New Delhi: Walmart India has abandoned plans to set up foodonly stores in the country, unsure about the viability of the business given the present restrictions, two industry people aware of the development said.
“The headquarters does not want to move ahead with the policy in its current form. It does not want to regret later,“ said a retail industry executive familiar with the plans of the company, based in Bentonville in Arkansas.
Retailers say operating food-only retail stores does not make business sense because of the waferthin margins. The government must allow the retailers to also sell a small portion of non-food items to offset high real estate costs in India and make such ventures viable.
“We are evaluating the model as per the guidelines announced,“ Rajneesh Kumar, head of corporate affairs at Walmart, said when asked if the company had scrapped plans to set up food-only stores. Food processing minister Harsimrat Kaur Badal, one of the biggest proponents of foreign investment in food-only retailing, said on rect investment in food retailing and that non-food products should be included. “I feel that whatever investment a company makes at the farm gate which augments infrastructure, a certain portion, say 25%, should be allowed for home care products,“ she said.
Badal said food processing in the country accounted for 10% of the overall produce currently, while in developed countries it was 80%.
“All global players are interested to enter India. We have a $600 billion retail market out of which 60% is food. This sector will treble by 2020 and no country can ignore us.“
Badal’s cabinet colleague commerce and industry minister Nirmala Sitharaman has vehemently opposed allowing overseas supermarkets to sell non-food items such as soaps and shampoos. Wal-Mart Stores Inc., the world’s largest retailer, has had a rollercoaster ride since its arrival in India in 2009. A global focus on its antibribery compliance programme led it to freezing its expansion plan in India and resulted in a split with its wholesale retail partner Bharti Enterprises in October 2013.
Walmart India operates 21 Best Price Modern Wholesale stores in the country after buying out the 50% stake in Bharti Walmart from Bharti.
India has allowed global retailers to sell multi-brand food products through both traditional stores and online channels as long as they are sourced and manufactured in the country . The policy does not allow such stores to stock general merchandise items such as soaps, shampoos and non-food items.