BUY LOCAL SELL
GLOBAL Close on Wal-Mart’s heels other Global biggies are making a beeline for Indian suppliers
The India
sourcing story is fast getting bigger and broader More and more global
retailers are buying from here, and they are buying a wider range of
products than ever before.
Wal-Mart is working towards sourcing spices, Basmati rice, tea, and shrimps from India. This is the first time the global retailers will be getting into the food segment here .Its global rival, Tesco ,which was sourcing from India primarily for its UK operations ,is now increasingly doing so for its stores in Central Europe ,a region whose lower income is making lower-cost sourcing imperative.
This year, Wal-Mart’s total sourcing from India will go up to over $1.5 billion, a 30-35 percent increase over last year’s $1.2 billion .Tesco’s chief executive of international sourcing , John Hoerner ,says the UK-based retailer’s purchases from India will grow to $93 million this year, 46 percent more than the $63 million it did last year.
GAP, the largest US clothing chain, does over Rs 2,000 crore of
apparel sourcing .According to Rajendra Hinduja, director in Gokaldas Exports, GAP’s largest Indian supplier, the seven-year-old relationship between the two has been supplies to the US chain growing from Rs 10 crore to over Rs 300 crore.
German retailer, Metro Group, sourced $53 million of primarily apparel and leather
goods from India in 2004,up from $45 million in 2002, and says it has plans to source food products soon. Women’s apparel chain, Chico’s gets about 12 percent of its apparel from India .French sporting goods retailer, Decathlon, sources products like sports apparel an performance bicycles. Target, J C Penney, Marks & Spencer and H&M are others from a growing list of international retailers who are rapidly expanding their India sourcing business .I find very good suppliers here, companies with enlightened managements that are making investments necessary to cater to our requirement , says Tesco’s Hoerner.
An immediate impetus for an India move is coming from retailers’ need to reduce their overwhelming dependence on China. One of such overdependence is a possible appreciation of the Yuan that would make Chinese goods more expensive .An international news agency recently quoted Ken Mark, a consultant who has co-written Harvard Business School case studies on Wal-Mart, as saying , Retailers that bought about $65 billion in Chinese goods last
year are turning to India because the anticipated Yuan revaluation may increase their costs by 10 percent over two years.
Robert Ulrich, chief executive of US-based Target Corp, was quoted in May s saying that the retailer is sourcing goods from India, Pakistan and Vietnam and if there is inflation (in China) , it’s possible some programs would move (to these other countries).
Sourcing from India is increasingly of products other than clothing and home textiles—a category that now constitutes more than 50% of most retailers’ purchases.
Two years ago, Tesco wasn’t sourcing anything other than apparel and home textiles .Last year ,it sourced $3.33 million of other products—a figure that will nearly double to $6.4 million this year.
In Wal-Mart’s case , fine jewellery constitutes 15% of its total sourcing ,while shoes/leather products, and stainless steel house ware have become significant categories , according to the head of its global procurement office in India, S Ramesh. The company also sources office supplies , sporting goods, automotive accessories, furniture , novelty handicrafts and electronic goods.
More reviews about the Times of India