As scale becomes necessary to achieve bargaining power and cost savings, a consolidation wave through a host of M&A activity can be expected in the coming years in the Indian organized retail. This has been witnessed in the Chinese market recently and is corroborated by trends in the US where top 7 players accounted for 20% of the US retail sales in 2005. The maximum action will be witnessed in top 50-60 urban markets where there shall be rapid margin erosion for those competing in mainstream formats e.g. Hypermarkets and Supermarkets.

Already, a number of M&A activities have been witnessed in the retail sector, such as:

• Acquisition of Adani Retail by Reliance Retail
• Trinethra Super Retail Ltd. by A V Birla Group
• Trent’s acquisition of 76% stake in Landmark Mega-stores

There could be 4 categories of “survivors” emerging in 3-5 years:

1. Large players with deep pockets
   
   
2. Intelligent niches / super-specialities
   
   
3. Regional players who may merge or partner with each other:
   
   » Such as Spinach (Mumbai) acquiring Home Store/Sabka Bazaar (Delhi)
   
   
4. Only a few of the existing national players may remain in business
   profitably