Walmart Inc, the world's largest retailer, has fired around 50 of its India executives as a part of restructuring in the country.
The move underscores the struggles Walmart has faced in expanding its wholesale business in India. The Bentonville, Ark. based company currently operates 28 wholesale stores where it sells goods to small shopkeepers, and not to retail consumers.
The firings mostly affected executives in the company's real estate division because the growth in the wholesale model has not been robust, two of the sources said.
ADVERTISEMENT
“It's happening because focus is shifting to e-commerce rather than physical (stores),” said one source, who declined to be identified as the decision is not public.
Walmart did not respond to a request for comment.
Walmart has placed bold bets on India's e-commerce sector. In 2018, it paid $16 billion to acquire a majority stake in India's online marketplace - Flipkart, in its biggest global acquisition.
ADVERTISEMENT
The second source added that while Walmart could slow down the pace of opening new wholesale stores, the focus will increasingly be on boosting sales through business-to-business and retail e-commerce.
“We are also looking for ways to operate more efficiently, which requires us to review our corporate structure to ensure that we are organized in the right way. As a part of this review, we have let go 56 of our associates, across levels at the corporate office,” Walmart India President & CEO Krish Iyer said in a statement.
All of the 56 impacted associates, eight in the senior management and 48 in the middle as well as lower management, have been offered enhanced severance benefits and out placement services to support their transition, he added.
Mr. Iyer, however, ruled out a second round of layoffs in April, terming the speculation as baseless and incorrect. He said the company remains committed to growing its B2B cash and carry business in India.
“We have recently made significant investments to serve our members better and will continue to do so. This includes investments in our brick and mortar stores as well as e-commerce. Our members are increasingly becoming omni-channel shoppers. We are thus investing heavily in technology and have a healthy pipeline of best price stores. This will provide our members a true omni-channel and convenient shopping experience in the future,” said Mr. Iyer.
Layoffs at Walmart’s brick and mortar business began after it bought a majority stake in e-commerce retailer Flipkart in an around $16 billion deal in 2018.
Walmart, as per its strategy to strengthen presence in the Indian market and also compete head-on with global rival Amazon, had announced a mega deal to pick up 77% stake in Flipkart. It was among the first companies in India, which had adopted the omni-channel retail system by integrating online and offline formats.
Walmart has around 600 staff members in the head office in India, out of a total of around 5,300 nationally, one of the sources said.