Only a day after Walmart announced to buy majority stake in Indian e-tailer Flipkart, reports of offline retail major Future Group looking for a global retail major to sell at least 10 per cent of its stake have surfaced. Its CEO Kishore Biyani has divulged plans to sell minority stake to the 'strongest global retailer' in a media report without naming any prospective buyers.
While Biyani has not taken any names, an individual in the know of things has disclosed that the Future Group founder has had early talks with Amazon and Walmart, according to a report by The Economic Times. Walmart happens to the biggest company in terms of revenue, whereas Amazon is a global forerunner in e-commerce sector.
"We are reasonably strong in all categories we are in - food, fashion and home. There are going to be alliances which will be formed and we believe that our alliance will be the strongest one," Biyani quoted as saying in the report.
Biyani's Future Group has been doing some serious shopping, acquiring half a dozen supermarket store chains over the past six years and building a combined retail space of 13.6 million square feet. The retail group operates 930 stores in 255 cities in India, with its footprint only rivalled by that of Reliance Retail. This makes Future Group a lucrative prospect for a company like Walmart which has been trying to enter the brick-and-mortar retail scenario in India for quite some time now.
Indian FDI norms, however, do not allow foreign investment in multi-brand retail. There is a way around this, though. Foreign portfolio investors (FPI) can buy up to 10 per cent in Amazon Indian companies as a single firm. This allowed Amazon to secure a five per cent stake in Shopper Stop using its investment arm last year in September. Future Group will have the option of selling 49 per cent of its stake to different FPIs.
Under the deal, Biyani plans to retain the market share Future Group holds in organised food and grocery business, the ET reported. He said that the Flipkart-Walmart deal may prove a turning point in consumer durables and IT products, but 98 per cent of the perishables and groceries are bought and sold at brick-and-mortar stores. This is also a segment in which Flipkart is still a fringe player.
"India will be ultimately be an ecosystem where you acquire a customer and do business with him across all categories... from healthcare, travel, education to financial services and entertainment," ET quoted Biyani.
He further added, "Ultimately it will be a customer ecosystem that will be built and in India, alliances will be formed to build such ecosystems. We will also align with many players to build our ecosystem."