Re­tail fires on all cylin­ders, up 57%

WHILE AMER­I­CAN BIGGIES AMA­ZON AND WAL­MART FIGHT FOR THEIR POUND OF FLESH IN IN­DIA, IN­DIAN RE­TAIL­ERS HAVE QUI­ETLY STOLEN THE SHOW.

Business Today - - THE BUZZ - By Ajita Shashid­har

YEAR 2018 HAS BEEN quite mo­men­tous for the In­dian modern re­tail story. While homegrown re­tailer DMart sur­prised the mar­ket with its high val­u­a­tions, Kishore Biyani-owned Fu­ture Group in­vested in build­ing scale, and Re­liance Re­tail strove hard to build its omni-chan­nel pres­ence. It was also dur­ing this time that Amer­i­can re­tail gi­ant Wal­mart Inc. an­nounced that it was go­ing to buy In­dian ecom­merce com­pany Flip­kart for an as­tro­nom­i­cal $16 bil­lion (about ` 1.17 lakh crore at ` 73.19 to a dol­lar). The ac­tion at once trig­gered, what many call, bat­tle of the Amer­i­cans in In­dia. There was scep­ti­cism ga­lore whether the pres­ence of

the two global biggies – Wal­mart and Ama­zon.com – could ac­tu­ally wipe out In­dian re­tail­ers. Apart from Re­liance Re­tail none of the other In­dian re­tail com­pa­nies had the money power to fight them out. The big­gest fear of In­dian re­tail­ers was that the Amer­i­can biggies would deep dis­count and take away their cus­tomers, while they didn’t have the where­withal to burn cash on sim­i­lar strate­gies.

It’s been close to six months since Wal­mart an­nounced it was go­ing to buy out Flip­kart, and the sur­pris­ing bit is that the mar­ket cap of the In­dian re­tail com­pa­nies has soared by 57 per cent. The big­gest gainer has been V-Mart Re­tail, whose av­er­age mar­ket cap grew by 127.8 per cent (`1,601 crore to ` 3,648 crore for the Oc­to­ber 2017-Sep­tem­ber 2018 pe­riod), Fu­ture Re­tail saw a 96.81 per cent jump (from ` 13,826 crore to ` 27,211 crore), while Shop­pers Stop’s av­er­age mar­ket cap grew by 68.20 per cent (from ` 2,840 crore to ` 4,778 crore). Value re­tailer Dmart

“DE­MON­ETI­SA­TION LED TO CON­SUMERS SAM­PLING MODERN RE­TAIL FOR THE FIRST TIME; GST BROUGHT IN A CLEANER SYS­TEM.” AB­NEESH ROY

Se­nior Vice-Pres­i­dent, Edel­weiss Se­cu­ri­ties

(owned by Av­enue Su­per­marts), whose mar­ket cap growth was the talk of the mar­ket all through 2017, also saw a 59.15 per cent growth in mar­ket cap.

The in­dus­try’s fear that the cash-strapped homegrown re­tail­ers would be wiped out has been laid to rest. The Amer­i­can re­tail­ers have also re­alised the im­por­tance of an omni-chan­nel pres­ence, and that it made much more sense to part­ner with In­dian phys­i­cal re­tail­ers who al­ready have the lo­gis­tics and sup­ply chain in­fra­struc­ture in place. So what if the In­dian gov­ern­ment doesn’t al­low for­eign di­rect in­vest­ment (FDI) in multi­brand re­tail? Global re­tail­ers have found a way to in­vest in In­dian com­pa­nies through their in­vest­ment arms. For in­stance, through its in­vest­ment arm, Ama­zon had picked up a 5 per cent stake in Shop­pers Stop for about ` 179 crore. More re­cently, it bought out Aditya Birla’s gro­cery re­tail chain, More, in part­ner­ship with Samara Cap­i­tal for ` 4,200 crore. Ama­zon is also in the fi­nal stages of pick­ing up stake in Fu­ture Re­tail.

“Ac­cess to cap­i­tal is not a chal­lenge to­day. Even pri­vate eq­uity com­pa­nies are en­thused to put money into re­tail and this is a ma­jor rea­son for re­tail com­pa­nies’ val­u­a­tion go­ing up,” says Arvind Sing­hal, Chair­man of re­tail con­sul­tancy, Technopak Ad­vi­sors.

“Ev­ery re­tail scrip will ben­e­fit from strate­gic in­vestors. For­mal re­tail is com­ing out of its shell as fund rais­ing has be­come eas­ier. Global funds are look­ing at In­dian re­tail com­pa­nies,” adds Ku­mar Ra­jagopalan, CEO of Mum­bai-based in­dus­try body Re­tail­ers As­so­ci­a­tion of In­dia (RAI).

FU­TURE RE­TAIL Big Bazaar’s par­ent saw a 96.81% jump in its av­er­age mar­ket cap for Oc­to­ber 2017-Sep­tem­ber 2018 pe­riod

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