Devika Singh

Isha Ambani, director of Reliance Retail Ventures Ltd, said on August 29 that the company would soon enter the packaged consumer goods segment. Here’s how the move would impact the segment and existing FMCG players.

With this foray, Reliance Retail will be competing with the likes of FMCG behemoths like Hindustan Unilever, Nestle, and Britannia.

Reliance Retail’s announcement on August 29 that it would enter the packaged consumer goods segment has created buzz in the market.

The retail giant’s entry into the so-called Fast-Moving Consumer Goods (FMCG) sector is set to intensify competition as it does in every new industry that its parent, Reliance Industries Ltd (RIL), enters, experts say.

With the venture, Reliance Retail will be competing with FMCG behemoths like Hindustan Unilever, Nestle and Britannia in an industry valued at over $110 billion.

Even so, the company potentially confronts multiple challenges in its intended venture into FMCG.

“The competition intensifies in every segment that Reliance gets into because of their approach of being aggressive and not just in terms of growth. The company also wants to acquire market share very rapidly. The telecom sector was a prime example of this,” said Devangshu Dutta, CEO of retail consulting firm Third Eyesight.

“However, Reliance’s entry into any consumer-facing business has always been a long play,” he added.

The intended entry of Reliance Retail, the retail arm of RIL, into FMCG was announced by Isha Ambani, director of Reliance Retail Ventures, at RIL’s 45th Annual General Meeting (AGM) on August 29.

“I am excited to announce that this year, we will launch our Fast-Moving Consumer Goods business. The objective of this business is to develop and deliver high-quality, affordable products which solve every Indian’s daily needs,” Ambani told shareholders.

Isha Ambani was introduced as the leader of the company’s retail business by Mukesh Ambani, her father and Chairman and MD of RIL, at the AGM.

In his speech, Mukesh Ambani also said that he is hopeful of the retail arm emerging as the largest segment within the group.

Private labels

Reliance Retail already has a presence in the FMCG segment in the form of private labels that are sold in the company’s chain stores such as Reliance Smart, Reliance Mart, and its online grocery platform JioMart.

Brands like Good Life, Best Farms, Desi Kitchen, Snac Tac, Yeah!, Safe Lite, Petals, Mothercare and Calcident are some private label FMCG brands that the company sells.

Private labels (including in the fashion and lifestyle segment) contribute 65 percent of the company’s revenue.

According to analysts, the company initially is going to expand its private label offerings and will focus on segments in which it already has a presence.

“The products which it plans to sell range from groceries like pulses and grains, edible oils, flour, dry fruits, spices, pickles, pastes, idli dosa batter, snacks which include biscuits, namkeens and sweets, ready-to-cook meals, ketchup, jams, carbonated drinks, fruit juices, breakfast cereal, oats, muesli, honey, sauces, tea and coffee in the foods space,” said a note by Edelweiss.

In the non-foods space, the company sells products like soaps, shower gels, hand wash, face wash, hair oils, talcum powder, sanitisers, sanitary pads, diapers, toothpaste and toothbrushes, nail enamel, beauty and hair accessories, and daily essentials including deodorants, nail clippers and scissors, the securities firm said.

Edelweiss said it expects Reliance Retail to initially target the commoditised parts of FMCG like pulses and grains, edible oils, flour, dry fruits, spices, pickles, pastes, idli and dosa batter, namkeens, sweets and lower-end detergents.

Potential strategies

Experts indicate that much on the lines of its earlier playbook, Reliance Retail is likely to adopt organic as well as inorganic strategies for growth in the sector.

“Reliance aims to be a dominant player in every segment and, hence, the company, besides organic growth opportunities, is also likely to look out for acquisitions in the space,” said Dutta of Third Eyesight.

Edelweiss also expects Reliance Retail to acquire regional entities and Direct-to-Consumer (D2C) brands and also target unorganised/regional brands in most FMCG segments it enters.

The company, analysts said, will also look at value-play to gain penetration into the categories.

