How Small Business Traders are Opposing Flipkart-Walmart Merger

The Walmart-Flipkart deal, worth about $16 billion, seems to be gathering a lot of opposition in India. This week there were around 30 different associations who met in Ahmedabad, Gujarat, all of which were representing the small traders of India, to discuss the possible outcomes of the acquisition of the Indian e-commerce firm by the US retail giant.

AM Vikkiramaraja, president, Tamil Nadu Vanigar Sangakalin Peramaippu, a trade association from the southern Indian state, was quoted in an interview saying, "We discussed what precautionary measures we can take to ensure that Walmart doesn’t enter offline trade". Vikkiramaraja’s association represents over 2.1 million Tamil Nadu traders.

Starting on July 23, the traders' associations have decided to hold a three-day conference in New Delhi, to mark their opposition. The different trades associations represent a combined total of hundreds of millions of small businesses in India. According to Vikkiramaraja, several ministers from the Narendra Modi government have been invited to the event. Vikkiramaraja was also quoted saying, "All trade bodies will be reaching out to the central ministries and we will make sure that we have our way".

The Confederation of All India Traders, or CAIT as is it is commonly, is representing over 70 million small traders in opposing the Flipkart-Walmart deal. It has also filed an anti-trust petition with the Competition Commission of India (CCI) over the previously mentioned deal. A few other trade committees are also reportedly planning a nation-wide strike against it on July 02.

It is the belief of India’s small traders that Walmart has a deeper interest in acquiring Flipkart offers. The US-based retail giant had previously failed to set up its stores in the country, as India doesn’t allow foreign direct investment in multi-brand retail. With this acquisition, it could now open stores all over the country, doing what it had failed to do over the last decade.

Vikkiramaraja also stated how despite consistent efforts, Walmart has not managed to get permission to open stores in New York City. "New York is one of America’s biggest cities, but the local government there didn’t give Walmart the permission to open stores there because small businesses will be affected," he pointed out, continuing, "If a country like India, which depends on its around 21,000 crore traders and farmers, allows the company to enter, the livelihoods of these people will be in question," The concern he raises is quite valid and does paint a picture of dread in the eyes of store owners and similar small businesses.

The American firm’s entry into India could potentially topple the business ecosystem, especially given its huge logistical network and deep pockets. With its global sourcing network, storage infrastructure, and access to capital will be able to minimise costs and bring the cost of consumer goods down to a record low, and in the process, affect revenues of small traders. The company would also escape the repercussions of minimised profits due to its vast resources.

The traders associations claims that Walmart has been trying to break its way into retail in the country for almost a year now, and it might soon gain access to sensitive data on various aspects, including consumer preferences, manufacturing capabilities of Indian suppliers and producers, quantity of different goods sold in all the states, etc.

Industry observers, however, do not share such concerns. They believe that the traders are acting out of misplaced concerns based on incorrect interpretation of the US retail giant’s plans. Sanchit Vir Gogia, a chief analyst and CEO at Greyhound Research, was quoted saying "I have spoken to the Walmart representative multiple times and they speak about the shared-value concept they have and how they’re investing in mom-and-pop-stores". He then continued "What the traders association do is they go on hearsay rather than facts."

Walmart itself in an official statement has stated that, "We believe that the sentiment among the kiranas in India is positive, as well as encouraging for us," the statement then continues on, "Apart from helping them grow their business through industry best practices, and we’ve been helping them during the GST transition as well. Our business with them continues to grow at a healthy rate, which means their businesses are growing, too. And we look forward to working with them more closely in the near future".

Walmart has had a presence in India for quite a long time and has established fairly strong relations and partnerships with several stakeholders here. It would be quite necessary for them to work out an agreement with small-time traders and enjoy a shared space alongside them. As a company, Walmart knows how important brand image is, and would not do anything to tarnish that, lest they lose business.