Retail's Battle of Wallets & Wits
Knives - and wallets - are out in full measure as three of the world's richest businesses vie for supremacy of India's $850 billion retail market, an industry that is projected to present an even greater business opportunity of $1.3 trillion as soon as 2025. Mukesh Ambani's Reliance Retail, Jeff Bezos's Amazon Inc. and the Walton family's Walmart-Flipkart combo are pitching themselves for the long haul in Indian retail. With $33.3 billion (Rs 2.46 lakh crore) already invested, they are digging into their deep pockets to ready an arsenal that will endure a multi-year battle for leadership. And the Tatas - one of India's oldest business houses and among the most conservative - have also thrown their hat into the ring by bidding for India's biggest grocery retailer Big Basket.
With such big money at their disposal, round one is about gaining scale before others do. Each one of the contenders is sweeping up any brands or companies that are up for sale. In just 2020, Reliance Retail has acquired or bought stakes in five brands or companies, including furniture e-tailer Urban Ladder and lingerie e-tailer Zivame. It now has a portfolio of 45 international brands and companies under its belt. Amazon has stakes in Future Coupons, Shopper's Stop, besides buying grocery retail business 'More' from Aditya Birla group in 2018. And Walmart has bought minority stakes in Arvind Brands, Aditya Birla Fashion Retail and Ninjacart, besides buying Flipkart in 2018. Each one of them also has their eyes set on onboarding as many kiranas as they can.
This is just the beginning. The trio - plus the Tatas - are setting this up to be a thrilling contest. Read Ajita Shashidhar's account of their sharp moves and calculated risks in our cover story this issue.
This pitched battle in retail is no different from what's happening in online transactions space, the industry that enables e-tail. Thanks to a simple app, in less than four years a new leader has emerged in UPI transactions - PhonePe. With about 40 per cent share, it has not just beaten entrenched digital transactions players such as Paytm and Mobikwik but has gone neck-and-neck with Google Pay, which also commands a similar market share. But PhonePe has a problem. It has 250 million users and 925 million transactions, but practically no revenue model! That's burning a hole in its balance sheet. It reported a net loss of Rs 1,905 crore on revenues of Rs 246 crore in FY19, the latest available. Rukmini Rao explains what PhonePe is doing to stand on its feet.
Meanwhile, just as the US prepares to welcome president-elect Joe Biden into the White House, signs emanating from the US indicate the new President may continue Trump administration's tough stance vis a vis China. That, in fact, is an opportunity for India. Having deliberately opted out of RCEP - the world's largest trade bloc - due to China's dominance there, India can now push for the much-awaited limited trade deal with the US. Especially, since the US itself has exited from what would have been the world's biggest trade bloc - the Trans Pacific Partnership (TPP). Joe C Mathew examines the opportunity in his analysis on page 32.
