Walmart expands in India (WMT)

pulse

May 4, 2017 2:57 PM

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Walmart has announced that it will invest more than $500 million in building 50 new stores in India over the next three to five years, more than doubling its number of physical stores in the country to 71, The New Indian Express reports.

The new store locations could help increase the company’s brand awareness across India’s vast consumer base, helping it stake out a share in the region’s burgeoning e-commerce sector.

Walmart is working directly with state governments to establish the new store locations. The company has already started acquiring land for 10 of the first new locations in the Indian state of Telangana after entering into a Memorandum of Understanding with the state’s government. It’s also in talks with officials in other Indian states to start work on new stores in those jurisdictions.

India boasts the fastest-growing e-commerce market in APAC, and a broader store footprint in the country could help Walmart take a significant share of it. Walmart has little brand recognition in India compared with its home market in the US, as the country’s retail sector is still overwhelmingly dominated by mom-and-pop stores. Expanding its store footprint could be a major step in improving Walmart’s brand awareness among Indian consumers — which will be crucial if the retailer is to see success in the country’s increasingly lucrative e-commerce sector. Online retail sales in the country will grow at a rapid 31% compound annual growth rate (CAGR) from 2016 to 2021, according to Forrester.

The new store locations may also help Walmart tackle logistics and payments challenges plaguing India’s e-commerce sector. Most e-commerce orders in India are still paid with cash on delivery (COD) because a large segment of India’s population lacks payment credentials for online purchases. Additionally, delivering e-commerce purchases can be incredibly difficult and expensive because of the country’s outdated transportation infrastructure. Walmart can offer omnichannel fulfillment options like it does in the US — including click-and-collect and ship-from-store — to get around these challenges. For example, customers could pick up their orders in stores and pay with cash, bypassing online payment and delivery altogether. Finding ways to circumvent these challenges might help Walmart succeed despite Amazon's growing presence in the country.

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