Global retail majors trim India biz to save on costs
Wal-Mart has closed down its quality-control department in India, as the largest retailer continues to downsize its outsourcing operations in the country in spite of early signs and rising expectations of a recovery from the world’s worst economic...
By Pradeep Pandey, ET Bureau |
MUMBAI: Wal-Mart has closed down its quality-control department in India, as the largest retailer continues to downsize its outsourcing operations in the country in spite of early signs and rising expectations of a recovery from the world���s worst economic crisis after the Great Depression.
���Wal-Mart has outsourced quality-control operations to a firm called ITF. ITF executives come to our factory for inspection,��� said a top executive of a firm which supplies apparels to Wal-Mart.
Quality control team checks if the outsourced products confirm to the quality benchmark set by the company and the rules of the importing country.
Confirming the development, a Wal-Mart spokesperson said in an e-mail reply: ���We have engaged a global third-party service provider to conduct merchandise final inspections, while focusing our internal quality efforts on merchandise development and quality assurance.��� It could not be confirmed how much the company will save from the move. Wal-Mart had earlier consolidated buying operations after closing its Delhi and Mumbai offices.
The US retailer JC Penney is also downsizing its business in India, according to some suppliers. ���Orders from JC Penney have come down by around 20%,��� said a top executive of a Delhi-based apparel supplier, requesting anonymity.
The company, however, denied it in an email reply: ���JC Penney is not making any changes or consolidating its sourcing in India. We are not sure where you heard this, but we can confirm that it is not true.���
Some retailers such as Mervins, 4004 Incorporated Steve & Berry, Quelle and Karstadt, which used to buy from India in large quantities, have filed for bankruptcies. Others such as Ann-Taylor, Foot Locker, Fashion Locker and Miroglio have downsized their orders.
���Many buyers either failed or were not able to buy as much they want due to the absence of credit availability. That has compelled them to take a low-cost route,��� said M Vaidyanathan, GM, exports services, Export Credit and Guarantee Corporation of India.
Hong Kong-based supply chain specialist Li & Fung, the biggest supplier of clothes and toys to Wal-Mart, is cutting costs in India to survive the slump.
���Wal-Mart has outsourced quality-control operations to a firm called ITF. ITF executives come to our factory for inspection,��� said a top executive of a firm which supplies apparels to Wal-Mart.
Quality control team checks if the outsourced products confirm to the quality benchmark set by the company and the rules of the importing country.
Confirming the development, a Wal-Mart spokesperson said in an e-mail reply: ���We have engaged a global third-party service provider to conduct merchandise final inspections, while focusing our internal quality efforts on merchandise development and quality assurance.��� It could not be confirmed how much the company will save from the move. Wal-Mart had earlier consolidated buying operations after closing its Delhi and Mumbai offices.
The US retailer JC Penney is also downsizing its business in India, according to some suppliers. ���Orders from JC Penney have come down by around 20%,��� said a top executive of a Delhi-based apparel supplier, requesting anonymity.
The company, however, denied it in an email reply: ���JC Penney is not making any changes or consolidating its sourcing in India. We are not sure where you heard this, but we can confirm that it is not true.���
ADVERTISEMENT
According to Rahul Mehta, president of Clothing Manufacturers��� Association, this year, orders are as much as 25% less than last year. While consumers in the US and Europe are spending less on clothes, India is also losing customers with retailers and buyers diverting their orders to Chinese producers. ���The cost difference is 15-20%,��� said Mr Mehta. Some retailers such as Mervins, 4004 Incorporated Steve & Berry, Quelle and Karstadt, which used to buy from India in large quantities, have filed for bankruptcies. Others such as Ann-Taylor, Foot Locker, Fashion Locker and Miroglio have downsized their orders.
���Many buyers either failed or were not able to buy as much they want due to the absence of credit availability. That has compelled them to take a low-cost route,��� said M Vaidyanathan, GM, exports services, Export Credit and Guarantee Corporation of India.
Hong Kong-based supply chain specialist Li & Fung, the biggest supplier of clothes and toys to Wal-Mart, is cutting costs in India to survive the slump.
Start a SIP with as low as ₹500 with ET Money App!
Download
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
The Economic Times News App for Quarterly Results, Latest News in ITR, Business, Share Market, Live Sensex News & More.
ADVERTISEMENT
