Reliance buys Future Group units for $3.2 bil. to be major retailer

31, Aug. 2020

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By Atul Ranjan

NEW DELHI,NNA - India's Reliance Industries Ltd. (RIL) will acquire the assets of the Future Group, one of the country's biggest retailers, for 247.13 billion rupees ($3.2 billion) to grow its own retail business formidably.

The move by the oil-to-telecom behemoth is expected to boost its retail arm even more because its innovative capabilities in omni-channel solutions will help it stay ahead of rivals.

RIL’s subsidiary Reliance Retail Ventures Ltd. (RRVL), the holding company of the country’s largest retailer Reliance Retail Ltd., will buy the retail and wholesale as well as the logistics and warehousing businesses of the Future Group.

Following the deal, which was announced last Saturday, Reliance Retail Ltd. and its existing stores will gain access to nearly 1,800 stores across Future Group's concept portfolio that includes Big Bazaar, FBB, Easyday, Central, Foodhall, Nilgiris and Brand Factory which have been established in several Indian cities.

Reliance Retail’s footprint already spanned across 11,784 stores in over 7,000 towns with a total of 2.7 million square meter of retail space as of March 31 this year. They cater to the entire consumer spectrum including grocery, fashion, lifestyle and electronics.

“The acquisition of the retail, wholesale and supply chain business of the Future Group complements and makes a strong strategic fit into Reliance’s retail business,” RRVL said in a statement.

The move will help Reliance Retail accelerate its support for millions of small merchants and enable them to overcome challenges during the ongoing COVID-19 pandemic, the company added.

The acquisition of Future Group’s apparel, general merchandise and house brands in FMCG (Fast-Moving Consumer Goods) will widen Reliance Retail's offerings to customers tremendously.

Among Reliance Retail's current outlets in India, consumer electronics stores account for 73 percent. Fashion and lifestyle 20.2 percent while its grocery 6.8 percent.

Industry experts believe the acquisition of Future Group’s logistics and warehousing units will help Reliance enhance its retail infrastructure significantly.

The latest development comes amid Reliance Industries' plans to acquire both online and offline retail businesses and transform traditional retail through JioMart, its digital commerce platform to strengthen its multi-channel sales approach as it looks to take on key rivals like Amazon and Walmart-run Flipkart in the country, according to industry experts.

This month, RRVL acquired a controlling stake in local healthcare products and services provider Vitalic Health and its subsidiaries including an online pharma business for 6.2 billion rupees.

This will boost its product offerings even as it is working on new e-commerce platforms to provide consumers with alternative and convenient ways to shop such as using WhatsApp, the popular messaging app of social media giant Facebook.

Reliance Industries said in its annual report that its retail arm has started digital transformation with the launch of the pilot phase of JioMart in selected cities to offer omni-channel shopping experiences.

“It’s aimed at changing the entire customer journey in ways that even consumers who are not comfortable with digital channels become comfortable with JioMart,” said the company.

According to Kumar Rajagopalan, chief executive officer of Retailers Association of India, the omni-channel approach is fast gaining favour, especially amid the coronavirus pandemic, as an effective and relevant means to boost sales.

“The pandemic has propelled consumers to make purchasing decisions based on convenience such as ordering online, shopping at offline nearby stores or opting for a time scheduled shopping,” Kumar told NNA in an interview.

“The concepts of digital browsing, click and collect, curbside delivery and video shopping have gained importance,” he said.

Rajat Wahi, senior director and partner of management consultancy Deloitte India, told NNA that retail companies in India are revamping their strategy to push sales via various channels that give them easy access to customers across various segments in India's fast-growing retail market.

A joint report by Retailers Association of India (RAI) and Boston Consulting Group (BCG) issued in February this year estimated that the size of the Indian retail market will cross $1 trillion-mark by 2025, up from $0.7 trillion in 2019.