Why is Tata Group Eying a Stake in Big Basket?
Created on 24 Oct 2020
Wraps up in 4 Min
Read by 3.2k people
Updated on 25 Aug 2022
Of the many records that Rahul Dravid holds, the maximum number of deliveries faced in Test Cricket is the least feted. Dravid has met 31,258 deliveries in 164 Tests. To understand how big this number is, let’s tell you that he is followed only by Sachin Tendulkar, who faced 29,437 deliveries too, but in a career that spanned eight more years and 36 more Tests.
*Let that sink in.* Take a stance, focus, react, repeat, more than 31,000 times! Different venues, different bowlers and different match conditions. Key learning from Dravid: Make runs in the process, but more importantly, don't lose your wicket.
This learning can help businesses navigate through different cycles of market volatility and still stand strong. With this, your business will change its stance depending on the environment (market condition) and bat in a manner to protect the wicket (avoid volatility).
In reference to the Indian retail sector, the industry is growing at a rapid pace. The sector's e-commerce push is new to the economy. So, the news is that the Tatas are planning to join hands with a unicorn startup Big Basket means that the Tatas are trying to keep up with the competition (trying to save their wickets).
Current Scenario of Retail Sector
This Covid-19 pandemic has forced all of us to stay indoors. The extending lockdowns are a significant hindrance for businesses as well. The increasing number of Coronavirus positive cases has made it essential for retailers to get into e-commerce.
This is because people these days do not prefer to go and shop in the physical market. So, the businesses that wish to survive are forced to provide their services virtually, and the big retailers have already taken a head-start in the race.
After acquiring a stake in Future Group and launching its e-commerce platform JioMart, Reliance Retail is on its way to becoming the fastest-growing retail brand. They are focused on building a strong consumer base and a robust delivery network.
But some of the big giants of the Indian retail sector, like Avenue Supermarts (DMart), are facing tough competition. DMart, a one-stop supermarket chain, offers customers a wide range of essential home and personal care products under one roof including food, toiletries, beauty products, garments, kitchenware, bed and bath linen, home appliances, and more. Now, with Reliance Retail entering the scene the level of competition is only expected to rise.
The Tata's Style
The Tatas have always tried to keep up with the changing business environment. Here’s an example. In 2008, the Tatas had problems with the then acquired Jaguar Land Rover (JLR) in the UK, as it struggled to deal with the global economic downturn.
During that time, Tatas empathised with the employees and reached out to them in a town hall meeting, where all their concerns were addressed transparently. While it may not seem like something big, this approach sure worked wonders for JLR as Jaguar's annual loss of £400m in 2008 turned almost overnight into handsome profits.
"The 152-year-old Tata Group is now in talks with Walmart Inc. for a $25 billion investment in a 'super-app'; a multipurpose online platform combining fashion, lifestyle and electronics retail, food and grocery, insurance and financial services, as well as digital content and education", the Mint newspaper reported.
Apart from this, Tata Group has taken one giant stride forward and bought a 20 percent stake in the unicorn startup Big Basket and two board seats in the potential deal.
What Could be the Reasons Behind the Deal?
Due to the growing demand for e-commerce services during the pandemic, Big Basket has seen a positive response. The market of Big Basket has also flourished during this time and hence has generated a need for fresh investments in it.
Big Basket is one of those brands, apart from Flipkart and Amazon, which has seen a boom in tier 1 Indian cities like Delhi and Hyderabad. We know that big foreign corporations have bagged Amazon and Flipkart. And that is why Tata Group is trying to capture this market through the deal with Big Basket. However, Big Basket is also backed by Ali baba.
What could be better for this unicorn startup than the Tatas investing in their business? The money that Tata Group will inject into Big Basket may help them grow and compete with Amazon and Flipkart. Apart from this, they will also face competition from Jio Mart.
The Bottom Line
Business expansion and diversification are the targets of all big business giants in the world. Apart from this, it is also essential for these businesses to save their wickets first and then make runs (remember Dravid). With the increasing competition in the industry, only those who will expand their business in all virtues will survive.
At the same time, the move of Reliance Retail hints toward their strategy to achieve a monopoly. It is all set to compete with international giants like Amazon and Flipkart. In contrast, Tata's strategic move is undoubtedly an excellent response to all of them. Having said that, only time will tell who will dominate the Indian retail market.
How was this article?
Like, comment or share.