Ambani has just made Reliance Retail XXXL

Mumbai: Here’s some size and scope to put the Reliance Industries-Future Group deal in perspective: In the organised retail business, Reliance Retail will be seven times larger than the runner-up. And in lifestyle and apparel retailing, the combined entity will be five times as large as all the five listed Indian players put together.With sales of Rs 1,62,936 crore, Reliance Retail is already the market leader across electronics, FMCG and apparel categories. But with an addition of about Rs 30,000 crore in revenue from the Future Group, Reliance’s sales will soar to nearly Rs 1,93,000 crore ($29.5 billion) to control 30 per cent of India’s organised retail market, estimated at $89 billion.“This is a unique transaction as it marks the largest consolidation exercise in the Indian retail sector and involved multiple entities engaged in various parts of the retail value chain,” said Pankaj Jaju, founder at Metta Capital Advisors, which advised the Future Group on this transaction. “It should augur well for the overall ecosystem with the business moving into strong hands and is timely as the sector has been reeling under the impact of Covid. This should provide some relief to the various small businesses that form part of the ecosystem.” 77842629Even in terms of retail space, the Reliance-Future store network of 13,600 stores will cover 53 million square feet, outpacing all of India’s listed retailers across segments combined."Reliance’s share in modern retail will be bigger than what Wal-mart has in the US. While apparel retailing is still fragmented, the deal will surely help them in low-margin FMCG retail business in terms of sourcing as well as selling at better prices, putting pressure on other grocery retailers,” said Abneesh Roy, senior vice president at Edelweiss Securities.According to Euromonitor, India’s retail market size is about $635 billion (42 lakh crore) that is split 59:41 between grocery and other categories such as apparel, footwear and electronics.Reliance Retail has about 800 stores in the grocery segment that accounts for just 7 per cent of its store network but a fifth of its sales at 34,600 crore. By adding Future Retail’s annual revenues of 22,000 crore from 1,350 supermarkets, Reliance’s grocery retailing division will be double of Avenue Supermart, which runs D’Mart and clocked Rs 24,675 crore in sales last fiscal.Experts believe organised retail is still a small part of the overall ecosystem, but brands or vendors skewed toward modern retailers could face an issue."On the consumer side, the market still remains fragmented since modern retail is still only a fraction of the total consumption. However, for any brand or supplier that has a disproportionate dependence on modern retail, this is certainly swinging the balance of power even further away from them," said Devangshu Dutta, founder of Third Eyesight, a strategy consulting firm.Reliance-owned fashion and lifestyle retail stores account for a fifth of all its overall outlets but contribute 8 per cent of overall sales at Rs 13,500 crore. With sales of Rs 7,500 crore, Future Lifestyle manages about 400 stores across formats such as Central, Brand Factory and nearly three dozen apparel brands.The nearest rival, Aditya Birla Fashion and Retail, posted sales of Rs 8,743 crore in comparison last year.“RIL can benefit from larger scale with higher purchasing power in procurement, inclusion of international brands such as Lee Cooper, Indigo Nation, or Clarks through Future Lifestyle, synergies in transportation and logistics, distribution of fixed cost on higher sales, and deepening of store network with 1,000 small format stores of Future Retail, which can also benefit new commerce initiative,” said a Credit Suisse report released last month. "This acquisition gives upside of Rs 55 per share (in RIL)."

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