Retail giant Wal-Mart Stores Inc. WMT has finally opened its first wholesale store in India, per media reports. This store has also opened doors for the retailer to expand in the second-biggest consumer market in the world.

Wal-Mart remains on track to open 50 Best Price Modern Wholesale stores within the next four to five years, as announced in Apr 2014. Wal-Mart already has 20 such stores in the country. The opening of 50 stores will add up to a total of 70 locations throughout India.

These stores, known as cash-and-carry outlets, will have roughly 5,000 items, including a range of fruits, vegetables, dry groceries, personal goods, home care items, and other general merchandise. They will sell directly to small retailers rather than to individuals, as the majority of the retailer’s customers in India are owners of businesses themselves. They include the traditional mom-and-pop grocery stores that sell most of India's food.

Wal-Mart has been trying hard to open its stores in the lucrative market of India. However, Indian regulators have been reluctant to let large foreign retailers such as Wal-Mart to build up their presence in the country.

Wal-Mart ventured into India in 2009 in partnership with Bharti Enterprises when the country opened its doors to foreign direct investment in the retail sector. However, things were not rosy for the company as Indian regulators require foreign retailers to procure 30% of their products and services from local small businesses.

In Oct 2013, Wal-Mart decided to terminate the joint venture with Bharti and shelved its plans to open its own retail stores in India. Moreover, Wal-Mart had to suspend its chief executive officer of the joint venture amid lobbying and bribing charges against the company. The hurdles made it difficult for the company to carry out business in India.

The Indian government currently allows international companies to open multi-brand retail outlets with an Indian partner owning a minority stake. However, it allows foreign companies to run 100%-owned wholesale chains.

Apart from wholesales chains, Wal-Mart opened its business-to-business e-commerce platform in India in Jun 2014. The retailer’s e-commerce service will be available only for existing users of its members-only cash-and-carry stores.

Wal-Mart has valued the cash-and-carry business of India at around $50 billion by 2020. Thus, the company is counting on its online operations to help fuel sales.

The company has been facing a huge expense burden lately. Substantial investments in e-commerce initiatives, higher wages and training costs increased expenses. This along with unfavorable currency has been pulling down profits. In fact, the company expects increased investments in e-commerce and pay hike to significantly affect fiscal 2016 earnings.

Wal-Mart currently holds a Zacks Rank #4 (Sell).

However, some better-ranked stocks in the retail sector include Ingles Markets, Incorporated IMKTA, The Kroger Co. KR and J.C. Penny Company, Inc. JCP, all of them carrying a Zacks Rank #2 (Buy).

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