Impact on the competition

According to experts, the move is set to intensify competition in the segment and may have an impact on existing FMCG companies in the near term.

“We don’t expect a big impact on numbers of existing players from a two-three years’ perspective. However, near-term multiples could come under risk for some companies Hindustan Unilever, Britannia, Marico, Adani Wilmar, Godrej Consumer Products, etc. It will not have much impact on Nestle, Colgate, Dabur, ITC,” Edelweiss wrote in its note.

The impact on the industry will depend on the level of aggression Reliance Retail summons in product launches.

Challenges

FMCG is a well-established segment with well-known brands that have a huge distribution network, and cracking the market would be the biggest challenge for Reliance Retail, industry experts suggested.

“It is tough for new players to get shelf space in kirana (grocery stores). Earlier, we have seen some retailers entering the segment but with little success,” Edelweiss said.

“The existing players have decades of loyalty with consumers and relationships with distributors,” it added.

Analysts indicate that even after getting shelf space, new FMCG players have to constantly innovate to stay ahead of the curve.

“A company can offer early-stage incentives, launch offers to retailers to grab the shelf space but then it has to keep reviving that engine constantly, which is not easy,” said Dutta.

Although Reliance Retail has a significant share of modern retail trade through its grocery chains, the company needs to build a multi-tier distribution network, especially in general trade, which commands 80-90 percent of FMCG sales.

Disclosure: MoneyControl is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.

moneycontrol

By Sharleen D’Souza & Sourabh Lele

‘First-ever end-to-end shopping experience’ on messaging platform, says Mark Zuckerberg

Meta Platforms Inc, the parent company of WhatsApp, will partner with Reliance JioMart for a service where WhatsApp users can buy groceries on the messaging platform from the Indian retail firm.

Mark Zuckerberg, chief executive officer (CEO) of Meta Platforms, said in a Facebook post, “[I am] Excited to launch our partnership with JioMart in India. This is our first-ever end-to-end shopping experience on WhatsApp–people can now buy groceries from JioMart right in a chat.”

“Business messaging is an area with real momentum and chat-based experiences like this will be the go-to way people and businesses communicate in the years to come,” he said in an announcement coinciding with the annual general Meeting (AGM) of Reliance Industries the parent company of JioMart.

A Reliance press statement said the service “will enable users in India, including those who have never shopped online before, to seamlessly browse through JioMart’s entire grocery catalog, add items to cart, and make the payment to complete the purchase–all without leaving the WhatsApp chat.”

WhatsApp users can shop on JioMart via by messaging “Hi” to +917977079770.

Mukesh Ambani, chairman and managing director of Reliance Industries, said, “The JioMart on WhatsApp experience furthers our commitment to enabling a simple and convenient way of online shopping.”

“Reliance Retail is looking at touching as many consumers across the country and WhatsApp is a logical platform as India is the largest market for the messaging app in the world,” said Devangshu Dutta, CEO of Third Eyesight, a retail consultancy firm. While WhatsApp is important for growth, Reliance Retail will also need to work on product availability and the cost of delivering to the customer, he said.

Ambani said Reliance’s retail business model has “five imperatives”, or ‘Panch Pran’. These include: enriching customer experience using technology; operationalising and growing multiple channels; integrating with small merchants and providing them a platform to prosper. The fourth imperative is to expand the product portfolio and the fifth one is to strengthen logistics and supply chain.

Isha Ambani, director at Reliance Retail Ventures, said at the AGM that the digital commerce platforms–reliancedigital.in and JioMart–enabled the retail major to deliver 93 per cent of online orders from stores within six hours. “We rolled out our JioMart Digital (JMD) initiative during the year. The platform enables small electronics merchants to sell the entire product portfolio of Reliance Retail on an assisted selling model, helping them deliver superior customer experience and growing their income,” she said.

The company’s new commerce initiative is on course to partner with one crore merchants as it expands to cover the entire country in the next five years, Isha Ambani said.

