Walmart eyes India as foreign success story, to invest $500 Mn & launch 50 more stores

WALMART-INDIA
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After failing to make a serious dent in other big foreign markets such as China, Brazil, Germany and UK, US retail behemoth Walmart wants India to be its foreign success story.

The Arkansas-based company, which has 21 stores in India, plans to open 50 more stores in the next four-five years, said Walmart India president and CEO Krish Iyer.

“We expect to open 5 stores in the current year and then pick up pace and eventually start opening 12-15 stores a year,” Iyer was quoted as saying in a Mint report. Till now, as per the company claims each of its India outlets has turned profitable at the store level.

At present, the retailer operates in 9 states and 19 cities and the future expansion is focused on more or less the same geographies. It aims to continue its operations primarily in Punjab, Haryana, Uttar Pradesh, Uttrakhand, Maharashtra, Andhra Pradesh and Telangana.

Walmart India offers close to 5,000 items through its cash-and-carry wholesale format. On Wednesday, Walmart bought 77 per cent of Flipkart share from existing shareholders, including Japan’s SoftBank, for $14 billion and investing $2 billion of fresh equity.

According to industry experts, it could use its Best Price stores as pickup and delivery points to service online sales made on Flipkart. Though the bigger question for Walmart would be how to turn Flipkart into a profitable business. The deal will cut into Walmart’s overall earnings by about 60 cents per share next year.

The retailer sees India’s young population, a growing digital payment ecosystem and an overall positive economic sentiment as an advantage to the company.

The retail giant’s initial period in India wan not easy, with a failed joint venture with the Bharti Group and adverse FDI policy forced it to change its business model.

The deal also pitches Walmart and Amazon, which has supremacy at home turf, against each other. Despite having a superior technology and operational set-up, Amazon is still second to Flipkart in terms of market share.

This is where Walmart has scored a point through the recent deal. And it would like to consolidate the lead through an aggressive move.

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