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Walmart trimming down of work force does not imply slowdown in operations: experts

The Week 2020-01-14 00:00:00

Though media reports are doing rounds that Walmart has laid off around 100 executives at the senior level, experts with whom THE WEEK spoke feel that this does not imply any slowdown in its operations and investments in India. It may even signify its expansion in the e-commerce field with Flipkart, and cutting down on its physical retail presence. It may also mean that Walmart is striving to operate more efficiently by laying off 100 senior level employees that may create a cushion of profit margin, and scope to give more discounts to customers.

Brand expert Harish Bijoor feels that the Walmart model of retail is in question in this layoff. “Walmart needs to and will reinvent. And I am sure it will be back. Till then, it's yet another story of job loss,” said Bijoor.

Alok Shende of Ascentius Consulting Mumbai feels that while Walmart has significant presence in the online markets through their acquisition of Flipkart, Walmart’s retail presence in India has not grown to be on par with its initially outlined growth ambitions. “The present move of laying off does not signify slowing down of investments. It probably reflects Walmart’s exasperation of slow progress in the Indian market place. However, will this move reinvigorate Walmart’s market expansion remains to be seen, particularly in light of advances made by big competitors such as Reliance Retail, Food Bazaar and DMart,” said Shende.

Some experts also feel that with such a move Walmart is triggering price pressure. “The layoff at the top gives a clear message to all the executives to be mindful of the margins. This strategic move may put considerable pressure on the competitors in the retail market, which is already struggling to generate a healthy bottom line. If the discount gap between the retail corporations and e-commerce companies reduces, many small or new e-commerce companies will lose the game and will be left with the best options of merging with the big fish. The consolidation may again give a smile for a while to the e-commerce companies until the retail companies reach a higher level of efficiency and trigger the next round of the game,” observed Prof Amit Srivastava, associate professor, T.A. Pai Management Institute (TAPMI), Manipal.

Many experts feel that the current market churning is likely to yield significant changes in the competitive landscape, and the players—both startups and companies with deep pockets—are crystal-gazing the permutations of business models and costs associated with these. “The layoff at Walmart can be understood as a retreat by a giant to figure out its next market move. It is reasonable to say that Jio's entry in retail space may bring 'telecom redux' imagery to existing players in the e-commerce market. However, I do not consider it as an indicator of loss of growth momentum or investment appetite. It is just remodeling the business,” pointed out Navneet Sharma, VB Padode chair professor of business responsibility at Vijaybhoomi University.