With changing demographic profile of India, rapid urbanisation, spread of digital payments and increasing purchasing power, the retail sector is poised for a quantum leap. India is becoming one of the largest preferred retail destinations globally. The early indications are showing up now. In 2018, the retail sector received a record level of foreign direct investment (FDI) as a host of international companies have invested in India through mergers and acquisitions. Partnerships and acquisitions will gain traction as more players look to gain access to new capabilities in this space.
Over the last two decades, the Indian retail industry has seen significant changes, evolving rapidly from traditional shops to large multi-format stores offering a global experience. The rapidly changing dynamics resulted in unprecedented growth in overall consumption with numbers suggesting that consumer expenditure in India is expected to almost double to $3,600 billion by 2020 from $1,824 billion in 2017.
In 2018, the value of all M&As in the retail and consumer sector was $27 billion, which is a 700% jump from $3.4 billion worth of transactions in 2017, according to data from EY India. The biggest deal was Walmart, the world’s largest retailer, acquiring 77% stake in India’s leading e-commerce market place Flipkart for $16 billion. Similarly, global e-commerce giant Amazon has made its presence in India more powerful by investing in offline formats such as K Raheja promoted Shopper Stop. Also, Amazon India along with Samara Capital bought out Aditya Birla’s retail chain More for Rs 4,200 crore.
Even modern home-grown retailer Kishore Biyani has announced his retail 2.0 ambition, which was all about empowering has chain of physical stores with technology. Chinese retail major, Alibaba had shown keen interest to enter the Indian retail space. With the rising need for consumer goods in different sectors including consumer electronics and home appliances, many companies have invested in the Indian retail space in the past few months. Data from Confederation of Indian Industry (CII) show that by 2021 traditional retail will hold a major share of 75%, organised retail share will reach 18% and e-commerce retail share will reach 7% of the total retail market.
Making clear his ambitious plan to take on Amazon.com Inc. and Walmart Inc.’s Flipkart on its home turf Reliance Industries will soon roll out an online shopping platform to 1.2 million retailers and store-owners in Gujarat. In fact, he wants to take on the world’s largest retailers by combining his Jio telecom service, mobile devices and a vast physical retail network.
Fast-growing Jio currently has 280 million subscribers, while Ambani’s retail arm operates nearly 10,000 outlets across more than 6,500 Indian cities and towns. They will team up to bring merchants aboard through Jio’s apps and devices. Ambani has been gradually revealing details of his plans in e-commerce. In July, he said his platform would use augmented reality, holographs and virtual reality to create an “immersive shopping experience.”
Industry on the go
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