It looks like Reliance’s retail domination dream is about to come face to face with a rival that can matchMukesh Ambani‘s financial might rupee for rupee.
The Tata Group, one of India’s biggest business empires, is reportedly all set to join the battle for India’s retail space in what could turn out to be a major challenge to the post-oil road map Ambani has laid out for his group.
Tatas are in talks to buy a 50-60% per cent stake in BigBasket, India’s largest grocery etailer, for around $1 billion in a deal that could see China’s Alibaba sell its entire 26% stake to the Indian salt-to-software behemoth, media reports said yesterday.
If the deal, which is not final as of now, fructifies, the ramifications for Indian retail are likely to be profound. If the Tatas throw their hat into the ring, the Indian retail scene — where there are currently fears of an emerging Ambani monopoly — could majorly change colour.
With Tatas set to add to the crowd of deep-pocketed players already vying for the vast, largely untapped Indian market, the ground looks set for a no-holds-barred fight of many big players. Ambani’s Reliance has already begun a strong push to capture grocery etail via its JioMart. Then there are Flipkart and Amazon, the two big daddies of ecommerce, who also have big plans for the grocery segment.
According to various reports, Tata group has been looking into M&A opportunities to push its ecommerce plan. A big part of this plan involves snapping up internet companies that could come in handy in scaling up its consumer retail foray. A company like BigBasket — which is known for giving biggies like Flipkart and Amazon Fresh a run for their money — suits this plan perfectly.
This push is primarily spearheaded by Tata Digital, a company arm that is used to seal M&A deals in the retail sector. According to company sources, the BigBasket deal is also likely to be pursued through Tata Digital.
BigBasket is not the only possible acquisition on the Tata radar. Several other similar deals are currently in various stages of negotiation, according to some Tata Group executives.
As per an ET report, IndiaMart and Snapdeal are two of the retail companies that Tatas have sought to rope in with a view to ramping up the group’s online presence.
Tata Group has several businesses in the retail domain. It has infused quite a bit of money in its retail arms which include Trent (the operator of Westside and Landmark) and Infiniti Retail (a group subsidiary that operates Croma stores).
None of these arms, however, has the heft to directly take on a rival like JioMart. But a collaborator like the already-big BigBasket — which is expected to close 2020-21 with a humongous Rs 9,000 crore in gross sales — could turn the scene on its head, some industry insiders say.
As covered by various reports, the $113-billion conglomerate is also pursuing a super-app plan that will take its retail operations to the next level.
All the group’s consumer businesses will be tied into one app that is likely to be launched early next year. These consumer businesses include consumer durables, ordering of food & grocery items, fashion and lifestyle, apart from insurance and financial services like bill payments.
As of now, most online shoppers use separate apps to access separate services. A single super app that enables users to do things from booking travel and buying stuff to paying utility bills is expected to be a major gamechanger.
The Tata super app is being envisaged as a direct competition to Ambani’s push for expanding Jio‘s digital services. The group wants to give consumers a simple, beautiful, omni-channel online experience connecting everything, Tata chairman Chandrasekaran said in an interview a while back.