The battle conch for the festive season has already been blown. Now in a bid to take control of a new frontier, two contenders have come to head again.
Walmart-owned Flipkart and Jeff Bezos led e-commerce major Amazon is reported to have held separate talks with Aditya Birla Fashion and Retail (ABFRL) for making a potential investment.
According to sources, the two e-commerce giants have tabled their respective offers, and are vying to acquire a minority stake in the Birla group company. ABFRL, which owns prominent and well-loved brands like Pantaloons, Allen Solly and Peter England, would add significant value in any of Flipkart’s or Amazon’s online quiver.
The news of the move has come at a time when offline retailers, especially in the fashion and apparel segment, have been severely hurt by the coronavirus pandemic and have seen paltry footfall.
However, if the sales figures of the ongoing festive season are anything to go by, e-commerce has seen a resounding jump due to the pandemic induced changes in shopping behaviour. Industry executives are upbeat that the fashion department, which lay relatively dormant in the resulting lockdown period, will bloom with élan in the coming weeks.
The move is clearly a strategic ploy by these rivals to partner up with someone of goodwill and considerable resource. ABFRL has a network of 3,004 stores, presence in 23,700 multi-brand outlets with 6,700 points of sales in departmental stores across India.
People aware of the matter have touted Flipkart to be ahead at the moment to finalise the deal. While Amazon was in talks earlier, their attempts look to have faded.
Flipkart’s interest in acquiring stakes in offline fashion retailers is a part of its broader scheme to expand operations and leverage strategic partnerships to keep its cost structures lean and scale rapidly.
Bearing the brunt of the pandemic, fashion brands across the spectrum including Bata, Max Fashion, Arvind Fashion and Aditya Birla Group have partnered with online marketplaces to expand their presence and offer value products to shoppers from small cities.
In fact, with the increasingly cut-throat three-way competition for the Indian retail market, all the major players – Amazon, Flipkart and RelianceMart have aggressively pushed for acquiring stakes in physical retail assets. In 2018, Amazon, along with private equity firm Samara Capital had acquired the supermarket chain More from the Birla Group. The US e-tailer had also picked up stakes in department store chain Shoppers Stop and Future Coupons, a promoter entity of Future Retail.
Reliance’s spree of acquisitions is also mind-boggling. With its controversial acquisition of Future Group’s assets, it has almost doubled its footprint in the retail sector. No one has pulled punches here.
Flipkart has been strategically and stealthily looking at strengthening its fashion portfolio to shore up its ecommerce presence. Earlier this month, the company announced a ‘House of Brands’ initiative that brought together Flipkart Fashion Originals, Myntra Fashion Brands and Myntra Brand Accelerator under a single umbrella. It remains the undisputed leader in the fashion segment, all by forming partnerships with the right entities.
ABFR clocked revenues of Rs 8,788 crore for the fiscal year ended March 2020 and has a market capitalisation of around Rs 13,000 crore. If the deal goes through for Flipkart, it will enable ABFR to expand its wings even more, taking the combined rivalries to a fever pitch.
From Flipkart’s perspective, let the festivities begin!
Stay tuned to this space for more updates.