NEW DELHI: Walmart India, the local unit of the world’s biggest retailer, said it is upbeat on the regulatory progress in India’s retail market and continuity in the government could accelerate ease of doing businessfurther.
“With the government getting the second mandate, our (ease of doing business) rankings will improve significantly further,” Krish Iyer, president, and chief executive of Walmart India, told ET. “I have no doubt in my mind that cash-and-carry businesses and even businesses as a whole, retail companies and foreign investors will find it easier to set up stores in India.”
In India, Walmart doesn’t sell directly to consumers and is an organised wholesaler or cash-and-carry operator that sells merchandise to local kirana stores, hotels and catering firms. India allows 51% FDI in multi-brand retail, while 100% FDI is allowed in cash-and-carry wholesale ventures.
Walmart, however, said the cashand-carry segment is complex due to its low margin nature and steep real estate cost in the county that has 3% of the world’s overall land but 17% of the population. While the company operates 24 Best Price wholesale stores across nine states opened over the past decade, it isn’t in a hurry to expand pan India. “The next 10 years will be the period of exponential growth. And if I look at the opportunities India presents, it will still remain important to stay focused and not start thinking about going national,” said Iyer.
While nearly 90% of all consumer goods are sold through small kirana stores in India, the channel is highly fragmented. There are an estimated 10 million kirana stores in India and a large part in the hinterland. Also, consumer companies mostly sell products directly to local kiranas or through distributors in urban markets but service customers through wholesalers in smaller towns. This in turn, helps organised B2B players such as Walmart and Metro to gain share especially after the implementation of the goods and services tax (GST).
With its focus on tier-II and tier-III cities to open more outlets, the company said it will double the store count in the next 3-4 years including six new stores in the state of Andhra Pradesh and Telangana this year itself. Also, it generates nearly half its sales from outside its big-box cash-and-carry stores either through members directly ordering online or the sales force visiting B2B members for orders.
The Bentonville-based retailer launched its online platform for members of Best Price Modern Wholesale stores five years ago. But that was restricted to cities with the stores. The company, two years ago, opened an online platform without a physical store.
“Growing the existing stores is one stream. The second stream would be from what we call our fulfilment centers and e-commerce business. As far as our e-commerce platform is concerned, we will see the acceleration of ecommerce and omnichannel in our stores as we progress further in the implementation of this new platform,” Iyer added.