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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