Some of the world’s biggest internet companies are reportedly wooing one of India’s largest offline retail chains.
Internet search giant Google, American e-commerce giant Amazon, and Alibaba-funded Paytm Mall are all reportedly queuing up for a stake of up to 10% that Kishore Biyani-led Future Retail is looking to sell.
The Indian firm’s businesses include hypermarket brand Big Bazaar, grocery chain Easyday, and electronics store Ezone, among others. For the year ending March 31, 2017, Future Retail had a turnover of Rs 18,477 crore ($2.7 billion) with a net profit of Rs11 crore.
“Going forward, retail will be controlled by tech-led players, be it in the form of online or offline retail,” said Shubham Anand, analyst at consulting firm RedSeer management. “(In) a market like India, where the share of organised retail is still at sub-10%, it makes sense for large foreign retailers to invest in both online and offline and to grow it.”
Future Retail refused to comment on reports, but said, “...in the course of its business, the company evaluates various possibilities, including in relation to business association with third parties, which is always (a) subject matter of further feasibility studies and the need for requisite consents in accordance to the applicable laws.”
Competition in India’s retail space has been heating up in recent years with several big global investors putting their money into e-commerce here.
Earlier this year, Amazon picked up a 5% stake for Rs 180 crore in departmental store chain Shopper’s Stop. And on May 09, India saw the world’s largest ever e-commerce deal when American retailer Walmart acquired a 77% stake in Bengaluru-based Flipkart for $16 billion.
While Biyani has some presence in the booming e-commerce space, Future Retail is still no match for the likes of Flipkart and Amazon. This seems to be the primary reason for the 57-year-old to bring on a partner.
Just a day after the Walmart-Flipkart deal was announced, Biyani had said, “I will sell a minority stake to the strongest global retailer.”
Finding a suitor would hardly be a challenge for Future Retail.
India’s $670 billion retail market is headed for a dream run amid rising per capita incomes in the country. Within this, Future Retail is uniquely placed as the country’s restrictive trade policies do not allow foreign players to directly invest in brick and mortar formats.
Future Retail is among India’s top players in the segment with around 1,035 stores scattered across the country.
It started off in 1987 selling apparel. Over the years it diversified into large departmental stores and hypermarkets. In the mid-2000s, it added home furnishings and electronics stores to its portfolio. Close to 500 million shoppers visit the retailer’s stores every year.
This article first appeared on Quartz.