Why Mukesh Ambani and Mark Zuckerberg love kirana stores

  • India's kirana stores account for 80% of the country's retail industry
  • Reliance Retail is India’s biggest retailer by revenue and caters to the entire range of consumer products

Kalpana Pathak
Updated22 Apr 2020
Reliance Industries chairman Mukesh Ambani. (Photo: Mint)
Reliance Industries chairman Mukesh Ambani. (Photo: Mint)

MUMBAI: India's ubiquitous neighbourhood kirana stores are not only on the minds of consumers, given the lockdown, but have also caught attention of billionaires Mukesh Ambani and Mark Zuckerberg.

On Wednesday, the companies signed a commercial pact to accelerate Reliance Retail's JioMart platform by connecting nearby kirana shops to customers.

The covid-19-induced lockdown has, ironically, given the mom-and-pop stores a new lease of life while hitting e-commerce platforms. The two companies now want these small merchants andku kirana stores to provide their products and services to end consumers, which number in billions, by transacting through Reliance's JioMart using Facebook's WhatsApp.

“Our focus will be India’s 60 million micro, small and medium businesses, 120 million farmers, 30 million small merchants and millions of small and medium enterprises in the informal sector,” Reliance Jio said in the statement announcing the deal.

India's kirana stores account for 80% of the country's retail industry, and for Reliance Industries' Mukesh Ambani, it is a massive opportunity.

"New commerce is a massive new business opportunity of $700 billion… the main purpose of New Commerce is to completely transform the unorganized retail market," Ambani had said last August at the company's annual general meeting.

Reliance Retail is India’s biggest retailer by revenue and caters to the entire consumer basket of grocery, fashion and lifestyle, and consumer electronics.

Of these segments, grocery is considered the growth anchor. "Grocery biz is expected to take centre-stage in Reliance Retail’s growth narrative over FY19-22 as expansion plans for the profitable stock-up format ‘SMART are revved up," said HDFC Securities in a report dated 14 April.

Reliance Retail recently acquired Coimbatore based SKDS department store which also validates its heightened focus on stock-up format.

The company has launched a new small store format-SMART point with presence in residential neighborhoods and 18 stores have been launched in Navi Mumbai, Thane and Kalyan so far. These outlets will double up as last mile delivery hubs for online fulfillment as well as act as pick-up points.

RR’s ‘New Commerce’ initiative wherein it connects kirana stores to a consumer base and manages their inventory via an M-POS (monile-point-of-sale) device is expected to bring down last mile delivery costs too as kirana stores act as delivery agents.

Reliance Retail, in December 2019, had soft launched JioMart, dubbing it as “Desh Ki Nayi Dukaan". JioMart currently caters to online shoppers in the suburban areas of Navi Mumbai, Thane and Kalyan.

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