US-based retailing giant Walmart seems to have started the new year on the wrong foot in India as it prepares to restructure and align its capabilities with Flipkart, one of its most expensive acquisitions globally.
Two weeks after the company fired 56 executives in India, the laid-off employees are escalating the matter to the US headquarters in Bentonville, Arkansas, calling the termination unfair.
More than 35 employees have written to the American retailer individually as well as a group, local media Economic Times (ET) reported.
The fired employees, which according to the company include eight senior and 48 middle-to-lower management associates, said Walmart India had assured them in December last year that there would be no lay-offs. But the company went back on its word and fired them anyway. The terminations, the employees who were cut off said, were unrelated to the performance.
“The US retailer has responded to our mail and a team from US compliance and ethics department could visit India to do a thorough investigation,” the report said citing three employees who have written to the Walmart headquarters.
“Some (of the employees) had even threatened to be whistleblowers in recent real estate deals where due process was not followed,” they said.
Walmart told ET that they “take all allegations seriously” and “will review these accordingly.”
“We are committed to growing in India, doing so in compliance with all applicable laws and in a way that benefits our associates, local businesses and the communities where we operate,” the company said.
Krish Iyer, president and CEO, Walmart India, in a statement on mass-layoffs, had said that the company is “looking for ways to operate more efficiently.”
He said, this “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 of 56 of our associates across levels at the corporate office.”
The company’s organized B2B retail business in India hasn’t been doing good. For the financial year ended March 2019, Walmart’s Indian wholesale unit posted a loss of USD 24.1 million (INR 1.72 billion), nearly twice the amount it posted the year before.
In one of its restructuring moves in India, Walmart shuttered one of Flipkart’s fashion units Jabong.com. The restructuring has reportedly followed Walmart India’s plan to merge its wholesale India business with e-tailer Flipkart, which it had acquired for USD 16-billion in 2018, over the next few months to fuel its e-commerce dream in India’s soon-to-be USD 89 billion online retail markets. This will involve, as per the local media, shutting down its warehouse in Mumbai and halt the new store expansion in the country.
At present, Walmart India owns and operates 28 wholesale stores under the Best Price brand, which sells an assortment of over 5,000 items to local kirana stores, and small business owners. (Kirana stores are neighborhood stores that sell household items, groceries, dairy, fruits, and vegetables, including other sundry products.) The company also has three fulfillment centers in the country – Mumbai, Lucknow, and Hyderabad. The American retailer first entered India in 2007 through a partnership with Bharti Enterprises for a cash-and-carry business catering to local neighborhood stores and large hotel chains. It competes with German wholesale physical retail chain Metro Cash & Carry.