Just a day after Reliance Retail gobbled up Kishore Biyani's Future Group, the new is that the Mukesh Ambani-owned company is looking to sell a minority stake in it, and one of the front-runners for picking it is Walmart.
The world's biggest retailer looking to pick up a stake in India's largest retailer is doubtless significant.
For, if it indeed happens, it would be biggest consolidation of forces against Amazon.
According to a report in the online news site The Morning Context, the two companies are already in discussions. Quoting an executive familiar with the development, the report said Walmart has emerged as an early candidate to pick up a stake in Reliance Retail.
It may be recalled that addressing shareholders at Reliance Industries 43rd annual general meeting recently, Mukesh Ambani had said "Reliance Retail has received strong interest from strategic and financial investors."
He also made it clear the company will induct global partners and investors for the retail business in the next few quarters.
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Mukesh Ambani is scouting for investors in his retail business with a deadline of March 2021. If Reliance wants a strong partner with proven execution skills in India, it is left with two options—Walmart and Amazon. Story by @varunstweets https://t.co/dTg6bpqf7DAugust 31, 2020
Expansion plans for Reliance Retail
Reliance Retail is India's largest and most profitable retailer. In 2019-20, Reliance Retail revenue was Rs 1,62,936 crore.
Ambani said in the last five years, the retail business revenue grew 8 times and profit 11 times. "This positions us well in the years ahead to continue delivering on our promise of exponential growth," he had said.
Around two-thirds of nearly 12,000 Reliance Retail stores are operated in tier II, III and IV towns, Ambani said.
Ambani explained his plans to add newer categories like electronics, fashion, pharmaceutical and healthcare into its omni-channel venture, JioMart.
Reliance Retail's deal with Future Group will help expand its retail footprint and warehousing area by over 80%. It is also expected to add 4.1% to Reliance’s market share of organised retail and take it to 17.8%.
Reliance Retail is valued at $72 billion. Walmart already owns 81% of Flipkart. Walmart-owned Flipkart and JioMart (which is Reliance Retail and Jio Platforms joint venture) are already in competition.
Happening time for Walmart-owned Flipkart, too
Walmart-owned Flipkart recently announced the launch of its hyperlocal services, Flipkart Quick, in Bengaluru. Flipkart also recently acquired Walmart's local cash-and-carry business to strengthen its wholesale offerings to mom-and-pop stores.
Flipkart is also rolling out 'dark stores', which are essentially shops or outlets operated to service customers in nearby localities, across several cities in India.
Flipkart has also secured an additional $1.2 billion in funding.
So these two rivals coming together, if at all it eventualizes, would be to take on the common rival Amazon which is trying to consolidate its business in India.
But existing rules for foreign players and the general competition from behemoths like Reliance are making the going difficult for Jeff Bezos' company.
The Ambani-Amazon face off is being billed as a major battle in the Indian e-commerce sphere.
The pandemic and the subsequent lockdown may have kept quiet many companies but not Reliance. In the digital arena, its subsidiary Jio Platforms has made remarkable deals with some of the big-ticket companies including the big daddies Facebook and Google.
Recently, it also made a foray into online pharmacy and acquired a majority stake in Netmeds for Rs 620 crore.
And it is also in talks for picking up a few more companies.