NEW DELHI: The Walmart-Flipkart deal has opened up newer possibilities for Indian retail, but it may also throw some minnows out of business.Two giants fighting for market share in e-commerce may translate into bigger discounts and more sale days, but that would pinch margins at cash-and-carry stores. FMCG players are counting their blessings, as deeper penetration of e-commerce will spell larger volumes. Food & grocery retailing is in for rapid expansion.The world’s largest retail company announced the world’s biggest e-commerce deal on Wednesday to acquire a 77 per cent stake in India’s e-commerce giant Flipkart “A physical retailer buying a digital retailer is an interesting deal. Online and offline are coming together, and there are many things to come. It is the beginning of a new dawn for retail and every passing day will make it more interesting,” says Kishore Biyani , one of the flag-bearers of the Indian retail story.Battle for lion’s shareIndustry watchers see fresh challenges for domestic cash & carry retailers, as an intense fight between two global biggies, Walmart and Amazon, for bigger market shares may mean more discounts and sale days for offline players, squeezing margins.In the near to medium term, discounting intensity is likely to remain elevated as both will aggressively focus on driving growth, ramping up scale and gaining market shares. Both have adequate war chests to fund the same, IDFC Securities said in a note.Brokerage IIFL says aggression in discounting is likely in e-commerce space, as Flipkart, aided by fund infusion, will try to drive sales growth even as it competes with Amazon.Walmart has a strong presence in offline grocery retailing globally, but lacks online presence. It first attempted to enter India’s brick-and-mortar retail with an alliance with the Bharti group in 2007. The JV was essentially a business-to-business (B2B) joint venture for wholesale cash-and-carry and back-end supply chain management operations, wherein Walmart’s cash-and-carry stores were to manage supplies for Bharti Enterprises.The JV envisaged opening B2C stores, regulations permitting. With FDI in multi-brand retail remaining capped at 51 per cent, Walmart exited the JV in 2013, and retained control of only the cash-and-carry stores. Today they have 21 ‘Best Price’ stores across nine states.Flipkart, which owns fashion portals Myntra and Jabong, could step in here and help it expand online. With deep pockets and years of expertise in retail grocery, Walmart’s big bang-entry may deliver a knockout punch to some offline retailers or force consolidation.IIFL says offline players such as D-Mart and Future Retail may now have to adjust their business models to ensure better service to customers.Edelweiss Securities says the deal has opened up potential for a surge in online-offline partnerships. This is an idea offline retail leader Kishore Biyani is already thinking aloud. “I will sell a minority stake to the strongest global retailer,” the Future Group founder said this week.Economic Times quoted a person in the know saying Biyani has already held early talks with Walmart and Amazon.Future Retail has already consolidated its position, having acquiring Bharti Retail, Heritage Fresh, HyperCity Retail.There could be further consolidation in the organised retail space, which could benefits some of the domestic listed and unlisted players, said brokerage Prabhudas Lilladher.Some domestic retailers have also received a valuation boost from the Walmart deal. The acquisition pegged Flipkart’s valuation at 4.5 times FY18 EV/sales, which is much higher than that of Future Lifestyles, Aditya Birla Fashion & Retail, Shopper Stop and Future Retail and compares well only with those of Avenue Supermarts and Titan Shares of Future Retail jumped 4.67 per cent on Thursday, a day after Walmart announced the deal. Another Future group stock, Future Lifestyle Fashions, gained around 2 per cent on Thursday after the deal, but gave them up on Friday.Shares of Tata’s retailing arm Trent have slipped on both days. Titan and Shoppers Stop have remained flat.Traditional offline businesses, which have already adapted to the online environment well, are hoping to gain. "Flipkart has been a very strong partners of us. We are actually excited about this development," Punit Lalbhai, ED at textile manufacturer Arvind.Back in US, the deal has not gone down well with Walmart shareholders. The stock lost nearly $8 billion in market value on Wednesday and another $1 billion on Thursday.Walmart’s aggressive bidding to outdo rival Amazon in India’s e-retailing race and the fact that it would take years before its India investments really fructify (Flipkart is seen making losses for the next couple of years) appear to have disappointed its investors.To fund its biggest deal ever, Walmart will raise $5 billion and expects a negative impact due to an increase in interest expenses on its FY19 EPS to the tune of $0.25 to $0.30.Some anlaysts say the Walmart-Flipkart combine may seek to move in fast. In the first investor call after the deal, Walmart leaders indicated that Flipkart would go in for an initial public offering (IPO), though it did not set any timeline.Flipkart co-founder Binny Bansal told employees that the company would stay focused on eventually becoming a publicly listed Indian tech leader. A transition to a listing for Flipkart implies an eventual path to profitability, which will require lower discounting, says IDFC Securities.Proliferating e-commerce is bad for cash-and-carry retail, which has already witnessed rapid slowdown and consolidation over the past few years. But mom-and-pop stores might have an opportunity to ride the boom.Walmart plans to develop omni-channel solutions in India, which may spur partnerships between offline and online players. The American retailer plans to tie up with mom-and-pop stores and support some 60 lakh kiranas to modernise businesses through an expanded supply chain.India doesn’t allow overseas investment in multi-brand retail. But there are ways to bring in FDI. Amazon, for example, picked up a 5 per cent in retail firm Shoppers Stop through its investment arm, analysts told ET.Consumer demand, online or offline, means good business for FMCG businesses. Food & grocery retailing is another space where industry watchers except a lot aggression from three large global players ─ Walmart, Amazon and Alibaba (Bigbasket).Expect increased activity in online FMCG and food retail segments, areas where online retailers have struggled so far. In the long run, it can trigger consolidation or strategic tie-ups between online and offline players; Amazon-Shoppers Stop is an example," IDFC Securities noted.