Judith McKenna, President & CEO, Walmart International spoke to CNBC TV18's Shereen Bhan about the Flipkart deal and the importance of India market for Walmart in terms of growth and expansion.
Q: How worried are you about the resistance from investors towards this deal?
A: We are really excited about this transaction and very excited about being part of India in a more expanded way than we are today. We have confidence in process that will occur, we understand that there are some people who have some views about this but we are going to comply completely with anything that the authorities ask us for and we expect this to be a smooth process.
Q: The only approval that you require is from the Competition Commission of India (CCI) because this transaction comes under the 100 percent foreign direct investment (FDI) route, so is that the only approval that you require from the government?
A: That is the approval that we require and that is what we are complying with, yes.
Q: Let me talk to you about the India opportunity and specifically about what changes for Flipkart with this investment coming in? In terms of the operating structure, we are given to understand that not too much is going to change but in terms of synergies in being able to leverage that, can you give me some sense of what the blueprint looks like over the next few months?
A: So, you are exactly right in terms of the operating structure that remains as it is today. We are really confident in the team that is in place and we want them to continue to run the business just as they do today. What we are hoping is that we can bring some support to the business in different areas both from a Walmart into Flipkart but Flipkart out to the rest of the world as well and from an Indian perspective and if you think about an area like sourcing, we believe this opportunity is to globally source through Walmart for certain products but equally we think there is a big opportunity to source out of India back into the rest of the world, it is one of our fastest growing sourcing regions already and we would like to make sure that we continue to do that.
Q: Any specific categories that you will focus on from global sourcing perspective from India?
A: One of the opportunities maybe around something like apparels. So what is great about Flipkart is they own a Myntra business. They already have a strong apparel business. We would like to support forth and perhaps offer access to more ranges, more assortment as they progress but everything will be done by the Flipkart team, thing is right for their customers which is right for their market.
Q: Speaking of the e-commerce opportunity in specific in India and of course penetration, clearly there is a lot of headroom for more growth. What is your sense about that? It’s about 2.5 percent of the retail market today. What is your outlook about e-commerce in India and in terms of investing further into Flipkart? USD 2 billion is what you are putting in with the option of doing another billion. What is your sense about profitability as well?
A: The curves that you see around the world about how e-commerce has taken off on markets; generally they have been understated in every market where this has begun to be more developed. We think that could possibly be true for India. It’s one of the fastest growing market, you know far better than I do. In terms of e-commerce penetration is low; we do expect that to increase quite dramatically over the coming years.
Our investment in Flipkart is a long-term investment. We are excited about the long-term future for this business and we will ride alongside every step of the way as they look to build the business, to build scale, to improve the mix business and ultimately to offer service to the Indian customers.Read the story here.