With plans to increase its 21 Best Price Modern Wholesale stores in nine states to 70 over the next few years in India, Walmart is focussing on building its e-commerce platform further and is undertaking several initiatives to push locally sourced produce. Walmart India’s Krish Iyer tells BrandWagon how the rural focus has worked for the company, its focus on going ‘local’ in every market and its outlook for FY17. Excerpts:
Since launch, Walmart India has had a rural focus with presence only in tier II and III towns. With competition largely focussed on metros, does that give you an advantage?
Accessibility and availability of a wide array of products is a big issue across existing distribution channels in tier II and III towns. Many SME suppliers across categories find it difficult to penetrate into these towns as distributors do not have the necessary infrastructure to store the products and are not willing to take the risk. Our focus is on providing a wide range of products at everyday low prices (EDLP) under one roof to our members. In such a scenario, modern wholesale stores provide the space, infrastructure and technology. So it works for the format, suppliers and customers. Having said that, our real estate and planning teams always keep scouting for right properties across the regions identified for growth, including metro cities.
You plan to launch around 70 more stores across the country by 2020. What will the strategy be?
We are studying various markets and shall open our stores where we believe business is a viable proposition. Among many aspects, we consider the potential customer base and the scope of the supply and distribution infrastructure. Some of the states in our focus are Andhra Pradesh, Telangana, Karnataka, Maharashtra, Rajasthan, UP, Punjab and Haryana among others.
Walmart has been in talks with e-commerce companies such as Flipkart and ShopClues for tie-ups. Is anything in the offing?
We are into the B2B Cash & Carry business in India and several businesses in the e-commerce space have approached us in the past, seeking membership of Best Price Wholesale stores and we continue to have a dialogue. We continue to look at all opportunities and keep scanning the business environment on how we can serve our
What traction is the e-commerce platform attracting for your members?
B2B e-commerce is a major driver of growth for Walmart’s Cash & Carry business in India. The e-commerce platform caters to the members of Best Price Modern Wholesale stores only, facilitating online shopping for those who find it difficult to physically visit our outlets. It is a 24×7 interactive site and ensures the convenience of easy selection and payment along with delivery of the merchandise at members’ doorstep, thus making it seamless.
The government now allows 100% overseas capital in processed food retailing. What are Walmart India’s plans ?
The reform will give impetus to the food processing industry and create vast employment opportunities. We are currently evaluating it as per the guidelines announced.
Private label is a high margin business and accounts for 50% of revenues for most retailers. How is Walmart’s private label business performing? What role will the private label play in your food retail?
Walmart India is building a strong private label business, fulfiling the needs of members by developing products with the pack, price and quality combination that are not available elsewhere in the market. We have a dedicated private label programme to meet the unique needs of re-sellers, offices and institutions, and hotels, restaurants and caterers (HoReCa). We have two private brands — Right Buy and Members Mark, which are exclusively available at all the 21 Best Price stores.
Members Mark offers quality equivalent to the leading national brands at competitive prices. It also includes innovative products which are not available in the market, including beverages like fruit drinks, tea and drinking water, vacuum pack dry fruits, spices and imported furniture etc. Right Buy is an opening price point brand that offers quality products at affordable prices. It offers products across food, grocery, cleaning aids and more. We have
received a fairly good response for both these labels.
Walmart also undertakes several CSR initiatives for community development. What are your key initiatives here in India?
One of the key reasons of Walmart’s international success is the fact that in every location where we operate, we are local. Approximately 95% of the merchandise sold in our Best Price Cash & Carry stores is locally sourced within India. Walmart India is committed to increase sourcing from women-owned businesses (WOBs) in order to grow diversity in its supply chain and has recently launched an Entrepreneurship Development programme for WOBs to enhance their skills and capacity.
What are your views on the retail sector in India and the challenges that are bogging down growth?
India is an attractive market for organised retail to service traditional retail and also end-consumers. As per the Retail 2020: Retrospect, Reinvent, Rewrite report by Retailer Association of India, the overall retail market is slated to grow at 12% per annum, modern trade will grow twice as fast at 20% and traditional trade at 10%.
The next five years will belong to those who commit to provide the omni-channel experience to customers. There will not be any pure-play format as it looks imminent that offline and online retail will merge. Hence in order to become profitable, retailers must constantly strive to understand consumers, define relevant value propositions, make the experience seamless across channels and build a risk strategy to protect the customer and brand in the digital world.
Why doesn’t Walmart see multi-brand retail as an opportunity in India?
We are pleased with our established and successful omni-channel cash and carry business and plan to grow this further.
What is your outlook for FY17?
We are seeing a lot of reforms by the Indian government, not only related to FDI, but also for removing several structural and systemic bottlenecks. This augurs very well for the long-term high growth possibilities for the Indian economy and we at Walmart remain very committed to play our part in this growth journey.