Could Wal-Mart succeed in India?

Wal-Mart recently announced that much of the mega-retailer’s future growth will come from expanding internationally, especially in emerging markets such as India and China. That’s risky business. Last year, Wal-Mart had to close up shop in South Korea and Germany. In fact, less than a third of international retail expansions succeed, according to the consulting firm Bain & Co.

If Wal-Mart in India were anything like Wal-Mart in the United States, there are some obvious reasons why its operations just wouldn’t fly:

• Lack of huge parking lots. Americans tend to go to Wal-Mart once a week and buy a ton of stuff. Hauling the loot home requires cars and parking lots. In India, expansive parking lots don’t exist, and it’s unlikely that Wal-Mart could find enough land to build one in India’s dense cities. (And Wal-Mart would have to target urbanites; the rural folk are too poor.)
• Lack of cars. Most Indians don’t have cars, much less ones with capacious trunks to hold a week’s worth of purchases. Instead they walk or bike to a nearby corner shop or open-air market, and make small purchases on a nearly daily basis. Plus, vegetable sellers wheel their carts through neighborhoods (sort of like ice-cream trucks in the United States), so an Indian homemaker often doesn’t even have to leave her doorstep to get the ingredients for that evening’s dinner.
• Lack of large fridges. Buying a week’s worth of fruit, veggies, and milk won’t work because Indians lack American-sized refrigerators to store large quantities of perishable foods. Plus, electricity in many places is sporadic.
• Protests from mom-and-pop grocers. In a nation with a tiny shop or kiosk on every corner, Wal-Mart would easily invoke the wrath of small-business owners, just as it has in small-town America.

Granted, if Wal-Mart adopts a different business model in emerging markets, it could succeed. Competition could even make Indian-owned stores provide better customer service. So, I’ll remain open-minded to the idea of Wal-Mart in India.

But, I’ll also remain skeptical.