No longer chasing the brick-and-mortar stores business in India: Walmart

Walmart president and CEO Doug McMillon doesn't mince words. In an interview, McMillon (59), who oversaw the US retail giant's acquisition of a controlling stake in Flipkart in 2018 in a $16-billion deal, tells TOI that the company seeks a level-playing field in the countries it operates, that would mean opening up the inventory based model to foreign e-commerce players in India like Walmart and Amazon, which local rules prohibit. He also says that Walmart is no longer chasing the brick-and-mortar stores business in India. Excerpts from the interaction with McMillon and Walmart International president & CEO Kathryn McLay:

Is there a rush to stock up before the reciprocal tariffs make a comeback? How are tariffs affecting you and American buyers?

Doug McMillon: We are doing everything we can to keep our prices as low as possible for as long as possible. Sourcing out of India is important to us. We have a long-term view. We will balance the various pressures.

Have tariffs changed the sourcing dynamics? Have you increased your purchases from US suppliers?

McMillon: There are many benefits to buying close to where your demand is... you can create more jobs, have less lead time. More than two-thirds of what we sell in the US is made, grown or assembled in the US. Whether it's in the US or Mexico or other countries, we try to first and foremost to buy in that country...

Kathryn McLay: We learned during Covid that if you had over-reliance on any particular trade route, then it could be very disruptive. So, for the last five years, we have been looking at building a resilient supply chain. Sourcing from India is a great option for us and it's a great option for India.

Has 'China+1' resulted in more sourcing from India?

McMillon: It has been good to see the breadth of categories expand. When we started here, we were buying a lot of soft goods. And now, we are buying food items, more general merchandise categories other than just in-home. What we see in India is that we can buy all kinds of things. We hope that the diversification of the manufacturing base in India continues.

Flipkart has been late to enter quick commerce. How will its growth trajectory look like?

McLay: When the Flipkart team decided to move to quick commerce, they moved with speed. Not only have they got really strong plans around roll out, but they continue to blow our minds in regards to the speed - to do a delivery in minutes.

Does it mean more cash burn?

McLay: We have always said that we are interested in making sure that we are positioned around growth and market share, and delighting the customers before we are focus on profits. Obviously, we need to make profits but we kind of think about it in that order. Flipkart's in this wonderful position of having access to 500 million customers.

How do you view the policy landscape here as there are questions on whether Amazon and Flipkart are compliant with rules in letter and spirit or not?

McMillon: Our job one is to be compliant. That's our focus. Job two is to communicate to everybody what we see that would help us to be able to serve customers better and what we think rules could look like that would help support the economy. We communicate with this govt and other govts all the time with regards to that.

Is allowing an inventory based model for Flipkart something that Walmart would seek?

McMillon: We like managing inventory, managing inventory is difficult but it's one of the areas where we have expertise. Hopefully, at some point, that will happen.

Would you be interested in brick & mortar stores in India if FDI rules permit?

McMillon: That's not something we are pursuing. We have learnt that that's very difficult. We are very excited to have invested in Flipkart.

Is that also because of the changing nature of consumers? Given that Amazon is overtaking in terms of revenue, how are you addressing that?

McMillon: Around the world, e-commerce has been growing and continues to grow. But particularly in India, the e-commerce business has a really bright future; Flipkart has a really bright future and I am really thankful that we made the investment when we did.

Is it a level-playing field given the rules allow an inventory based model for Indian companies?

McMillon: The rules aren't up to us. As we operate around the world, all we ask for is a level-playing field.

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