The entire business space is in a buzz after Reliance bought the retail & wholesale business and the logistics & warehousing business from Future Group for a huge sum of Rs 24,713 crore. You may think that what’s the benefit for Reliance for making this move as it has nearly 12,000 stores under its wing and has an annual revenue of ₹1.6 lakh crore. Whereas Kishan Biyan’s Future Retail has just 1500 stores and has over $2 billion as debt.
The main reason behind this annexation is Future Groups’ stronghold on grocery and fashion. They have managed to create a name for themselves in the grocery sphere as people flock to their stores to get their monthly rations. In the retail sector, they are a fan favorite with their Lifestyle brand. Everyone knows that fashion, retail, and food segments provide high margin therefore Reliance doesn’t want to miss it and hence they took steps to buy Future Retail.
Though Reliance has a huge market in our country, the major share of its revenue comes from consumer digital products. Grocery accounts for just 8% of their total revenue. As per recent statistics, the food and retail segment, which is currently at $545 million will reach $850 million in the next five years. So having a stronghold on this market will reap huge benefits for Reliance Group in the long run.
With the acquisition of Future Retail, they got hold of the huge format stores like FBB, Big Bazaar, FoodHall, and small-format stores like WH Smith and EasyDay. Also, Future Retail, Future Lifestyle Fashions, Future Consumer, Future Market Networks, and Future Supply Chain will merge into a single organization Future Enterprises Limited (FEL) after this acquisition.
Reliance Retail will now take complete control of the Future’s logistics and warehouse. Reliance Group strongly believes that this acquisition will boost offering support to millions of small merchants in enhancing their competitiveness and boost their income during this challenging COVID-19 pandemic.
Simply put, with this acquisition Reliance Group is all set for a transition from its energy business and become a forerunner in the retail and telecommunication.
What do you think will be the next big move of Reliance Industries?