According to sources, the US giant wants to lend its famous name only to large format stores, such as hypermarkets, and not to other retail formats.
NEW DELHI/MUMBAI: What’s in a name? Plenty, if the foot-dragging by Bharti and Wal-Mart over signing a joint venture agreement for retail trade in India is any indicator. In the first signs of a difference of opinion between the two, it is now emerging that Bharti is keen to use the Wal-Mart name for all its front-end stores, but the latter has some reservations.
According to sources close to negotiations between Bharti and Wal-Mart, the US giant wants to lend its famous name only to large format stores, such as hypermarkets, and not to other retail formats.
This means that the smaller, neighbourhood stores Bharti is planning to open throughout the country would not have any visible connection with the world’s biggest retailer, if Wal-Mart has its way.
And this difference of opinion on branding appears to have become one of the biggest bones of contention between the two. Reports of Bharti being keen on using the Wal-Mart brand come even as there have been protests in political circles over this very issue.
On his part, Bharti chairman Sunil Mittal has maintained all along that his company is conducting a survey to ascertain the most suitable brand name for front-end stores - it could either be Bharti, Bharti-WalMart or just Wal-Mart.
So, it seems the disagreement over branding could be one major reason for the delay in the two companies signing any deal, despite several round of negotiations. Mittal had earlier asserted that the JV would be in place by the end of April.
When asked about differences with Bharti, a Wal-Mart spokesperson merely said, “Any talk of differences is pure speculation and not true. The Wal-Mart, Bharti JV announcement will be made soon”.
A Bharti Retail spokesperson also denied any difference between the two parties, asserting that a JV announcement was expected shortly.
Not only branding, the extent of back-end support Wal-Mart is willing to provide Bharti for its retail stores is under intense negotiations even now. Wal-Mart’s emerging markets president Raj Jain has already made it clear that the cash-and-carry wholesale partnership with Bharti would not exclude sourcing by other retailers.
In other words, any other retailer could source goods from the JV outlet and Bharti would be unable to derive any specific price advantage by virtue of its being one of the JV partners. It seems this issue is also proving to be a deterrent to the two sides signing on the dotted line till now.
Besides the cash-and-carry wholesale JV, the two companies are also expected to ink a separate pact for technology transfer that will allow Bharti to incorporate Wal-Mart’s practices across its retail operations.
But do all these differences mean the negotiations between Bharti and Wal-Mart are at such a sensitive stage that Bharti may finally decide to walk the retail tightrope all alone eventually?
It is too early to say, but a further delay in any joint announcement from the two sides cannot be ruled out.
Bharti’s front-end retail stores are expected to come up only by March next year, whereas the cash-and-carry wholesale operations are slated to commence by the second half of 2008.
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