The company said on Tuesday that it plans to open 50 wholesale clubs that target small businesses as customers under its Best Price Modern Wholesale banner in the next four to five years. The company also plans to set up online shopping for those customers. The announcement came after the world’s largest retailer, with $466 billion in worldwide sales last year, ended its partnership with Indian partner Bharti Enterprises at end of last year. Wal-Mart opened the first Best Price store in 2009 with Bharti, eventually operating 20 locations. It hasn’t opened a new one since October 2012.
The partnership ended in part as Wal-Mart has reportedly faced challenges and complex local rules regarding its ambition to open general-merchandise stores that sell directly to consumers, including a rule that 30% of the products have to be sourced locally. India allows 100% foreign direct ownership in wholesale clubs, but requires a local partnership for a retailer like Wal-Mart that wants to sell to consumers.
“Wal-Mart is committed to India and we are excited about our growth plans,” said Wal-Mart Asia President and Chief Executive Scott Price.
Wal-Mart is grappling with four-straight quarters of same-store sales declines at its U.S. namesake unit and slowing growth at its membership warehouse Sam’s Club. But Best Price, which unlike Sam’s Club doesn’t charge for membership but is only open to registered businesses, last year posted a 19.7% gain in comparable sales.
The Indian wholesale stores, known there as a cash-and-carry format, are about 50,000 square feet in size (about the size of an average U.S. supermarket) and sell about 5,000 items, ranging from food and consumables items to hotel, restaurant and office supplies as well as clothing. Wal-Mart said over 90% to 95% of its products at the wholesale stores are sourced locally. It also works with local farmers to stock its produce aisles.