The merger of Kishore Biyani’s Future Retail with Bharti Retail coming a day after Kumar Mangalam Birla of the Aditya Birla Group announced the merger of his two well-known brands, Pantaloon Retail and Madura Garments, is a further pointer to the consolidation taking place across sectors. It started in a big way in 2014 in the e-commerce space with Flipkart and Snapdeal and has now spilt over to retail. Consolidation of like-minded companies that provide synergies, which is the buzzword today, is the way forward if companies want to meet growing competition and to grow pan-India in a cost-effective manner.
For instance, Future will have access to Bharti stores in North India without any fresh investment. Mergers help such companies take advantage of each other’s floor space, what with commercial real estate rates soaring. Besides, they will also in the future have to face competition from the online retail segment, which at present is minuscule but growing fast. Online retailers are currently facing logistics issues as they expand rapidly. Maybe in the future one will see brick and mortar stores merging or forging alliances with online retail firms.
Fortunately for the retail sector in India, there is no competition from the likes of MNC giants like Walmart who do not find Indian government’s foreign direct investment policy in multi-brand retail attractive enough. Bharti had to abandon its eight-year association with Walmart because of the government’s policy. The retail segment is in for exciting times and it is the customers who will benefit when the giants compete for their patronage.
