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While Walmart Stores Inc’s India plans have suffered a jolt, with the Bentonville-based retail major forced to call off its troubled six-year joint venture with Bharti Enterprises amid allegations of FDI rule violations and bribery, there are other markets too where the company has found the going tough.
Walmart’s experiences in Russia and Japan are indicative of partner trouble. In other major markets such as Germany and South Korea, Walmart woes have been largely a factor of not sizing up customer demand.
In Russia, Walmart registered its main trademark way back in 2001 and opened an office in Moscow in 2008, only to close it down two years later after failing to establish a joint venture with Russia’s third largest oil producer TNK-BP. Plus, high land prices, which surged sharply and remained at those levels even after the global financial meltdown, put paid to the plans of Walmart’s specific format of sprawling stores with huge parking spaces. In 2002, Walmart had entered Japan through an alliance with a local player, Seiyu. Despite it being Walmart’s biggest investment in Asia at that time, the venture was faced with consistent losses over the years.
This was attributed to the venture’s low pricing strategy that reportedly proved ineffective in Japan’s highly fragmented market. Seiyu’s ineffective management was also blamed for Walmart’s lack of success in Japan in the first eight years of operations. In Germany, Walmart had trouble adapting to customer demands and after nearly a decade of operations, in July 2006, Walmart was forced to beat a hasty retreat from the country by selling its 85 stores to Metro AG at a $1-billion loss.
Earlier that year, in May, the firm agreed to sell its unprofitable chain of South Korean super-centres to Shinsegae for $860 million, largely as the company did not understand the quality conscious psyche of the Koreans.
Bharti ropes in Jain as group advisor
New Delhi: Former Walmart India head Raj Jain has been roped in as an advisor by the Bharti Group, which today parted ways with the US retail giant to operate stores independently in India. “The appointment will be effective soon, but I cannot share the details of my role right now,” Jain said. In June, Walmart India announced a change, with Ramnik Narsey replacing Jain. (PTI)