Last year, Reliance Retail entered pharmacy retail with the acquisition of Netmeds. That year, it launched new operations through Netmeds Wholesale and onboarded merchants in 1,900 towns and cities.

Source: business-standard

Written By Akanksha Nagar

Wakefit’s expansion plan hinges on stepping out of the big cities, beefing up its offline presence and moving into adjacent categories

Although the mattress market in India is largely unorganised (almost 60%), it has seen the mushrooming of branded players of late.

Having recently opened three mega stores in Bengaluru, New Delhi and Lucknow, Wakefit — the D2C home and sleep solutions company — has outlined an aggressive expansion plan for the current fiscal. It has kept aside a budget of `6-10 crore to open a total of 25 stores across the country. Of these,15 will be mega stores or large format, multi-category stores, and at the end of the process, the Bengaluru-based company hopes that its offline stores will account for 10% of its revenue by the end of FY23.

Wakefit is not the only one. Other D2C brands including The Sleep Company, Flo Mattress and SleepyCat are setting up physical stores and finetuning their offline market operations as they eye a larger share of the market. Devangshu Dutta, chief executive, Third Eyesight, says that since most of India’s consumers still buy offline, having brand-operated offline stores is an important part of a controlled experience, even if it entails additional costs.

“The new generation D2C brands can take charge of the entire process of discovery, education about the brand’s value proposition, decisions about specific products, the purchase transaction, and post-sales support if needed. Distributor and retailer margin money, that the D2C brand saves, can, to an extent, compensate for the higher customer acquisition costs and logistics,” he adds.

Although the mattress market in India is largely unorganised (almost 60%), it has seen the mushrooming of branded players of late. Globally, sleep solutions is a big market and India is also moving in that direction. A report by Marketwatch predicts the global sleep aids market will grow from $64 billion to $111.93 billion between 2020 and 2030, growing at a CAGR of 7%.

Accessibility and affordability

Ankit Garg, CEO and co-founder of Wakefit, claims that all of the company’s products are 20-25% cheaper than that of rivals of comparable quality. The Sequoia-backed company is targeting `1,050 crore revenue in FY23, while trying to break deeper into tier-II and III cities. “Earlier almost 70% of our revenue was coming from the top metros but in the past two years, this ratio has changed. Now, more than 45% of our revenue comes from tier-II and III cities and we plan to expand that base steadily,” Garg adds.

It is not going to be a cakewalk for Wakefit though. For one, competition in the category is heating up; for another, brands like Soho Mattress are luring consumers with promises like same-day delivery.

As a brand that manufactures products from scratch in India, Wakefit differentiates itself with offerings that are made keeping the Indian user in mind, with an aesthetic appeal that is aligned with the taste of that consumer. In contrast, many retailers offer imported products that are designed for an altogether different consumer cohort.

Dutta of Third Eyesight notes that D2C brands face several challenges, the most significant being the commoditisation of the product category. “In this initial stage of market development for D2C brands, the price differential itself can be a barrier to building a significant scale quickly,” he says.

For its part, Wakefit is looking at under-served pockets as its next port of call. It is also trying to increase the bouquet of offerings to include products from adjacent categories like lighting and home decor. Furniture sales which account for 20% of its total revenue, is expected to touch 25% by the end of this fiscal. It has seven manufacturing units and 23 warehouses; by next fiscal it plans to have 20 new distribution centres in smaller cities. “We are going very traditional in our approach to marketing and have allocated 50:50 share of 50:50 for traditional and digital mediums. We have been very cost efficient in terms of our spending,” says Garg.

Nisha Sampath, managing partner, Bright Angles Consulting, says while non-metro markets present a huge opportunity, it is important that brands understand the consumer psyche and the buying journey of the small-town consumer. Timely delivery in good condition, installation, servicing and repair of products, returns, and replacements are some aspects that can be logistically challenging in smaller markets.

