India: According to reports Google is looking forward to team up with Paytm mall and invest Rs.3500-4000 crore in the Future retail chains. The consortium will then be pitted against the world’s largest online retailer, Amazon who has also submitted a term sheet to get a similar stake at the Future Retail group. A report said that Future group was exploring for alliances with both Amazon and Alibaba. Biyani had been to U.S. to meet Jeff Bezos to have a talk regarding this matter and he also visited Chine to meet the Alibaba officials.
The Chief Executive of Future group has been exploring various ways to raise funds for a strategic partnership so that it can streamline its operations and increase the profitability as he faces challenges and has to fight other deep pocketed retail chains like Reliance Retail, Amazon and also Wal-Mart. All the competitors are eyeing the changing demographics of India and a digital economy of $1 trillion by 2025 through their consolidated presence.
In a recent interview taken by ET, Kishore Biyani said he is most likely to close a deal with a foreign investor within the next two months with the backup of a database that has informations of more than 500 million customers who visit his stores annually. The fund will be both on the primary as well as secondary sales basis. Biyani while in an interview with ET said: “Ultimately, it’s all about how formidable we all are. As players get bigger, you need alliances”. He further added: “We can’t sell more than 10% and foreign portfolio investor (FPI) is the only route available. It should take two-three months for any deal to fructify.”
Last year November, Kishore Biyani unveiled his idea called the Retail 3.0 blue print in association with Google and Facebook with Deloitte which is a consulting firm that is going to see a lot of personalization and analytical technologies. The developments that are taking place in online and offline channels as retailers are entering each others’ markets which are a part of omnichannel strategy and they are seeking to combat the shrinking margins of retail. Amazon brought Whole Foods for a whopping amount of $13.7 billion while in India they have already made an additional investment of Rs.2700 crore. Wal-Mart has entered the Indian market by buying Flipkart for $16 billion.
According to BlueWeave Consulting, this merger or teaming up could be a positive one given the changing habits of the customers. More and more people are buying products online which is shifting the shopping structure totally. Thus, during the forecasted period it is highly possible that online shopping growth will increase and for continuing to be in the market, the retails and stores along with other online companies need to form alliance for a steady continuation of the businesses.