Bharti-Wal-Mart: A Glocalization Experience

Abstract

This paper analyzes the experience of Bharti-Wal-Mart, a joint venture between Wal-Mart and Bharti Enterprises (an Indian telecommunications company), based on the principles of glocalization theory. By and large, glocalization refers to the adaptation of multinational corporations (MNCs) to local cultures. MNCs achieve this by immersing themselves into local cultures and by adopting unconventional marketing techniques. A major finding of this analysis is that globalization is not monolithic. It is not a homogenizing factor that forces local cultures to follow the norms, practices, and values of a big corporation. In fact, Wal-Mart executives quickly learned that imposing the Bentonville blueprint on local Indian populations would be doomed to failure from the beginning. An important focus of this analysis is to establish a framework for greater understanding of the strategies adopted by Wal-Mart in India.

Keywords

Adaptation business culture globalization glocalization India marketing Wal-Mart

Introduction

This paper analyzes the experience of Wal-Mart in India – now called Bharti-Wal-Mart, a joint venture between Wal-Mart and Bharti Enterprises, an Indian telecommunications company. Glocalization is the proposed theoretical framework. By and large, glocalization is the idea that, in order to be successful in foreign markets, multinational corporations (MNCs) must cater to the local culture by immersing themselves into that local culture and by adopting unconventional marketing techniques. From this vantage point, glocalization envisions a business approach that is simultaneously global and local. A major finding of this analysis is that globalization is not monolithic. It is not a homogenizing factor that forces local cultures to follow the norms, practices, and values of a big corporation. In fact, Wal-Mart executives quickly learned that imposing the Bentonville blueprint on local Indian populations would be doomed to failure from the beginning. An important focus of this analysis is to establish a framework for greater understanding of the strategies adopted by Wal-Mart in India, which opened its first store in the northwestern state of Punjab in May 2009.

This analysis begins with a thorough description of glocalization theory, its origins, and the different contexts in which the theory has been applied. Then, the author proceeds to describe India’s current economic situation (i.e. with respect to India’s economy and India’s retailing approach), the presence of Wal-Mart in India, and the problems the United States (US) corporation has faced in that country. What comes subsequently is the heart of this analysis: the glocalization strategies adopted by Wal-Mart in India. As such, three categories of glocalization have been found: (1) adaptation to Indian culture; (2) adaptation to local brands and products; and (3) adaptation to local attitudes toward economizing. This paper ends with a discussion section that also offers suggestions for future research.

Glocalization Theory

Coined by Robertson (1994), the term ‘glocalization’ is a portmanteau of ‘globalization’ and ‘localization.’ By and large, glocalization embodies the interaction of the global and the local (Andrews and Ritzer, 2007; de Nuve, 2007; Swyngedouw, 1997), the underlying forces of cultural homogenization and heterogenization (Eric, 2007), and the cooptation of both universalizing and particularizing trends (Robertson, 1994). Glocalization is slightly different from globalization. The latter emphasizes the universality of corporate or cultural undercurrents worldwide. Glocalization, on the other hand, concentrates on particularism of an international product, idea, or service. For example, glocalization permits the replica of McDonald’s to simultaneously co-opt and adapt to local tastes and preferences in more than 120 countries. While McDonald’s keeps its golden arches and red color the same across all nations, it also shows cultural adjustability and ‘location-friendliness.’ As such, the McDonald’s restaurants in Brazil have ‘happy hours’ with salsa bands. In New Zealand, they have kiwiburgers. In Egypt, they serve McFalafels (Ritzer, 2007) – falafels are meatballs containing beans and chickpeas. From this vantage point, glocalization envisions a culture that is simultaneously global and local (Ingleby, 2006). This McDonald’s illustration also shows that glocalization coincides with relocalization; that is, local elements are incorporated into global products and/or services (Archer, 2008; Lee, 2003).

Glocalization has been studied extensively by Marwan Kraidy, a communication scholar. For Kraidy (2001), glocalization embodies novel cultural hybrids and modification of norms and practices to cater to local worldviews and expectations (Kraidy, 2002). Glocalization is not merely another theoretical model of niche-marketing, now global: glocalization also provides an improved accurateness of the current approach to globalization among scholars and practitioners (Svensson, 2001). The glocalization theory integrates the connection, equilibrium, and harmony between cultural homogenization and heterogenization, standardization and adaptation, homogenization and tailoring, convergence and divergence, and universalism and particularism (Robertson, 1995). The theoretical model of glocalization is significant because it contests the classic vision of Western imperialism (Schiller, 1971). From this perspective, globalization reinforces the consciousness of the world – one which permeates both the local and the global (Holton, 1998). Hence, globalization is no longer a complete homogeneous process: it simultaneously shifts toward some degree of cultural homogenization while allowing people to associate more profoundly with their local grouping (Maynard and Tian, 2004).

What glocalization underscores is that internationalizing products or services has a better chance of success when these are adapted specifically to each local region in which they are introduced. When marketed in a given culture, they become commodities of glocalization in the sense that they are developed and managed indigenously (Appadurai, 1996; Robertson, 2001). The fundamental principle of glocalization is that imposing our cultural blueprint on other cultures is not always efficient. Let us look at the case of Disneyland Paris. It might have branched out of the US Disney World, but it is now run by a French executive who has provided a lot of efforts to uphold key elements of French culture in the amusement park. For instance, the restaurants at Disneyland Paris serve French food and wine. French personnel, who hate to provide the smiles and friendly greetings so expected at any US amusement park, simply do not display broad smiles and do not go out of their way to be friendly (Cheney et al., 2004).

