Retail giant Wal-Mart's new social media arm, WalmartLabs, will open a software development center in the southern Indian city of Bangalore by the end of this year, a company executive said on Wednesday.

Wal-Mart entered into a retail joint venture with Indian firm Bharti Enterprises in August 2007 and currently operates 8 stores in the country, as it awaits a potential change in regulations to allow foreign firms to own supermarkets.

We think there is a fundamental change happening in the way people shop, driven by smart phones and social media, Anand Rajaraman, senior vice president of global e-commerce operations, told Reuters on the sidelines of a conference.

This new way of shopping will blur the lines between e-commerce and offline retail shopping.

India allows 51 percent foreign direct investment in single-brand retail but global retailers such as Wal-Mart and Tesco have long sought greater access to a fast-growing retail sector dominated by mom-and-pop operators.

WalmartLabs, which is looking to hire about 100 people for the new office, is a product of the Arkansas-based company's acquisition of Kosmix, a California-based data mining firm, which was co-founded by Rajaraman.

The new venture will develop applications to provide customers with the exact location of a certain item in the company's sprawling stores and detailed product comparisons -- a feature typically found only on online shopping web sites.

WalmartLabs currently has one software development center in San Bruno, California, which employs about 100 people, Rajaraman said.

Wal-Mart has recently forayed into social media in its attempt to exploit the window into consumer tastes and preferences provided by social media outlets such as Facebook.

The company joined hands with Facebook in October and launched My Local Walmart, a page that lets the retailer's roughly nine million Facebook fans follow what is happening at stores in their neighborhoods.

(Reporting by Arjun Kashyap; Editing by Henry Foy and Aradhana Aravindan)