Walmart Inc’s urgency to stem market share losses to rivals around the world is driving it to partner with local players in the UK and India, even as it scales back in some other markets like Brazil.
The world’s largest retailer is in talks to merge its UK arm ASDA with J Sainsbury Plc in which it will hold a minority stake. Walmart is also looking to acquire a majority stake in India’s leading online retailer Flipkart for $10 billion to $12 billion after years of underperformance there.
The moves underscore Walmart’s renewed focus on catching up with competitors, ranging from grocer Aldi Inc to Amazon.com Inc, in key international markets. The retailer’s underperforming international business contributed less than a quarter to its total revenue of $500.3 billion in fiscal 2018.
“Walmart has simply been too slow to react when it comes to their overseas business,” said Burt Flickinger, managing director, Strategic Resource Group. “They have finally started taking corrective action and are now dedicating their resources to where they think they can grow,” he said.
It also marks a shift in Walmart’s traditional approach of building a business on its own.
“Walmart is clearly moving away from trying to crack tough foreign markets by itself to striking partnerships because it realizes that is the fastest way to bridge the gap with competitors,” said Laura Kennedy, vice president, retail sales and shopper practice at Kantar Consulting.
A Walmart spokesman declined to comment on the negotiations in the UK and India.
Overall, sales from Walmart International, which runs about 6,300 stores globally, stood at $118.07 billion in the fiscal year ended 2018, down nearly 14 percent from $136.5 billion in 2014.
This was in large part due to adverse currency movements, which hurt the money repatriated from its foreign arms, but also because of a series of missteps in major markets around the world.
In an effort to fix its international performance, Walmart in January appointed Chief Operating Officer Judith McKenna to run its international unit and has indicated it will focus on its core North American markets and growth markets like China and India.
Walmart’s international woes have been exacerbated by slow decision-making over the years and even initial talks with India’s Flipkart began as far back as 2016.
Walmart initially entered the Indian market in 2007 through a joint venture with India’s Bharti Enterprises, years before Amazon debuted there. That joint venture was called off in 2013 and its presence in India has remained largely static since then, at least in part due to restrictions around foreign investment in physical retail in India.
Updated Date: Apr 30, 2018 11:54:04 IST