Reliance Retail, the fastest-growing unit of Reliance Industries Limited is looking for further expansion. As the chairman Mukesh Ambani has made it very clear that the consumer business will set the future course for the conglomerate, the company is set to expand its private level brands market. The company wants consumer business, which contributes only 20 percent to the total revenue, to contribute as much energy and refining businesses by 2025.
The brands like Best Farms, Good Life, Masti Oye, Kaffe, Enzo, Mopz, Expelz and Home One which are currently available only on Reliance Fresh, Reliance Smart and Reliance Market stores will be available at local stores. The company will distribute the products with the help of distributors.
“RIL is planning to appoint FMCG (fast-moving consumer goods) distributors on a trial basis,” said a person aware of the development. “A network of FMCG dealers will help RIL meet the logistics and delivery needs from online channels,” said another person.
The company is likely to roll out its local stores initiative and Jio Gigafibre business in annual general meeting on August 12. In the past too, AGM’s has been used for unveilings and announcement.
The selling of house brands to local stores fits in Reliance’s online-to-offline (O2O) which the company aims to pioneer to take on existing online retailers like Amazon and Flipkart.
In January, Mukesh Ambani had announced the entry of Reliance in e-commerce at the inauguration of the three-day Vibrant Gujarat summit. “Jio and Reliance Retail will launch a unique new commerce platform to empower and enrich our 1.2 million small retailers and shopkeepers in Gujarat, which are part of the over 30-million (retail) community in India,” said Ambani in Gandhinagar. Mukesh Ambani laying more emphasis on small retailers and shopkeepers is important as the large e-commerce players earlier faced a setback because the government decided to check the e-commerce platforms operating on ‘marketplace model’ such as Amazon, Flipkart, and Paytm Mall to enter in exclusive deals with specific players.
It will also explore the untapped rural and small towns market for e-commerce and is expected to be outside of the discounting game. Earlier, the big e-commerce players were involved in a heavy discounting game with exclusive deals from particular retailers who were backed by the platform itself. The small retailers were being pushed out of business through this unethical practice. Reliance is likely to give more importance to these small retailers. The company itself has 4,000 Reliance retail stores and 10,000 Jio outlets.
The consumer and retail businesses of the company have registered profit and grown exponentially over the last few years. “Now consumer businesses account for almost 25% of RIL’s Ebitda (earnings before interest, tax, depreciation and amortization)” said Srikanth, Joint Chief Financial Officer.
The Reliance Retail grew by 89 percent in the March quarter. The March quarter revenue in the last year was 69,198 crore rupees and grown to 1.31 lakh rupees this year. The profit rose by 168 percent to 5,546 crore rupees from 2,064 crore rupees. In the last fiscal year, the company opened 2,829 stores and for the first time crossed revenue crossed 1 lakh crore rupees.