Wal-Mart changed Canadian retail. Can it save India?

The chain has proven to be the right store for the times

Wal-mart changed Canadian retail. Can it save india?

Mario Beauregard/CP

India is in a bit of trouble these days. Despite its reputation as one of the “economic tigers” of the developing world, growth has slowed, inflation is running over 10 per cent and infrastructure problems remain staggering. So where has Prime Minister Manmohan Singh turned for help? Wal-Mart.

Last week the Indian leader announced a package of sweeping economic reforms; chief among these are changes to his country’s restrictive retail laws that will allow Wal-Mart and other foreign firms to set up shop for the first time. While the plan still faces political opposition, Singh is hoping the store’s famously obsessive commitment to low prices and efficient logistics will play a key role in curbing inflation, stoking domestic growth and modernizing India’s entire retail industry.

“We are willing and able to invest in back-end infrastructure that will help reduce wastage of farm produce, improve the livelihood of farmers, lower prices of products and ease supply-side inflation,” Raj Jain, president of Wal-Mart India, told Bloomberg News after the new policy was announced.

Wal-Mart as national saviour isn’t an image most Canadians are likely familiar with.

Since it first appeared in Canada in 1994, Wal-Mart has more commonly been portrayed as a corporate killer of mom-and-pop stores, the scourge of unions and a destroyer of urban landscapes. Over the years there have been movies, books, online petitions and countless public, political and legal protests against the 337-store retail behemoth. Lately, however, it seems the tide has turned for Wal-Mart in Canada, just as it is turning in India.

The prospect of a new Wal-Mart no longer calls protesters to action the way it once did. In Guelph, Ont., for example, opposition to Wal-Mart stretched on for decades and was led, at one point, by a group of Jesuits whose retreat bordered the proposed store. The Jesuits argued the mere existence of a Wal-Mart nearby constituted an infringement on their right to religious freedom. But that was the last gasp of protest, and the Guelph Wal-Mart opened in 2006. Vancouver also prided itself on being Wal-Mart-free for many years. After energetic attempts by municipal politicians and activists to hold the firm at bay failed, Wal-Mart opened its first store in that city in 2009. Contrast all this with the opening of a new Wal-Mart in Mission, B.C., this past summer that attracted minimal protest. “Mission just lost its soul tonight over a pair of cheap underwear,” a lone cranky critic complained to the local newspaper, to no avail.

Almost two decades since it first appeared in Canada, it seems Wal-Mart has not only bested its competitors, but outlasted public opinion as well. News of Wal-Mart $750-million, 73-store expansion plan earlier this year barely raised a whisper. How did such a turnabout occur?

First, Wal-Mart has made itself harder to hate. With solar panels and windmills on its roofs and a variety of other commitments to sustainability on its books, Wal-Mart has credibly embraced corporate environmentalism. While the bill for much of this is, unfortunately, borne by taxpayers via massive renewable energy subsidies, the firm has nonetheless turned many of its harshest critics into grudging supporters. In 2010, environmental soothsayer David Suzuki gave the keynote address at Wal-Mart’s Green Business Summit in Vancouver. The sky did not fall.

Second, Wal-Mart was simply the first of many. The firm’s focus on large-scale, low-price retailing surrounded by plenty of parking has proven to be the preferred mode of shopping for most Canadians, regardless of its impact on Main Street. The current popularity of suburban “power centre” shopping areas filled with familiar big-box stores makes it impossible to single out Wal-Mart for any particular animosity. Shoppers have spoken.

Finally, Wal-Mart has proven to be the right store for the times. In the midst of a recession, low prices, convenience and competition count for quite a bit. Research by the National Bureau of Economic Research in the U.S. has identified a significant “Wal-Mart effect” in lowering food prices that is of crucial benefit to poor households. And with the impending appearance of American retailer Target next year, Wal-Mart Canada recently announced it was dropping prices on 10,000 items, ranging from potato chips to digital cameras. Who wants to argue with that?

Our point here is not to promote Wal-Mart as a shopping destination, or purveyor of virtue. Certainly criticisms remain, such as a recent bribery scandal in Mexico. Rather, what’s worth noting is the way in which the store has moved from locus of anti-corporate opposition to accepted fixture of everyday life merely by responding to the spoken and unspoken demands of consumers. Whether you shop there or not, Wal-Mart has had an impact on Canada. Now we’ll see if it can save India.