‘India has a lot of potential, not just in commercial aspects, but also in hiring of people and sourcing of products.’
In an indication that Walmart’s aspiration for multi-brand retail is a thing of the past, the chief executive of the biggest retail company of the world, Doug McMillon, lists out his India focus as Flipkart, PhonePe, sourcing and technology.
There’s something else that he counts as part of Walmart’s past in India: the lows.
During a short visit to New Delhi, he spoke to Nivedita Mookerji & A K Bhattacharya/Business Standard on issues ranging from Flipkart and PhonePe’s IPO to India growing faster than the China market and more.
You are the second American CEO coming to India within a month after Apple’s Tim Cook. How has India changed in the 15 years that Walmart has been here?
I’m very encouraged and enthusiastic. I made my first trip to India in 2004 and I have been coming here for a while since then and it seems to me that that the country is in a real good position.
Real progress is being made here across areas like financial services and infrastructure.
One of our objectives is to increase the exports coming out of India.
We set a goal in 2020 of exporting worth $10 billion from India per year by 2027.
At that time, we were a fifth of that number, so it was a big objective.
But it’s possible. When we started our relationship with manufacturers, the product category was pretty narrow.
Home textiles was the big opportunity.
But today the opportunities are much wider, not just in home textiles but in apparel, shoes, toys, bicycles, supplements…. We even found a fish supplier for the US and other places.
You’ve reiterated the sourcing target. How are you planning it?
I reiterated that we believe we can do it, but there’s a lot of stuff to do between here and there.
We set the target to motivate our team and let people here in India know that we are really serious about growing our business.
The breadth of categories that are now available and the other improvements such as the highway system, the deep water ports make it achievable, but there’s a lot of work to get there.
The regulatory environment in retail may have been clouded and confusing for you at times in India….
Particularly talking about retail, in every country that we operate in, rules change.
What we ask for is fairness, transparency, being a part of the process, and consistency is helpful.
But that’s true in the United States, Mexico and everywhere else.
You have faced regulatory challenges in India like nobody else. Do you still have big-box retail plans here?
Things are working out really well. As years have gone by, the whole world has changed in terms of e-commerce.
We are very comfortable with e-commerce, Flipkart and PhonePe business.
We are in a good spot. Our focus is on those investments and supporting the local teams there to help them achieve their potential.
How would you describe the India face of Walmart at this point?
Maybe you can describe that better than I can. But, when I think about it, there are many dimensions to it.
There’s Flipkart, which is a marketplace business, there’s PhonePe, a financial services business.
Then we have sourcing relationships and we employ around 10,000 technologists in the country.
So we have quite a few faces.
What is the face that you would like Walmart to have in India?
It’s important to know how our customers view us. That reputation is driven by our brands such as Flipkart and PhonePe….
Does Walmart still have the aspiration to be a multi-brand retail player in India?
What really excites us are Flipkart and Phone Pe, and that’s our focus.
After your $16 billion deal to acquire Flipkart, what’s Walmart’s investment plan here?
We’ll invest what is necessary. The initial investment in Flipkart and PhonePe was $16 billion and then there have been subsequent rounds of investments. Others too have participated.
We have said eventually there will be an IPO and at that time more investors will be able to participate.
We want to be here for long-term and want Flipkart and PhonePe to be well supported by a breadth of investors.
Even retail investors should participate in the upside of the business.
Can you tell us a bit more about Flipkart and PhonePe IPO?
Eventually both will go for IPOs. I’m pleased that PhonePe is domiciled in India, which means its IPO will happen from here.
But those decisions will be made by the independent boards and the timing will be made by them.
We’ll see that both are timed in the right moment.
There was much shareholders’ concern when you acquired Flipkart. Has that settled down and looking back, was it an expensive deal?
It’s gone very well and we are very pleased that we made this investment.
Yes, initially because of the investment cycle, Walmart shareholders had questions.
As the years have gone by, the Walmart community has come to realise these are great businesses and that our investment was well-placed and well-timed.
They are seeing the benefits of Flipkart and PhonePe beyond India.
Flipkart is helping launch the e-commerce business in South Africa and PhonePe has been helping with fraud detection service.
We are a global business operating in 20 countries and we exchange information and help build common tech these days.
Flipkart and PhonePe are part of that process.
The Walmart CFO had recently said that India will surpass China and be the biggest international market this year. Can you elaborate?
India is growing at a much faster rate, but it’s a different type of business.
It’s a GMV number in India as opposed to a real revenue number in China.
So there can be some apples and oranges comparison.
The point is that India has a lot of potential, not just in commercial aspects, but also in hiring of people and sourcing of products.
Flipkart was last valued at $38 billion during a fund round. What’s the valuation at which Flipkart’s IPO is expected?
It will be exciting to see!
Do you have any manufacturing plans in India?
We don’t typically directly invest in manufacturing. We partner with companies like Trident and Welspun through commercial agreements. That’s how we will keep it.
What’s the Walmart perspective on artificial intelligence?
It’s such an exciting time. Some of the things we dreamt about over the years are now possible with today’s technology.
I’ve been doing this for 32 years now and I’m so struck by how technology has made things possible.
We are making investments in artificial intelligence and automation to make jobs better.
Ultimately we try to do something simple — provide value for money, a wide assortment and enjoyable experience.
If those are the outcomes we want, how can technology help us do that? Generative AI helps us be more personalised with customers, more relevant in connecting with buyers, make our jobs more enjoyable and associates more knowledgeable.
What about job losses because of AI?
History has shown that new jobs get created. In our business in the US for example, the composition of work has changed a lot.
We have a same number of people, but a large number is participating in e-commerce.
There are efficiencies and new ideas to grow.
I think things will change but there always will be new ideas and those ideas will require resource and that will take the form of jobs.
How do you view the latest disruption in e-commerce through open network for digital commerce (ONDC)?
It’s important to digitise industries. It’s a good thing to have competition and it’s good to be able to connect with sellers….It’s early days, let’s see how it plays out.
Every country has its own path. In India, UPI has been transformative, maybe India can do it again in e-commerce.
Can Walmart play a role there?
Flipkart and PhonePe can figure that out.
Do you expect M&A deals in the PhonePe domain?
We have made quite a few acquisitions in that space. The leadership team here has made those decisions.
History will say that there will be more because we have done them before.
In the backdrop of the global economic slowdown, Walmart has cut many jobs. What’s the road ahead like?
I think our employment around the world will be fairly consistent, but there will be additions and subtractions and structural changes.
In the early years, there were huge concerns over Walmart coming to India and taking away jobs in the retail business, especially in the mom and pop stores. Have you been able to bring down that fear?
We have our core values and our focus is on being system thinkers and think about all stakeholders, not just one.
…If we do over time, people will say that they are glad that this company exists…
Walmart has exited many geographies. But despite the hurdles, you stayed on in India. Why?
That’s because of the opportunities here and great people. We are optimistic and are long-term oriented business.
At Walmart board meetings, how much does India figure?
We talk about India in every board meeting.
What are some of the highs and the lows for Walmart in India?
I’m really encouraged by what’s happening on the infrastructure side here.
It’s getting easier to do the export business.
I’m really excited about the tech team. And Flipkart and PhonePe have been terrific investments.
And the lows?
The lows are all in the past…
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