Battle for India’s grocery retail sector
India’s retail sector has become a battleground in recent times, with major investments made by giants Amazon and Reliance Industries, both of whom are seeking to expand their presence on the subcontinent, particularly in Future Retail, a key operator in India’s retail sector. According to Bloomberg reports, Reliance is closing on a deal to acquire a stake in Future Retail, which operates retailers including Big Bazaar. This comes only months after Amazon entered a long-term business agreement that saw Amazon India become the official online retail channel for Future Retail. At the end of 2019, Amazon also acquired a small stake in Future Retail with the purchase of a 49% stake in Future Coupons, the promoter entity of Future Retail.
Satish Meena, senior forecast analyst at Forrester Research, told Bloomberg that this is shaping up to be a fierce battle, particularly in groceries, which accounts for 55% of all Indian retail sales.
“Grocery is Reliance’s strength and they will assert their pricing power by combining their offline muscle,” said Meena.
In 2020, Reliance piloted its online retail platform JioMart, which has since been expanded to 200 cities and towns across India. According to a Bloomberg report, Mukesh Ambani, managing director of Reliance Industries, said four-fifths of the fruits and vegetables sold on JioMart or through its retail outlets were sourced directly from farmers. Amazon has also launched its own project aimed at developing a farm-to-fork model.