Source: financialexpress

Written By Ratna Bhushan

Large restaurants have increased the amount of discounts and promotional offers by 15-20% on their own apps compared with those offered by aggregators Swiggy and Zomato, to offset steep commissions and search optimisation fees being charged by the aggregators and reduce the dependence on them, industry executives said.

India’s largest quick service chain, Domino’s Pizza which operates 1,625 outlets, launched multiple “free rewards offers” on its own app last weekend, across delivery, takeaway and dine-ins.

While Zomato and Swiggy charge commissions of 15-30% on every order, new tech platforms like ThriveNow and Google-backed DotPe levy only 3-5%. These food tech platforms allow restaurants to set up their own digital services.

Domino’s, McDonald’s, Social, Punjab Grill, deGustibus Hospitality, Street Foods of India, Wow!Momo and Pizza Hut are among the ones offering higher discounts on their own apps.

For large brands, orders from their own apps are averaging anywhere between 10% and 25%, though smaller ones are still relying heavily on the aggregators for scale, executives said.

“Our focus is to increase promotions and give more value through our own delivery platforms to entice customers to transact and reduce dependence on more expensive aggregators,” said Rohit Aggarwal, director at Lite Bite Foods, which operates Punjab Grill, Artful Baker and YouMee. He said close to 20% of the company’s delivery business was now through its own platforms.

Executives said the relationship between restaurants and aggregators involved both a huge benefit and cost.

“There’s the inherent benefit which restaurants reap from the aggregators in terms of scale and last-mile delivery, specially for the mid-sized restaurants which don’t have the budgets to set up their own deliveries. But the restaurants are also dealing with the very steep cost of commissions,” said Devangshu Dutta, chief executive of retail consultancy Third Eyesight.

Some brands that offer direct deliveries are also focusing on the nascent but emerging subscription-based meal services and menu customisation.

“It is extremely important for restaurants to take back some control of their digital landscape, rather than being totally dependent on the aggregators. This will not only save them huge delivery costs but also give them access to more customer data; aggregators have thrived on discounts, which is funded almost entirely by the restaurants,” said Anurag Katriar, chief executive of Indigo Hospitality.

In addition to third-party delivery operators such as Dunzo and Shadowfax, which work either through logistics aggregators or directly with the restaurants, brands are also delivering through their own fleet.

Riyaaz Amlani, chief executive at Impresario Handmade Restaurants, which runs Social, Smoke House Deli and Salt Water Cafe, said: “We are offering the best price on our own platforms and our discounts are in the range of 20-25%.”

For large brands, orders from their own apps are anywhere between 10% and 25%, though smaller ones are still relying heavily on the aggregators for scale, executives said.

In addition to third-party delivery operators such as Dunzo or Shadowfax which work either through logistics aggregators or directly with the restaurants, brands are also delivering through their own fleet. Some that offer direct deliveries said they were also focusing on the nascent but emerging subscription-based meal services and menu customisation.

Mid last year, over a dozen large restaurant chains had collaborated to start a #OrderDirect movement, amid escalation of a long-standing tussle between restaurants and aggregators. The food services chains alleged that aggregators charged steep commissions and masked critical customer data.

According to estimates by the National Restaurant Association of India, the annual food services market in India is of about Rs 4.2 lakh crore and could grow to Rs 7.7 lakh crore by 2025.

India’s largest quick service chain, Domino’s Pizza which operates 1,625 outlets, launched multiple “free rewards offers” on its own app last weekend, across delivery, takeaway and dine-ins.

While Zomato and Swiggy charge commissions of 15-30% on every order, new tech platforms like ThriveNow and Google-backed DotPe levy only 3-5%. These food tech platforms allow restaurants to set up their own digital services.

“We’ve grown 40% this quarter over the previous quarter, enabling restaurants to set up their own direct ordering platform; we expect to see further escalation in demand in the upcoming festive season,” said Dhruv Dewan, cofounder at Hashtag Loyalty, which operates ThriveNow.

