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How Retail Giant Walmart Is Modernising Kiranas Through B2B Ecommerce Solutions

How Retail Giant Walmart Is Modernising Kiranas Through B2B Ecommerce Solutions

Inc42 caught up with Rajneesh Kumar, Chief Corporate Affairs Officer, Walmart India, to understand to ask him what’s in store for Indian retail and consumers

The ‘Mera Kirana’ programme has been created to share best practices with small and medium retailers, says Kumar

He believes that the combination of Walmart’s global expertise and Flipkart will position the company for long-term success and enable it to contribute to the Indian economy

Until May this year, most Indians (except for the well-heeled and foreign-travelled ones) probably knew of US retail giant Walmart as the world’s largest brick-and-mortar retailer and those in the retail segment through its Best Price stores.

But on May 9, one inadvertent announcement by Masayoshi Son, the chief of Japanese MNC holding conglomerate SoftBank which held a 23.6% stake in Indian ecommerce company Flipkart, made Walmart a household name in India — exactly what the company has been wanting all this time.

Everyone knew Walmart was big — but they got to know exactly how big when it announced the $16 Bn acquisition of a 77% stake in Indian ecommerce giant Flipkart. After much drama — including flip-flops by Flipkart shareholder SoftBank, trader protests, regulatory assessments, and tax hurdles — the deal was finally completed in August.

Did you know: Walmart has been in India since 2007 and has maintained a slow and steady (albeit low-profile) rate of growth and expansion in the country. Today, it boasts 21 Cash and Carry stores, Best Price flagship stores, Kirana programmes, and a lot more.

For over a decade now, Walmart had been trying to expand its presence in the lucrative Indian retail industry, which is expected to reach $11.25 Bn by 2019. The Flipkart acquisition has given Walmart just that key. With India’s homegrown ecommerce posterboy in its kitty, Walmart is in prime position to embed itself in the country’s retail fabric and finally get a piece of its growing ecommerce pie, slated to be $200 Bn by 2026.

Walmart India opened its first fulfilment centre (FC) in Mumbai in November 2017 and most recently it launched another in Lucknow.

With the spotlight now on both Walmart’s growing ecommerce and retail operations in India, Inc42 caught up with Rajneesh Kumar, Chief Corporate Affairs Officer, Walmart India, to understand its 11-year journey here and to ask him what Indian retail and consumers can look forward to now that the biggest battle has been won.

Kumar, who has high hopes from India’s retail industry, talks to us about Walmart’s Mera Kirana programme, Best Price stores, success stories of supporting talent in India, going the agri-way, and a lot more. Walmart India, which has been piloting Mera Kirana for the past four years, now wants to make it part of its mainstream business.

Kumar, who has professional experience of more than 20 years, leads corporate affairs for Walmart’s India operations and oversees and directs the unit’s strategic government engagement, public affairs/media, internal communications, CSR/philanthropy, and sustainability initiatives, in addition to helping drive its long-term strategy here.

Here are some excerpts from Inc42’s interview with Rajneesh Kumar of Walmart India:

Inc42: Please explain the Mera Kirana programme under which you are looking at modernising kirana (mom-and-pop) stores. What does the term “modernisation” imply here?

Rajneesh Kumar: Walmart India owns and operates 21 omni-channel Cash and Carry stores under the brand name Best Price Modern Wholesale Stores (“Best Price”) in nine states across the country. Kiranas comprise almost 70% of our membership base and we are committed to helping them become more efficient and serve the underserved customers in their communities.

Each of Walmart’s stores offers B2B ecommerce solutions for members either online or through a mobile app and accepts orders over the phone or through Kirana Relationship Managers.

The ‘Mera Kirana’ programme has been created to share best practices with members who are small and medium retailers. It also advises them on various aspects of using low-cost modern techniques and processes such as assortment planning, layout and fixtures, displays, backroom, licenses, safe food handling, customer retention, and value-added services.

Dedicated zones have been set up in all our “Best Price” stores that are designed to resemble a modern kirana store. They serve as a model for kirana store owners to replicate when it comes to assortment and placement.

