliefs" or core philosophies Sam Walton built the
company on. Those beliefs are: (1) Respect for the Individual, (2) Service to Our
Customers, and (3) to Strive for Excellence. Other beliefs include, exceeding customer
expectations with "aggressive hospitality" such as using door greeters. The store also
features patriotic display and themes in its US stores.
Another goal for the company is to support efforts in the local community via
charitable contributions. Wal-Mart identifies several affiliations with charities such as
the United Way and the Children's Miracle Network.
In all, the company strategy is that of growth, expansion, and diversification by
finding new areas to expand into within retail and the service industry. It is the number
one retailer in the US and in the World as a result.
There have been several disagreements between the Union and Wal-Mart, as
Wal-Mart will not allow its workers to unionize. Several battles have been fought in
court and in the U.S. Congress over Wal-Mart's questionable labor practices. Wal-
Mart's policy has been one of delay and "terror" in the words of one union
representative who has accused the company of old-fashioned union-busting tactics. All

27. of Wal-Mart's competitors are unionized. They simply decided to avoid all the trouble.
Wal-Mart has decided to go up against labor laws to keep its overhead lower
(Bernstein).
Wal-Mart awarded its employees differently, shifting the focus from salaries and
into profit-sharing stock based rewards, working to improve the employees skills, trust
and involvement by doing constant job shifts and sharing the corporate information
with them.
The reputation of companies is not driven just by customer experience.
Highly public events can have a significant impact on customer and stakeholder
perceptions. Such events might be a “corporate crisis” or a natural disaster, but either
can be opportunities for companies to leave a positive lasting impression. Reputation
management requires a tight connection with the core identity and strategy of a
company. It also requires an ability to think strategically from the point of view of an
increasingly skeptical public. Wal-Mart embraced its success in responding to the
Katrina challenge as an opportunity to demonstrate the positive social value of its core
business model.
Other retailers have a stake in how well Wal-Mart is doing and how much they
are expanding. If a Wal-Mart moves into a community, changes are the other retailers
in that community, especially if they are privately owned are going to lose money and
may even be forced to close down. Because Wal-Mart is the largest retailer in the
United States and number 1 on the Fortune 500 list, they have the ability to lower their
prices and therefore can force other retailers out of business because they cannot
match Wal-Mart's low prices.
Wal-Mart’s technological edge is in its logistics, distribution, and inventory
control having installed a computer in its first distribution center in 1969, it had, by the

28. late 1970s, connected all Wal-Mart stores and distribution centers, along with company
headquarters, to a computer network. Wal-Mart was an early adopter of bar-code
technology. Wal-Mart is currently at the forefront of efforts to integrate Radio
Frequency Identification — a technology in which each individual item receives a tag
that can be read by a radio signal, thus facilitating tracking shipments, inventory, and
sales. Wal-Mart’s investment in information technology does appear to have increased
its own productivity over the last several decades. Computations from Basker and Van
(2007) indicate that improvement in Wal-Mart’s technology have reduced its cost of
operating alarge chain.
Wal-Mart has managed to build one of the most efficient distribution systems in
the US. Distribution centers were constructed so that any Wal-Mart’s stores will always
have a distribution center less than a day’s drive away and operating its own truck fleet
has led to 99.5% on time delivery record.Wal-Mart was able to build a win-win
partnership with their suppliers while still acting as a very strong negotiator. Insisting on
lower prices, Wal-Mart was also working with suppliers to help them achieve those
prices by providing them with support and consultancy and going into details to achieve
efficiency for their businesses.
The United States has well-established distribution channels for all types of retail
companies. The retail services industry provides an openly competitive environment that
fosters strong business operations and spurs innovations that increase efficiency and reliability.
Numerous opportunities for growth exist in the U.S. retail market for retail providers of
all sizes, including individual direct marketers or direct sellers, small- to medium-sized franchise
unit owners, and large “big-box” store operators. New distribution companies are opening
stores and units daily to serve a large, affluent consumer base.