Jubilant Foodworks, the master franchise for Domino’s Pizza in India, had acquired a 35% stake Hashtag Loyalty late last year.

Thrive charges a 5% commission and is working to increase its scale from 11,300 restaurants at present, Dewan said.

Domino’s, McDonald’s, Social, Punjab Grill, deGustibus Hospitality, Street Foods of India, Wow!Momo and Pizza Hut are among the ones offering higher discounts on their own apps.

For large brands, orders from their own apps are averaging anywhere between 10% and 25%, though smaller ones are still relying heavily on the aggregators for scale, executives said.

“Our focus is to increase promotions and give more value through our own delivery platforms to entice customers to transact and reduce dependence on more expensive aggregators,” said Rohit Aggarwal, director at Lite Bite Foods, which operates Punjab Grill, Artful Baker and YouMee. He said close to 20% of the company’s delivery business was now through its own platforms.

Executives said the relationship between restaurants and aggregators involved both a huge benefit and cost. “ .

“There’s the inherent benefit which restaurants reap from the aggregators in terms of scale and last-mile delivery, specially for the mid-sized restaurants which don’t have the budgets to set up their own deliveries. But the restaurants are also dealing with the very steep cost of commissions,” said Devangshu Dutta, chief executive of retail consultancy Third Eyesight.

Some brands that offer direct deliveries are also focusing on the nascent but emerging subscription-based meal services .

“It is extremely important for restaurants to take back some control of their digital landscape, rather than being totally dependent on the aggregators. This will not only save them huge delivery costs but also give them access to more customer data; aggregators have thrived on discounts, which is funded almost entirely by the restaurants,” said Anurag Katriar, chief executive of Indigo Hospitality.

In addition to third-party delivery operators such as Dunzo and Shadowfax, which work either through logistics aggregators or directly with the restaurants, brands are also delivering through their own fleet.

Riyaaz Amlani, chief executive at Impresario Handmade Restaurants, which runs Social, Smoke House Deli and Salt Water Cafe, said: “We are offering the best price on our own platforms and our discounts are in the range of 20-25%.”

For large brands, orders from their own apps are anywhere between 10% and 25%, though smaller ones are still relying heavily on the aggregators for scale, executives said.

In addition to third-party delivery operators such as Dunzo or Shadowfax which work either through logistics aggregators or directly with the restaurants, brands are also delivering through their own fleet. Some that offer direct deliveries said they were also focusing on the nascent but emerging subscription-based me .

Mid last year, over a dozen large restaurant chains had collaborated to start a #OrderDirect movement, amid escalation of a long-standing tussle between restaurants and aggregators. The food services chains alleged that aggregators charged steep commissions and masked critical customer data.

According to estimates by the National Restaurant Association of India, the annual food services market in India is of about Rs 4.2 lakh crore and could grow to Rs 7.7 lakh crore by 2025.

Source: economictimes

Written ByAlakananda Chakraborty

Brand’s positioning may be just below Starbucks

It is against this background that Reliance Brands (RBL) announced its strategic partnership with global fresh food and organic coffee chain, Pret A Manger (PAM).

By Alokananda Chakraborty

India may boast of the presence of several marquee international coffee chains, but none of them, with the possible exception of Starbucks, have been able to make much of an impact. The reasons are obvious; for one, India is largely a tea-drinking market, with coffee penetration still at just about 11%. Coffee remains largely an in-home consumption drink. Then there are the usual challenges of getting prime real estate at a reasonable cost and consumers’ capacity to pay. The pandemic, which disrupted food supply chains and the overall demand, delivered a body blow, leading to shutdown of around 8% of the outlets during 2021.

It is against this background that Reliance Brands (RBL) announced its strategic partnership with global fresh food and organic coffee chain, Pret A Manger (PAM). The first store will open by the end of this financial year. While RBL is tight-lipped about the pricing or positioning strategy, experts say PAM’s biggest advantage is its association with Reliance.

