Walmart India, which runs 22 Best Price wholesale stores since its second entry into the country in 2019, is planning to increase the share of its private labels to topline to 10 per cent by next year as it plans to tap the Flipkart platform.
Walmart India, which runs 22 Best Price wholesale stores since its second entry into the country in 2019, is planning to increase the share of its private labels to topline to 10 per cent by next year as it plans to tap the Flipkart platform. The company opened its 22nd store in Ludhiana late last month, which is the sixth in the state, where it began with and the second in the Punjab city.
The company will have 30 stores by the time it completes a decade of its second coming next year. Globally, the retail major which is bigger than Boeing, Coca-Cola, Facebook, and the Google parent Alphabet in total sales–nets around 20 per cent of its topline from private labels, which are low-priced but high margin items while from a volume perspective it is around 25 per cent, which it has already achieved in the country as well.
Walmart India closed fiscal 2017 with a topline of Rs 3,609 crore, up around 14 per cent, according to government filing. The numbers for FY18 is not available for Walmart. “Currently, our revenue from private labels is 6-7 per cent from our two brands–Right Buy and Member’s Mark, wherein the first is the cheaper than the other. We hope to take this to 10 per cent by 2019, when we close our first decade,” Walmart India chief executive Krish Iyer told PTI.
Internationally, its private labels are a USD 60 billion business for them under the name of Sams Club, while its total volume is over USD 500 billion. India is the only market where Walmart is only into wholesale. Iyer, also said he expects an uptick in private label sales going forward as the company is planning to cross-sell these brands on Flipkart, its online marketplace subsidiary here.
In the biggest M&A deal, the world’s largest retailed Walmart had bought 77 per cent of the homegrown online marketplace Flipkart for over USD 16 billion in August. It can be noted that FDI norms allow only 51 per cent in multi-brand retail, whereas in cash & carry 100 per cent is permitted. Flipkart also has developed private brands like Billion though not exactly in the grocery segment.
“What can be done is while we can’t sell on Flipkart, our manufactures can do and vice versa, which can be beneficial for both,” Iyer explained. But he was quick to add that both are independent companies with independent boards and the process can take time. “Nothing will happen immediately at least over the next quarter or so. But we do see tremendous scope for synergies as Flipkart is very good at their logistics, deliveries, customer relationship management, artificial intelligence, machine learning and analytics, among others. We too have similar strengths, which can be combined,” he said.
The company made a reentry in 2009 after exiting its failed jv with Bharati Enterprises, on its own and opened the first wholesale store in Amritsar. The new 56,000-sqft store in Ludhiana is the sixth in the state and the first one since August 2015 in Agra. The company has announced plans to open 50 stores by 2025. When asked where it would be by the turn of the first decade (next year), Iyer said, adding they would have 30 stores by December 2019.
We will also two fulfilment centres by then, and the next one is coming up in Vishakapattanam by December 2019. He said the company has created over 1 million customers since 2009, and each store typically generates around 2,000 jobs of which around 250 are direct jobs.