In a move that mirrors the recent Amazon and Future Retail tie-up, US-based retail giant Walmart is in advanced talks with India’s Tata Group for a strategic partnership that will help it leverage the latter’s distribution network to reach local stores for its wholesale cash-and-carry business.
Three senior industry executives told local media that the ‘deep engagement’ Walmart is seeking from Tata Group will eventually also help Flipkart—which it bought for USD 16 billion in 2018—in fulfillment of grocery deliveries.
Flipkart first ventured into grocery delivery under the brand name ‘Nearby’ in October 2015, which it had to shut down within four months. In late 2017, it forayed into this space again, this time with a fresh name ‘Supermart’, which was available only for its employees. It opened the service for the public at large after Walmart’s acquisition last year.
“This partnership will aim to expand its reach to kiranas, upgrade them and then utilize the network for fulfillment 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 asset-light model and Walmart will thereby have an indirect presence in retail in a peaceful way without making any capital investment,” one of the three executives said.
According to the sources, Tata Group and Tata Sons CFO Saurabh Agrawal is leading the negotiations with a team of senior executives and have visited the US to discuss the matter with Walmart’s global top management.
In India, Walmart runs 26 wholesale cash-and-carry stores that are marketed as ‘Best Price Modern Wholesale’. Tata Group, on the other hand, holds a strong position in the physical retail space. Under the 50:50 joint venture with UK’s Tesco, it operates 43 stores across five Indian cities. India currently allows 100% foreign direct investment (FDI) in single-brand retail, food retail, and e-commerce marketplaces, while it limits FDI in multi-brand retail to 51%.
The executives quoted above, said Walmart is looking for an Indian partner who is “respected” and “has a voice in policymaking.”