“PAM is a late entrant and would have been at a huge disadvantage if it went alone,” says Anthony Dsouza, executive director & country service line leader, innovation, Ipsos India.

So what does Reliance brings to the table? “Significant investment capability, real estate strength and know-how of retail. These could lead to a much higher scalability and access to the right locations,” says Angshuman Bhattacharya, national leader, consumer product and retail sector, EY India. “However, running a café chain also involves building out the right supply chains across the country, which the brand would need to build,” he adds.

Bhattacharya is bang on. The success of an F&B franchise business depends on getting real estate at the right price. Reliance can offer a tremendous advantage here to PAM. Not only does it run a very large retail business, it also owns malls.

Experts say a lot would also depend on the right pricing. Pramod Damodaran, who had relaunched Costa Coffee India in his earlier stint as COO for that firm, and is now CEO of Wagh Bakri Tea Lounge, says, “There’s a big space between the 240 and170 for a cup of cappuccino, that is, just below the Starbucks/Costa Coffees of the world.”

PAM will probably occupy that window – it is unlikely to be a premium offering for two reasons. One, PAM is primarily a sandwich chain in the UK and it’s not clear how much premium it can command for a pre-made sandwich. Two, if PAM were to take advantage of the retail footprint of Reliance and were to follow a shop-in-shop format, say, in a Reliance Trends store, it can’t afford to be premium. The positioning would be a consequence of that captive audience.

In other words, the store location will, to a large extent, determine both the pricing and positioning of PAM. Agrees Devangshu Dutta, chief executive of Third Eyesight, a specialist management consulting firm: “At the end of the day, PAM is more a quick service outlet than a cafe. (Pret A Manger means “ready to eat” in French). And the consistency of its offering comes from what is called the pre-prep.”

All PAM outlets in the UK follow the concept of “freshness of ingredients” and “quickness of service”. The hero product – the sandwich in this case – is still a convenience food, a grab-and-go item. It is prepared by a central commissary or multiple commissaries and is at the most heated or packaged at the counter. “So it is not a restaurant and it can’t charge a restaurant price,” says Dutta.

In a sense, Domino’s has perfected this model with a lot of pre-prep done at the commissary end but the actual pizza is prepared “at location” or in the store. “In this case (PAM), you are not doing that volume of work at the consumer-facing counter,” Dutta adds. And if that is the model RBL plans to replicate in the country, the positioning, by default, is mass.

“The PAM-Reliance combination is likely to be a mass market offer, with value pricing and highly localised strategy,” Dsouza of Ipsos says.

But mass or premium positioning, PAM’s entry will no doubt roil the waters. “Incumbents have to up the food game if they want to take on the might of Reliance,” says an executive with a rival brand. Beverages form a dominant part of the café industry sales. Besides food and beverages, merchandising, which is employed largely for branding, is rapidly becoming a source of additional revenue. About 60-65% of café sales come from beverages, followed by food which forms about 20-25% and about 10% from merchandise.

For one, Tata Starbucks, which witnessed a 76% growth and logged `636 crore revenue in FY22, has been working at its food menu and delivery for some time. In a recent interview to FE BrandWagon, Sushant Dash, CEO, Tata Starbucks, had said that the brand had to “re-prioritise” because of the pandemic, with innovation becoming more important to keep the brand relevant. Starbucks innovated with the menu to keep the interest level up among customers and introduced new food items and gave the existing food items an Indian twist,” he had said.

Earlier this month, Starbucks added masala chai, filter coffee and an array of bite-sized snacks and sandwiches to its menu card. Its new milkshakes will be priced starting at 275, while masala chai and filter coffee will start from190. It also introduced the ‘Picco’ – meaning ‘small’ in Italian – starting at `185.

Will that be enough? Given PAM’s strong presence in the food space, there is no denying that existing café chains in India have to tweak their food menu considerably. In other words, they will have to get out of their comfort zones.

Source: financialexpress