Reliance Retail extends timeline of Future Retail acquisition

Date : 06 April 2021

Francis Ramos

Senior Retail Analyst

Reliance Retail has announced that it is extending the date to complete the purchase of Future Retail.  While waiting for the merger to be approved by the authorities, Reliance Retail is focusing more on growing its private label brands, while Future Retail has enhanced its digital capability with a two-hour delivery guarantee for online shoppers of Big Bazaar.

Potential acquisition of Future Retail to be completed by September 30

Reliance Retail has extended the time to conclude the acquisition of Future Retail by another six months, from March 31 to September 30.  Although Reliance Retail has agreed to buy Future Retail’s assets in August 2020, ecommerce giant Amazon has objected to the deal since it owns a stake in the Future Group.  Since then, the transaction remains under dispute in the Delhi High Court and Supreme Court of India. 

Private labels of Reliance Retail pose a threat to global brands

While the deal to purchase Future Retail is awaiting clearance, Reliance Retail has been promoting and expanding its private labels.  It is beneficial to businesses as the profit margin it offers to Kirana Stores on its private labels is as high as 20%, compared with the 10% to 12% offered on similar products by global brands.  Shoppers also benefit from paying lower prices for these products that look and taste similar as the leading brand.  The most popular items bought are Reliance’s Snac tac ‘ready in two minutes’ noodles that cost roughly 18% less than Nestle’s Maggi ‘two minute noodles,’ and bottles of Yeah! Colas that are around half the price of Coca-Cola and Pepsi.  But unlike Western retailers such as Walmart, Aldi and Lidl which have been pitching their own labels with a value proposition, they act not only as an affordable alternative but also as a lifestyle choice in India.  This immense focus on private labels has also made online grocers such as BigBasket and Amazon expand their private brand portfolio in India.

Future Retail now has a two-hour delivery guarantee for Big Bazaar shoppers

Big Bazaar has recently enhanced its digital infrastructure.  The retailer has launched its two-hour delivery guarantee across food and consumer goods, household care products and fashion for orders placed online through Big Bazaar’s mobile app or portal.  The first phase starts in April, committing a two-hour delivery in Mumbai, Bengaluru and Delhi.  Once a hundred thousand orders a day have been achieved in these cities, the second phase will be rolled out in the next 45 days in other cities where Big Bazaar has three or more stores. The retailer aims to complete the expansion of this service across over 285 Big Bazaar stores in India within the next six months.  This service will likewise be extended to the other banners of Future Retail.  Its Head of Digital Commerce, Bharati Balakrishnan, commented, “This service is an extension to our brick and mortar stores. It is the most logical step now. The main expense would have been the physical infrastructure, which we had already. The other bit was spent on the back-end building and integration.”  When asked about how this service would be impacted by the potential change of hands with the Reliance Retail deal, he said, “We are on a journey of innovation and solving problems of our customers and we will continue to do so irrespective of ownership.” 

Retail Analysis weekly newsletter

Keep up-to-date with the latest retail developments shaping the industry.

Sign up for our newsletter »