Consolidation in retail space soon

Retailers are selling more than goods off their shelves; many are buying and selling businesses reports CNBC-TV18. With so many mergers and acquisitions, is consolidation round the corner?

Kumar Mangalam Birla recently bought grocery chain Trinethra, Mukesh Ambani's Reliance has bought Adani Retail, the Tatas are interested in India's largest consumer electronics retailer Vivek's while private equity fund Actis has bought a majority stake in Nilgiris dairy farm, leading to speculation whether the industry is on the brink of a consolidation.

Says Hemant Kalbag, principal, AT Kearney, "Everyone is on the market today to look for good acquistion targets. Anything that they can get in terms of speed to market, the big guys will execute against. So absolutely, there are a number of potential targets out there and big guys will get them. "

Some potential targets don't seem ready to sell. Supermarket chain Subhiksha apparently was an acquisition target for Reliance Retail and ironically, was also in the running to buy out Adani. But this retailer says it isn't ready to cash out just yet.

R Subramanian, MD of Subhiksha Trading Services, says, "There is no reason for us to even think of selling out today. Our view is that in the next three years, some of the players who are talking plans and want to come in will probably get out and we will be acquiring them rather than selling out."

Analysts say India's organised retail is seeing early signs of consolidation. They say, most regional chains like FoodWorld, Nilgiris or Spinach might scale up, only to fetch better valuations later. Either way, they stand to gain. The retail industry, it seems, has something on the shelf for everybody.