Reliance Retail to expand its business-to-business play by foraying into distribution of apparel, FMCG and white goods directly to neighbourhood and kirana outlets since it wants to tap a larger pie of the market considering scope of exponential growth in organised retail, currently limited to 8% of the total market.
Two senior industry executives said the company wants to tap 92% of the untapped market since it cannot achieve faster growth by just betting on the consumer-facing retail business. For this, it will also offer a complete suite of services to the kiranas such as financing, help in GST compliance and also on managing efficient supply chain and merchandising operations.
Company plans to start trial of apparel distribution from early next calendar year and has already informed the vendors about it, which will be subsequently expanded into FMCG and white goods by April. While initially Reliance Retail would start with distribution of their private brands, subsequently it will be expanded into the mainstream brands as well, the executives said. An email sent to Reliance Retail did not elicit any response till Sunday press time.
One of company Executive said “Reliance’s experience with distribution of smartphones has been successful and it wants to expand the business into other categories with the same business model start with its own brands like it did with Lyf smartphones then eventually do it for other brands. The private brands are successful in its own stores. For instance, in FMCG private brands account for 23% of sales”.
Another executive said “company feels the potential is huge since the reach of distributors in smaller towns is still limited. Reliance Retail plans to utilise the Jio network whereby payments to kiranas and local shops can ride the digital Jio Money platform, while it also wants to offer additional services to these small stores like helping with GST and financial support. “The company will eventually roll out the distribution business in over 10,000 cities and towns where Jio already has a presence”.