In The World Is Flat, Friedman (2005) claims that, for nations to survive in a globalized world, they must forfeit a certain degree of economic imperialism to global forces so as to achieve economic growth by Western standards. Yet, at the same time, to be a successful player ‘locally,’ corporations must ensure that local cultures preserve, to some degree, their local traditions while experiencing globalizing processes. Friedman also calls this glocalization. It follows that glocalization is a variety of globalization that is cognizant and sensitive to differences across areas of the world (Robertson, 2001). The objective of glocalization is to search for local market input and break out from the ivory tower. For this reason, this means that no single approach is right in all instances.

Glocalization can refer to both minuscule changes in global products and more impactful changes to those products for a particular local market (Robertson, 2007). In all cases, it happens in some specific region. Glocalization implies more direct connections between the local and international levels (Cheney et al., 2004; Mooney and Evans, 2007). Glocalization constitutes local forces that alleviate the effect of global institutions (Aliet, 2007). As explained in depth in this study, the global institution in question is the economy of global scale established by a prominent cathedral of consumption: Wal-Mart.

India’s Current Economic Situation

This section provides a description of India’s current economy and how it has rapidly evolved over the past few years. Of particular relevance is the shift from the local store format (i.e. kirana) to the modern retail store format. What follows is a description of India’s retailing approach, which is driven by growing interest in global investors that view India as an ideal emerging market.

India’s Economy

In the world today, there are four big emerging markets: Brazil, Russia, India, and China (commonly referred to as BRICs). The BRICs seem to be most prepared to withstand the global economic downturn (Bogoslaw, 2009). India is one of the world’s fastest growing economies, with a gross domestic product (GDP) escalating at an average annual rate of about 7.5% over the last three years (Choi, 2006; The Economist, 2006). The nation’s retail industry is not well centralized; much of its buying and selling occurs in open-air markets where it is common to barter over prices (Lomax, 2009). Stocks in India tend to be somewhat more expensive than in other parts of Asia, as Indian businesses have made more of a profit and have delivered higher returns on equity than nearby countries (Bogoslaw, 2009).

In India, people have shopped for their food and groceries for generations at crowded open markets known as bazaars. This allowed them to bargain with street vendors and purchase products for their money’s worth. However, with the development of dual-income families, especially in the cities, citizens are not necessarily searching for the best price. Instead, they are now concentrating on practicality, product selection, and improved quality. Many tier-one cities in India have experienced a growth of malls, supermarkets, and hypermarkets to accommodate the increasing necessities of middle-class families. Several domestic corporate powerhouses are seriously contemplating entry into the retail space (Chary, 2009). From this standpoint, the organized retailers are entering the Indian grocery market at a fast pace – thereby posing a threat to the survival of kiranas. At the same time, there are also many frugal consumers, forcing market players to cut costs. Kiranas are like mom-and-pop stores in the US (or corner shops in the United Kingdom). For a long time, they represented over 90% of store sales in India. Small in size (smaller than 500 square feet on average), it is expected that they will not be able to compete with modern retailers (in terms of variety and scale). Consequently, kiranas have already lost volume and share of consumer’s wallet in several parts of India (Vijayraghavan and Ramsurya, 2007).

In 2008 the retail industry was hailed as the new big hope for India’s economy. Supercenters (or supermarkets) were opening all over the country, with sprawling malls and fashionable boutiques holding extravagant launch parties everywhere. Retailers acquired every inch of space in metropolitan areas, escalating real estate prices. Even India’s small towns jumped on the mall-mania bandwagon (Lakshman, 2009a). With India recognized as the ‘global back office,’ the cost savings can be astronomical (Enderwick, 2009). From being pigeonholed as the most self-sufficient non-Communist nation in the whole world, India has progressed to become the target market of international institutions for its open-door policy toward foreign corporations (Joshi and Little, 1996). In spite of the global economic recession, the Indian economy is increasing at a secure pace and is expected to continue to do so (Singh and Chaudhuri, 2009). Over the past few years, India’s growth rate has been roughly 50% (Goswami and Mishra, 2009), which makes it an attractive emerging market.

India’s Retailing Approach

Since the early 1990s India has initiated a large-scale economic liberalization program (Desai, 2009). As of 2009, India’s US$350 billion annual retail industry has mostly consisted of stores that are much smaller than the average US Wal-Mart supercenter (Bellman, 2009; Bellman and Misquitta, 2009). The retail industry has progressively undergone substantial changes in its size and look. Though it used to be mainly comprised of kiranas (the economical ‘mom-and-pop’ store format), present-day Indian retail is now a huge ‘industry.’ The major transformation is in its organization (Shabnam and Paul, 2008). As opposed to the retail industry in poorer countries, retailing in India – while larger in terms of size – has been highly fragmented and unorganized (because the countless kiranas were spreading like mushrooms after the rain). Indeed, with almost 12 million kiranas, India had one of the largest retail densities in the world. Examples of kiranas are street vendors, small restaurants, road-side stalls, hand-cart and pavement vendors, and two-wheeler and car showrooms (Shabnam and Paul, 2008). Kiosks, where the ownership and management rely on one person, are also considered traditional or unorganized retail stores. Kiranas usually require the labor of low-skilled employees and represent a colossal part of India’s sector’s output (Desai, 2009).

