Walmart has approached the Tata Group with the proposal to mould a strategic partnership in India to engage in a ‘deep engagement’ amidst the whole cash-and-carry business.
This collaboration will anchorage Tatas’ existing distribution network to expand the US retail giant’s reach to kirana stores. Permitting companies like Flipkart augment its existence in the food and grocery segment through the network, narrated three senior executives.
“This partnership will aim to expand reach to kiranas, upgrade them and then utilise the network for fulfilment of food and grocery orders for Flipkart. It’s almost the same as what Reliance Industries intends to do and at a similar scale. This is an assetlight model and Walmart will thereby have an indirect presence in retail in a peaceful way without making any capital investment,” states an executive.
The executives also mentioned that Walmart hopes to have an Indian partner who is respected and has a voice in policymaking. On the other hand, The Tata Sons spokesperson refused to pass any comment on this. On the contrary, a global spokesperson for Walmart mentioned in an email that the company does not express any opinion on speculations around ventures.
The deliberation is taken forward by Tata Group and Tata Sons CFO Saurabh Agrawal along with a team comprising senior group executives who is believed to have visited the US to hold talks with Walmart’s global top management. However, the final verdict on the partnership is yet to be brought to a conclusion.Director of the Tata Sons has said that they have held multiple discussions and meetings, but all are not converted into deals. Such proposed partnerships take months of ironing-out, he added. “Such proposed partnerships take months of ironing-out,” he added.
Apart from its stake in Flipkart, Walmart currently runs 26 wholesale cash-and-carry stores in India that are branded as ‘Best Price Modern Wholesale’. At present, Tata has an equal joint venture with UK’s Tesco Plc to run supermarkets and hypermarkets under the banner of Star Hyper, Star Market, Star Daily and Star Extra. The 43 stores are spread across Mumbai, Pune, Kolhapur, Bengaluru and Hyderabad, according to the company’s website.
India at the present day permits 100% foreign direct investment in single brand retail, food retail and ecommerce marketplaces, while 51% is allowed in multi-brand retail.
An executive stated that Walmart is not interested on setting up food and grocery supermarkets and hypermarkets in India right now, and plans to focus solely on Flipkart — in which it has made a huge investment — for expanding the business in the country.