India's richest man has sealed another deal in his battle with Amazon and Walmart for India's online retail market, which a Morgan Stanley estimate sees at $200 billion by 2028.
On Thursday, Reliance agreed to purchase the 259-year-old British toy store chain Hamleys from C.Banner International Holdings for $88.5 million in cash in a transaction that will “catapult Reliance Brands to be a dominant player in the global toy retail industry,” said a statement.
The 62-year-old businessman is quietly piecing together a network of partners through stake purchases or outright acquisitions in his push for consumer business, which Ambani says will contribute nearly as much as to the conglomerate’s total earnings as its core energy business by the end of 2028.
A Hamleys in pocket will give Reliance 167 stores across 18 countries. Hamleys gives Reliance Retail a global footprint which the company currently lacks. Despite its huge sales network in India, Reliance Retail so far has no overseas presence.
Ambani is clearly in a hurry and he has the right reason to be so. India will have 829 million smartphone users by 2022, according to Cisco Systems, from a projected half a billion this year. That means a potential surge in demand for online services and products from music to food delivery, electronic gadgets and clothes.
The plan
Ambani outlined his plan to shareholders in July, saying the effort will involve the group’s unlisted businesses Reliance Retail and Reliance Jio Infocomm. He has already spent about $36 billion on Jio, which has rolled out a nationwide 4G network and fiber broadband infrastructure, causing some established rivals to pull back.
The platform will use augmented reality, holographs and virtual reality to create an “immersive shopping experience,” said Ambani.
The service will seek to get on board the millions of mom-and-pop stores that dominate the Indian retail market, providing heft to its operations. Chains and large department stores account for only 10 percent of the market. The Reliance e-commerce platform would enable small merchants to “do everything that large enterprises and large e-commerce players are able to do,” Ambani said. A spokesman for Reliance IndustriesNSE 0.29 % declined to comment on the progress of the plans.