Did Reliance defeat Amazon in the Future Retail case?

Tanhaai, Tanhaai

Business Ke Raaste Mein Kaisi Thokar Maine Khaayi

Toote Khwaab Saare, Ek Maayusi Hai Chhaayi

Har Khushi So Gayi, Zindagi Kho Gayi”

Future Groups with no future at all!

The Future Group, started by Kishore Biyani in 2013 and once the king of Indian retail stores, operates 1,700+ stores in India under various brand names like Big Bazaar, Fashion Central, and Home Centre. However, the company soon ran into losses and started looking for possible buyers. Future Retail currently has more than ₹17,000 crores in debts, and thus we dedicated the above song.

Reliance- Future deal of “Growth is Life”

For Reliance, the deal with Future Retail would help in establishing itself as “India’s Largest Retailer” with a presence in smaller cities and towns almost overnight, thus helping the company in last-mile access for its e-commerce delivery to small towns..

From where did Amazon come?

In August 2019, Amazon invested in Future Coupons, and bought approximately 49% stake in it for ₹1,500 Crore. This stake roughly translates into a 3.5% stake in Future Retail. While Amazon had bought a stake in Future Coupons, it had made Future Group agree on some special conditions.

One of these conditions was that there was a list of industrialists and businesses provided by Amazon that Future had to abide by not selling the stake to these listed entities without Amazon’s consent. And guess what? Mukesh Ambani’s name was on this list.

So now, Amazon has jumped in the deal with a “Future, what is this behavior?” attitude with a point that looks valid as well.

Amazon setting up its “India mei Sapno ki Apni Dukaan”

With Future Retail, Amazon intended to deliver products in selected cities within two hours of a customer ordering them, thus looking at Future’s stores as intrinsic to its plan. So, any alliance between Future and Amazon would have given the latter a huge advantage in the consumer experience.

How the Amazon-Reliance saga unfolded

Twist in the Story

So, the much-awaited twist is that, in 2020, landlords began to send termination notices to Future Retail due to long rent due. Reliance Retail has seized the opportunity and negotiated the lease agreements with these landlords. As a result, Reliance Retail has subleased several stores of Future Retail.

At present, Reliance Retail has already taken control of more than 300 stores; Reliance has taken possession of 100 Big Bazaar Stores. Reliance Retail is also going as per its tagline- “Aapki Khushi, Hamari Khushi” and offered jobs to former Future Retail employees who have lost their jobs due to store closures.

Reliance Retail is in the process of stock-taking from Future Retail. It is also rebranding these stores as Reliance Retail stores, which are currently closed for shoppers and online deliveries but are expected to open soon.

And the Saga continues…

Mukesh Ambani’s Reliance Retail has found a loophole to take possession of these stores, citing rent overdue. Reliance has effectively dealt a serious blow to Amazon without directly fighting them in Court with this move. However, Amazon has approached Delhi High Court to stop Reliance from taking possession of Future Retail stores and even plans to start criminal proceedings against Future Group.

Even as the battle carries on, there is an interesting shift of events. The Supreme Court has offered now both the parties, viz. Amazon and Future Retail a last chance to sit across the table and hammer out an out-of-court settlement.

It now looks like even Future Group and Amazon are also keen on an out-of-court settlement as it would allow them a reason to get back to business as usual. The next few days in this case would be really interesting. What are your thoughts? Let us know in the comment section.

References:

1.  https://bit.ly/3vR4akx
2.  https://bit.ly/3HNaifF
3.  https://bit.ly/3MovsVb
4.  https://bit.ly/3hJ7q99
5.  https://bit.ly/3tyKkYh
6.  https://bit.ly/3KtJxip
7.  https://bit.ly/3MowaSl
8.  https://bit.ly/3sMoth0