Old Foes new battleground - Walmart vs Lotte Mart - The War shifts to India

NEW DELHI: Wal-Mart will not get a respite from its Korean nightmare just yet. Discount store chain Lotte Mart, which played a role in elbowing out Wal-Mart from South Korea, is chasing the world’s largest retailer all the way to India.

Lotte Mart is planning its India strategy and has set up an office in Delhi to study the domestic market. The third largest Korean discount store chain, which gave Wal-Mart a tough fight in Korea, was in the race to acquire Wal-Mart stores in the country.

It eventually lost out to its rival and the leading retail player in the country, Shinsegae. Early this year, Wal-Mart announced its decision to sell its 16 stores in Korea to Shinsegae for $882 million after posting reasonable losses.

While Wal-Mart has already decided on the franchisee model in the absence of regulations permitting 100% FDI in retail in India, the Seoul-based Lotte is scouting for an Indian franchisee partner to set up its discount stores. Initially, the company would look at entering malls and subsequently, get into stand-alone formats, according to sources.

Lotte Mart stores are typically over 3,000 sq ft in size, stocking mainly fresh and processed foods, home appliances and apparel. It’s a part of Korea’s fifth largest conglomerate, the Lotte Group, which has interests in diversified industries including confectionery, restaurants, retail, construction and petrochemicals.

This won’t be Lotte Group’s first tryst with the Indian market. Last year, the group’s confectionery unit, Lotte Co, had forged a joint venture with India’s diversified FMCG player DS Group. However, the JV fell through later. A DS Group spokesperson said, “Lotte is a conservative company and was taking a lot of time to seal the deal.”

Lotte Group, which has been conservative in its approach towards expansion, has aggressive plans to chart a global retail footprint. Lotte’s retail operations have so far been confined to the Korean market which it now wants to expand into the overseas market. It will open stores in Russia, Vietnam and China in the next two years.

Meanwhile, Wal-Mart, after exiting the Korean market, is set to debut in India in partnership with Bharti Enterprises. While the two will enter into a joint venture for the supply chain and wholesale business or what is called the ‘cash-and-carry’ business, Bharti will be the Wal-Mart franchisee for front-end retail.

Source : Economic Times