Walmart India Fires 30% Of Top Executives, Shuts Down Mumbai Fulfillment Center: Why This Layoff?

Update: We have received an official statement from Walmart India CEO Krish Iyer. Walmart has categorically denied any further layoffs in April, and have confirmed that 56 employees have been fired.

Here is the statement from Krish Iyer, President & CEO, Walmart India

“Walmart remains committed to growing its B2B Cash & Carry business in India. We opened 6 new Best Price modern wholesale stores, 1 Fulfilment Center and our sales grew 22% in 2019.

We have recently made significant investments to serve our members better and will continue to do so. This includes investments in our brick and mortar stores as well as e-commerce. Our members are increasingly becoming omni-channel shoppers. We are thus investing heavily in technology and have a healthy pipeline of Best Price stores. This will provide our members a true omni-channel and convenient shopping experience in the future.

We are also looking for ways to operate more efficiently, which requires us to review our corporate structure to ensure that we are organized in the right way. As part of this review, we have let go 56 of our associates across levels at the corporate office.  All of the 56 impacted associates (8 in the senior management and 48 in the middle/ lower management) have been offered enhanced severance benefits and outplacement services to support their transition. A report appearing in the section of the Press speculating second round of layoffs in April is baseless and incorrect. ”

Earlier..

Reeling under heavy losses, Walmart India, owner of Flipkart has triggered a massive layoff exercise across their top management layer.

Besides, they will shutdown their Mumbai warehouse, which is their biggest in India.

What exactly is happening here?

Walmart India Layoffs Begin

In a townhall meeting, Walmart has announced massive layoffs, across their top management layer.

Several Vice presidents across sourcing, agri-business and the fast-moving consumer goods (FMCG) divisions have been fired.

As per reports, 30% of their top executives from Gurgaon have been fired in this layoff round. Entire real estate sales team for hunting and finalizing new store locations have been fired as well.

Overall, more than 100 top level executives have been given pink slips, in what is described as Walmart’s one of the biggest layoff exercise in India.

Mumbai fulfillment center, which is their biggest in India, will also be shut down.

Walmart’s Response: Corporate Restructuring

Walmart India has described this as ‘corporate restructuring’ exercise, as they said in a statement: “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 organised in the right way to best meet the needs of our members,”

As per Walmart, all the fired executives will be given appropriate severance packages and assistance in getting new jobs.

As per some insiders, this is only the first round of layoffs, and in April, more employees will be fired.

Why Walmart Is Firing Employees in India?

Walmart, which entered India almost 10 years back, is reeling under severe losses.

As per some reports, Walmart India has almost given up on their brick-and-mortar cash-and-carry business, which was its focus in the last 10 years.

They have accumulated total losses of Rs 2181 crore till now, and now, the US-headquartered retail behemoth wants to stop this leak.

In FY2019, against revenues of Rs 4095 crore, Walmart India’s Best Prices Store reported losses of Rs 172 crore, which was R 91 crore a year back, against revenues of Rs 3686 crore.

On reports on quitting their brick and mortar cash and carry business, Walmart 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’ need through brick-and-mortar and ecommerce.”

What Next?

As per some retail observers, Walmart India can now consolidate their Best Prices store business with Flipkart, and scale down their cash and carry business.

There has been no confirmation or denial regarding this development.

We will keep you updated, as more details come in.