An expanding market such as India has a growing number of choices from non-branded, locally branded, and internationally branded products (Kaufman-Scarborough and Forsythe, 2009). The food and grocery (FandG) sector represents about 60% – Rs1,200,000 crore – of the Indian retail market (India Retail Report, 2007). Less than 1% of this is in the organized sector. In fact, the FandG sector experienced a yearly growth of about 30% in 2005–2006 (India Retail Report, 2007). India, then, is launching a revolution in food retail, stimulating competitiveness and supply chain development (Sagheer, Yadav and Deshmukh, 2009). This presents huge opportunities in corporate retail. India’s organized food retailing is expected to climb to US$33 billion by 2015 (Kaushik, 2006).

The single constant in India’s retail industry is change. India has been ranked as the fifth most appealing emerging retail market in the world and the first in a Global Retail Development Index of 30 developing countries developed by Kearney (2006). Retail has conventionally been a key sector in India, employing millions of individuals. In fact, it contributes 10% of India’s GDP and 6–7% of the workforce. Organized retail growth in India has followed a pattern of ‘level of supermarket diffusions,’ a strategic business model that began in the 1980s and that developed at slow speed through the early 1990s (GoI and ICRIER, 2005). The first level of diffusion was characterized by a wide expansion of home-grown food retailers – supermarkets and discount stores, especially in the south of India. Global food retailers showed growing interest in the Indian market. By 2006 the admission of several Indian big industries pushed the Indian organized food retail further into the stage of ‘second level of diffusions’ (Sagheer et al., 2009).

Presently, the ‘second level of diffusions’ has to do with foreign and domestic investments, directed by global multinational retailers (e.g. Wal-Mart) and India’s prominent industries (e.g. Bharti). Indian retail corporations have either launched or are at the point of launching their own food retail endeavors. Although the Indian government has not removed its restrictions on foreign direct investment in organized food retailing, most global retailers aiming at the Indian market have either opened fully-owned subsidiaries (e.g. Metro of Germany, Shoprite of South Africa, etc.) or have taken part in joint ventures (e.g. Bharti-Wal-Mart) for cash-and-carry formats (Sagheer et al., 2009).

Wal-Mart in India: A Description

This section explains how Bharti Enterprises has entered into a partnership with the successful behemoth of Wal-Mart, opening its first store in May 2009. As a joint venture, Bharti-Wal-Mart has already created a distribution center in Amritsar (in the northwestern state of Punjab). The distribution center mainly caters to the merchandise needs of the cash-and-carry stores and the retail stores in the area, including Easy Day stores (fully owned by Bharti Enterprises).

Wal-Mart in India

Due to the financial crisis in the US (Bustillo and Zimmerman, 2008), it is opportune timing for Wal-Mart to take advantage of India’s retail market as it already dominates a majority of the world market (Hussain, 2009). The introduction of Wal-Mart in India began when the first store opened in May 2009 (Wax, 2009). It is located in Amritsar, in the northwestern state of Punjab. By May 2009 Raj Jain, the president of Wal-Mart in India, planned to open 15 more stores across the country by 2012 and employ about 5000 people (Bellman, 2009; Bellman and Misquitta, 2009; Singh, 2009a, 2009b). Another Wal-Mart store has already opened in Mumbai. The company has formed a partnership with Bharti Enterprises, so it is now referred to as Bharti-Wal-Mart (Daft, 2009; Hussain, 2009). Bharti Enterprises is an Indian conglomerate and the country’s largest mobile phone company, which has experienced great success in the telecom sector (Halepete, Seshadri, and Park, 2008). Thanks to this merging, Bharti owns the shops while Wal-Mart controls the logistics, procurement, and storage aspects of the business (Alexander and Doherty, 2009; Chary, 2009).

On the whole, Bharti-Wal-Mart is a business-to-business (B2B) joint venture in India between Bharti Enterprises and Wal-Mart for wholesale cash-and-carry and back-end supply chain management operations. The objective is to cater to small retailers, manufacturers, and farmers (Singh, 2009b). A major reason Wal-Mart has joined forces with Bharti Enterprises lies in its ability to develop such a unique sequence of wholesale cash-and-carry stores in India (Boone and Kurtz, 2009). Today, Bharti-Wal-Mart has become a wholesale industry accommodating to the exclusive wishes of vegetable vendors, hospitals, restaurants, and hotels, working under the name ‘BestPrice Modern Wholesale’ (Alexander and Doherty, 2009). By 2015 Bharti Enterprises is projected to invest US$2.5 billion in retail while taking part in a 50/50 joint venture with Wal-Mart for the cash-and-carry sector (Hussain, 2009). After opening a distribution center in Amritsar (Punjab), Bharti-Wal-Mart executives said they intended to open, soon, other distribution centers – each supplying facilities within a 60- to 100-mile radius. This decision will serve both cash-and-carry stores and Bharti Retail’s Easy Day stores (Zwiebach, 2009).

An average Bharti-Wal-Mart supercenter store will be between 50,000 and 100,000 square feet and provide a wide variety of fresh, frozen, and chilled foods, fruits and vegetables, dry groceries, personal and home appliances, hotel and restaurant products, clothes and garments, stationery, and additional merchandise items (Lakshman, 2009b; Singh, 2009b). To safeguard its smaller merchants, the Indian government has secured legislation that Wal-Mart should sell only to wholesalers and business owners (as well as their families and friends). This law has reduced frictions among the merchant organizations and left-wing political parties. Business owners are permitted to give access to the store to three friends (and family members) at the most. Not surprisingly, many Indian consumers jump through hoops to borrow membership cards for an opportunity to enjoy Bharti-Wal-Mart’s low prices (Wax, 2009).

