The richest man in Asia of the Reliance Industries, the one and only Mukesh Ambani is going to bring the convenience stores’ chain, 7-Eleven Inc, to India. As elaborated by Mukesh Ambani,7-Eleven stores are aimed to provide a unique and specialized style of convenience to all their consumers, offering a wide range of products from basic daily essentials to variegated snacks and beverages along with other delicacies.
7-Eleven is a Texas-based convenience stores chain present in 18 countries and has about 77,000 stores across the globe.
Reliance Industry’s subsidiary, Reliance Retail Ventures Limited, would be launching the 7-Eleven convenience stores in India and is all set to open the first retail store on October 9th Saturday. The location of the first 7-Eleven store in India is in Andheri East, Mumbai, soon after which it would “roll out” various branches in commercial areas and places of significance, starting with the Greater Mumbai cluster as the initial target.
The retail arm of Mukesh Ambani’s Reliance Industries, Reliance Retail Ventures Ltd., inked the master franchise deal with the 7-Eleven convenience stores only a few days after its prime competitor, the indebted Future Group’s deal with this company dropped.
The deal between the Future Group and 7-Eleven Inc was terminated on a mutually consented basis owing to the inability of troubled supermarket operator Future Group to meet the stipulated opening targets and regular payments of franchise fees.
The president and chief executive officer of SEI Investments Group, Joe DePinto, said that India being the second-largest country in the world it has one of the fastest-growing economies. He continued by saying that it’s an ideal time for the largest convenience retailer in the world to make our entry into India. SEI is the investment group that provides franchise options for the chain convenience store, 7-Eleven Inc.
Mukesh Ambani’s Reliance Retail Ventures is the largest and the most profitable venture in the retail sector in India, and their extension into the opening of the 7-Eleven stores in India only adds to its profitability. Now it would also be bringing in the only billion-people-plus consumer-based retail store in the world, which was open to foreign firms, thereby fuelling the expansion of his retail empire.
Moreover, Mr. Ambani led Reliance Industries’ future plans include a lower dependency of revenue from oil owing to the lessening demand and higher expansion in Indian’s retail sector. This franchisee, in collaboration with one of the most widespread multinational convenience stores, 7-Eleven, is definitely a stronghold position of expansion for Reliance.
Reliance is expanding its foothold at a highly rapid rate, stimulated by the addition of about 1,500 new stores last year to a total of nearly 13,000. This was told by Mr. Ambani at a shareholders’ meeting that happened in June.
The ideal time as stated by the CEO and President, Joe DePinto, refers to the recovery of the economy post the COVID-19 fall. Moreover, now lockdowns have been lifted in most of the cities, and the situation is returning to normalcy, with the vaccine drive happening on a full-fledged scale. This, fuelled by the possibility of India nearing the endemic according to different analysts denote a positive and conducive sign for the entry of a retail store in the market.
The receptiveness of the Indian market in welcoming a foreign firm in the retail sector also plays a huge role in its determination of entry. However, our county poses high challenges for new entrants being introduced in the market. They face a lot of opposition, primarily due to politics and red-tapism. Nevertheless, lately, the government’s positive approach to increasing foreign direct investments (FDI) and foreign institutional investments (FII) has worked in favor. In retail trading, recent policy changes have allowed completely 100 per cent FDI under the automatic route for single-brand retail trading and up to 51 per cent FDI in multi-brand retailing.
Most foreign institutions and firms, who are now major players in the market have primarily entered through articulating deals and strategies partnered with a firm based in India, be it even Starbucks or Facebook.
The major players in the retail segment other than Reliance Industries include D-Mart and Futures Retail headed by the Future Group, the latter of which is indebted and whose distribution of assets is the cause for Reliance and Amazon being on a dead-lock court battle. This simply incentivises Mukesh Ambani’s wide ambition to seize India’s ever growing retail sector.
Standing at a USD 883 billion worth retail market in 2020, it is projected to reach atleast USD 1000 Billion by the year 2025, which can be revised to a higher rate by the entry of 7-Eleven Inc.
As a positive response to the announcement of this deal, Reliance Industries’ share prices rose by about 1.6% on a single day on Thursday. Opening at a price of ₹2567.70 on Tuesday, it touched up to ₹2611 on Wednesday and is showing an upward trend even today.