With Retail 3.0 In Making, Future Group’s Kishore Biyani May Join Hands With A Foreign Investor

Flipkart, Snapdeal, OYO, Paytm, and Zomato are India’s leading companies across sectors. Despite following different business models, they have one thing common — they’re all backed by foreign investors. Another big name that may soon join this list is Kishore Biyani’s Future Retail.

In a recent media interview, Kishore Biyani disclosed his plans to close a deal with a foreign investor for Future Retail in the near future.

“Ultimately, its all about how formidable we all are as players get bigger and you need an alliance. We can’t sell more than 10% and foreign portfolio investor (FPI) is the only route available. It should take two-three months for any deal to fructify,” said Biyani, without naming the alliance partner.

The Future Group currently has a total retail space of 13.6 million sq ft, with a presence in 255 cities through over 1,030 stores. He said that Future Retail has a database of nearly 500 Mn customers visiting his stores annually, which can be a great attraction for foreign investors.

With data science and data mining becoming increasingly important in the Indian economy, Biyani’s bet on Future Group’s large customer database can certainly help him compete with giants such as Amazon India and Walmart by bringing a foreign investor onboard.

Also, 500 Mn customers is a huge number for any single company to have, online or offline. In comparison, the country’s overall online shoppers base is 108 Mn, according to a joint study by ASSOCHAM and Resurgent.

Biyani’s announcement has come at a crucial time as there are major changes happening in the Indian ecommerce ecosystem as of now. Here are the five important ones:

• The Indian ecommerce policy draft proposal is in the making
• The Walmart-Flipkart deal has gained the approval of the CCI, boosting the chances of Walmart’s entry into Indian retail
• Amazon has already attained the status of being the first foreign company to get a food retail licence; it has already started a pilot in Pune
• Retailers are demanding FDI in multi-brand retail
• Data localisation debate is on, thereby puzzling foreign companies on the issues of not allow mirroring of the data overseas.

Earlier, Inc42 had reported that Future Group was in talks with Amazon for a stake sale. However, instead, PremjiInvest picked up a 6% stake in Future Retail for $251 Mn.

Amazon can invest in Future Retail through its investment arm — Amazon NV Holdings — in India. In December 2017, Amazon picked up a 5% stake in Shoppers Stop through a similar route.

Amazon NV Holdings is registered as a foreign portfolio investor (FPI) that can acquire up to 10% in an Indian entity as a single company. An Indian company, however, can dilute up to 49% of its stake to multiple foreign portfolio investments (FPIs).

Kishore Biyani is one person who truly believes that online cannot survive in India without offline. In November 2017, he announced to launch his Retail 3.0 business model in India, which would blend technology with brick-and-mortar stores. With this model, Future Retail plans to become Asia’s largest integrated consumer retailer by 2047 with a revenue in excess of $1 Tn.

“It is a model called Tathaastu. This will help you get anything you want,” said Biyani in an earlier media statement.

Here are other plans in the pipeline for the Future Group:

• It plans to enter the milk and dairy products delivery segment by launching 1,000 outlets under the Easyday, Nilgiris, and Heritage brands
• Other verticals such as fruits, vegetables, and groceries will be added after the milk delivery model is in place
• Biyani is also launching a grocery delivery app, which will route deliveries through Future Group’s neighbour format stores, EasyDay
• It has plans to expand its network of Easyday stores to 10K by 2022 from the present 950 stores

With Biyani joining hands with a foreign investor, a level playing field is likely to be created among companies such as Walmart, Amazon India, and Future Retail. And the Indian consumer only stands to gain.

With Flipkart already part of the Walmart camp, if Amazon India is able to seal an investment deal with Future Retail, it will likely gain an edge over its arch-rival Walmart in India, thanks to Biyani’s 500 Mn customers.

[The development was reported by ET.]