Focusing on few geographies in India is key: Walmart India's Krish Iyer

Our entry into or growth now in cash-and-carry is a strategic move, and it is not because 100% FDI is not there in retail: Iyer

Krish Iyer, the president and chief executive officer (CEO) of Walmart India, tells Ritwik Sharma where the retail major stands after a decade of operations in India: Edited excerpts:

How does a recent initiative such as the women entrepreneurship programme tie in with Walmart’s business strategy?

For Wal-Mart, creating a condition of shared value is a part of our strategy. It means that while we do things for the society it is also strategically important for the business. And that initiative is also eventually going to generate profits and grow our business. So when we talk of women entrepreneurship development, it is a very good example of creation of shared value. We have done research in the US and here, and found that products manufactured by women-owned businesses are perceived to be of a higher quality. And it’s not only perception, but in reality they are of higher quality because repeat purchases don’t happen otherwise. So, it makes immense sense to focus on increasing diversity in our supply chain and focus on women-owned businesses as well. On the social front, gender equality in India is an important issue. So providing equal opportunity, a platform, market access, facilitating access to capital is an important part. Providing women the necessary skills, both in terms of leadership/business as well as life skills, that’s what we do through this programme of nine months.

You have been in India for about a decade. As a market, what lessons have you learnt here?

Number one, India is not just a country, it is like a subcontinent with six-seven countries. Consumer behaviour is so different and people are diverse, be it north vs south or east vs west that it is really important to understand the behaviour of each region and accordingly customise your offering. Secondly, particularly in retail, when you talk about trying to serve 1.3 billion simultaneously it can be an extremely challenging task. So, concentric circles, focusing on a few geographies in India becomes very important, to the extent that it is different from the rest of the country. India is a complex market. Of course in the last three years a lot of effort is being made in terms of the ease of doing business, and some progress has been made. In the next three years it should become a lot easier, which will make a difference in future. India is certainly the most attractive market. Barring the last couple of quarters that have seen a slowdown in GDP growth because of GST, the long-term outlook for the country over the next 10 years is very good. We, as a foreign retailer, look at India very positively and believe there is a good business model to be established here which we already have as far as cash-and-carry is concerned, and we have a good opportunity to grow this business.

There more restrictions for foreign retailers compared to domestic ones. And your strength lies in areas like logistics. So, how do you see the retail business going ahead?

Our entry into or growth now in cash-and-carry is a strategic move, and it is not because 100 per cent FDI is not there in retail, etc. I think cash-and-carry by itself is a profitable business in the long term. $1.2 trillion as overall size of traditional trade over the next 10 years provides a huge opportunity to continue to grow this.

How have you chosen markets in India?

In terms of focus on geographies, our first store was in Amritsar. And we had clearly decided that we will concentrate on Punjab, particularly in the north. That strategy continues in terms of focusing on a few geographies. So, focusing on Punjab, Haryana, Himachal, UP and Uttarakhand, that’s one cluster, Andhra and Telangana is the second, and Maharashtra is the third cluster in terms of the order in which we are growing. And as we saturate some of these regions we will consider opening in more geographies.

Do you feel the regulatory environment so far is suited more in favour of the mom-and-pop stores and producers than retailers? How do you tackle it?

I think mom-and-pop stores are an important part of the economy. Farmers are an extremely important part of the economy, taking care of their interests is critical. We believe our current business model is actually helping in making mom-and-pop stores prosper.

And eventually farmers also should prosper. I believe the many steps that are being taken in the ease of doing business will go a long way in helping us grow our business, and helping others also grow their business. GST is just one example, where earlier you had to have 29 warehouses to serve all of India, today you can do with five large distribution centres. So that’s an important part of the ease of doing business.