In this episode we talk about Future Retail’s bankruptcy, Reliance Retail’s stellar results, challenges faced by the Indian toys segment and a new collaboration of YouTube and Shopify.
Hello and welcome to This Week in Indian Retail - a podcast and blog dedicated to the major events, news and stories that impacted the Indian retail industry in the last week. This is July 24th 2022 and I’m your host Prateek Malik from New Delhi. Let’s get started! Summary of Week 29 of 2022 :
The Indian court agreed to allow Future Retail proceed with the bankruptcy resolution process: On Wednesday, the National Company Law Tribunal shared its verdict on the petition filed by Bank of India seeking to allow Future Retail’s bankruptcy resolution and to find a new owner for Future Retail. It also dismissed Amazon India’s previous allegations that Future Retail’s lenders were colluding with its founders to push the firm into insolvency. As the industry members are well aware, the cash crunch is looming over Future Retail, and both Amazon India and Reliance Retail were pursuing the legal tussle to win over the assets. This verdict also stops Amazon from any further arbitration against Future Retail in Singapore courts. Now the court resolution process will decide how and when the insolvent firm assets are diluted. It will be no surprise if Reliance Retail would like to engage once again in winning these assets or become at least a partial owner of Future Retail in near future.
Reliance Retail reported a double jump in the pre-tax profits of Q1 According to the Indian retail giant, the pre-tax profits of Q1 FY22 stood at Rs 3,897 crore vs Rs. 1,390 crore in the last FY. Gross revenue was up 51.9% vs the corresponding quarter of last year. This was led by higher contributions from fashion and lifestyle, consumer electronics and growing operating leverage with strong LFL growth over last year across consumption baskets. The company proudly claimed that with 792 store openings in the quarter, the spread of 15,866 stores with an area of 45.5 million square feet now covers all corners of the country. The business continues to bolster its supply chain capabilities with the addition of 79 warehousing and fulfillment locations measuring 3.3 million sq ft of space added during the quarter. This definitely looks like a stellar growth from the company and it doesn’t seem to be slowing down anytime soon.
The challenges faced by the Indian toys segment Since the Central government of India banned the sale of uncertified toys and imposed heavy custom import duties on imports, the Indian toys industry has seen a fresh growth. As per the govt. reported stats, the last three financial years, the imports of toys declined by 70% and exports surged by 61%. Industry experts mention that while many toy manufacturers are trying to match the market demands, there is still a huge shortage of the necessary equipment to develop the electronic toys because even this carries a 34% import duty. The Bureau of Indian Standards (BIS) granted more than 800 licenses to toy producers in India, however, many failed to adhere to the quality norms. This has ultimately become a constant problem for the small scale retailers who are dependent on the limited supply from the bigger companies managing the high quality toys. There are other issues too like the hike in the prices of the raw materials including polymers and plastics. Now the industry operators are raising several new requests to the government like increasing toy manufacturing clusters, subsidizing toy exports and production linked incentive schemes. Currently, this segment is valued at Rs 15,000 crores and is expected to grow by 20% each year.
The new collaboration between YouTube and Shopify This week e-commerce webstore platform giant Shopify and world’s video content giant YouTube announced a new collaboration that can change the way online consumer traffic flows. Now YouTube shopping is available to all Shopify merchants worldwide. This will allow brands to directly connect with their audience on YouTube and offer more compelling experiences. According to Shopify research, 56% of Indian online consumers will connect with brand-created content this year and 48% are expected to attend the live video shopping events this year. So far, the product catalog details used to sync to other video engagement platforms, but now the items will also be removed from YouTube videos touchpoints once they go out of stock on Shopify. Sellers will also be able to track their multi-channel performance and live track the performance of video placements. Earlier, only links to product pages used to connect the audience on YouTube. Now, even the product details can be previewed along with the video playback. This seems to be a much more intuitive way to engage end customers on YouTube. However, the question is that not the entire world is on Shopify yet, so will YouTube create more such collaborations or will it ask brands to move to Shopify.
That’s a quick wrap for this week.
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