Problems Facing Wal-Mart in India

The introduction of Wal-Mart in the land of Gandhi did not go unnoticed and was not well received at first (Lomax, 2009). A majority of the opposition against Wal-Mart’s introduction in India argues that, in many of the countries that Wal-Mart has previously entered, wages have been driven down and competing retailers have been put out of business. The company has a strict anti-union policy designed to prohibit workers from gaining collective bargaining power, which could lead to increased wages, covered health benefits, and job security. There have been many reports conducted with records of the economic and potential social and environmental obstacle that could occur when Wal-Mart invades a foreign country (Hussain, 2009).

The first major problem that Wal-Mart faces in India is the 12 million kiranas. If Wal-Mart can conquer kirana customers, these will probably become its biggest customer base. However, should these customers have an aversion to shopping at Wal-Mart, they could represent a bump in the road to the US behemoth (Bellman, 2009). According to India Foreign Direct Investment Watch, an organization of labor unions, environmentalists, and academics, Wal-Mart will ultimately hurt the incomes of kirana owners, even if its newly-opened stores are not open to the general public – as aforementioned, they will be open only to wholesalers and business owners, as well as their families and friends (Wax, 2009).

The second major problem pertains to the resistance of the Indian government. Because India is still considered an ‘emerging market,’ or a ‘developing economy,’ the government has not adopted the principles of free market to a full extent. For example, it can play a pivotal role as to what national environmental laws and policies should be adopted (Sagheer et al., 2009). In addition, as of 2009, Bharti-Wal-Mart is only allowed to sell no more than 6000 food and nonfood items to other businesses. Indeed, Indian law forbids foreign corporations from engaging in direct-to-customer selling, particularly with respect to multi-brands. The purpose is to protect smaller domestic retailers (Eileen, 2009). Other constraints, though not as major, pertain to infrastructural barriers, skill shortage, rising wages in the local Indian population, volatile political and policy milieus, and problems in managing suppliers (Singh and Chaudhuri, 2009).

Wal-Mart’s Glocalization Strategies in India

India represents an important component of Wal-Mart’s rapid international expansion. Mike Duke, the former leader of Wal-Mart’s international division, became the chief executive officer (CEO) in February 2009. In his previous job, Mike Duke applied principles of glocalization theory. For example, he recruited native-born supervisors and executives (in markets abroad) who understood local customs (Bellman, 2009). This section describes the diverse glocalization strategies adopted by Wal-Mart in order to cater to local Indian customs. More specifically, three categories of glocalization were listed and described in detail: (1) adaptation to Indian culture; (2) adaptation to local brands and products; and (3) adaptation to local attitudes toward economizing.

Adaptation to Indian Culture

While the US culture is a couple of centuries old, the Indian culture is 9000 years old (Reddy, 2003). The variety and heterogeneity of the Indian market are enormously complex. The wide range of religions and dialects, the unique value system, tradition, and societal structure, the distinctive economic purchase power, and access to transportation are all powerful indicators suggesting the complexity of India (Chesney, 2010). India resembles the European Union in many ways. It consists of 35 states and union territories; the languages and customs vary from state to state (India has 22 official languages and over 1500 dialects spoken); and income disparity can be excessive even within states and territories themselves (United Nations, 2008). The per capita income of the wealthiest state, Punjab, is currently 4.5 times higher than that of the poorest state, Bihar (Makar, 2008). The extreme diversity of the billion-plus Indian population creates an issue for Wal-Mart stores. With conflicting values, food habits, buying power, and access to transportation and markets, designing specific products can be complicated. Along with this, the corporation must deal with opposition from the 12 million locally-owned kiranas that offer competing prices and understand native preferences (Halepete et al., 2008).

However, regardless of the vast intercultural differences, Wal-Mart executives have managed to properly analyze and understand Indian consumers’ culture by adapting to the multitude of regional disparities. Consequently, several Bharti-Wal-Mart stores have already been built in different parts of the country. The first one opened in Amritsar, in the northwestern state of Punjab in May 2009 (Wax, 2009). In Amritsar, Wal-Mart executives tactfully surveyed shopkeepers and designed a video in the local language to get local consumers familiarized with the corporation (and its business style). Wal-Mart’s objective is to make them aware of the importance and benefits of modern retailing (Bellman, 2009).

Additionally, Wal-Mart took quick notice of the reality that the social, economic, and cultural needs of rural India are different from those of urban India. While in the US it is easy for Wal-Mart managers to deal with these needs through formal, transactional business relationships (after all, stores in Milwaukee are very similar to those of Houston), Bharti-Wal-Mart executives have realized that, to be successful, they have to jump through hoops in order to create solid informal relationships with local Indian customers. These informal relationships can easily outweigh high product quality and motivate local Indian customers to purchase groceries at large stores – and not at local businesses (kiranas). From a glocalization standpoint, corporations that have the capability to immerse themselves into local cultures, in addition to providing high-quality products at low prices, can build a customer base that is valuable, as if the corporations were aiming at the ‘premium’ segment (Singh and Chaudhuri, 2009).

