The ₹2,850 crore acquisition of Metro Cash & Carry India Pvt Ltd will help Reliance Retail Ventures Limited (RRVL) expand its warehouse network for the B2B e-commerce JioMart Kirana as well as its B2C hypermart business, say sources close to the company. Metro operates 31 large format stores across 21 cities. Most are either own properties or on long-term lease, says an executive.
Reliance Retail had the cash & carry business, Reliance Market, before the Covid-19 outbreak. But these facilities were shut down, and converted into warehouses/fulfilment centres for supporting its kirana e-commerce business. The business of Metro will also be reshaped to fit the requirements of Reliance, the sources adds.
"As a foreign investor, Metro has the restrictions in stepping into brick and mortar retailing in India. Reliance has no such restrictions and that will help in changing the store format to whichever way they want," an industry expert says.
Metro started as the first cash-and-carry retailer in 2003, but was expecting changes in foreign investment restrictions. It has about 3,500 employees in the country. The multi-channel cash & carry wholesaler has reach of over 3 million B2B customers in India, of which 1 million are frequently buying customers, through its store network and eB2B app.
The JioMart Kirana is also rapidly expanding as the business onboarded 4 times merchants in the September quarter compared to same period last year, the company said. "The business expanded its supply chain infrastructure by adding 57 new fulfilment facilities in July-September, increasing business reach and reducing merchant response time," it added.
In 2021-22, Metro India recorded sales of ₹7,700 crore. "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, strong supplier network and some of the global best practices implemented by Metro in India. The acquisition will further strengthen Reliance Retail’s physical store footprint and ability to better serve consumers and small merchants by leveraging synergies and efficiencies across supply chain networks, technology platforms and sourcing capabilities," the company said.
Isha Ambani, director, RRVL, said: “The acquisition of Metro India aligns with our new commerce strategy of building a unique model of shared prosperity through active collaboration with small merchants and enterprises... We believe that Metro India’s healthy assets combined with our deep understanding of Indian merchant/kirana ecosystem will help offer a differentiated value proposition to small businesses in India.”
The transaction is expected to complete by March 2023.