Spencer's enters online space with meragrocer acquisition

Spencer's Retail has forayed into online space with the acquisition of 100 per cent stake in meragrocer.com at an undisclosed sum to grab 10 per cent of revenue in 4-5 years. This acquisition makes meragrocer.com a subsidiary of Spencer's, and will form the starting point of Spencer's online retail business, Spencer's said in a statement.

"With the acquisition we will be able to enter the online channel for Spencer's soon. However, this does not stop us from tying with other hyper local delivery startups", sector head Shashwat Goenka said. "Currently we will be in Gurgaon and Delhi as the acquired company is present in these markets. By April-June quarter of 2016, we will launch the service in Kolkata", he said.

Spencer's, he said, is working on greenfield entry in this segment but the acquisition will help the retail major to roll out the online channel much faster. Goenka said gradually the service will be rolled out in 8-10 cities. Meragrocer.com currently has operations with a gross merchandise value of Rs 5 crore.

"We are eyeing Rs 500 crore gross merchandise value from e-commerce in five years, while total sales of Spencer's is targeted at Rs 5,000 crore. This will become an omni-channel front for us", he said. Goenka said the cost of acquisition for meragrocer.com is much lower than what it would have been to set up a greenfield operation for e-commerce.

"The acquisition will help us to break-even faster. Loss at Spencer's Retail is already down to Rs 2 crore per month in the second quarter as compared to Rs 9.5 crore per month five years back", Goenka said. The deal is a mixture of debt and equity.

Image : Shutterstock