Amazon, in collaboration with the private equity firm Samara Capital, is making significant investments in the grocery retail chain, More Retail. The company recently received over Rs 387 crore in funding for the last fiscal year, focusing on market expansion and aligning with Amazon’s grocery services under its Fresh brand. This capital influx marks a crucial step towards enhancing More Retail’s operational capabilities and market reach.
Recent filings with the Registrar of Companies reveal that the financial support is not limited to past investments. The ongoing fiscal year has already seen an infusion of Rs 145 crore, with the previous two fiscal years contributing Rs 300 crore and Rs 400 crore, respectively. These figures highlight a sustained commitment by Amazon and Samara Capital to bolster More Retail’s growth trajectory.
The challenges faced by More Retail are apparent. Despite raising substantial funding—over Rs 800 crore across the last two fiscal years—the company continues to grapple with profitability. It has been reported that More Retail plans to close unprofitable stores, a strategic move aimed at reducing losses in the short term. This approach, as outlined by managing director Vinod Nambiar, anticipates the company reaching break-even by the third quarter of this fiscal year, further supported by a growing business that has seen Amazon’s activities expand by more than 60%.
In order to meet the increasing demand, More Retail is focused on improving stock availability in more than 280 stores, integrating over 10,000 stock keeping units (SKUs) for their online operations. The retailer has ambitious plans to open approximately 100 new stores within the next 3-4 quarters, aiming to enhance its geographical footprint and accessibility to consumers.
The decision to focus on profitability through the closure of unproductive outlets has reportedly led to a “significant reduction” in losses during the second half of the previous fiscal year, compared to the first half. Despite this progress, the losses at a company-wide level have remained largely unchanged in FY24, emphasizing the need for a more comprehensive evaluation of growth strategies.
More Retail operates a diverse chain of hypermarkets and supermarkets across India, with a total of 777 stores covering 300 towns. The expansion under Amazon Fresh aims to penetrate previously underserved markets in the country, demonstrating a commitment to enhancing consumer access to grocery services. Despite the positive narrative surrounding the funding, industry experts such as Mohit Yadav, founder of AltInfo, caution that without a fundamental overhaul of its strategic approach focusing on revenue generation and market share growth, the company’s long-term survival may be at risk.
The financial implications of More Retail’s operations are stark. The company reported net losses of approximately Rs 550 crore in 2022-23, while revenues were recorded at Rs 4,507 crore. The closure of loss-making stores has been a pivotal move, leading to discussions about how to sustain the operational improvements established in the second half of the fiscal year.
In conclusion, Amazon and Samara Capital’s investment in More Retail reflects a broader trend toward consolidation in the grocery retail sector, driven by online market demands. As the company prepares to introduce its services to new areas and optimize store performance, the road ahead will require meticulous balancing of expansion efforts and profitability initiatives. The journey of More Retail remains a notable case study in the evolving landscape of Indian e-commerce and retail integration.