Let us focus on one specific case in which Wal-Mart has successfully glocalized to Indian culture: Valentine’s Day. Valentine’s Day is a celebration in many cultures worldwide. In India, Valentine’s Day is openly discouraged by Hindu fundamentalists, mainly the Shiv Sena, as they resist the Western ideals that the celebration represents. Each year since 2001, there have been violent confrontations between shopkeepers (trying to sell Valentine-related items) and Shiv Sena fogeys, who view the celebration as a cultural abomination from the West. Messages are conveyed days before Valentine’s Day, warning Indians to stay away from the celebration (Ghoshal and Keneka, 2009). In fact, in some Indian regions, retailers are barred from selling Valentine’s Day cards and goods – not surprisingly, an underground market on V-Day paraphernalia has emerged. It may be true that cultural universals transcend borders, but cultural dynamics differ and, in this case, the focus is anti-US consumption. As a result, Bharti-Wal-Mart sells no Valentine’s Day cards or any other paraphernalia (Close and Zinkhan, 2009).

Another cultural factor that Wal-Mart has taken seriously into account is that the vast majority of India’s consumer base displays a unique habit in their ‘shopping trips’ to the supermarket. As such, most Indian consumers have a usual day (and time of day) to go shopping for groceries (East et al., 1994; Singh and Powell, 2002). Seventy percent of consumers go to the grocery store with random intervals and 30% with rather fixed intervals. In a similar vein, ‘routine’ shoppers spend more money on a single shopping trip but are less able to visit grocery stores more frequently and to switch stores (Chetthamrongchai and Davies, 2000; Kim and Park, 1997). Wal-Mart has adapted to this ‘customer segmentation’ by enacting logistic changes based on time orientation and shopping motivation. In doing so, Wal-Mart has a better idea of India’s consumer culture. Glocalizing to the local Indian culture and gathering information on the country’s various shopping attitudes are better methods of adaptation than relying solely on socio-demographic data (Wax, 2009).

Adaptation to Local Brands and Products

Wal-Mart executives quickly understood that putting oneself in the local consumers’ shoes is essential to serve a large customer base. When Wal-Mart opened stores in Germany, its annual profits were low because the corporation failed to apply glocalization principles, particularly with respect to local brands and products. For example, Wal-Mart managers should have realized that the German pillow size is bigger than the American one (Tarun and Chopra, 2007). By definition, a local brand is a brand existing in a given country or in a confined geographical area (Wolfe, 1991). Anti-brand attitudes are based not only on psychological factors but also on societal and cultural factors (Zavestoski, 2002). Indian consumers view their own brands and products as more ‘down to earth’ than global brands. This means that local trademarks provide a more basic or generic brand proposition. Local brands tend to be more associated with local traditions and cultures than global brands are (Eckhardt, 2005). Argenti (2008) found that local brands offer the advantage of trust because they create a distinctive relationship with consumers that take a long time to develop. Yet, for the average Indian, glocal brands are still perceived as luxury goods.

In line with these contentions, while, in the past, brand loyalty was found to be associated mostly with less affluent shoppers (Dunn and Wrigley, 1984; Enis and Paul, 1970), recent studies demonstrate a stronger correlation between brand loyalty and a customer base that is wealthier (e.g. McGoldrick and Andre, 1997). Knox and Walker (2003) also confirm the existence of a weak but significant relationship between brand loyalty and a wealthy customer base in grocery stores. What significantly influences customers’ loyalty is not necessarily overall satisfaction with a store. Rather, it is determined by factors such as the brand or product itself, but also frequent-buyer reward schemes, the length of the trip to the store, amount of the average grocery bill, store recognition (in terms of visual graphics), and the degree of sale assistance (Miranda, Kónya, and Havrila, 2005).

What Wal-Mart executives also realized is that many local Indian consumers attach a considerable level of importance to the concept of ‘Indian-ness.’ According to intercultural communications scholar Harry Triandis (1995), Indians want to preserve the values of family and community and live in the Indian fashion. From this perspective, what Indian-style products or brands did Wal-Mart take into consideration before opening its store in India? To begin, only about a third of Indians consume aerated drinks (e.g. soda, pop) on a daily basis (Goswami and Juneja, 2008). Not surprisingly, Wal-Mart stores in India do not sell a lot of varieties of aerated drinks. Furthermore, the US corporation had to consider the reality that the most respected global brands of products are noodles, juices, potato chips, and chocolate. Conversely, the least respected global brands of products are ready-to-eat meals (a big chunk of the food business in the US), cheese, vermicelli, and pickle. In fact, it has also been reported that most Indian consumers enjoy buying homemade or local manufacturers’ brands of pickle, vermicelli, and even bread because these items are tailored specifically according to local tastes and needs (Goswami and Juneja, 2008).

Lastly, adoption of Indian culinary practices in the Bharti-Wal-Mart stores includes crop-favored foods and other groceries well-matched to local agro-climatic endowments (Atkin, 2009). Besides, to suit local vegetarian tastes, Bharti-Wal-Mart sells more types of vegetable goods than one can find in US Wal-Mart stores (Lakshman, 2009a). Halepete et al. (2008) also give an account on several adaptive changes made in Wal-Mart’s clothing department.

Adaptation to Local Attitudes toward Economizing

Indian consumers are well conscious of the value and price of products (Bullis, 1997). People in India are accustomed to the Gandhian tradition of simplicity where it is considered honorable to get the cheapest price. Therefore, their feelings toward economizing may be correlated with their consumption. According to Maxwell (2001), consumers’ acceptability of prices is influenced by their outlook on economizing. This implies that customers with high attitudes regarding economizing may have less intention to buy foreign products because they are usually at a higher price than local goods. On average, the rate of savings in India is 22% as opposed to the −0.4% in the US (Maxwell, 2001). This is particularly evident when it comes to groceries. Retailers are forced to manage with razor-thin margins in order to compete for patrons. Indian consumers spend just under 50% of their income on food, and margins on food retail are 12–15% with a post-tax margin of 2% (Vijayraghavan, 2007).

