Reliance Retail, which saw its revenue nearly double in the June quarter (year-on-year), is now planning to sell its in-house brands in local kirana stores through distributors. These brands are currently available across its own Reliance Fresh, Reliance Smart and Reliance Market stores. This fits it with parent Reliance Industries' plan to create the biggest online-to-offline (O2O) e-commerce platform in the country.
Sources in the know told Mint that RIL will soon hire distributors on a trial basis to sell its private-label brands through neighbourhood stores. The in-house brands include Best Farms, Good Life, Masti Oye, Kaffe, Enzo, Mopz, Expelz and Home One, which cover a range of categories from staples and food FMCG to home and personal care as well as general merchandise. This is an attempt to boost Reliance Retail's contribution to RIL's margin to counter the weakness in the traditional petrochemical and refining business. After all, most of India's $700 billion retail industry is unorganised and is made of neighbourhood kirana stores.
On July 19, the Mukesh Ambani-led conglomerate reported that Reliance Retail had posted a 70 per cent jump in pre-tax profit to Rs 2,049 crore compared to Q1FY19 and a 47.5 per cent rise in revenue to Rs 38,196 crore. It now boasts 10,644 stores across the country and the company said in a statement that it crossed the milestone of 150 million footfalls during the quarter, "establishing its position as the most preferred retailer in India".
"A network of FMCG dealers will help RIL meet the logistics and delivery needs from online channels," a source told the daily. Speculation is rife that Ambani will make an announcement on this front at the upcoming RIL annual general meeting on August 12. By 2025, he expects the consumer businesses to contribute nearly as much to RIL's overall earnings as the energy and refining businesses. As part of this strategy, RIL is taking on online retailers such as Amazon and Flipkart in the e-commerce segment and the likes of Hindustan Unilever Ltd and ITC Ltd in the offline segment.
In April, Reliance Retail began testing its food and grocery app among a select group of users, largely comprising its employees. The company has also launched Jio mobile point-of-sale (MPoS) devices for kirana stores, which will allow the shops to connect to Jio's 4G network and allow their shoppers to place online orders. The Jio MPoS will take on SnapBizz, Nukkad Shops and GoFrugal in the fragmented MPoS space. At an analyst presentation to discuss the Q1 results, RIL further announced that it has initiated a pilot for assisted e-commerce at Jio Stores wherein store staff will take orders and the customer can collect/return orders from a Jio Store.
According to a recent report by Bank of America Merrill Lynch (BofAML), RIL's entry into online retailing will help to digitise more than five million kirana stores by 2023, up from just 15,000 currently.
With PTI inputs
(Edited by Sushmita Choudhury Agarwal)