Chinese e-commerce giant Alibaba and US-based e-tailing behemoth Amazon, are reportedly in talks with RP-Sanjiv Goenka (RPG) Group, to acquire a minority stake in Spencer’s Retail, a food and retail arm of RPG Group.
There have been reports of Alibaba executives being in Kolkata, to discuss possible investment opportunities in Spencer’s Retail. Alibaba could be exploring the Indian retail industry, to establish its foothold in the country.
The news has not been confirmed by Alibaba, Amazon, or RPG Group.
The news comes soon after it was reported that Amazon and Samara Capital had acquired Aditya Birla Group’s retail chain ‘More’. The deal has been done through Witzig Advisory Services, owned by Samara Capital, with Amazon acquiring the minority 49% stake.
According to reports, the deal with Amazon is expected to be in the penultimate stage but was held up due to valuation. Reportedly, Spencer’s is looking for a better valuation, compared to Aditya Birla Group’s grocery and retail chain ‘More’, claiming that Spencer’s Retail is a profitable chain, which will generate a better return on investment.
Kolkata-based Spencer’s Retail has 128 stores across more than 30 cities in India, including 58 large-format, hypermarkets and supermarkets.
Amazon has been aggressively looking to expand into the Indian food and grocery domain, seeing as its Indian rival, Flipkart has ventured into online grocery domain, with the launch of its online grocery store Flipkart Supermart.
With Flipkart besting Amazon in the e-commerce space, gaining a greater market share, Amazon is exploring an omnichannel strategy to strengthen its footprint in India.
Amazon invested ₹100 crores ($14 million) in Amazon Retail, to strengthen its food business in India. Amazon had also committed an additional $500 million for its food retail business in India.
According to an IBEF report, India’s retail market is expected to increase by 60 per cent to reach US$ 1.1 trillion by 2020, on the back of factors like rising incomes and lifestyle changes by middle class and increased digital connectivity.