Amazon India signs pacts to sell Future Group products online

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Published: January 7, 2020 4:13:08 AM

Shares of Future Retail on Monday ended up 0.45% at Rs 336.05 apiece on the BSE.The deals will help the companies leverage omnichannel play, expanding selection for customers and facilitating added convenience, analysts reckon.

Amazon India, Future Group, big bazaar, big bazaar onlineFuture Retail, which operates in 400 cities across the country through 2,000 stores, will be able to tap more customers through the deal. FRL attracts over 350 million footfalls across its network.

More than four months after Amazon had picked up a 49% stake in Future Coupons, a promoter entity of Future Retail, the Kishore Biyani-led retailer and Amazon India on Monday announced two business agreements in grocery and fashion segments.

As part of the deal, Future Consumer will list its food, grocery brands and general merchandise items on Amazon’s Prime Now program, enabling delivery to customers within two hours in New Delhi, Mumbai, Bengaluru and Hyderabad. Future Retail will also list stores like Big Bazaar and Foodhall on the Amazon India marketplace.

“Amazon India will become the authorised online sales channel for FRL stores and FRL will ensure participation of relevant FRL stores on the Amazon India marketplace and its programmes,” the companies said in a joint statement.

Shares of Future Retail on Monday ended up 0.45% at Rs 336.05 apiece on the BSE.The deals will help the companies leverage omnichannel play, expanding selection for customers and facilitating added convenience, analysts reckon.

Future Retail, which operates in 400 cities across the country through 2,000 stores, will be able to tap more customers through the deal. FRL attracts over 350 million footfalls across its network.

The announcement came on a day S&P Global Ratings assigned its preliminary ‘BB-‘ long-term issuer credit rating to Future Retail and preliminary ‘BB-‘ long-term issue rating to the company’s proposed senior secured bonds. On January 4, the company’s board approved raising up to $500 million through dollar-denominated bonds to fund acquisition of retail infrastructure assets of Future Enterprises.

Future Retail’s net profit fell to Rs 165.08 crore for the three months ended September 2019 on a consolidated basis, from Rs 177.37 crore in Q2FY19. Revenue from operations, however, increased to Rs 5,449.06 crore, compared with Rs 4,965.40 crore in Q2FY19.

Online retailers are pulling high-end customers away from traditional players by offering big discounts and increasing data-led mobile phone penetration, S&P said in a note. “Competition is forcing companies such as Future Retail and D’Mart to shift towards an “omni-channel” strategy. We believe Future Retail’s increasing focus on new small-format convenience stores (EasyDay) and its recent collaboration with Amazon.com are steps in that direction,” S&P said.

Rival Walmart-backed Flipkart was understood to be in talks to acquire grocery chain Namdhari’s Fresh last year, but the deal has not yet materialised. Analysts at Deloitte estimate India’s retail industry to reach $1,200 billion by 2021 and $1,750 billion by 2026. Of the total retail market, food and groceries comprise the largest share, followed by apparel and footwear.

FRL will augment existing store infrastructure at its retail outlets for facilitating pick up of products ordered online. FRL and Amazon India have already launched this service across 22 stores, the companies said in the statement.

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