Reliance adds 7-Eleven to portfolio as retail wars heat up
Premium- The move gives Reliance Retail a stronger foothold in the country’s $850 billion retail market where it already operates stores for different categories such as apparel, grocery, electronics with chains such as Reliance Fresh, JioMart, Reliance Digital and Reliance Trends, among others
NEW DELHI: Reliance Retail Ventures Limited on Thursday said it has entered into a master franchise agreement with convenience store retailer 7-Eleven, Inc. (SEI), to set up 7-Eleven stores in India, a move that is set to widen the store network of the country's largest retailer.
The first 7-Eleven store in India will open on 9 October in Andheri East, Mumbai. This will be followed by a "rapid rollout" in key neighbourhoods and commercial areas, across the Greater Mumbai cluster to start with, the company said in a statement on Thursday.
The development comes after the debt-laden Future Group, earlier this week, mutually terminated its agreement to open 7-Eleven stores in India. Future Group had first signed the agreement with 7-Eleven, Inc. in early 2019, but no store was opened.
Reliance Retail Ventures Ltd (RRVL) will open these stores through its wholly owned subsidiary, 7-India Convenience Retail Ltd.
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 move gives Reliance Retail a stronger foothold in the country’s $850 billion retail market where it already operates stores for different categories such as apparel, grocery, electronics with chains such as Reliance Fresh, JioMart, Reliance Digital and Reliance Trends, among others. Reliance Retail has over 3,500 outlets. It is the largest retailer in the country and the only one with multi-category presence, analysts at Jefferies said in a March report.
In August last year, Future Group had decided to sell its retail, wholesale and other assets to Reliance Retail to pare its debt. The deal, which includes the sale of its large retail format stores such as Big Bazaar, Fashion at Big Bazaar, and Nilgiris, will provide Reliance Industries an edge in the offline retail market. The deal, however, has been stuck due to a legal dispute between the Future Group and American retailer Amazon.
The association with 7-Eleven will enhance RRVL's capacity of small format stores that form the bulk of the country’s unorganised retail trade. Such a wide network of stores is seminal for retailers such as Flipkart and Amazon to D-Mart as they rush to fulfil timely deliveries of daily essentials.
SEI will support RRVL in implementing and localizing the 7-Eleven convenience retail business model for India, the two said in a statement.
Analysts tracking the retail industry said the move is “interesting" given Reliance Retail is the largest retailer and is working closely with many kirana shops. Last year, it launched JioMart, a hyperlocal retail platforms that enables the retailer’s own network of stores as well as local stores to fulfil orders.
“Having said that neighbourhood convenience stores in India have been quite challenging with many failures. This step is negative for other retailers like Avenue Supermart as Reliance Retail becomes all encompassing," said Abneesh Roy, executive director, institutional equities, Edelweiss Securities.
The formats will need to be tweaked depending on their location in India, said others.
“Convenience stores only work where you have high density of these stores," said Harminder Sahni, founder and managing director, Wazir Advisors. Such stores typically appeal to office goers and those on the move, but the format will need to be altered for residential areas, he said.
7-Eleven’s expansion is expected to be a significant contributor to local employment and building the ecosystem for convenient foods in India, the company said.
"7-Eleven is among the most iconic global brands in the convenience retail landscape. The new pathways we build together with SEI will offer Indian customers greater convenience and choices within their own neighborhoods," Isha Ambani, Director, Reliance Retail Ventures, said in a statement.
The chain will target “millions of Indian consumers", it said.
India is the second largest country in the world and has one of the fastest-growing economies. It’s an ideal time for the largest convenience retailer in the world to make our entry into India, said SEI president and chief executive Joe DePinto.
Based in Irving, Texas, SEI operates, franchises and licenses more than 77,000 outlets in 18 countries and regions. It also offers shoppers an online delivery platform in over 1,300 cities. 7-Eleven stores aim to offer a range of beverages, snacks and delicacies specifically curated to appeal to local tastes, along with refill of daily essentials.