29. FACTOR AFFECTING FDI IN RETAILING(U S A)
Factor Impact Advantage Disadvantage
Employment Improve the employee’s skills, trust Allow employee’s Several battles have
and involvement. ability to grow with the been fought in court and
company and be in the U.S. Congress over
promoted into higher Wal-Mart's questionable
positions. labor practices.
Price policy However, as the economy faced a It fulfills budgetary These price segments do
downturn, people wanted low price needs of their target not target all population
stores. customers. of that area.
Technology Flexible systems provide retailers with While this industry is Technology change is
a competitive advantage that can very technical, one dynamic process.
improve shopping experience and thing that has not, and
increase profitability. will not ever change is
that consumers want
and demand superb
customer service.
Companies Significant impact on customer and
Services stakeholder perceptions.
Supply chain Wal-Mart’s stores will always have a
and distribution center less than a day’s
distribution drive away and operating its own truck
fleet has led to 99.5% on time delivery
record.

30. Nature of retailing in Brazil
Despite its wealth Brazil is a country in which 26% of the population lives below the poverty
line. The good news for businesses, however, is that this percentage is shrinking, meaning that
more and more people have disposable income. The emerging middle class – a significant
proportion of a total population of more than 190 million – presents a wealth of opportunity to
potential retail entrepreneurs. Indeed, Brazil has just overtaken the UK as the sixth-largest
economy in the world and is expected to carry on growing at a healthy rate for the foreseeable
future. Brazil has falling unemployment (very rare in the current economic climate), falling
inflation, and a rising population of working women – just a few of the positive attributes that
bode well for a robust and fertile retail economy.
Brazil’s consumers are classed into four main categories: A, B, C and D. Classes A and B occupy
the higher end of the personal income scale. Class C, containing those with low to
middleincomes, is growing the fastest. New opportunities are constantly arising for astute
retailbusinesses as Brazil takes on characteristics usually associated only with the most
advanced western economies:
• More working women
• Growing class of Double Income No Kids couples (‘DINKS’)
• Longer life expectancy
• Greater consumption of health related products
As a result of these developments the consumer market in Brazil is evolving. Although still a
relatively young population, the average age is set to rise, which along with the general
increase in affluence will create new desires for consumer goods.
Among the distinctive traits highlighted during the seminar was the concentration of wealth in
a few regions of Brazil, 18 in total, which together account for approximately 48% of all retail
trade. Of these regions, the Northeast, with the largest proportion of people below the poverty
line, is also changing quickly, with the fastest growth in class C consumers. Interestingly, 70% of

31. point of sale stores, around 400,000, are small independent stores, not large chains, and in
geographical terms are spread out thinly. This clearly presents a challenge to retailers
attempting to reach the consumers.
Important considerations for businesses when planning on entering the Brazilian retail market
include
• Identifying the consumer
• Understanding their unique desires
• How to communicate with the consumer to meet these desires
• How to meet the geographical challenges of the Brazilian landscape
Even in the late 1990s, Brazil was just like any other emerging economy, characterized by
extremes of wealth and abject poverty with no social class dividing the bridge between. A
decade and more down the line, the effervescence in the middle cannot be missed. Yes, the
great Brazilian middle class – defined as those who earn between $690 and $2,970 a month –
has arrived and is here to stay. If Brazil has made a name in the global retail sector, it had better
thank these late comers, empowered with good purchasing power and access to credit.
For the eighth consecutive year, the Brazilian retail industry has grown. While Brazil’s
GDP increased 2.7 percent in 2011, the retail sector expanded 4.4 percent, demonstrating
resilience against an economic downturn. According to the Brazilian Supermarket Association
(ABRAS), the retail industry was estimated to be worth about R$224.3 billion (approximately
US$119.31 billion) in 2011. Ongoing macroeconomic stability and social inclusion policies that
have put more credit in the hands of consumers have played an important role in maintaining
this positive result. The industry has also adopted aggressive strategies as the market becomes
more competitive. These are all factors impacting the sector’s improved profile compared to
2010: the number of stores increased from 81,100 to 82,000 (1.1 percent); the number of
employees also went up from 919,900 to 967,700 (5.2 percent); sales floor size expanded from
19,700 thousand square meters to 20,600 square meters (4.4 percent); and the number of
check-outs increased from 199,300 to 206,600 thousand (3.6 percent).