Just as it is in the US, Bharti-Wal-Mart relies greatly on its EDLP (everyday-low-pricing) or ALP (always low prices) strategy (Burt and Sparks, 2006; Singer and Parker, 2004). Yet, in India, Bharti-Wal-Mart has reduced its prices even more. Wal-Mart’s argument is that its modified EDLP strategy will make a positive impact on Indian consumers, to such an extent that they will eventually re-evaluate their previous store habits. As the US retailer always claims, every consumer loves a bargain. Accordingly, if the price difference and the quality of products are attractive, then shoppers may not go anywhere else (Lakshman, 2009a).

Of equal relevance is the fact that Indian consumers have had a tendency to spend less money in response to the global recession, and vendors are confronting a major slump in sales (Lakshman, 2009a). Considering that Indian consumers are particularly value-conscious – with 80% of average spending on products from the store next door – the critical question that Wal-Mart now has to address is how many stores it should open in highly populated areas (Tarun and Chopra, 2007).

Discussion and Future Directions

What this analysis has demonstrated is that Wal-Mart’s venture in India was not made exclusively to experience the trend of global village. Rather, Wal-Mart has had to glocalize in India’s vibrant population. Whether glocalization principles have to do with cultural acclimatization, linguistic adaptation, respect of local brands and products, or even tailoring prices to local consumers’ needs, it is evident that, in order to fill the gap, multinational corporations (MNCs) have to adopt unconventional marketing techniques in this 21st-century global landscape. While Wal-Mart investors may be thrilled at the idea of opening stores in India, they should not overlook the problems of venturing in emerging markets. The giant behemoth in question cannot do business in India the same way it does in the US

Before undertaking the Bharti-Wal-Mart joint project, Wal-Mart executives knew that Indian retailers were very familiar with the tastes and preferences of Indian consumers. Nevertheless, the US corporation has managed to properly assess, understand, and satisfy customers all the while taking the Indian context into consideration. By the same token, Wal-Mart’s expansion into the swiftly growing Indian market is proof that the corporation surpasses its own previous feats. These include the achievement of being the largest and most successful employer worldwide.

For future research, it might prove interesting to investigate whether glocalization was the best approach for Wal-Mart to circumvent cultural and social constraints in India. In addition, as Wal-Mart – and other MNCs – enter the Indian market, will it have an effect on local retailers, so much so that the latter might fail to live up to the needs of young Indian consumers – India is the youngest nation in the world, in terms of mean age (Bhattacharya, 2005) – and deliver better customer satisfaction to their own local inhabitants? Put simply, it may be useful to further examine whether Indian businesses can continue to flourish against global retailers.

In a similar fashion, as intercultural communication scholar Harry Triandis (1995) points out, India represents a collectivistic society. Foodways and shopping habits in India are influenced by symbolic and social dynamics. For instance, brands and products constitute a social identity for Indian consumers, thereby impacting their purchase behavior. As a collectivistic culture, Indians have to maintain a particular status within the group(s) to which they belong, and this is reflected in the way they purchase local brands. As such, scholars should examine whether this collectivistic behavior is also applicable with respect to the purchase of global brands. In other words, does Indian culture permit individuals to maintain their particular status – within their ingroup(s) – by frequently purchasing foreign brands or products in giant retailers?

This case study validates the reality that globalization is not monolithic. It does not represent a homogenizing influence compelling local cultures into adopting the norms, practices, and values of a giant retailer. At the same time, it does not seek to erode local cultural arrangements altogether. No matter what the future holds in the Wal-Martization of the world, it is the author’s hope that this analysis has enlightened readers on a valuable glocalization experience of a corporation.

Footnotes

Author biography

Jonathan Matusitz, PhD, is an Associate Professor in the Nicholson School of Communication at the University of Central Florida. His academic interests are globalization, intercultural communication, organizational communication, communication and technology, and health communication.

References

Alexander

Doherty

(2009) International Retailing. Oxford: Oxford University Press.

Aliet

(2007) Convergence and glocalization – Not counter-penetration and domestication: A response to Prof. Ali Mazrui. Alternatives: Turkish Journal of International Relations 6(1): 1–14.

Andrews

Ritzer

(2007) The grobal in the sporting glocal. Global Networks 7(2): 135–153.

Appadurai

(1996) Modernity at Large: Cultural Dimensions of Globalization. Minneapolis, MN: University of Minnesota Press.

Archer

(2008) Cultures of Globalization: Coherence Hybridity Contestation. New York: Routledge.

Argenti

(2008) Strategic Corporate Communications: A Global Approach for Doing Business in the New India. Boston, MA: McGraw-Hill.

Atkin

(2009) Trade Tastes and Nutrition in India. Hartford, CT: Yale University Press.

Bellman

(2009) Wal-Mart exports big-box concept to India. The Wall Street Journal, 28 May, p. B1.

Bellman

Misquitta

(2009) Wal-Mart exports big-box concept to India. Wall Street Journal – Eastern Edition, 253(123), 28 May, p. B1.

10.

Bhattacharya

(2005) Implications of An Aging Population in India: Challenges and Opportunities. Schaumburg, IL: Society of Actuaries.

11.

