Reliance Retail, India’s largest organised retailer just took a big step to strengthen its wholesale operations. The company has signed definitive agreements to acquire Metro Cash & Carry India for Rs 2,850 crore.
German retailer Metro was the first company to launch wholesale cash & carry business in India back in 2003. Currently, it operates 31 large-format stores in 21 cities. The wholesaler operates in the country via large brick-and-mortar stores and also has an eB2B app. But, scaling up the wholesale business has been tough amid intense competition from the large unorganised trade, organised retailers and deep-pocketed e-commerce players.
Several big players have tried their hand at wholesale business in India, but haven’t been very successful. Back in 2014, French retail giant Carrefour shut down its wholesale operations in the country. US giant Walmart also operated wholesale stores in India under the Best Price Modern Wholesale brand. The operations were acquired by e-commerce giant Flipkart in 2020. Incidentally, Walmart acquired Flipkart in 2018.
Apart from the physical store network, Reliance will get access to a huge customer base of Metro. The wholesaler reached over 3 million B2B customers in the country, one million of which are frequent buyers.
“Through this acquisition, Reliance Retail gets access to a wide network of Metro India stores located in prime locations across key cities, a large base of registered kiranas and other institutional customers, a strong supplier network and some of the global best practices implemented by Metro in India,” said Reliance.
The acquisition also helps Reliance better serve customers and small merchants by leveraging synergies and efficiencies across supply chain networks, technology platforms and sourcing capabilities, it added.
“Metro India is a pioneer and key player in the Indian B2B market and has built a solid multi-channel platform delivering strong customer experience. We believe that Metro India’s healthy assets combined with our deep understanding of the Indian merchant / kirana ecosystem will help offer a differentiated value proposition to small businesses in India,” said Isha Ambani, director of Reliance Retail Ventures.
Reliance is already the market leader in the country’s organised retail market. It operates 16,500 outlets across formats and reported a consolidated revenue of close to Rs 2 lakh crore on a net profit of Rs 7,055 crore in the year ended March 31, 2022. The company in the last couple of years has also focused on reaching out to the vast unorganised kirana trade through the JioMart platform.
Through the Metro Cash & Carry acquisition, Reliance Retail will be able to further scale its reach across the entire spectrum, including households, merchants, small enterprises, institutions and the hotel and restaurant sector.
Subject to requisite approvals, the deal is expected to close by March 2023. Reliance shares were trading up 0.3 per cent in the afternoon trade, even as the benchmark BSE Sensex and NSE Nifty50 were down around 0.3 per cent.