Inc42: You have been piloting the Mera Kirana programme for the last four years. What are your observations so far? What are the challenges you’ve faced in its implementation and how did you overcome them?

Rajneesh Kumar: It is very interesting to note that small businesses and kiranas are open to adopting the technology. With our ‘kirana support team’ on the ground supporting our kirana members with an awareness of our B2B ecommerce offerings, the majority of our kirana members have started browsing and ordering online. They realise that using ecommerce saves them time and helps them serve their customers better.

Our associates also go to the market with their tablets and assist kiranas in ordering through the virtual store on the device; the orders are then serviced by our logistics partner.

Inc42: It has been observed globally that Walmart Best Price stores are opened on city outskirts due to the availability of large spaces in such areas. However, India is a land-deprived country. Will you be able to manage the same scale of operations here?

Rajneesh Kumar: Each market is different, and we take a very thoughtful and deliberate approach when looking at our international portfolio. Walmart is looking for new ways to serve customers and is moving with speed in the rapidly changing retail environment.

Inc42: While working with kirana stores, what will be the two-way monetisation model to make the deal lucrative at both ends, considering that India is a price-sensitive economy?

Rajneesh Kumar: The mission of Best Price is “Enabling businesses to prosper every single member”. The assortment, service, and store layout are customised to the specific needs of members who can walk into a Best Price Store and source high-quality products in quantities they need and at the time they require.

The price structure allows profitability for the members and also allows them to pass on the price savings to the end-customers, thereby helping them save money and live better.

Each of our stores offers B2B ecommerce solutions for our members, either online or via the mobile app and call centre, and accepts orders over the phone or through Kirana Relationship Managers.

 Inc42: With the Indian government working on the national ecommerce policy and the general election around the corner, there is a lot of uncertainty in the Indian economy at present. Do you think this may have an impact on Walmart India’s plans in the near future?

Rajneesh Kumar: Walmart remains committed to contributing to the Indian economy by supporting smallholder farmers, manufacturers, and our Kirana customers. Our partnership with Flipkart is a testament to our continued confidence in our ability to contribute to this market. Flipkart is a prominent player in India with a strong, entrepreneurial leadership team that is a good cultural fit with Walmart.

We believe that the combination of Walmart’s global expertise and Flipkart will position us for long-term success and enable us to contribute to the economic growth of the country.

Inc42: Walmart entered India back in 2007, opening its first store in 2009. But, even after almost a decade, you have just 21 warehouses in India. What’s gone wrong with Walmart’s India adventure?

Rajneesh Kumar: Walmart has built a solid foundation in India. We plan to open 50 more stores over the next few years. This year alone, five new Cash and Carry stores are going to open. Walmart recently opened its second fulfilment centre in India in Lucknow. The first one was opened in Bhiwandi in Mumbai in 2017.

Inc42: Unlike Kishore Biyani’s Future Group, Walmart India does not have its own ecosystem here. It operates only a part of the Indian kirana business. What is your view on this? Is Walmart open to collaborating with other stakeholders through M&A?

Rajneesh Kumar: Our business in India benefits more than 1 Mn members, including small resellers and kiranas, hotels, restaurants, offices and institutions — with high-quality products at consistent, transparent, and competitive prices so that their business prospers.

Walmart India opened its first Fulfillment Centre (FC) in Mumbai in November 2017 to enable kiranas, resellers and other businesses in Mumbai and neighbouring areas to get access to a wide and exciting assortment of merchandise relevant to them without stepping out of their stores. Walmart recently opened another FC near Lucknow.

In addition to the Cash and Carry business, Walmart is trying to support the Indian economy in many other ways, including through its Global Sourcing Centre and the Technology Centre, Walmart Labs.

  • Global Sourcing Centre (Bengaluru): The global sourcing hub procures non-food products from Indian manufacturers for 13 of its global markets in a bid to support the economy and the ‘Make in India’ initiative.
  • Walmart Labs (Bengaluru): The technology centre in Bengaluru started in November 2011. It houses more than 1,200 local engineers and technical experts who develop cutting-edge solutions, retail technology, and support Walmart’s global operations to ensure operational efficiencies, thereby driving seamless shopping experiences for customers.