Bogoslaw

(2009) Emerging markets: Time to invest? BusinessWeek Online, p. 8.

12.

Boone

Kurtz

(2009) Contemporary Marketing. Cincinnati, OH: South-Western College Publications.

13.

Bullis

(1997) Selling to India’s Consumer Market. Westport, CT: Quorum Books.

14.

Burt

Sparks

(2006) Wal-Mart’s world. In: Brunn

(ed.) Wal-Mart World. New York: Routledge, pp. 27–43.

15.

Bustillo

Zimmerman

(2008) Wal-Mart view: Big plans abroad, small US stores. Wall Street Journal – Eastern Edition 252(102), 29 October, p. B8.

16.

Chary

(2009) India: Nation on the Move: An Overview of India’s People Culture History Economy it Industry and More. Bloomington, IN: iUniverse.com.

17.

Cheney

Christensen

Zorn

Jr Ganesh

(2004) Organizational Communication in an Age of Globalization: Issues Reflections Practices. Prospect Heights, IL: Waveland Press Inc.

18.

Chesney

(2010) Indian Polity a View of the System of Administration in India. Bel Air, CA: General Books LLC.

19.

Chetthamrongchai

Davies

(2000) Segmenting the market for food shoppers using attitudes to shopping and to time. British Food Journal 102(2): 81–101.

20.

Choi

(2006) Eyeing India’s riches: As barriers come down, luxury brands go slow. WWD, 13 March, p. A1.

21.

Zinkhan

(2009) Market-resistance and Valentine’s Day events. Journal of Business Research 62(2): 200–207.

22.

Daft

(2009) Organization theory and design. Cincinnat, OH: South-Western College Publications.

23.

de Nuve

(2007) The glocal and the singuniversal. Third Text 21(6): 681–688.

24.

Desai

(2009) Adaptive India: The changing market scenario. Paper Presented at the European Association for Comparative Economics Studies (EACES) 9th Bi-Annual Conference: Development Strategies – A Comparative View, 7–9 September, the University of Brighton, England.

25.

Dunn

Wrigley

(1984) Store loyalty for grocery products: an empirical study. Area 16(4): 307–314.

26.

East

Lomax

Willson

Harris

(1994) Decision-making and habit in shopping times. European Journal of Marketing 28(4): 56–71.

27.

Eckhardt

(2005) Local branding in a foreign product category in an emerging market. Journal of International Marketing 13(4): 57–79.

28.

Eileen

(2009) Wal-Mart chairman warns of lethargic economic recovery eyes growth in China and India. Available at: www.newser.com (accessed 14 March 2013).

29.

Enderwick

(2009) Large emerging markets (LEMs) and international strategy. International Marketing Review 26(1): 7–16.

30.

Enis

Paul

(1970) Store loyalty’ as a basis for market segmentation. Journal of Retailing 46(3): 42–56.

31.

Eric

(2007) Glocalisation, art exhibitions and the Balkans. Third Text 21(2): 207–210.

32.

Friedman

(2005) The World is Flat: A Brief History of the Twenty-first Century. New York: Farrar, Strauss and Giroux.

33.

GoI and ICRIER (2005) FDI in Retail Sector Ministry of Consumer Affairs Food and Public Distribution. New Delhi: Government of India and Indian Council for Research on International Economic Relations.

34.

Ghoshal

Keneka

(2009) V-Day turns into battlefield. Times of India, 14 February, p. A1.

35.

Goswami

Mishra

(2009) Would Indian consumers move from kirana stores to organized retailers when shopping for groceries? Asia Pacific Journal of Marketing and Logistics 21(1): 127–143.

36.

Goswami

Juneja

(2008) Rural India: Exploring potential consumer markets. Marketing to Rural Consumers 4(4): 10–21.

37.

Halepete

Seshadri Iyer

Park

(2008) Wal-Mart in India: A success or failure? International Journal of Retail and Distribution Management 36(9): 701–713.

38.

Holton

(1998) Globalization and the Nation-State. Basingstoke, England: Macmillan Press.

39.

Hussain

(2009) Wal-Mart in India: Is India ready for the retail revolution? Available at: http://www.chillibreeze.com/articles_various/Wal-Mart.asp (accessed 5 October 2009).

40.

Indian Retail Report (2007) Images Multimedia. New Delhi: Indian Retail Report.

41.

Ingleby

(2006) Globalisation, glocalisation and mission. Transformation 23(1): 49–53.

42.

Joshi

Little

(1996) India’s Economic Reforms 1990–2001. Oxford: Oxford University Press.

43.

Kaufman-Scarborough

Forsythe

(2009) Current issues in retailing: Relationships and emerging opportunities: Introduction to the special issue from the American Collegiate Retailing Association 2005 and 2006 conferences. Journal of Business Research 62(5): 517–520.

44.

Kaushik

(2006) The retail rush. The Hindu Business Line, 26 October, p. A1.

45.

Kearney

(2006) The 2006 Global Retail Development Index. Available at: http://www.atkearney.com/main.taf?p=5,3,1,141,1 (accessed 28 September 2009).

46.

Kim

Park

(1997) Studying patterns of consumer’s grocery shopping trip. Journal of Retailing 73(4): 501–517.

47.

Knox

Walker

(2003) Empirical developments in the measurement of involvement, brand loyalty and their relationship in grocery markets. Journal of Strategic Marketing 11(4): 271–286.

48.

