Reliance Retail’s Next Feather in the Cap: 7 – Eleven Stores in India; Future Retail’s exit an excellent business oppurtunity

Mukesh Ambani is not Asia’s richest for nothing; he has strong business acumen and is one of the few businessmen who are always on the go when it comes to creating headlines and making a splash by bringing something ‘new’ to the Indian markets.

Reliance Retail Ventures (RRVL) has entered into a franchise agreement with the US-based 7 – Eleven store, the first of the kind store is set to open in Mumbai, on Saturday marking a foray of the world’s largest convenience retailer’s entry into the highly competitive Indian market.

With this, RRVL will look to a rapid-fire “rollout” of these stores across India, the only market globally with a billion-plus consumer market.

7 eleven store Stock Photos & Royalty-Free Images | Depositphotos

Reliance hits the iron when it’s hot.

Reliance may have lost out on this new deal had the already in debt Future Retail not ended the agreement it made in 2019 with 7 – Eleven. The deal came to an end, and Future Retail exited the venture with mutual consent as the company was not able to honour the agreement – open the brand’s stores or pay franchise fees.
Hence, Mukesh Ambani’s business strategy, the opportunity it presented, is an example that the man does not let go of a good deal!

The world’s biggest convenience stores are all set to tap the Indian market, this even as India’s most competitive retail chain is locked in a tough legal battle in court with Amazon Inc for the assets of Future Retail, which incidentally is the biggest brick – and – mortar chains in India.

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Mukesh Ambani’s Ambition
The Indian market is one of the most sought after in the world, and the reason for the same is the fact that foreign businesses are lured by the untapped potential of the Indian markets.
India is one of the fastest-growing economies in the world; the consumer base is also the most ideal with a healthy percentage of youngsters, one of the highest penetration of internet services and mobile phone users.

There is yet another factor that may have propelled the fast rollout of the first and the subsequent 7 -Eleven stores, and that is that as compared to the rest of the world, the number of Covid -19 cases have been on a sharp decline in the country. One also needs to factor in the fact that India is also one of the few countries in the world which has the highest vaccinated percentage; perhaps this lull in the cases presented itself as an excellent opportunity to enter the Indian market and fast.

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The business tycoon’s ambition to seize the ever-growing formalized retail sector in the county is known to all; in the last year, Reliance Retail has made announcements and acquisitions from time to time, giving us a glance at the seriousness and the ambition of the leader – Mukesh Ambani.

Reliance has been rapidly expanding its foothold, adding 1500 new stores last year alone to a total of nearly 13,000 stores.
The recent months have been quite hectic, and the markets have been abuzz with Ambani taking on both Amazon and Walmart, which have been dominating online shopping in India. Hence Reliance has been steadily building its e-commerce platform JioMart as an effective competitor against the two brands mentioned above.

JioMart is set to make a significant splash as it prepares to offer everything from electronics to apparel to even pharmaceuticals and healthcare.
RRVL is a subsidiary of Reliance Industries Limited and the holding company of the group’s retail ventures, with a consolidated turnover of Rs1.57 trillion and net profit of Rs5,481 crore for the year ended 31 March 2021.

The latest deal gives Reliance Retail a stronger foothold in the country’s $850 billion retail market. It already operates stores for different categories such as apparel, grocery, and electronics with chains such as Reliance Fresh and JioMart, Reliance Digital and Reliance Trends. Reliance Retail has over 3,500 outlets. In a March report, analysts at Jefferies said it is the largest retailer in the country and the only one with a multi-category presence.

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It’s a race for the Indian markets.

The Indian market is dotted with small Kirana stores, and these have been the go-to for the locals in towns and cities.
However, the landscape has slowly but steadily changing, especially in the urban cities and smaller tier – 2 cities, as well as more and more people, are preferring to go to supermarkets and pick up all their needs under one roof, ambience and convenience are also high on the priority list so are the larger discounts that one can profit from.

The icing on the cake is India’s country’s $850 billion retail market that promises immense possibilities with the launch of the 7-Eleven stores; RRVL proposes to offer a greater shopping experience and a higher and competitive price-value proposition for Indian customers.

The 7-Eleven stores would offer a range of beverages, snacks, and delicacies, particularly catering to appeal to the local tastes and daily essentials, focusing on hygiene and affordability as its primary offerings.

The company aims to open several stores across the country. With a rapid expansion plan in the near future, it is expected to be a significant contributor and boost the local employment in the areas that it opens its stores.
SEI will also support RRVL in implementing and localising the unique 7-Eleven convenience retail business model for India, including bringing best in class processes and practices.

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Introducing 7-Eleven
7-Eleven is based out of Irving in Texas; it has made a significant mark in the convenience retailing industry. It operates, franchises and/or licenses more than 77,000 stores in 18 countries and regions, including 16,000 in North America.

In addition to the 7-Eleven stores, SEI operates and franchises Speedway, Stripes, Laredo Taco Company and Raise the Roost locations.
Known for its iconic brands such as Slurpee, Big Bite and Big Gulp, SEI has expanded into high-quality sandwiches, salads, side dishes, cut fruit and protein boxes.
Joe DePinto, CEO of SEI, the owner of 7-Eleven, said that the new tie-up would help bring the chain “to millions of Indian consumers.”

“India is the second-largest country in the world and has one of the fastest-growing economies,” he said. “It’s an ideal time for the largest convenience retailer in the world to make our entry.”

266 Insider Trading Stock Photos, Pictures & Royalty-Free Images - iStock

What makes the markets upbeat?
Analysts tracking the retail industry said the move is “interesting” given that Reliance Retail is the largest retailer and works closely with many Kirana shops. Last year, it launched JioMart, a hyperlocal retail platform that enables the retailer’s own network of stores and local stores to fulfil orders.

The retail landscape has been shifting and changing shape; it is poised to take on a different hue, profits could be higher and ventures could rake in billions if they play it right.
In the end, it is all about being able to offer maximum discounts and shopping experience that touches on convenience and the novelty of shopping in these places.

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