Why Apple, Walmart Are Bullish On India

At a time when the overall narrative is around India being an attractive investment destination, the two American multinationals are more specific in projecting India as their centrepiece.

In the India season of the Oscars and all things else, two developments stand out.

One is about Cupertino-based Apple Inc and another relates to Bentonville-headquartered Walmart Inc.

At a time when the overall narrative is around India being an attractive investment destination, the two American multinationals are more specific in projecting India as their centrepiece.

Apple, according to media reports, is making organisational rejigs to focus more on India.

The details are yet to be out, but it is clear that India will have a much bigger play in the tech giant’s scheme of things.

This follows the massive demand for iPhones in India and competition among states to spread the proverbial red carpet for manufacturing hubs to make Apple products.

Apple’s intention to move away production from China has made its top contract manufacturers such as Foxconn act fast on other destinations, India being a preferred one.

As for Walmart, it has made its India pitch openly.

At the Raymond James Institutional Investor Conference in Orlando, a fireside chat with the top management of Walmart Inc made retail industry watchers sit up and take notice.

The last 10 minutes of the fireside chat were kept for the retail major’s international business.

The question was on opportunities vis-à-vis Indian and Chinese markets.

To that, Walmart Chief Financial Officer and Executive Vice-President John David Rainey’s answer was a headline point.

‘I guess …. believe India is going to be the largest market in the world this year, surpassing China. It’s a really promising opportunity in the future.’

This came in the midst of Walmart exiting some international markets as the chain looks ‘to maximise valuation and return on dollars’.

According to the CFO, Walmart will be disciplined with both divesting and investing, going forward, so that the portfolio of products and segments maximises the company’s valuation.

Even as he put India over China in his outlook, he noted that Walmart was excited about both India and China, which are ‘certainly growing faster than others’.

Walmart has 29 wholesale or cash-and-carry stores meant for business-to-business transactions in India.

The US chain’s long-drawn ambition to open retail stores (commonly known as multi-brand retail) in India has remained a dream due to regulatory constraints for foreign investors.

In India, Walmart is equal to Flipkart and PhonePe.

In 2018, the US retailer bought a majority stake in e-commerce firm Flipkart in a $16 billion deal.

Walmart also owns online payment app PhonePe, which was earlier a Flipkart entity.

Against India’s nil score in retail store, this is how other geographies stack up in the Walmart universe.

According to Walmart’s annual report of 2022, the chain has 5,342 stores in the US alone, with 3,573 of them being supercentres, spread over 100,000-250,000 square feet each.

In its international business (non-US), there are 5,251 stores. While in India, the Walmart physical presence is only through 29 wholesale stores, in China it has 397 — 361 retail and 36 wholesale.

In Africa, it has 414, Canada 408, Central America 864, Chile 384, and Mexico 2,755.

Like Walmart, Apple had failed to open fully-owned stores in India due to sourcing conditions linked to foreign investment in single-brand retail.

Now that the sourcing conditions have been eased after Apple’s engagement with India in manufacturing, the company opened its first fully-owned stores in the country in Mumbai on Tuesday, April 18, 2023. The store in Delhi opens on Thursday, April 20, 2023.

Apple has more than 500 stores around the world — close to 275 in the US and some 250 elsewhere.

After the US, China has the maximum number of Apple stores at 44. In fact, the latest store in China was set up as recently as May 2022.

Other geographies with double-digit store numbers include the UK at 39, Canada 28, Australia 22, France 20, Italy 17, Germany 16, Japan 10, and Spain 11.

Both Apple and Walmart have been quite a political hot potato in India cutting across governments.

Back in 2013 when Scott Price, then chief executive of Walmart Asia, broke the news that the group’s retail plan was not tenable and therefore the joint venture with the Bharti group was being terminated, it seemed like the end of the road.

A decade later, the group has named India its potential topmost market for this year in international business. Apple has gone through a similar cycle.

By wanting to make top-management changes keeping in mind India, Apple has added to India’s moment in the sun.

Feature Presentation: Ashish Narsale/Rediff.com

Source: Read Full Article