With a large number of brick-and-mortar players competing among themselves and the advent of e-commerce players, industry insiders say that the retail sector will see many more mergers and acquisitions over the next six months along with the launch of e-commerce platforms by traditional players. The views came in after two big mergers were announced within 24 hours creating two major players in the segment.
While the back-to-back announcements are being seen as a mere co-incidence, the move is strategically driven to create a big entity that raises their leveraging ability. “This is to become big, operate under one brand and to increase their ability to bargain with e-commerce players,” said Paresh Parekh, tax partner — retail practice, Ernst & Young India.
“It is a competitive landscape and e-commerce is providing a lot of competition.
The retail sector needs consolidation and it was on the cards as there are many small players not large players … Brick-and-mortar players are also working on their e-commerce platforms and some of them have already launched theirs,” said Arvind Singhal, chairman and MD, Technopak.
According to a 2014 Crisil report, the e-retail market size that stood at Rs 1,500 crore in 2008-09 hit Rs 13,900 crore in 2012-13. It further projected it to grow by over three times to Rs 50,400 crore in 2015-16.