It's Christmas time. Usually, the best time of the year. When the world goes on vacation. But this year is different right? 2020 has brought us into a different kind of Christmas. Meanwhile, in the world of business, especially retail, things are happening. There's a war brewing between Reliance and Amazon. Read about it in this bulletin. Also read about Adidas possibly selling Reebok and India's readiness to tackle a new strain of the famous virus.
Today's Highlights:
Synopsis :
The battle for dominance in one of the fastest-growing major retail markets is being fought on the ground in India and the courts in Singapore and New Delhi.
The current bone of contention is the assets of Future Retail Ltd, which runs the Big Bazaar supermarket chain. Ambani’s RIL agreed in August to buy the indebted Future Group’s assets for ₹24,713 crore, just about a year after Amazon had purchased an indirect stake in Future Retail. Amazon has opposed the sale, claiming it violates Future Group’s investment deal with it. The outcome of the dispute is likely to shape India’s retail market. To know the full details, check out the article. Or read our analysis below!
Why is this relevant to you, the MBA student?
Well, for starters, economics, trade, business deals, these lie in the purview of an MBA graduate's role. No matter, what specialisation you choose, this is something you'll need to know in terms of strategy, aftereffects, etc.
So on to the topic of Future Group. If there's one sector every major player wants a byte of today, it's retail. One of the fastest growing sectors in the world, retail has also evolved. Retailers have been looking for newer markets in order to widen their global footprint. And with only a small percentage of India's almost 2 Bn people online, new, first time customers are a given. Add to this the fact that during this pandemic, more and more people are buying online, the prime position of market leader in India's retail sector is up for grabs. Ergo, Amazon's decision to invest in the Future Group led by Kishore Biyani, which was a good thing in general for Indian consumers at least.
But now we come to the pain point. Thanks to COVID, The Future Group suffered losses and needed a quick fix to pay off dues. The solution they hit upon was selling off assets to RIL, one of the largest players in India's retail sector. But this is where the trouble began. Amazon, who purchased 49% in Future Coupons Ltd, an unlisted firm of the Future Group, has an indirect stake in Future Retail. The agreement also gave Amazon the right to buy a bigger stake in the Future Group flagship company once India lifts restrictions on foreign investments in brick-and-mortar retailers. So Amazon contested Biyani's decision to sell assets to RIL in a Singapore court.
What this means for India's retail sector though, is the interesting part. Acquiring Future’s network of retail, wholesale, logistics, and warehousing assets will provide Reliance Retail, which is already the biggest offline retailer in the country, with the firepower to take on Amazon and Flipkart in the online retail market. Which means Reliance will be well on its way to the market leader position in India.
But is that a good thing for us Indian consumers? Does a monopoly or duopoly bode well for India's retail sector? What do you think? Do you believe that India will benefit if RIL gets their hands on Future Group brands and assets? Tell us your thoughts and opinions on the comments section below!
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In Other Highlights:
Adidas Tells Employees It May Sell Reebok
German sports goods manufacturer Adidas has communicated to its employees in India about the possible sale of its subsidiary Reebok. While sources said, private equity firms may be interested to buy Reebok, which Adidas acquired for around $3.8 billion in 2005, employees, who did not wish to be quoted, said the communication could be an early heads-up aimed at cushioning last-minute blows. Find out more about this here!
How Prepared Is India To Tackle A New Strain Of COVID
Just as the first crop of vaccines started giving a glimmer of hope to people reeling from the covid-19 pandemic, the UK government’s announcement of a mutation in the novel coronavirus on Sunday set alarm bells ringing across the world. The Indian government on Monday banned all flights to and from the UK from Wednesday to 31 December. It also issued a new standard operating procedure, wherein the government will conduct genome sequencing of all covid-19 positive passengers arriving from the UK between Monday and Wednesday to determine whether they have been infected by the new strain of the virus found there. Find out more about this new strain and our response to it here.
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