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“Reliance purchased Metro Cash & Carry. – Why”

"Reliance purchased Metro Cash & Carry. - Why"

You might remember the Amazon vs. Future Retail saga where almost every month someone was suing someone else, and indirectly or directly benefiting Reliance. Reliance wanted to dominate India’s retail business by striking a deal with Future Retail. However, things didn’t go as planned for Reliance, and when the straightforward approach didn’t work out, Reliance took a twisty route by acquiring Future Group’s retail stores.

Now, in the expansion of this retail business, Reliance, which already has more than 16,600 stores, is taking another step forward. How? Well, by acquiring Metro Cash and Carry Pvt Ltd. for Rs. 2850 crores.

Let’s delve into this deal in detail and understand why Reliance made this move.

This deal has been made by Reliance Industries LTD’s subsidiary Reliance Retail Ventures Ltd (RRVL) – which is currently the largest retailer in the country. In this deal, RRVL has purchased 100% equity stake in wholesale food products company Metro Cash & Carry India Pvt Ltd for Rs. 2850 crores through an agreement.

Metro Cash & Carry is the Indian unit of the German company Metro AG. It’s an international food wholesaler that also owns retail and department stores. However, its specialization lies in serving the needs of hotels, restaurants, caterers, and independent merchants.

How will it benefit Reliance?

The purchase will not just help Reliance Retail deepen its operations and physical store footprint in India, it will also help the company access a wide network of outlets and retail and institutional buyers, and give it a strong supply channel.

The retail giant’s ability to better serve consumers and small merchants by leveraging synergies and efficiencies across supply chain networks, technology platforms and sourcing capabilities will get a boost.

Reliance will also benefit from the aggressive omnichannel strategy and digitization of kirana stores which Metro India had recently undertaken in terms of offering Business-to-Business (B2B) customers modern fixtures, Point-of-Sale (PoS) terminals and marketing tools.

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. So, the acquisition of Metro India aligns with Reliance’s new commerce strategy of building a unique model of shared prosperity through active collaboration with small merchants and enterprises.

Metro has been in India since 2003. On many parameters Metro was by far the best organised wholesaler in India. The customer base, supplier network and well-trained team as well as being a well-oiled international standard process-driven organisation is a valuable asset and will give Reliance Retail a definite edge in the wholesale market.

After this acquisition, Reliance Industries will be able to strengthen its position in the Indian retail market. However, it remains to be seen how and when Reliance accomplishes this.

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