Ensuing competition among biggies may benefit MSMEs contributing to the supply chain.
With Big Bazaar and other mass-appeal fashion and food retail brands of the Future Group in its kitty, Reliance Retail is now battle-ready to take on other organised retail biggies such as Amazon and Walmart-Flipkart, who have made significant investments in India leading to sizeable presence.Analysts said the Reliance-Future Group deal will help in the growth of organised retail which is only 10 to 12% of the entire pie, besides further reducing the inefficiencies in the supply chain, which will benefit MSMEs and farmers.The ₹24,713 crore deal, besides helping a relatively stronger Reliance Retail to effectively compete with the likes of Amazon and Walmart-Flipkart, is also expected to expedite the growth of Jio through the JioMart online grocery delivery service and Facebook owned Whatsapp-based retail transactions.With e-commerce major Amazon acquiring minority stakes in the likes of the More retail chain and Shoppers Stop, the lines between online and physical retail have begun blurring.“This [Reliance-Future] deal should not be seen as a case of consolidation. It is unlike the telecom sector. This is only formalisation of organised retail which has vast scope for growth. Recently, many marque foreign investors invested in Jio Platforms and they want immediate performance. Reliance Retail will now help Jio’s retail payments vertical to scale up,” said Ankur Bisen, vice-president, Technopak Advisors.Stating that Reliance had to come and take on Amazon and Walmart-Flipkart in the market, he said since there was enough headroom left for all players to grow, India would be a multi-player market with different players specialising in different categories.“Don’t forget Kalyan Jewellers, Bata and Tata Retail including Westside and Tanishq are also large retail players. So, the Indian market is different. Here, it will be a multi-player and category play. The battle ground is food and grocery and not so much about designer wear,” he said.“Any player which gets the supply chain and farm-to-fork model correct, will make the difference. The logistics and warehousing assets of Future Group will help Reliance on this front. When you formalise the retail sector, you create demand pressure and gain,” Mr. Bisen added.K. Vaitheeswaran, co-founder AGAIN Drinks, author of “Failing to Succeed” and co-founder of India’s first e-commerce firm Fabmart.com said Reliance’s experience in petrochemical and other B2B businesses had driven its strategy of backward and end-to-end integration and complete control over the supply chain.“Reliance is trying to replicate the very same approach in the ecommerce space. It is a deep strategy and it could give them a lead in the e-commerce space. Everything can become part of the local delivery system and every single consumer can be controlled through Jio app. This strategy could worry Amazon and Flipkart.”However, he said, Amazon and Walmart with several decades of experience in serving end-user customers, will have an upper hand in this.Dr. Chandan Chowdhury, senior associate dean, Indian School of Business,said a key factor for scalability and success would be how well the big players can integrate product manufacturing and sourcing from India’s growing MSME layer.“A large part of this success also depends on these companies actually investing in the MSME sector, upskilling them, standardising their processes and product qualities, and getting them digital-ready and connected to e-commerce marketplaces,” Dr Chowdhury who is driving a research initiative at ISB to understand the challenges of India’s MSME supplier ecosystem of major eCommerce players, said.“I believe among the top players like Walmart-Flipkart, Amazon, and Reliance, the winner’s ability will depend on how they develop their MSME supplier ecosystem. On the consumer front, they need to focus on connecting and servicing the needs, preferences, and purchase behaviours of Tier 2,3, small-town and rural customer and start looking outside the top 1% that lives in metro cities,” he said.According to Rajesh Srivastava, former CEO JK Helene Curtis, and author of ‘The New Rules of Business’,Amazon – ranked among the Top 5 innovative companies globally – will come up with an innovative solution to keep growing its business in India.He said since COVID-19 had already made people familiar and dexterous with WhatsApp, the Reliance-Facebook combination will take a leaf out of WeChat and will integrate buying and payments into a seamless experience. “This will accelerate the movement towards organised retail,” he said.Kumar Rajagopal, CEO, Retailers Association of India, said more consolidation was expected on segmental and channel basis. “No online or offline retailer can afford to think he has the game in his hand and keep quiet. The world is now fully prepared for an omni-channel retail approach. Every retailer should be available online as well as try and make sure that the offline offering is perfect,” he said.According to consumer analyst Sachin Taparia, Reliance, with Future Group’s assets in the bag, may improve its logistics and speed of fulfilment.
You have reached your limit for free articles this month.
To get full access, please subscribe.
Already have an account ? Sign in
Show Less Plan
Subscription Benefits Include
Find mobile-friendly version of articles from the day’s newspaper in one easy-to-read list.
Move smoothly between articles as our pages load instantly.
Enjoy reading as many articles as you wish without any limitations.
A one-stop-shop for seeing the latest updates, and managing your preferences.
A select list of articles that match your interests and tastes.
We brief you on the latest and most important developments, three times a day.
*Our Digital Subscription plans do not currently include the e-paper ,crossword, iPhone, iPad mobile applications and print. Our plans enhance your reading experience.