Morgan Stanley expects Indian online food and grocery to become the fastest-growing retail segment, expanding at a compounded annual growth rate of 141% by 2020 and contributing $15 billion, or 12.5%, to overall online retail sales.
Amazon’s aggression in this line shows the potentiality of this platform— Amazon acquired grocery chain Whole Foods for almost $14 billion and launched the checkout-free Amazon Go store in Seattle last year.
After Walmart entry in India with acquisition of Flipkart, Amazon has increased its marketing strategy thereby all set to acquire a minority stake in Future Retail providing the ecommerce podium access to nearly a third of the country’s organised food and grocery market through the Big Bazaar and Nilgiris supermarket chains and other outlets.
Amazon, through the foreign portfolio investor (FPI) route, will buy about 9.5% stake in Future Retail and has already signed a term sheet and the deal by Amazon’s investment arm is pegged at about Rs 2,500 crore.
Future Retail has more than 1,100 physical stores across India. However, more than 95% of all retail sales in the country still take place at physical stores. Biyani has created an offline retail model that combines food and non-food profitably. In the past six years, Biyani has acquired more than seven supermarket store chains to put together a total retail space of 14.8 million sq ft. with a presence in 340 cities, a national presence that can only be matched by Reliance Retail. In addition, the retailer also has data on 500 million consumers. Future also owns Easyday stores.