32. Brazil’s retail market is estimated to be worth about $230 billion, driven mostly by domestic
demand. Besides the 40% growth in GDP per capita during the last eight years or so, population
distribution also plays a vital role in encouraging the growth of sectors such as retail. About 30%
of the country’s population lives in the 10 principal metropolitan cities. Sao Paulo brims over
with a population of 18 million, while Rio de Janeiro has 10 million.
Still, the consumption habits of this predominantly urban population are diverse. As a
PwC report points out, the lower income sections tend to spend more on essentials such as
food and beverages, while those in the upper income bracket splurge on leisure, durable goods,
as well as luxury items. The Brazilian market is also perhaps the most internationalized among
the BRICs, as the top 10 retailers corner almost 60% market share among themselves. Food
retailers, apparel retailers, consumer goods makers, appliance retailers, and consumer staples
companies form the backbone of the sector.
Wal-Mart in Brazil
The original intention of Wal-Mart was to achieve the number one retailer position in the
Brazilian retail market through a partnership with a local “player” in a very short period of time.
In order to achieve this ambitious goal, Bentonville headquarters planned a logistics and
communication infrastructure capable of supporting no less than 80 stores in the Brazilian
market. In addition, the headquarters’ intention was to export its expertise and practices in the
form of an extensive set of operational manuals that proved successful in the United States,
including product assortment and internal space utilization as well as its product mix.
Wal-Mart began its operation in Brazil in an absolutely fantastic way. The initial five
stores were opened in a few months and, through a very aggressive pricing strategy, attracted
thousands of enthusiastic consumers ready to empty the shelves. Another attraction was
employees' disposition to help consumers, as well as wide product offering. Overall, during its
initial periods of operation in the Brazilian market, Wal-Mart had captured a very favorable

33. image from consumers and, subsequently, had painted a dark picture for its competitors'
future.
The initially aggressive and promising entry strategy came to a halt after Wal-Mart
immediately encountered severe unexpected operational problems. Long checkout lines, high
stockout rate (40%), unreliable supply lines, faulty management-performance measures, traffic
congestion, competitors’ reactions, and governmental forces were responsible for Wal-Mart’s
initial failure in the Brazilian retail market.
Following Wal-Mart’s disappointing performance in the Brazilian retail market, the
company had to revise its originally aggressive strategy. To accomplish this, some valuable
lessons learned from Wal-Mart’s international expansion into Mexico and Canada had to be
incorporated into the redesigned strategy for Brazil. Consequently, Wal-Mart’s strategy revision
planned for adoption of a more conservative and controlled expansion, consolidation of
distribution lines, and improved assimilation into the Brazilian culture. An example of Wal-
Mart’s revised strategy included for the opening of only 10 stores from 1995 to 1997, down
from the initial 80 plus stores. Furthermore, Wal-Mart intended to acquire an existing retail
chain instead of exploring other partnerships, as was originally planned. In addition, the
company wanted to acquire experienced managers from other competitors.
The challenges that Wal-Mart has experienced in Brazil may be grouped into six categories: state
of the economy, cultural differences, management, advertising, logistics & distribution, and
competition.
Economy
Since Wal-Marts entry into the Brazilian retail market in 1994 until the end of 2001, Brazil’s
economy has been all but stable. The “Real Plan,” implemented in 1994 to curb the currency
hyperinflation, brought the inflation from 40% in the year it was instituted, to 3% in 1999.
Thanks to appreciation of the U.S. dollar, the Asian financial crisis, and a resulting global
economic slowdown, Brazil floated its currency in 1999, as was the case prior to the Real Plan of
1994. This caused the inflation to moderately increase to 8.9% in 1999, but was brought down

