After record FDI in 2018, retail sector gears up for more M&As in new year

After record FDI in 2018, retail sector gears up for more M&As in new year
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New Delhi, Dec 20: With the lines getting blurred between organised brick-and-mortar model and new-age online platforms, retail sector is ending the year 2018 with a record level of FDI and is gearing up for more mergers and acquisitions, partnerships and other deals in the new year.
According to the sector experts, the year 2018 brought big tickets investments across all formats while bridging the online and offline divide to bring their customers closer and the trend may continue further.
The sector, which employs over 60 million people and received one of the largest FDI in 2018 would continue to invest on supporting tools like data analytics, virtual reality and artificial intelligence to boost trade volumes, while new tie-ups, innovative thinking and accelerated adoption of omni channel systems should also become order of the day.
With young demographics, increasing disposable income and digital payment-assisted consumption acting as key enablers, the retail sector expects to be more consumer-friendly, while competition may grow manifold to lure customers.
“Whether offline or online, retail will continue to drive the virtuous cycle of growth,” Walmart India President and CEO Krish Iyer said.
Walmart Inc, the world’s largest retailer, acquired 77 per cent stake in India’s leading eCommerce marketplace Flipkart in 2018 for approximately $16 Billion, making it the largest deal in India.
Metro Cash & Carry India chief Arvind Mediratta said, “With India becoming one of the largest preferred retail destinations globally, the Indian retail industry is growing at a fast pace. Digitisation in retail has changed the landscape of the segment.”
There have been several other deals and many more are in making.
Jeff Bezos-controlled e-commerce giant Amazon has strengthened its presence by investing in offline formats such as K Raheja-promoted Shopper Stop and Aditya Birla group’s retail arm More.
Amazon is also believed to be in talks with Kishore Biyani-led Future group to pick up stake.
Amazon India, which is currently only involved in online retail space in the country through its marketplace, said it “will continue to invest and innovate for India by working in close partnership with the local network of small and medium businesses. We continue to remain committed for the long term for India and it’s still just Day 1 here.”
Consultancy major EY’s Partner and National Leader (Consumer Products and Retail) Pinakiranjan Mishra said, “Partnerships and acquisitions will gain spotlight as players look to gain access to new capabilities in this space.”
Deloitte India Partner Anil Talreja also said the retail sector in India would continue to grow and there would be more M&As in 2019.
Industry body Retailers Association of India’s CEO Kumar Rajagopalan said there is an increasing focus by various retailers to evolve towards an omni-channel presence.
He said large online retailers might start looking at an offline presence and large offline retailers would start looking online, resulting in various tie-ups in the next one or two years.
According to EY’s Mishra, retailer are now accelerating use of next-generation technologies such as AI, IoT, and AR/VR for experiential retail.
A T Kearney India Partner and Head of Consumer and Retail, Debashish Mukherjee, said there would be coexistence across all formats as the Indian retail industry is still in early stages of evolution compared to its peer developing and developed markets.
“This will not only help a harmonious co-existence of traditional and modern retail but also lead to an overall reduction in cost-to-serve the end customer and better shopping experience,” he added.