02 Sep 2020
Posted in Retail
Battle of mergers and consolidation intensifies in India’s retail market, says GlobalData
The Indian retail market is expected grow and reach US$1.4 trillion by 2023 at a compound annual growth rate (CAGR) of 10.7% between 2020-2023. Following the acquisition of Flipkart by Walmart in 2018, the fast-growing and lucrative market has been buzzing over the past few weeks with talks of mergers, acquisitions, billion-dollar investments and moving towards consolidation, says GlobalData, a leading data and analytics company.
Amazon is in talks with Reliance Industries Ltd to buy a stake in Reliance Retail, while the latter is in talks with Future Group for the acquisition of Future Group’s retail business consisting of Big Bazaar, Easyday Club, smaller neighbourhood stores such as Nilgiri’s, Heritage fresh, and fashion retailers such as FBB and Central among others.
With the launch of JioMart and aggressive investments in the Jio platform by Google and Facebook, and the recently announced consolidation of Flipkart and Best Price, India’s retail market is set for a massive change.
Best Price consists of 29 stores and 1.5 million members (it is a customer membership model). Flipkart will have an all-round advantage with the consolidation as it will be able to leverage Best Price’s network of supply chain, warehouses and trained man power to serve its 200 million+ online consumers in India.
Hrishabh Kashyap, Retail Analyst at GlobalData, comments: “The deal prepares Flipkart for the upcoming battle with Amazon and JioMart, especially in the food and grocery business. Flipkart Wholesale, which is expected to start operations next month if it manages to sail through the Competition Commission of India probe demanded by All India Online Vendor Association, will have control over the entire retail ecosystem.”
Flipkart will have a network of B2B clients comprising of many small to large individual retailers and a strong consumer base to whom it can sell the products through data-driven recommendations on its ecommerce platform.
Kashyap concludes: “The COVID-19 pandemic has accelerated the digitization drive among the Indian retailers, which are facing credit crunches due to the slowdown in demand. The crisis has presented an opportunity for Flipkart to bring more sellers under its umbrella and leverage its partnership with Non-Banking Financial Company (NBFCs) such as Aditya Birla Finance, Tata Capital, Flexiloans and LendingKart to offer credits to these sellers during these distressed times, which will help it in expanding its own retail footprint.”