Walmart India is undoubtedly looking at the next decade of growth in the country. Spending a few hours at their corporate office gave us a sense of how Walmart, the organisation, is really about a culture, which makes all the people come together almost like a family. A townhall meeting that we had a chance to attend in the morning was about listening to, learning from and thanking associates for the hard work they do every day. The pride that people take, particularly with the categories they address, was embedded on the walls for all to see. Clearly, Sam Walton, the man who built Walmart, still guides the brand’s way of thinking and doing business.
‘Going Green’ is another agenda at Walmart; right from the sensory switches across the office that automatically get the lights to go off when a person moves out to the tiny ‘recycled-paper’ visiting cards of employees, everything spells ‘Green’. The office walls are adorned with quotes that the organisation swears by, and the rear wall in the CEO’s cube is a mini library, with reading material from around the world neatly stacked.
Walmart could have wished for a better start in India, though. Since it arrived in the country, back in 2004, the tight government policies, a bumpy partnership with Bharti Retail that eventually came off and consumer activists’ backlash, Walmart India has seen and lived it all. As Krish Iyer, who now helms Walmart India, has let bygones be bygones and has carved out an aggressive growth strategy in India, the Retailer team caught up with him to know what lies ahead. According to him, Indian economy has the power to tempt any foreign retailer, especially with the new government’s encouraging steps and making it favourable to do business here.
What are your plans for your Best Prices stores across India?
To provide you a little context – starting January 2014, we became a 100 per cent subsidiary of Walmart and our entire focus currently is on growing the Cash&Carry business. We propose to open 50 stores in the next five years. We currently have 20 stores in 19 different cities, both in the South of India as well as the North. And going forward, we want to focus on a few states, like Andhra Pradesh and Telangana in South, UP, Rajasthan, Punjab, Haryana in the North, and Maharashtra in the West.
The focus is also on primarily growing the business with resellers or `Kiranas’ as they play a very important role in the economy of the country. And I do see us contributing towards making the `Kiranas’ more efficient and more profitable. We will also continue to service the hotels, restaurants, caterers, offices and institutions as a part of our business model.
How far has the FDI norms in the country played a crucial role in your evolving business strategy for India?
As far as the current business model of Cash&Carry is concerned, there are no restrictions whatsoever as 100 per cent investment is permissible through the automatic mode. And since our entire focus is on business members, I think the FDI regulations or the lack of it would not matter much at this point of time. We are also growing our business in the B2B eCommerce space, where again 100 per cent investment is permissible.
What (still) excites Walmart about India?
I think India as a country or as an economy is something that no foreign company can afford to ignore. The ease of doing business, which was certainly an issue in the past, is getting better. In our experience, the state as well as the central governments have been working on making it easy for the Industry to do business in India. So, we are quite happy with the progress we have made in the last one year in this whole space.
Current challenges exist in the area of real estate and talent. The real estate rates are very high these days. Second challenge is finding the right talent, developing them and retaining. The talent in India for our industry is still in short supply.
How is there a people empowerment focus at Walmart India?
We do make a significant amount of investment in giving exposure to our people by sending them outside the country while also inviting experts from outside India to come and train our people. Senior and middle management team members are exposed to trainings etc whenever the opportunity arises, who then return and transfer the learnings to relevant teams.
Besides, our expat pool of talent who have significant amount of industry experience, spend time here and train people on Walmart business models and culture. It increases the efficiency of the output, improves the processes and eventually customer service and experience. For us, it should all percolate to customer satisfaction and experience inside the store.
What are your sourcing strategies and how do you see Private label performance in India?
More than 90 per cent of our products are sourced from within the country. We deal with almost all major FMCG companies and with several regional and local players. We have examples of how small suppliers in some states have grown profitable and bigger by doing business with us. With ’Responsible Sourcing’ being a priority area, the development of suppliers in terms of helping them comply with laws of the country as well as upgrade their facilities, making them understand the right and ethical way of doing a business is equally important for us.
Private Label has globally been significant for Walmart and in India too we are laying a lot of emphasis. Our Private label business in India is growing well.
Tell us how Walmart in India is going about the task of its supply chain management?
We have kept it fairly simple at this point in time. Our 20 stores are also the warehouses in a way when it comes to eCommerce. All our suppliers deliver merchandise directly at the stores. As and when we increase our presence in a particular geography, we will start exploring the need for distribution centres. For now, the current model of direct store delivery is a very efficient one. It removes a lot of inefficiencies in terms of delays and stock holding.
What is the quantum of investments Walmart has done in India so far, and could you talk about profitability?
We do not talk about numbers.
Where do you look at Walmart in India five years from now?
We are in the country for long term. When one starts looking at it with a long-term commitment perspective, we would continue to contribute to making a difference in terms of helping people save money so they can live better. Our mission for our cash&-carry stores is about making every small business prosper. The focus is on the customer all the time and in ensuring that the customer saves money. We will continue to be true to our mission and our core purpose for a long time to come.
What is your point of view on the disruptive scenario of eRetail. And what bearing it has on Walmart India?
eRetail is undeniably disruptive; and is here to stay. Understandably, that is where the consumer is going. The choice, ease of ordering from your home gives a greater shopping convenience to the consumer, which in my opinion would only grow in the coming years.
From Walmart’s perspective, although we are not into the B2C space, we see this opportunity to educate the `Kirana’ shop members, as well as the hotels and institutions as soon as we started our B2B eCommerce initiative in July 2014.
Our focus is to go omni-channel, but we are going step by step. We are enabling eCommerce for consumers to order online. Currently, we have integrated eCommerce in 10 Best Price stores, and by end of this year we will roll it out in all the 20 stores. I believe that eCommerce is one of the many channels of the consumer. We are integrating experience across these channels and making them seamless.