Walmart started its second innings in India in 2014, going solo after the break-up of its joint venture with Bharti Retail. The US retailer has been fairly low profile since then in India. But suddenly the announcements have begun — 50 more stores by 2021, an MoU with the Maharashtra government to open 15 cash-and-carry stores in the State and so on. Excerpts from a meeting with Krish Iyer, President and CEO of Walmart India:

You had been rather quiet after coming back solo in 2014, but suddenly there seems to be action...

We had been quietly focussing on many things — building a good team, creating a good strategy for our cash-and-carry business, which is 100 per cent under the automatic route as far as FDI is concerned. We have been busy building our pipeline of stores and working on obtaining licences and permits. We are now in a position to open stores on the ground.

Construction work on one of the stores in Vizag has already begun. We are well on track with our target of 50 more stores by 2021. (Walmart currently has 21 cash-and-carry format stores in India).

How do you feel about having to settle for just the wholesale format in India, and not being able to play to your strength of core retail?

If you look at overall Indian retail, traditional retail is expected to be $1.2 trillion by 2020. Modern retail will be $600 billion to $800 billion. So the overall retail pie will be $2 trillion.

E-commerce will be roughly about 10 per cent of modern retail. So there’s a lot of room for us in cash-and-carry, where 100 per cent FDI is being allowed.

And globally we do have the expertise to run cash-and-carry stores, having run those in Brazil and Chile.

Any learnings from operating in the Indian market?

What is unique here in the cash-and-carry model is that some part of our business happens out of the box.

Here we go to kirana stores and take orders for whatever the businessman needs for the next day and get those delivered. What is also unique to the Indian model is we sell only to business members who have licences, which is a regulatory requirement.

How many members do you have?

We have nearly a million members as of now. Each store will have 40,000-50,000 members.

How tough is member acquisition?

Member acquisition is not tough as our proposition is very strong. All under one roof, lowest prices, complete transparency in prices and convenience are our propositions.

There is no discrimination in terms of prices between larger members and smaller members.

There are schemes for higher quantities which is open to all. Also the member does not have to stock — he can come every day, or once a week, so the working capital needs are minimum.

Any particular geographies you are focusing on?

We have chosen three clusters. One is in the North, covering Punjab, Haryana, UP and Uttarakhand. The second cluster is Maharashtra and the third is in Andhra Pradesh and Telangana.

Has GST helped you in terms of leasing properties more transparently?

There are many aspects to the impact of GST — increase in formal trade, the warehouse strategy. No longer do you need 29 or 30 warehouses but can work with four or five large warehouses.

What is your warehouse strategy?

So far we haven’t set up any distribution centres. Each store acts as one.

Only when we have the critical number of stores we will do so and are considering the option of setting up either in Punjab, Uttarakhand or Haryana in the North and Andhra Pradesh or Telangana in the South. In whichever State the ease of doing business is better, we will go there.

What is the critical mass of stores you are looking at for a warehouse?

Around 15 to 20 stores in a cluster. Typically it takes us three-and-a-half years to set up a store.

But in many States, because of the single window concept, we are shaving off six months.

Have you felt the pain of the economy slowing down?

In my view GST is a very bold reform and in the longer term it will be beneficial. In the short term everybody is feeling the pain. But I do expect this Diwali season will help us overcome a lot. It will be one year of pain.

But between March and June next year we could see some stabilisation.

The food retail window has just opened up. Will that prompt you to enter retail with just food first?

Hundred per cent FDI in food retail is a very good step. It will help farmers and help drive prices of essential commodities down.

But at least 25 per cent of non-food items should also be allowed under 100 per cent FDI.

If that is allowed, will you come in?

We have certain processes. We have to evaluate and take approvals from our parent. So that takes time. But we like the direction the country is taking in terms of regulatory changes and opening of economy.

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