Walmart-Flipkart plans an aggressive food foray

A spokesperson for Walmart India declined to comment on the planned investments but said food is crucial component of the Bentonville company’s wholesale business in India. “Food is an important part of our cash-andcarry business comprising around 60-65% of sales annually. As we grow our cash-and-carry business further, we’re confident that we’ll be able to impact more farmer lives in the country by increasing their income,” the spokesperson said in an emailed response.

ET had earlier this month reported Walmart could invest up to $10-12 billion to purchase stake in Flipkart. Walmart will start with 20-26% to become largest shareholder in the home-grown ecommerce company and the world’s largest retailer eventually plans to increase its shareholding to 51% in tranches. The deal will include the purchase of shares from existing investors such as Japanese telecom and Internet giant SoftBank.

A consumer analyst at a foreign consulting firm said Walmart could use Flipkart’s consumer database to push low-priced grocery and that would lead to purchase of other items. “Flipkart has a huge database, so technically Walmart could just build warehouses in cities and deliver food and grocery online and they don’t even have to open stores everywhere,” the analyst said, asking not to be quoted as Walmart is his firm’s client.

Food and grocery is the largest retail segment in India and it accounts for almost 60% of the country’s annual $600 billion plus retail market. But, organised food and grocery retail currently accounts for less than $10 billion of that market at present.

Walmart’s focus on food in India will mirror its global strategy. According to analysts, the company is renewing its push on food in the US, its largest market. A recent report by investment bank Oppenheimer said Walmart is looking at a slew of measures to boost food sales including stepping up its fresh offerings and private labels, creating accessible online grocery pick-up services and ramping up offerings at Jet.com that Walmart acquired in the US in 2016 for $3.3 billion.

This has become even more important after Amazon last year acquired Whole Foods in the US for $13.7 billion, taking its fight right into Walmart’s stronghold of food and grocery business.

Source: techgig.com