Will Walmart (WMT) Fail In India?

Walmart (NYSE: WMT) has waited for years to gain the ability to have 100% ownership in a large retail company in India. It should be careful what it wishes for. It has failed in its efforts to gain a large market share in other highly populated nations because of its trouble adapting to local customs.

India’s new regulation which lets foreign companies own all of the equity in local retailers will open a door for Walmart. The world’s largest retailer already has set up Walmart India which handles wholesale distribution of store goods. It is very likely now that Walmart will aggressively enter the store market.

Business Monitor International reports that “the India retail market is expected to double to $785 billion by 2015 from $396 billion this year,” according to BusinessWeek. India is the second largest nation in the world by population which makes it irresistible to Walmart and its global competitors.

Walmart has has great success in Mexico, its largest operation outside the US, and China. But, it had great failures in Germany. Walmart left Europe’s largest nation by GDP in 2006 after it lost several hundred millions of dollars. It also pulled out of South Korea, and has struggled in Japan.

Walmart make have learned a lesson from its failures in other big countries. But, in India it faces several hurdles. The first is local shopping habits. It could not adapt its big box, big savings tactics in Germany. Walmart will also face competition from within India, and will come up against huge European rival Carrefour which already has a presence in the country.

Walmart will spend hundreds of millions of dollars on India operations. History shows that, for Walmart, that will not guarantee success.