India has its own rules, we must comply with them: Walmart CEO McMillon

India is a diverse country and Walmart has to think and execute locally and comply with its rules, said Doug McMillon, chief executive officer and president of the world’s largest retailer.

“It has its own rules. So we’ve got to comply with those rules,” said McMillon during a fireside chat with Prof Murali Mantrala of The University of Kansas School of Business at Converge @ Walmart, the flagship event of Walmart Global Tech India. “Today we’re not allowed to make foreign direct investment in a multi-brand retail store, the physical brick and mortar store. So we operate in a different way.”

But in the end, he said the company has to solve the food business in that kind of business model. It also has to solve other categories so it would be able to serve people in the way that they want to be served.

He said the Indian market is very unique and is one of the most exciting around the world. It is among the top three along with the US and China. The Bentonville-based company (in Arkansas) is locked in a battle with US rival Jeff Bezos-founded Amazon, Mukesh Ambani-owned Reliance’s JioMart, and Tata-owned BigBasket for dominance in India’s online retail market through Flipkart, which it bought for $16 billion in 2018. Digital payments giant PhonePe also came to Walmart as part of the acquisition. India’s retail market is estimated to reach over $1 trillion by 2025.

“We’re really proud of the history that we’ve had in the country as we work to build a business there,” said McMillon. “We think the future is very bright, and we are going to see a market that’s north of a trillion US dollars by 2025.”

McMillon said he is excited about the leadership teams at Flipkart and PhonePe and the associates in India and the businesses that are being built. He said the Flipkart business has now reached over 300,000 marketplace sellers and PhonePe business has more than 300 million users. “Both are growing very well,” said McMillon. “It’s been really fun to see how our team there solve problems because you have to be so creative, open, and fast and that inspires us around the world.”

Talking about the learning from the India market, McMillon said when Walmart was thinking about making the investment in Flipkart and PhonePe, his key takeaway was that the teams there can solve problems.

“No doubt every market where we operate, especially India is going to have challenges. It is a very dynamic environment. Rules, customers and competition are changing,” said McMillon. “The real question is, can you show up every day and have a really capable engaged set of associates and leaders that want to solve tomorrow’s problems.”

The role of technology in all of Walmart’s markets, including India, is now even more important than ever. Companies that are born recently, are more digitally native and have some advantages. It’s also true that in an omnichannel world some of the older companies that may employ more people and have more physical assets would also have some advantages. But it would only happen if those older businesses including Walmart have an openness, and an ability to change.

“We are fortunate at Walmart that we inherit a strong set of DNA from our founder Sam Walton who loved change,” said McMillon. He said purpose and values are constant at Walmart and everything else is open to change.

Leading a digital transformation at scale is a real challenge as Walmart operates in multiple countries. He said Suresh Kumar, the executive vice president and global chief technology officer (CTO) and chief development officer (CDO) of Walmart, Inc and his team are doing a fantastic job of leading the digital transformation.

“Digital transformation, in the end, is about people,” said McMillon. “There is technology involved and automation to play, but you actually have to change the mindset of the way people have worked, and have them be willing to work in a different way, in a small team environment, to get a different outcome.”

For digital transformation, McMillon also brings in guests and interviews them in front of the company’s leadership group or different teams. These guests include different CEOs of various companies from Google, Salesforce to Microsoft. For instance, “Satya Nadella (Microsoft CEO), if you were a leader at Walmart, how would you be looking at the opportunity for digital transformation?”

Walmart is focusing on technologies related to the optimization of data. It is also looking at the role of mathematics and algorithms to help it understand how the whole system works from forecasting to the customer experience. Other technologies include robotics and automation. In the future, it expects to see a huge role being played by innovations such as automated storage and retrieval systems and electric vehicles and drones for last-mile connectivity.