Kraidy

(2001) From imperialism to glocalization: A theoretical framework for the Information Age. In: Ebo

(ed.) Cyberimperialism? Global Relations in the New Electronic Frontier. Westport, CT: Praeger, 27–42.

49.

Kraidy

(2002) Hybridity in cultural globalization. Communication Theory 12(3): 316–339.

50.

Lakshman

(2009a) Indian retailing suffers in the slowdown. BusinessWeek Online, p. 11.

51.

Lakshman

(2009b) Why Wal-Mart’s first India store isn’t a Wal-Mart. Time 275, 15 May, p. 15.

52.

Lee

(2003) Media business strategies in the global era: From a ‘connectivity’ perspective. Mass Communication Research 75: 1–36.

53.

Lomax

(2009) Wal-Mart’s warm welcome in India. 15 July. Available at: Townhall.com (accessed 14 March 2013).

54.

Makar

(2008) Doing business in India keeps getting easier. World Trade 21(4): 38–40.

55.

Maxwell

(2001) An expanded price/brand effect model: A demonstration of heterogeneity in global consumption. International Marketing Review 18(3): 325–343.

56.

Maynard

Tian

(2004) Between global and glocal: Content analysis of the Chinese Web Sites of the 100 top global brands. Public Relations Review 30(3): 285–291.

57.

McGoldrick

Andre

(1997) Consumer misbehaviour: Promiscuity or loyalty in grocery shopping. Journal of Retailing and Consumer Services 4(2): 73–81.

58.

Miranda

Kónya

Havrila

(2005) Shoppers’ satisfaction levels are not the only key to store loyalty. Marketing Intelligence and Planning 23(2): 220–232.

59.

Mooney

Evans

(2007) Globalization: The Key Concepts. London: Routledge.

60.

Reddy

(2003) Indian History. New Delhi: Tata McGraw Hill.

61.

Ritzer

(2007) The Globalization of Nothing 2. Thousand Oaks, CA: Pine Forge Press.

62.

Robertson

(1994) Globalisation or glocalisation? Journal of International Communication 1(1): 33–52.

63.

Robertson

(1995) Glocalization: Time-space and homogeneity-heterogeneity. In: Featherstone

Lash

Robertson

(eds) Global Modernities. Thousand Oaks, CA: Sage, 25–44.

64.

Robertson

(2001) Globalization theory 2000+: Major problematic. In: Ritzer

Smart

(eds) Handbook of Social Theory. London: Sage, 458–471.

65.

Robertson

(2007) Glocalization. In: Robertson

Scholte

(eds) Encyclopedia of Globalization. New York: Routledge, 524–552.

66.

Sagheer

Yadav

Deshmukh

(2009) Developing a conceptual framework for assessing competitiveness of India’s agrifood chain. International Journal of Emerging Markets 4(2): 137–159.

67.

Schiller

(1971) Mass Communication and the American Empire. Boston, MA: Beacon Press.

68.

Shabnam

Paul

(2008) Employment in Retail Sector: A Comparison of Unorganized and Organized Retail in India. Deonar, Mumbai, India: Tata Institute of Social Sciences.

69.

Singer

Parker

(2004) Wal-Mart, rivals launch bids for Carrefour’s Japanese stores. Wall Street Journal – Eastern Edition 244(108), 2 December, p. B8.

70.

Singh

(2009a) Wal-Mart tiptoes in, smoothly. Calcutta Telegraph, 30 May, p. A1.

71.

Singh

(2009b) Bharti Wal-Mart opens first cash-and-carry store in India at Amritsar. Punjab Newsline, 30 May.

72.

Singh

Chaudhuri

(2009) The reality of India: Folding constraints into business strategy. Journal of Business Strategy 30(4): 5–16.

73.

Singh

Powell

(2002) Shopping from dusk ‘til dawn. Marketing Week, 9 May, p. A1.

74.

Svensson

(2001) ‘Glocalization’ of business activities: A ‘glocal strategy’ approach. Management Decision 39(1): 6–18.

75.

Swyngedouw

(1997) Neither global nor local: ‘Glocalization’ and the politics of scale. In: Cox

(ed.) Spaces of Globalization: Reassuring the Power of the Local. New York: Guilford Press, 115–136.

76.

Tarun

Chopra

(2007) Beyond the retail hype. Indian Management 46(1): 12–27.

77.

The Economist (2006) Special report: Coming to market; retailing in India. The Economist 379(8473): 76–81.

78.

Triandis

(1995) Individualism and Collectivism. Boulder, CO: Westview Press.

79.

United Nations (2008) India. Available at: http://www.unescap.org/ttdw/Publications/TIS_pubs/pub_2303/IndiaB5.pdf (accessed 22 January 2010).

80.

Vijayraghavan

(2007) Future GROUP to focus on lifestyle and non- grocery biz for higher margins. The Economic Times, 9 February, p. A4.

81.

Vijayraghavan

Ramsurya

(2007) Mom and pop happy letting a rich tenant take over. The Economic Times, 5 February, p. A4.

82.

Wax

(2009) India’s first Wal-Mart draws excitement, not protest: Venture comes with limits that protect merchants. Washington Post, 13 July, p. A1.

83.

Wolfe

(1991) The single European market: National of Euro-brands. International Journal of Advertising 10(1): 49–58.

84.

Zavestoski

(2002) The social-psychological bases of anticonsumption attitudes. Journal of Business Research 19(2): 149–165.

85.

Zwiebach

(2009) Bharti Wal-Mart sets cash-and-carry openings in India. supermarketnews.com, 3 February.