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Some, however are not too optimistic, arguing that cash and carry constitutes a small percentage of India’s total organised retail business. Although it registered a 100% growth in 2008, it needs to be remembered that the operating base of the cash and carry business itself is still small in the country. Raghav Sehgal, Retail Analyst, Angel Broking opines that Bharti’s retail business has the potential to provide that next big leap to Bharti Enterprises, if they focus on their B2C model viz. the Easyday chain of convenience stores and hypermakets. “Every brand is driven by consumption led by the end consumer and B2C model has the potential to reach out to rural markets as well,” agrees Sehgal. And here, there is a lot that Bharti’s retail venture can learn from its telecom stint. Airtel is the market leader in the sector and there were a few primitive requirements that helped it scale this feat – vast reach and coverage, a strong network and price competitiveness. Applying these principles in retailing, the B2C model has the potential to reach out to the mass market. There can be an Easyday store opened in small towns and cities, unlike Best Price. Secondly, Bharti Walmart has invested extensively in its back-end over the last two years. Taking expertise from Walmart, Bharti is sourcing fruits and vegetables directly from farmers in Punjab. “With telecom, they understood the nerve of India and so were able to expand even into the hinterlands. Their retail venture will require them to do the same,” asserts Wadhwa of SKI Capital. Moreover, managers at Bharti are already in sync with retailer psyche (thanks to Airtel) and they can play on that. Crucial perhaps is the slow but sure manner in which Bharti is going about its retail ambitions. Organised retail is a political potboiler in India. Mukesh Ambani’s experience with retail shows the level of resistance that can be evoked with the merest whisper. No wonder Bharti has only 27 stores operating till date - a majority of them in Punjab and Haryana. Unlike Ambani, his strategy seems to be to acquire critical mass and then flex muscles. Mittal surely knows how to learn from the mistakes of others, especially the ‘big boys’ of India Inc.
But here’s the most pertinant reason why Bharti-Walmart has the potential to become the number one player in its segment. It’s the incredibly potent combination of Walmart and Bharti stupid! With annual revenues of $405 billion, Walmart is the most successful retail business in the world and the Walton family dwarfs even Bill Gates in terms of personal wealth. Their well-oiled retail business operational skills are stuff of global legend now. Sunil Mittal and his brothers on the other hand have already shown proof (with Airtel) of their acumen for succeeding in sunrise businesses. If anyone can work magic in the sector - apart from Mukesh Ambani of course - it is this combine. “Bharti group is known for its scale and all its business ventures have the ability to become cash cows. Given the nature of partnership, the chances of success of the ventures are much higher,” agrees Jagannadham Thunuguntla, Equity Head, SMC Capitals. Even the Mittals are banking heavily on at least one or more of these businesses to firefight its way to the top. They’ve tasted success once and are not happy remaining a one trick horse anymore. Their diversification strategy seems set to reap results - at least in the organised retail biz. Ready to usher in India’s next home grown conglomerate then?
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Source : IIPM Editorial, 2009
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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