Thursday, April 18, 2019

Future Retail to soon join hands with foreign investor

Monday, August 13, 2018, 0:53
This news item was posted in Business category and has 0 Comments so far.

MUMBAI: Kishore Biyani said his flagship company Future Retail could close a deal with a foreign investor in the next two months on the back of a large database created from nearly 500 million customers visiting his stores annually.“Ultimately, its all about how formidable we all are as players get bigger and you need alliance. We can’t sell more than 10% and foreign portfolio investor (FPI) is the only route available. It should take 2-3 months for any deal to fructify,” said Biyani without naming the alliance partner. Future Group is reportedly in talks with Amazon.India doesn’t allow overseas investment in multi-brand retail but Amazon can invest in a retail company through its investment arm, the route through which it has picked up a 5% stake in Shoppers Stop, an analyst said. The arm is registered as a foreign portfolio investor (FPI) that can acquire up to 10% in an Indian entity as a single firm. An Indian company, however, can dilute up to 49% stake to multiple FPIs.

DATA AS HOOK? Over the past six years, Biyani has acquired half a dozen supermarket store chains and put together a total retail space of 13.6 million sq ft, with a presence in 255 cities through over 1030 stores. Yet, he believes data and not merely physical stores will help seal the deal. “While everyone needs physical presence, data is my biggest wealth. Data is my oil,” he said. The retailer has data on consumption and buying frequency pattern of nearly 30 million loyal customers and a whopping 500 million footfalls or consumers who have visited Future Group stores last year, unmatched by rivals in the Indian retail market. In comparison, the country’s overall online shoppers base was 108 million, according to an ASSOCHAM-Resurgent joint study.“Amazon in India is building itself beyond online space and would obviously want to learn from successful retailers in physical space,” said Ruchi Sally, director at Elargir Solutions. Future Group also feels a physical presence by online companies is key to the Indian market with online giants investing in brick and mortar stores world over. For instance, in China or US, more than 80% of the consumers still shop at brick and mortar stores. Most consumer companies are relying on external data to gauge their sales and plan new launches.Future Group too is trying technology integration, known internally as Retail 3.0, which is being piloted through several EasyDay stores that function as a marketplace which are also used to study shopping behaviour. For instance, each member spends nearly Rs 40,000 at small format stores and their purchase frequency is between 38-52 times a year. These collated insights are used to predict consumption patterns and even manufacture products.

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