Inc42: 21 stores, 5K listed products, what do you think these figures will be two years down the line? Which other items/categories do you aim to add? Which cities do you plan to expand it further?

Rajneesh Kumar: Walmart directly employs around 4,000 associates in India and we estimate that each new store opened creates about 2,000 direct and indirect job opportunities for the local community.

We strive to create value for our members, local and regional suppliers, small farmers, associates, women-owned businesses and the community. We also expect the transaction to create millions of jobs through the development of supply chains, commercial opportunities such as supplier development, the Make in India initiative, and direct employment. With our growth and expansion in India, we will continue to partner to create sustained economic growth across agriculture, food, and retail.

Inc42: The Flipkart acquisition is the biggest ecommerce deal in the world. How do you view this move from the Walmart India perspective?  

Rajneesh Kumar: Walmart is looking for new ways to serve customers and moving with speed in the rapidly changing retail environment globally. This includes thoughtful and deliberate consideration of the company’s international approach.

The ecommerce opportunity in India is undeniable, with 2% penetration today expected to grow to 6% by 2023. We only provide ecommerce projections for Walmart US. However, Flipkart has positioned itself as a leader in India’s ecommerce by making high-quality products affordable to consumers.

We believe Flipkart’s people, platform, brands and momentum, together with Walmart’s global footprint and expertise, position the business for long-term success.

Walmart and Flipkart will achieve more together than each of us could accomplish separately to contribute to the economic growth of India, creating a strong local business powered by Walmart. Our investment will benefit India by providing quality, affordable goods for customers, while creating new skilled jobs and opportunities for suppliers.

As a company, we are transforming globally to make life even easier for customers, and we are delighted to learn from, contribute to and work with Flipkart to grow in India, one of the fastest-growing and most attractive retail markets in the world.

Walmart’s investment includes $2 Bn of new equity funding to help accelerate the growth of the Flipkart business. Both companies will retain their unique brands and operating structures in India.

Kirana Stores: Becoming An Essential Ally For Ecommerce Giants

India has an estimated 12 Mn Kirana stores.

In 2015, during a presentation, Boston Consulting Group’s Senior Partner and Director Abheek Singhi had said that the kirana store model works well in a complex market like India, where small-format stores can easily penetrate the length and the breadth of the vast country.

But considering their sheer vastness in presence and number, they lack online visibility.

However, not so long ago, kirana stores evolved from being nondescript neighbourhood stores for all and sundry household needs to becoming an essential ally for ecommerce giants as they started using kirana stores as intermediaries to reach their local customers.

The country’s ubiquitous network of kirana stores was suddenly an important go-between for FMCG companies, Reliance Jio, etc. Global ecommerce giant Amazon India did the same while Flipkart’s fashion subsidiary Myntra also launched its Myntra Extended Network Through Store Activation (MENSA). This was the beginning of micro-management of kirana store clusters.

Recently, retail giant Future Group’s founder and CEO Kishore Biyani announced the launch of his Retail 3.0 business model in India, which would blend technology with brick-and-mortar stores. With this model, Future Retail plans to become Asia’s largest integrated consumer retailer by 2047 with a revenue in excess of $1 Tn.

At the same time, the premise of these business opportunities was laid on the requirements of the ecommerce industry and they did not necessarily solve the larger problem of how kirana stores could be discovered.

In 2017, Adi Godrej, the Chairman of Godrej Group said, “Kirana stores and not ecommerce, will fuel FMCG growth in India.”

Walmart seems to have understood this very well. The company, which is prioritising the Indian market, is looking for new ways to serve customers while rapidly experimenting with the retail environment. Let’s see how its Kirana experiment turns out.

[With inputs from Meha Agarwal.]

Update: October 12, 7:00pm — The headline and copy were updated to make it clearer that Walmart has been in India for a long time. The earlier headline, ‘Retail Giant Walmart Is Banking On Kiranas To Take Baby Steps Into The Heart Of India’, may have been misconstrued.

Author

Bhumika Khatri

Inc42 Staff

Hailing from a business-oriented family, Bhumika has always been crunching numbers in her head. Words are her escape and she looks to find hidden startup stories. Reach her on [email protected]

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