13 January , 2020 Fdiindia
Walmart India Announces Its First Layoffs of Top Executives; Second Round Likely To Be In April
NEW DELHI: Walmart India is in a great state of disorder after going through a huge loss. Following this, the world’s largest retailer sacked off about one-third of its top executives from the local headquarters in Gurgaon.
The announcement came on Friday that Walmart India will be dismissing more than 100 senior executives which include presidents of the divisions sourcing, fast-moving consumer goods and agri-business. Further, it also to shut down its largest warehouse that is the Mumbai fulfillment center and is might come up with new stores to expand its reach throughout India.
It seems as it any kind of profit has taken a major toll for the company in India and ever since its entry in the country, it has seen hardly any exciting sales growth. Sources close to the development also state that the real estate team has been set free which earlier was responsible for new store locations.
Walmart India has not officially commented on the specific number of executives dismissed but it will not be ending its services to the country. Its spokesperson said, “We are always looking for ways to operate more effectively to serve our members. This requires us to review our corporate structure to ensure that we are organized in the right way to best meet the needs of our members. Impacted associates have been offered enhanced severance benefits and outplacement services to support their transition.”
However, this is just the first layoffs, there will be a second round in the month of April. “This is the first phase of layoffs and we expect the next round by April,” said a source.
The spokesperson also said that the multinational retail corporation had no plans to put a stop to its service in India. “Walmart remains deeply committed to growing its cash-and-carry business in India and is making deep investment in technology to cater to its members’ need through brick-and-mortar and e-commerce.”
“The parent company has given a mandate to either turn around the business or face a massive scaledown”, said another person aware of the development.
Until March 2019, a total number of Rs 2,180.8 crores loss has been faced by Walmart India’s best price stores. Even in the last financial year, there were sales of Rs 4085 crores with a total loss of 171.6 crores.
There have been discussions by the Tata Group on buying the wholesale business of Walmart but its current form was incapable of any growth.
Walmart acquired the e-commerce platform Flipkart for $16 million in the year 2018. The main motive was to get access to India’s retail market worth $670 billion.
Walmart’s reduction in the existing program came after Flipkart announced its entry into the Food retail in India. The locally produced items could be sold online and through physical stores as well. For locally manufactured items in food retail, India allows 100% foreign direct investment (FDI). This is the only segment where any e-commerce platform is allowed to sell directly to a consumer.
“While they will have to figure out synergies and efficiencies between both companies, they will have to keep the regulatory framework in mind. There will be overlap and commonality which will be merged over time,” said the chief executive officer at consultancy firm Third Eyesight, Devangshu Dutta. “Walmart still has a small presence in India which is a nascent market but will keep growing for several decades.”
Walmart entered India in the year 2007. Firstly, it made a partnership with the Bharti group in the wholesale business and then bought its partner’s 50% stakes. The retailer’s expansion was put on hold between the year 2012 and early 2015 to check if it violated the US Foreign Corrupt Practices Act in any way.