Reliance plans to rope in kirana stores as franchise partners for JioMart
The kiranas will source goods from Jiomart franchise Reliance or elsewhere, said two senior industry executives aware of the plans. In the case of products ordered on JioMart and not in stock with the kiranas—which typically sell the 300-400 most popular items—Reliance Retail will supply them and the margins will be shared equally. However, Reliance will continue with the sale of perishables such as fruits and vegetables from its stores or fulfillment centres.
Reliance has also decided to shelve its B2B cash-and-carry store format, Reliance Market, which will be turned into fulfillment centres for B2B delivery of products to kiranas. The neighbourhood stores will place their orders online and get deliveries at their stores.
JioMart will pilot this system of direct sale to consumers from kiranas in the June quarter in 30 cities, with more than 56,000 kiranas having been signed up. It will eventually be implemented wherever JioMart has operations. A drive to enrol kiranas in over 100 cities by April is currently underway, said the people cited above. The pilot for supply of products from Reliance to kiranas is already operational.
“Since roping in kiranas is a long-drawn process, for next few months JioMart will have a hybrid model of sales through kiranas, and in pin codes where there is no such partnership, the Reliance Retail stores will fulfill till the time kiranas are roped in,” said one of the persons cited above. “But Reliance will eventually exit from direct fulfillment of FMCG and grocery in JioMart.” The company said last week said it won’t enter contract or corporate farming and neither would it purchase agricultural land. This followed vandalism against its property in Punjab, owing to speculation that Reliance would benefit from three new agricultural laws that have sparked protests by farmers.
Reliance said the “miscreants indulging in vandalism have been instigated and aided by vested interests and our business rivals,” who have taken advantage of the farmer agitation to launch “an incessant, malicious and motivated vilification campaign against Reliance, which has absolutely no basis in truth.”
Until now, Reliance has been using its retail store network for the delivery of grocery and FMCG products ordered through JioMart. Amazon has been investing in its wholly-owned food and grocery unit Amazon Retail apart from using the More chain of stores, in which it has a minority stake, and other large sellers for the sale of food and grocery products.
JioMart processes more than 300,000 food and grocery orders per day with over 70% of the orders from regular buyers.
Reliance has 51 Reliance Market outlets that occupy 50,000-80,000 square feet. It has already converted a portion of 26 such stores into Reliance Smart supermarkets. The rest of the space in these outlets and the remaining stores will be fully converted into online B2B fulfilment centres.
The online sale of food and grocery has got a boost with consumers preferring to buy online instead of visiting stores due to the pandemic, though there was a recovery at large brick-and-mortar grocery chains in the December quarter.
According to Nielsen, the share of ecommerce in overall FMCG sales in the country rose to 3.1% in the September quarter from 2.6% in the January-March period. In the metros, the share of ecommerce in FMCG went up to 8.6% from 6.4% in the same period, the researcher said.
“B2B will become a bigger area of action for Reliance since the market scope is huge, will increase scale and also ensure Reliance does not impact the livelihood of the smaller kiranas and instead strengthen them who have already taken a beating due to Covid and other e-commerce players,” said another executive. There are estimated 20 million kiranas in India.