Carving another chapter in the story-‘How Reliance became India’s Alibaba,’ the company’s retail arm-Reliance Retail, which is also the largest retail chain of the country, has acquired a majority of the runner up in this race-Future Group. This leaves the company unabated to expand its footprint even further in one of the biggest internet markets in the world.
The announcement came today, when Reliance Retail said it has completed talks with Future Group, and has reached the decision to acquire the latter’s retail and wholesaler business, and its logistics and warehousing business for $3.4 billion. Now, Reliance’s biggest competition in the retail business has not only given up the fight, it has also surrendered its army, making the group’s position even stronger.
While Reliance and Future might be happy about the merger, there are many others who won’t like this. First, any retailers looking to compete with the combined force of Reliance and Future Group are going to have a hard time. Moreover, this will also put the position of Amazon and Walmart backed Flipkart in danger, as Reliance will probably use this deal to expand its ecommerce as well.
Last year, with the launch of JioMart, Mukesh Ambani had made it clear that he wants to rule every market there is. Now, with this deal and the $20+ billion (rough figure) that Jio Platforms raised earlier this year from the likes of Facebook and Google, he is better positioned that any other player in the digital tech and ecommerce domain to take over India’s digital industry..
Reliance Retail’s strategy to expand the online side of business becomes even clearer by another acquisition it made earlier this month, when it bought a majority stake in Netmeds-an online pharmacy, for $83 million. The group is already worth about $29 billion (according to a report from Morgan Stanley), a large chunk of which is credited to the expansion of the JioMart.
“With this transaction, we are pleased to provide a home to the renowned formats and brands of Future Group as well as preserve its business ecosystem, which have played an important role in the evolution of modern retail in India. We hope to continue the growth momentum of the retail industry with our unique model of active collaboration with small merchants and kiranas as well as large consumer brands. We are committed to continue providing value to our consumers across the country,” said Isha Ambani, Director at Reliance Retail, in a statement.
