Bryan Roberts is Director Retail Insights at Kantar Retail, a WPP group insight and retail consultancy. He has spent over 15 years advising and monitoring retail businesses globally, including Walmart ( on which he has co authored a recent book with Natalie Ber : ‘Walmart : Key Insights and Practical lessons from the World’s largest retailer’ Kogan Page)
The interview has been conduced by Sanjay Badhe. Sanjay is a consultant in the area of retailing, shopper marketing, branding and retail related strategies. He is currently working on projects with a number of retail and marketing organizations, including start ups, in and outside India. Previous corporate roles include senior level assignments at Tata Trent, Aditya Birla Retail, Shoppers Stop, Raymond and Al Futtaim in the Middle East, as well as in marketing research across diverse markets and regions. Special focus over the past few years is in helping SMEs and start ups take a leap into the next level of growth. Sanjay Badhe can be contacted at firstname.lastname@example.org
SB : You must be aware that there is a lot of interest in India with Wal-Mart and what’s happening with Wal-Mart. From your knowledge and work on Walmart how do you think Walmart would look at a market like India in the long run, given our large, yet fragmented and highly regulated retail business at present?
BR: Wal-Mart obviously believes that there is some justification for being in India, which is one of the global markets that you have to be in for the future. In a way though, I no longer believe in the ‘BRICS ‘as such: Russia has become ‘ the wild west’ because of the regulations and the manner in which business is conducted there, really leaving just Brazil, India and China and the CIVETS. And for any global player to have any aspirations to be a true global player, then you have to be in at least two out of these three markets, which is what Wal-Mart, as well as Tesco and Carrefour are planning. China was not really a very easy market to get into. If we go back to the early days in China, and if you consider just the area of regulations, working with provincial governments and local partners was critical, and then as things became relaxed and the whole market became stable, growth followed. I think that Walmart has a lot of experience of using joint ventures to grow - Mexico was the first International market it entered in this manner. So this looks like the way they are planning to grow in India.
So, they need to put a mark in the ground in India, and while things might be regulated, I would think Wal-Mart has learnt to be patient and humble and grow slowly. I’m sure they won’t suddenly open 3000 stores once they get a green light from the authorities! I do think that there will be more patience in India, since they know that India is a very long term game. In a variety of markets that they have entered, there are a lot of smart retailers, and I can see that they’ll look at these in India too, as well as an entrenched traditional retailer in place and their usual global competitors, as they move ahead.
SB: And the reactions to Walmart’s entry? Specially in the press ?
BR: I must say, that in every significant market that Walmart has entered, there is a certain 'hysteria’, a fear that Walmart will drive local retailers and suppliers out of business. Yes, there has been some impact, but not, I feel, is it really as big as it’s made out to be.
SB: And what of the impact of Walmart on a market, specially suppliers and local retailers?
BR: Well, it’s interesting, but my understanding is that Walmart has nothing to gain from driving out local suppliers: in fact the data I have shows that the vast majority of what it sells when it goes international, is sourced locally. Shoppers in each of the markets that Walmart operates in are different, in terms of their needs and satisfying these. There is certainly an advantage in sourcing globally, for categories such as non resaleable items (shopping trolleys and cash registers for example), and also a huge opportunity for global sourcing in some of their non food private lable ranges as well as some branded product, but for groceries and even clothing, there are local market differences and so local sourcing remains quite important for Walmart in almost all of their international markets.
Obviously the impact on local retail can be a bit more ‘impactful’, but then it does go both ways: in Mexico, their move into the small retail business has resulted in a large number of independents being driven out of business, but the positive impact is when Walmart also establishes a wholesale businesses for retailers, as they are doing in India. So for some local retailers it will be negative, but for some it is positive.
Even in a market such as America, where Wal-Mart is massive, we’ve seen a lot of small retailers coexist with Walmart: I know that that independent discount retailers actually like to be located close to a Walmart store and it becomes more of a symbiotic relationship rather than a destructive one!
SB: One of the areas often mentioned is their strength in logistics and supply chain and how this is brought into markets that they enter. Here in India it is often seen as a reason for inviting retailers from outside to enter – in fact Indian FDI policies link investments in the back end to entry into the retail sector. How does Wal-Mart look at supply chain?