34. to 5.3% at the end of 2001. However, triggered by national currency depreciation, inflation
increased again in 2002 and was expected to cross 8%.
The Brazilian economy was recently struck with the energy crisis. The crisis was caused
by electricity consumption in Brazil being greater than its production, thus forcing the import of
electricity from Paraguay. Although the current state of the Brazilian economy could be
characterized as somewhat stable as compared to that before 1994, the future outlook of the
economy does not provide any guaranties on a long-term basis.
Cultural Differences
Brazilian retail consumers consider product quality the most important factor in the decision-
making process of purchasing, followed by product price, customer service, store cleanliness,
and store distance.
Most Brazilians prefer shopping in small- to medium-size neighborhood stores.
Nevertheless, they also enjoy the occasional shopping trip to a big discount supercenter. This
trip, however, occurs only once a month, and thus making so-called “monthly purchases,”
instead of once a week as in the United States. Yet the current energy crisis has forced most
Brazilians to turn off their freezers and to adjust their shopping habits accordingly. Namely,
food-related trips to the store in Brazil have increased in frequency, but decreased in the
quantity of food purchased, especially in perishable goods.
Despite the unbelievably bad traffic jams, the average Sao Paulo resident is willing to
take the long lasting trip to a specific supercenter if he/she perceives it as cost efficient and
need satisfying. Similarly, the notion of having to pay a membership fee in order to shop at
Sam’s Club is not greatly appreciated by Brazilian consumers, especially when shopping at
“buyer’s club” is not perceived as providing greater savings and overall extra benefit to the end-
consumer.

35. The product mix in Wal-Mart’s supercenters should be as close to reflecting the needs
of Brazilian consumers as possible. Offering products popular in the United States such as golf
equipment, vacuum cleaners for garden leaves, American footballs, and food grinders shows
complete ignorance to Brazilian consumers since they have little or no use for these items.
Likewise, assigning 25% of supercenter space for food in a country where food represents 60%
of supermarket sales is another example of Wal-Mart’s cultural ignorance.
Management
Due to dissimilarities in income and culture between U.S. and Brazilian markets, a greater
degree of managerial autonomy may be desirable for Wal-Mart in Brazil. In addition, getting
back to the basics, or in other words, implementing Sam Walton’s “management by walking
around” concept has not been used to its fullest extent by Wal-Mart in Brazil.A faulty product
mix and store-space misallocation present examples of bad management policies. Moreover,
the overall corporate grip that Wal-Mart has on its subsidiary in Brazil can best be exemplified
by the fact that performance of the local managers in Brazil was based primarily on store sales
volume. Thus, mangers set prices below cost to artificially stimulate demand and inflate sales
volume numbers. Managers should have greater freedom in managing on a micro level. Wal-
Mart has recognized the need to hire professionals, and has recently started a head-hunting
campaign to acquire proven professionals from local competitors. This move should reduce
Wal-Mart’s need to micromanage the Brazilian effort.
Advertising
Many Brazilian consumers, and housewives in particular, have the habit of listening to the radio
during the day, while cooking and/or cleaning the house. Radio advertisements, therefore,
should be used to reach and attract potential shoppers. Contrary to logic, Wal-Mart did not use
radio as a medium for communicating to its customers. Some television and newspaper
advertising is used by the company, but the resources allocated to the overall advertising
campaign amount roughly to only 2% of Wal-Mart’s revenues. Although Wal-Mart has hired a

36. Brazilian advertising agency, the lack of autonomy given to the agency defeats the whole
purpose of “going local” through advertising.
Logistics & Distribution
Initially, Wal-Mart experienced an alarming 40% stock out rate in Brazil, as compared to 5% in
the United States. Although the stockout rate has decreased since, the problem is far from
being completely eliminated. Namely, Brazilian suppliers are lagging behind their U.S.
counterparts in logistics technology, thus making computerized inventory management systems
useless. Additionally, constant traffic jams present another major obstacle to consistency and
predictability in supply of both Wal-Mart stores and distribution center(s).
Competition
Since Wal-Mart entered the Brazilian retail market in 1994, competition has been ever
increasing, and all to the benefit of end-consumers. Many retailers are focused on expansion
into different retail formats with the purpose of targeting different customer segments.
Increasing the number of stores across the country is another way retailers compete in Brazil.
Thanks to Wal-Mart, “price wars” are the most visible effects of fierce competition.
The 1995 data state that Brazil’s entire retail industry accounts for 6.6% of GNP, with
total consolidated sales of U.S. $43.7 billion. The top 5 retailers in the Brazilian retail market
account for roughly U.S. $11.2 billion. The 1997 data show that Wal-Mart’s major competitors
are Carrefour, CompanhaBrasileira de Distrubuição, Royal Ahold, and MakroAtacadista. In
addition, some smaller retail chains and a large number of individually owned stores account
for the remaining portion of the Brazilian retail market.
Wal-Mart Now
Since originally entering the Brazilian retail market in 1995, Wal-Mart has revised its strategy
and consequently gained a substantial share of the marketplace. Although Wal-Mart is
currently the 6th largest retailer in Brazil, it still holds a relatively small share of the retail

