“There is a strong focus on profitability and processes at Myntra and it may come at the expense of growth,” said a person familiar with the development. “For instance, there are clear instructions to reduce discounts by around 13-14% and shutter small warehouses that do not meet Walmart standards. These measures could impact sales in the short run.”
Reducing inventory will help Myntra unlock working capital. “In the fashion business, you will have to offer heftier discounts to clear old stocks and that means burning cash. Walmart does not have the appetite for such losses in fashion. They would rather do that through Flipkart Fashion than Myntra,” said a senior executive, who did not wish to be quoted.
Walmart bought 77% stake in Flipkart in 2018 for around $16 billion. The deal included Myntra and other group companies of Flipkart, such as fashion portal Jabong. Earlier this month, Jabongwas shut down and since then users are being directed to Myntra.
“As part of the Flipkart group, Myntra runs an independent premium fashion platform, which is led by an extremely talented local team, driving rapid growth for the business,” said Amar Nagaram, CEO of Myntra. “This phenomenal growth has been possible due to our strong and independent local leadership team that comprehends the nuances of the domestic market and long-term thinking. Myntra is on a healthy growth path and will continue to move forward in our strategic direction, with a focus on bringing the best brands to our customers.”
Flipkart Group controls around 70% of the online fashion business, which accounts for 10% of organised apparel market in India. The domestic apparel market is estimated to be worth $59 billion in 2022, making it the sixth largest in the world, according to McKinsey’s FashionScope.
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