Amazon Is Looking To Strengthen The Retail Presence


As we all know that Flipkart, one of the leading players in the Indian ecommerce industry, has been acquired by the global retailer Walmart and is looking to encash on the online to offline model for initiating the abutting growth level. Never to step rearwards in the contest, the global commerce giant Amazon has been examining for the Indian retail ventures for aligning the powers.


Amazon is in talks for acquiring the stake in Kishore Biyani’s Future Retail and Aditya Birla Group’s More chain of stores and now it is in talks with the Spencer’s Retail for picking up the minority stake in food and the grocery retail chain. It is also said that the talks with the Spencer’s on valuation and the structure are currently growing, however, “they are preliminary in nature, so we can’t be sure that the deal will go through.” In addition to that, the deals are structured by the Amazon Inc’s mergers and acquisitions team in Mumbai along with the India’s business heads in Bangalore.

In December 2017, Amazon has also elected up to a 5% stake in the Shoppers Stop through its investment arm Amazon NV Holdings. Spencer’s is a subsidiary of RP Sanjiv Goenka group’s flagship power unit, CESC Ltd. Calcutta Electric Supply Corporation (CESC) recently received National Company Law Tribunal (NCLT) approval for demerger of the business into four entities, including Spencer’s Retail, which will become a separately listed company. Spencer’s Retail runs 128 stores in over 30 cities. These include 58 large-format, hypermarkets and supermarkets. Its revenue was INR 2,091 Cr in FY18 on a loss of INR 30 Cr loss before tax compared with a loss of INR 129 Cr in the year before.

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Despite government approval for a fully owned food retailing venture, Amazon is still struggling to build out a profitable business model in this segment and is thus looking for local support here.  Amazon also needs an omnichannel presence to strengthen its lead in the food and grocery segment against the existing brigade of players like BigBasket, Grofers, and Flipkart’s Supermart among others.

Without the support of brick-and-mortar chains that already have stores in all cities including the tier II and III markets, it will be difficult for Amazon to expand its play in food and grocery retail across the country,”. Thus, Amazon may save on margins with the stakes in brick-and-mortar retailers. Also, if the foreign direct investment (FDI) rules on multi-brand retail get liberalized, Amazon may look at full ownership in some of the chains.

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