37. market, which is dominated by the French retailer Carrefour. Still, future prospects are looking
good for Wal-Mart in Brazil.
As of 2002, Wal-Mart has a total of 22 stores in operation and has 2% of the market.
Out of 22 Wal-Mart stores in Brazil at the moment, it operates under three different formats,
12 Supercenters, 8 Sam’s Clubs, and 2 Wal-Mart TodoDia stores in the states of Sao Paulo, Rio
de Janeiro, Minas Gerais and Parana (AOL Latin America Announces Marketing Alliance With
Wal-Mart Brazil, 2001).As previously stated, Wal-Mart’s first revised strategy called for the
opening of only 10 stores from 1995 to 1997, down from initial plans of over 80 stores. Looking
back, Wal-Mart actually opened only 3 stores over that same time period. Most of the
expansion occurred within the past two years until 2001 Wal-Mart revealed its revised plan for
expansion in Brazil in July 2002. According to the plan, the company would inaugurate 5 stores
in Brazil. However, by the end of 2002, the total number of stores in operation continued to be
22.
In May of 2001, Wal-Mart opened the Barueri distribution center in São Paulo. Wal-Mart
previously had three rented, limited-capacity distribution centers. The new distribution center
has 35,000 square meters of storage space and is built on a 200,000 square meter lot owned by
Wal-Mart. This new facility is designed to easily supply 20 local stores at its current size, gives
Wal-Mart better control over supply lines, and allows for future building expansion.
In May of 2001, Wal-Mart opened its first “TodoDia” store in the eastern Sao Paulo
section, Sapopemba. Since the Sapopemba section of São Paulo is mostly inhabited by a lower
income segment of the population, this move signals that Wal-Mart is looking to increase its
market share through catering to different market segments. Another TodoDia store opened on
October 10th, 2001 in Taboao de Serra region of Sao Paulo, with a third store scheduled for
opening by the end of the fiscal year 2001. As opposed to Wal-Mart Supercenter that carries
60,000 items, Wal-Mart’s TodoDia carries only 12,000 items. Besides being a smaller format
store, TodoDia’s inventory is stored directly above display shelves. It is reasonable to suspect
that Wal-Mart’s introduction of the TodoDia store format is used to test the market in Brazil for
future expansion into local, and extremely value-conscious neighborhoods. This strategy is

38. similar to that of Wal-Mart de Mexico where the company currently dominates the retail
market with six retail formats.
In line with Wal-Mart’s revised strategy that called for improved assimilation into
Brazilian culture, the company is currently involved with local communities, supporting social
programs such as “Special Olympics Brazil” and “Mesa Sao Paulo”.
Wal-Mart’s latest move is the announcement of the marketing alliance with AOL Latin
America whereby AOL Brazil will be promoted in all Wal-Mart and Sam’s Club units in Brazil.
This marketing partnership is a logical strategic response to a current growth of the e-
commerce sector. The value of business-to-consumer (B2C) e-commerce sales is forecasted to
reach $4.3 billion in 2005. The number of Internet users in Brazil is expected to jump to 29
million in 2005.

39. FACTOR AFFECTING FDI IN RETAILING(Brazil)
Factor Impact Advantage Disadvantage
Cultural Differences Involved with many social Identify to consumer.
programs.
Price policy / Income Start Everyday low price Attract middle and This strategy does not
group strategy. lower class segment improve market share.
consumer.
Competition To targeting consumer Open It fulfills demand of Existing competitor also
different retail format store. different costumer follow that’s idea.
segment.
Marketing Alliance with AOL Latin Generate marketing It affect organization low
America wealth for Organization. price strategy.
Distribution Open new distribution Better control on Wal- This policy handle only
policy. Mart supply chian. few number of store.

