Amazon acquires stake in Future Retail company.
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Amazon and Future Retail Partner Through Acquisition of Future Coupons

photo credit: frankieleon save me from myself via photopin (license)

Future Retail may be one of the largest retail organizations that you’ve never heard about. The Indian based retailer operates a variety of retail formats selling grocery, perishables, electronics, and fashion apparel. Their collection of brands represents many of India’s most popular retail chains serving millions of customers in over 2,000 store locations across more than 400 cities in every state of the country.

Big Bazaar is the chain’s flagship brand and is recognized as one of the most trusted retail brands in the country. In contrast to the big retailer model, Future Retail also operates EasyDay and Heritage Fresh, two neighborhood brands offering fresh goods and daily consumables.

Why are we talking about Future Retail today? Amazon has announced that it was set to acquire a 49% stake in Future Coupons Limited, a Future Retail subsidiary engaged in developing value-added payment products and solutions such as corporate gift cards, loyalty cards, and reward cards primarily for corporate and institutional customers.

According to Tech Crunch, Future Coupons owned warrants equivalent to a 7.3% stake in Future Retail according to prior regulatory filings. Amazon’s investment announced this week would then give Amazon a 3.58% stake in Future Retail. Financial terms of the deal were not disclosed.

Amit Agarwal, manager of Amazon India, commented in the Tech Crunch article that “One thing to keep in mind is that e-commerce is a very, very small portion of total retail consumption in India, probably less than 3%”. Amazon obviously sees the potential for growth and is building on its current investment of over $5.5 Billion in India.

It is interesting to note that as Amazon seeks to establish a larger presence and market share in Indian retail, that it has chosen to invest in brick and mortar to build brand recognition and trust among consumers. It is widely reported that Indian consumers enjoy the brick and mortar shopping experience and like to see and touch goods they purchase. Rather than push e-commerce at the consumer, Amazon is making investments that will connect them more readily with the consumer.

We wanted to get the ground level view of what this partnership means to both Amazon and Future Retail. Mala Raj, Partner at Strategic Caravan, shared these thoughts “This brings together in partnership two players with complementary strengths which should work very well for the end consumer. Amazon is known for its customer centricity and deep customer focus in whatever they do. Future Group is arguably India’s largest brick and mortar retail group with deep penetration beyond metros into Tier 1 and 2 towns of the country and price points that appeal to India’s large middle-class population.”

Strategic Caravan is an organization based in Mumbai, India which provides high level consultative thinking on customer centric strategy for retail and B2B brands. The company is led by Brian Almeida, Managing Director and we were delighted to have Partner Mala Raj provide additional views on this new retail partnership; “To Amazon, this partnership gives it much needed exposure to a deeper and more ‘touch and feel’ India beyond the metros and e-commerce savvy populace. To Future Group, the integration of the Amazon culture and way of operations will bring a greater customer focus, sensitivity to customer needs as well as a place into the e-commerce consumer world with a known name and reputation”.

One additional note; Future Group recognizes the value of developing consumer loyalty through its participation in the Payback program, originating in Europe and now proliferating in India. It should be interesting to see when and if any blending of Amazon’s Prime strategy might mesh with the Payback model. India is a fascinating market to test new customer loyalty strategies and the partnership between Amazon and Future Group will reveal much about where this market is headed.

Also Read: Barney’s Bankruptcy Provides Lessons for the Future of Retail

Amazon and Future Retail Partner Through Acquisition of Future Coupons
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