BR: I think they may be more than well aware of the logistics in the Indian market, as they are in any of the markets that they operate in. You know logistics even in a market such as the UK has difficulties: traffic and blockages and moving product efficiently (with less environmental damage) is an equally difficult task. Nor it the US easy – there are 50 different State Governments, with different taxes, regulations, labour laws, working hours, etc. The point I’m making is that Walmart is used to working with fragmented and difficult and challenging structures. I think South Africa is an example of how it actually worked to overcome some of these challenges. If anything Walmart will take a leading role in applying efficiencies in the supply chain, even in the Indian market. I know of initiatives that they have taken with Indian farmers as well as suppliers, and Walmart will lead by example. But it will take more than Walmart – they can’t just click their fingers and change. And it will take more than Walmart to change.
SB: You talked about South Africa as a market that Walmart entered successfully. What would Walmart have done when they entered the market there as compared to retailers already in the market ?
BR: A lot of this was in and around bringing in efficiencies. In South Africa retailers and suppliers operated regionwise, using the provinces or regions as a basis for everything. When Walmart came in they were clear that they didn’t want 5 conversations with the same supplier : they wanted just one. And this is where Walmart’s strength lies, in centralisation. All efficiencies come from this, whether in marketing or promotions or even supply chain. They work towards streamlining their relationships with suppliers and bring in efficiencies because of this. For example, most suppliers are organised by brand: Walmart actually changes this and gets suppliers to reorganise by customer. They tend to accelerate change and centralisation.
SB: In your book, you mentioned that Walmart has also stumbled - for example in Germany. How does that happen and what does Walmart do in these situations?
BR: I think that most of the problems in Germany were really their own fault. They bought 2 – I can only describe them as -‘dreadful’- retail chains, and then chose a wrong trading and merchandising style, as well as private lable, and in their EDLP ( Every Day Low Prices) programme, they suggested that this was different, while there were strong local retailers- Aldi and Lidl – who have done this for a long, long time in that market. I think that they brought most of the failure upon themselves, but there were also alignments within the German retail trade and suppliers that they didn’t appreciate or understand, which made Walmart’s job more difficult – and honestly some of the things that they did were alien to Germany and even suppliers were a bit mystified.
SB: And the lesson for Walmart? I did notice their stores in China had sections which looked like a Chinese market – with live fish being sold from tanks. It seems that they have taken this to heart?
BR: Being ‘local’ is as important, if not more important than being ’global’ when you are an international retailer. We’ve seen that in subsequent market entries and with subsequent acquisitions, that they now make very little changes at the front, shopper facing end. If anything it’s little changes in pricing, private lable and very little imposition of American cultural norms. Use local knowledge and local talent.
And I also see that they’ve seen the need to become more humble and diplomatic.
SB: The other area you’ve mentioned in your book, is the problems they faced when they rationalised their SKUs ( items) and actually reduced the number of products that a store stocked- arguably to reduce inventory, lower labour costs and allow for better shopper experience. How much of an issue was this?
BR: the rationalisation was clearly one of the most serious problems they have faced in their US operations. Typically they felt they needed to reduce the choice given to shoppers by reducing skus by 20-30%– why show 25 skus of ketchup, when just 15 would do- and costs in inventory and labour would also come down. It was put into place, along with a store refurbishment programme. But when a favourite brand is missing, shoppers move their entire baskets to others and the drop in sales hurt had Walmart scrambling to restore almost 9000 skus!
SB: And what new challenges do you see for Walmart?
BR: Well how to tackle the multi channel shopper now using various methods ( including online ), in the US and other developed markets – and with smart phones in the emerging market. The fact that as other discounters are sharper and other retailers-drug stores chains for example- have started stocking similar categories, with the added advantage of location and frequency of visit. Technology is an area where they were ahead, but the others have caught up. They don’t use analytics to understand the consumer, as much as say Tesco, but they have gone in for systems from outside, such as SAP and have also made some interesting moves, such as Walmart Labs.
Using a two level private lable branding approach: Global for men’s accessories and textiles, local branding for food is another. I feel that there seems to be an attitude change - social media practices are being taken from their retail chain ASDA in the UK and so ideas no longer flow one way from Bentonville!
SB: And the Walmart retailer ‘power’ equation in India?
BR: It doesn’t really work in Walmart’s favour. Walmart is miniscular in India, inspite of a large presence in other parts of the world. So while it does help, that Walmart has a strong relationship with lot of suppliers in India, it doesn’t work as believed by observers at the ground level. For example Walmart does well in the UK and South Africa because of it’s relationship with suppliers, since there are much larger retailers (Tesco and Shoprite respectively) who would have much more clout and would object to any preferential treatment to Walmart. So Walmart has to be ‘collaborative’ in India.