40. Literature Review
Literature review is a study involving a collection of literatures in the selected area of
research in which the researcher has limited experience, and critical examination and
comparison of them to have better understanding. It also helps the researchers to
update with the past data, data sources and results and identify the gap for further
research, if any.
Wal-Mart is the largest Discount Store in the United States. Its magnitude is not only
recognized domestically but also expanded to International Market. The company
believes that one day this one will replace the United States position when the trend
down (Molin, 2004). With this goal Wal-mart is encouraged to expanding stores into
nine countries around the world and more in its plans (About Wal-Mart, 2001). Being
number one in the United States does not always guarantee for being number one
elsewhere in the world. There are many problems that Wal-Mart is now facing in this
highly competitive business world. Finally, many references illustrate various problems
and causes Wal-Mart faced while expanding into International market.
The three basic belief and two keys rules that differentiated Wal-Mart from the
rivals were proposed in “The Wal-Mart Culture” (2004). Gilman, 2004; Jones, 1998 and
Menzer, 2001 describe the reason why Wal-Mart expand its intensity to international
market. They believe that in the future this division will replace the US market.
However, expansion through world market does not seem easy to Wal-Mart, it also
faced some problems both from external and internal. Sources tend to agree that Wal-
Mart itself has less consideration in international market when compare with
competitors (Groeber, 2002; Wal around…, 2001).

41. Another reference states that it was misreading the competitors (Molin, 2004).
In addition, other sources state that culture difference is another problem that Wal-
Mart was overlooked (Lewis, 1998; Anderson, 1994).
Even though Wal-Mart has close relationships with American suppliers, it fails to
make connection with local suppliers (Bianco & Zellner, 2003; Lohr, 2003). Wal-Mart
tried to use the same standard and concept as in United States but unfortunately one
concept does not fit all. Moreover, Gilman (2004) and Zellner, Schmidt, et al. (2001)
agree that Wal-Mart is too concentrated in expanding their concept.
Another external factor that comes into play is government regulations. Both
Groeber (2002) and Molin (2004) agree that these restrict regulations lead monopoly
market in some countries.
Although some source states that one of the biggest problems of Wal-Mart is
Human Resource Management (HRM) (Biddle, 2004), sex discrimination is the most
controversy topic not only in the United States but also in the international market as
well (Rock, 2001).

42. Research methodology
Research in common parlance refers to a search for knowledge. Once can also define
research as a scientific and systematic search for pertinent information on a specific
topic. In fact, Research is an art of scientific investigation. The Advance learner
Dictionary of current English laysdown the meaning of research as “A careful
investigation or inquiry especially through search for new facts in any branch of
knowledge”
According to Cliffort and Woody Research comprises defining and redefining problems,
formulating hypothesis or suggested solution, collecting, organizing and evaluating data
, making deductions and reaching conclusions and testing conclusions whether they fit
the formulating hypothesis.
Research Designing
Aresearch design is master plan or modal for conduct formal investigation. Once the
formal investigation is decided, the researcher must formulate the formal plan of
investigation. A research design is the specification of method and procedure for
acquiring the information needed for solving the problem. the information needed for
solving the problem. The information needed for solving the problem. The formal
investigation plan will concentrate on the three selection source of method and
procedures for gathering the data. Data gathering forms are prepared.
There are three basic type of research:
Exploratory
Descriptive
Casual

43. Exploratory:Designed to generate basic knowledge, clarify relevant issues, uncover
variables associated with a problem, uncover information needs, and/or define
alternatives for addressing research objectives.
Type of Exploratory studies
Literature Search
Analysis of Selected Cases
Experience Surveys
Descriptive: The Descriptive study Designed to provide further insight into the research
problem by describing the variables of interest. It can be used for profiling, defining,
segmentation, estimating, predicting, and examining associative relationships.
Type of Descriptive studies
Cross-Sectional Study
Longitudinal Study
Causal:This type of research Designed to provide information on potential cause-and-
effect relationships.Most practical in marketing to talk about associations or impact of
one variable on another.
In this project report primary data collected by interview method and secondary data
collected by previous report and case study.