Reliance began stealth seizure of Future stores on Feb. 25. Much of Future management was in the dark about the takeover according to sources. Reliance wants to rebrand the stores and keep Future employees on as per sources. After the takeover of stores, Amazon and Future would commence talks.
Workers were offloading hundreds of vibrant blue grocery boxes affiliated to India’s largest retailer Reliance at a huge Future Retail supermarket in Mumbai the other week.
Security pushed away potential shoppers, dissatisfied by the store’s shut status, which still bears the branding of Future’s largest label, Big Bazaar, but will most likely be relaunched as a Reliance outlet eventually.
Identical scenarios are now being repeated out across India as Mukesh Ambani’s Reliance Industries, India’s largest conglomerate and the country’s wealthiest man, pushes ahead with a surprise de facto purchase of valued retail real estate that Amazon.com Inc has so far been anxious to assume part-ownership of.
The Supreme Court of India is presently hearing a high-profile bitter conflict between corporate behemoths wherein Amazon is attempting to obstruct Reliance’s intended $3.4 billion acquisition of Future Group’s commercial properties.
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The takeover began quietly on the night of February 25, when Reliance’s employees began appearing at Future outlets. According to those with firsthand understanding of the incident, several in Future’s management were unaware of the plan when store employees from throughout the nation began calling anxiously.
“It was tense, everybody was panicking. We didn’t know who they were. They wanted access and seniors didn’t know about it,” a New Delhi Big Bazaar store worker stated, narrating what occurred around 8 p.m. that day.
One source reported that after Reliance took possession of a Future store in Sonipat, Haryana, statements were made requesting consumers to vacate. Future employees reporting for duty the following morning in Vadodara, Gujarat, were told to go home without notice, according to another insider.
Reliance has assumed charge of the activities of about 200 Big Bazaar outlets and intends to acquire additional 250 of Future’s retail outlets, claiming unpaid debts. They make up the crown jewels of Future’s retail network, accounting for almost a third of all Future locations.
Although Reliance had not taken a prominent role in the legal battle, insiders said it had taken over several of the leases owned by cash-strapped Future, India’s No. 2 retailer and Amazon’s disgruntled business associate, for several months.
Reliance’s rapid acquisition of the outlets looks to have delivered a coup de grace, sabotaging Amazon’s ability to untangle the transition of Future’s holdings to Reliance, according to several experts. Despite the fact that the US e-commerce behemoth has won a number of court challenges to date, the two Indian companies have announced a 2020 partnership.
“What will Amazon fight for now?” questioned a source close to the corporation who is familiar with the legal wrangling. “The shops are gone.”
Reliance, Amazon, and Future did not reply to any requests for comment for this report. Due to the sensitivity of the situation, sources requested anonymity.
AFTER THE TAKEOVER, TALKS
Future Retail announced on February 26 that it was “scaling down its operations” to save deficits, even though it made no reference of Reliance. Future Group is in debt to the tune of more than $4 billion.
According to insiders, Reliance intends to keep Future’s personnel at the locations it acquires.
Amazon, which owns a stake in a different Future Group unit that it claims forbids Future from selling retail assets without its consent, has referred to the supermarkets and other businesses as a “irreplaceable” network in a $900 billion-a-year industry.
The legal squabbles had become increasingly high-stakes and defined by obnoxious rhetoric over time. Amazon attempted to have Future Chief Executive Kishore Biyani put in jail for breaching a court order at one time. Amazon was once compared to Alexander the Great and his “ruthless ambition to scorch the earth,” according to Future.
Six days following Reliance’s move, Amazon surprisingly proposed for friendly discussions to settle the dispute at a Supreme Court hearing on Thursday, a request Future accepted.
Amazon’s lawyer Gopal Subramanium remarked, “People have taken over shops… let’s at least have a conversation.”
The talks are likely to start soon.
Whatever the conclusion of the discussions, many believe Amazon misjudged Reliance.
“If anybody should have seen this coming, it should have been Amazon and they should have prepared against it,” said Devangshu Dutta of retail consultancy Third Eyesight.
“Clearly, they didn’t.”