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Flipkart’s parent company Walmart to lay off top executives amidst mounting losses

Walmart might merge its wholesale business with its online retail unit Flipkart.

Image credit to 123rf.com.cn.

The Indian arm of US-based physical retailer Walmart which has been reporting losses with an upward trend every year since 2017, has decided to lay off over 100 senior-level employees—two-thirds of top executives, local media Economic Times reported.

At its townhall in Gurugram—the satellite city of New Delhi—the company announced laying off executives such as vice presidents across divisions including sourcing, agri-business, and fast-moving consumer goods (FMCG).

“We are always looking for ways to operate more effectively to serve our members. This requires us to review our corporate structure to ensure that we are organized in the right way to best meet the needs of our members,” a Walmart India spokesperson told ET. “Impacted associates have been offered enhanced severance benefits and outplacement services to support their transition.”

The report said Walmart India might also shutdown its largest warehouse and fulfillment center based in Mumbai and put a temporary halt on new-store expansion in India. Currently, the company operates 28 stores across nine Indian states including Jammu&Kasmir, Punjab, New Delhi, Andhra Pradesh, and Maharashtra, among others.

Walmart entered India over a decade ago with its wholesale cash and carry business catering to local neighborhood stores and large hotel chains. It competes with German wholesale physical retail chain Metro Cash & Carry. Walmart India’s losses have been surmounting year after year. It posted a net loss of INR 172 crore (USD 24 million) in the fiscal year 2018-19, which nearly doubled from INR 91 crore (USD 12.8 million) loss it posted in the previous fiscal.

Quoting people aware of the development, the report said this is the first phase of layoff and the next round of layoff will happen in April. Three people told ET that the layoffs might be the beginning of the company’s plans to sell off its physical retail due to its shoddy performance. It might also merge it with its online retail unit Flipkart, which it bought for USD 16 billion in 2018.

“The parent company has given a mandate to either turn around the business or face a massive scaledown,” a person aware of Walmart’s plans told ET. However, the company has refused these claims and said, “Walmart remains deeply committed to growing its cash-and-carry business in India and is making deep investment in technology to cater to its members’ needs through brick-and-mortar and e-commerce.