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Future Group: Spencer Joins More & Future on Amazon's Grocery List



KOLKATA | NEW DELHI: Amazon is in an early conversation with Spencer's Retail to take a minority stake in the food and grocery retail chain as two US online giant explores the country for alliances to penetrate deeper into the US market ,

The US company is also in talks with the Aditya Birla Group on the purchase of equity interests in its More chain of stores and is expected to work with Samara Capital and other investors to fully acquire the business. It is also seeking a minority stake in Kishore Biyani's Future Group. With all three deals completed, Amazon will be involved in more than 1,700 businesses and a range of data to drive business in India to successfully compete with Walmart Flipkart and Reliance Retail.

"Talks with Spencer about rating and structure are currently underway," said one of the two executives mentioned above. "They are preliminary, so we can not be sure that the deal will be completed." Spencer's retail did not respond to questions. Amazon India declined to comment. Amazon must have an omnichannel presence to make its mark in India's grocery and grocery business, said a veteran retailer. This strategy is likely to unfold over Amazon's hyperlocal platform, which promises two hours to deliver food and groceries the same day.

MOVING TO SAVE CO ON MARGINS

This is currently available in some areas of Mumbai, Delhi-National Capital Region, Hyderabad and Bengaluru. Sellers can use Amazon's logistics network or their own. "Without the support of brick chains that already have branches in all cities, including the Tier II and III markets, it will be difficult for Amazon to expand its role in food and grocery retailing across the country," said one manager ,

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Involvement in brick-and-mortar retailers will help Amazon save margins, said the expert quoted above. Spencer & # 39; s is a subsidiary of the flagship of the RPSanjiv Goenka Group, CESC Ltd. CESC has recently received approval from the National Company Law Tribunal (NCLT) to spin off the business in four companies, including Spencer's Retail, which will become a separate publicly traded company. Spencer has plans to raise money after it's spun off, people said with knowledge of the matter, with Goenka trying to dilute a minority stake.

When the rules on foreign direct investment (FDI) for multi-brand retail are liberalized, Amazon will consider full ownership in some of the chains, an executive said. "It has made a similar offer to Spencer's retail and others," he said. The businesses are being structured by Amazon Inc's Mergers & Acquisitions team in Mumbai along with the managing directors of Amazon India in Bengaluru. India allows 51% FDI in multi-brand retail, while 100% is allowed in cash-and-carry projects for wholesale companies such as convenience stores and business licensees.

Amazon will continue the food and food marketplace model because India does not allow for inventory-based e-commerce investment abroad. Spencer's Retail operates 128 stores in over 30 cities. These include 58 wholesale stores, hypermarkets and supermarkets. His revenue was Rs 2,091 crore in FY18 with a loss of Rs 30 crore before tax loss compared to a loss of Rs 129 crore the year before. Spencer & # 39; s plans to open 40 hypermarkets over the next four years.

A senior executive said Amazon has recognized that, despite the government's approval, it will take a wholly-owned grocery retailer to develop as it is difficult to remain profitable without presence in other categories. Among them, Amazon can only sell food that is manufactured or manufactured in India. "These strategic investments in top chains from brick-and-mortar stores will prove useful here," the person said. "The stickiness in the food and food categories is huge and consumers tend to make more frequent purchases, which is why Amazon is interested."

Amazon's rival Walmart owns and operates a chain of Cashand Carry stores in India, apart from the recent acquisition of Flipkart. Alibaba, which has heavily invested in payment and retail space in India through Paytm and BigBasket, is also looking for local trading partners in leading domestic conglomerates such as Reliance and Tata.


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