Walmart is closing in on deals in developing economies, its chief executive said, the day after it sealed the world’s largest ecommerce investment, taking control of India’s Flipkart for $16bn.
Doug McMillon, Walmart’s chief executive, said in New Delhi on Thursday that his buying spree would not end with the agreement to buy 77 per cent of India’s biggest online retailer.
He warned that if Walmart did not move into new areas, the world’s largest retail chain faced extinction.
“The management team and the board are trying to position the company for the next generation of retail,” Mr McMillon said. “We’ve identified the geographies where we want to make the most significant investments because of the potential of those markets.”
He described India, China, Latin America as three priorities for the company’s expansion. “There are businesses we’ve identified and that we’re evaluating which we may want to be in.”
Mr McMillon added another warning for those who argued the company should focus instead on protecting profits in its core North American market.
“We know from retail history that if retailers don’t change they go away,” he said. “And so we are reaching out to embrace change aggressively.”
Recommended
Walmart is facing one of the biggest threats in its 56-year history as Amazon continues to grow while Walmart’s own online retail business has stalled. Its earnings in February showed a sharp slowdown in US ecommerce sales, and since then its share price has fallen more than 20 per cent.
Mr McMillon is carrying out a major shift in strategy, retreating from the UK where its Asda stores have struggled to compete with Tesco and Sainsbury’s, and focusing instead on fast-growing but often turbulent developing countries.
Its deal to buy a majority shareholding in Flipkart pits it directly against Amazon, which is investing $5bn to become India’s largest e-commerce business.
Mr McMillon told reporters he was “very excited” about his investment in Flipkart, saying: “India is not only large but it is growing so quickly.” The Indian online retailing market is forecast to grow at 27.8 per cent on average per year until 2022, according to the market research group Euromonitor.
Binny Bansal, one of Flipkart’s two founders, will be the group chief executive. Sachin Bansal, however, who co-founded the business with him 10 years ago, is leaving the company and selling his 5 per cent stake for roughly $1bn.
Mr McMillon pledged that Walmart would not interfere with the day-to-day running of Flipkart, but said the board would change to reflect the American company’s investment.
For Walmart, the deal is a chance to reboot its Indian business, now limited to just 21 wholesale stores in the country. The company has found itself unable to launch retail operations thanks to strict Indian regulations limiting how much foreign companies can invest in selling multiple brands under one roof.
Read Again https://www.ft.com/content/76bc1366-541a-11e8-b3ee-41e0209208ecBagikan Berita Ini
0 Response to "Walmart signals start of global push with Flipkart purchase"
Post a Comment