Over the past five years, legacy players have made a slew of investments in D2C startups. 

Marico has acquired men’s grooming brand Beardo, beauty brand Just Herbs and breakfast brand True Elements. Similarly, Emami acquired vegan cosmetics brand Brillare Science and grooming brand The Man Company. It recently picked up a minority stake in nutrition company TruNativ. Colgate-Palmolive and Reckitt both hold minority stakes in Bombay Shaving Company, whereas Wipro Consumer Care has invested in The Ayurveda Company. ITC has invested in baby and mother care brands Mother Sparsh and Mylo.

Devangshu Dutta explained the reasons behind the trend of larger FMCG companies acquiring D2C brands.

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

Akash Podishetty & Krishna Veera Vanamali, Business Standard

New Delhi, 8 July 2022

India’s $900 billion retail market has emerged as one of the most dynamic industries and is expected to reach anywhere between $1.3-$1.5 trillion by 2025. The organized retail is seen gaining 15% market share in the overall retail space, while food & grocery and apparel and lifestyle may account for 80% of India’s retail market by 2025.

Large market offers big opportunities. And it looks like Reliance Retail has seized it, with its massive omni-channel retail play of physical stores, B2B with kiranas and e-commerce.

The company went on an acquisition spree and partnerships in the last three years, adding to its portfolio some of the biggest names, including Hamleys, Dunzo, Zivame etc.

It has also partnered with famous global retail chain 7-Eleven. Catering to India’s affluent consumers, Reliance, meanwhile, houses some of the most iconic brands such as Versace, Armani Exchange, GAP, GAS, Jimmy Choo, Michael Kors among others. The premium segment has become one of the fastest growing categories.

Also firming up its inorganic play, the company is planning to acquire dozens of niche local consumer brands to build a formidable consumer goods business.

Arvind Singhal, Chairman and Managing Director, Technopak Advisors says, there’s focus on physical retail expansion. Reliance is looking to cater to both price conscious and brand conscious customers, while trying to capture as much of the private consumption market as possible, he says.

Reliance Retail’s competitors are nowhere close to even put up a fight. The company has over 15,000 offline stores across categories, compared with DMart’s 294 stores or Aditya Birla Fashion’s 3,468 outlets.

Reliance retail’s revenue has grown five times in the last five years and the core retail revenue of $18 billion is greater than competitors combined, according to a Bernstein report.

Speaking to Business Standard, Devangshu Dutta, CEO, Third Eyesight, says, Reliance wants a decent share of Indian consumers’ wallet. From that perspective, Reliance still has a long way to go, he says. As consumer preferences evolve, Reliance too should adapt.

An undisputed leader in the domestic market, the aim of Reliance, according to Mukesh Ambani, is to become one of the top 10 retailers globally. Part of this bet is based on the premise that incomes and consumption power of Indians will increase across the board in coming years. However, could the uneven recovery that different segments of the population have seen stop the pie from growing larger and prove to be a dampener for Ambani’s ambitions?

(Published in Business Standard)

Written By Christina Moniz

Prashanth Aluru, a former Facebook and Bain hand, will be behind the steering wheel for this venture

The Aditya Birla Group has just announced the launch of its ‘house of brands’ business entity, TMRW, to support digital fashion and lifestyle brands. TMRW, which will operate as a wholly owned subsidiary of Aditya Birla Fashion & Retail (ABFRL), aims to build and buy over 30 brands in the next three years, the company said in a statement.

With this move, the company expects to make its entry into the D2C market, which is expected to be reach $100 billion by 2025. “What a brand like Shoppers’ Stop does in brick and mortar, ABFRL is doing online. While in the past, the company was known for certain brands, it is now pivoting itself towards a wider pitch with bigger variety of brands that could potentially appeal to a wider range of consumers,” said Ankur Bisen, senior partner and head, food and retail, Technopak Advisors. The launch could be ABFRL’s next step in positioning itself as a fashion major, he said.

Prashanth Aluru, a former Facebook and Bain hand, will be behind the steering wheel for this venture.

ABFRL will compete with start-ups like the Good Glamm Group and Mensa Brands, among others. The number of D2C brands and online sellers in the country have grown over the last couple of years, and experts believe that TMRW could be the company’s endeavour to become relevant to new-age consumers. Brands like Reliance Retail and Myntra are going down the same path, says Bisen.

The opportunity is immense; according to a report by IMARC Group, the Indian textile and apparel segment reached $151.2 billion in 2021 and is set to grow at a CAGR of 14.8% between 2022 and 2027.

ABFRL, which has a network of over 3,300 stores across India, is home to brands like Pantaloons, Van Heusen, Louis Philippe and Allen Solly, and has partnerships with labels like Forever 21, American Eagle and more recently, Reebok. The retail company has also forayed into the ethnic wear business and has forged strategic partnerships with designers such as Sabyasachi, Masaba and Shantanu & Nikhil.

Having reported losses for the last three years, the company narrowed its losses to `108.72 crore in FY22 on the back of revenues of `8,136.22 crore. The company reported a 55% surge in revenues during the last fiscal. While Madura Fashion & Lifestyle contributed 68.4% to the company’s FY22 revenue, the remainder 31.6% came from Pantaloons, according to Bloomberg data.

Ambi Parameswaran, author and founder of Brand-Building.com, said ABFRL has already built a good retail presence for the brands in its portfolio. “There must be significant synergies at the back end, but the brands are managed separately,” he said. “I suppose the new venture, TMRW, will offer all these brands as well as all the other ethnic brands that ABFRL has acquired in the last three years.”

He said the synergies will probably lie at the back end with supply chain, logistics, finance and HR. However, the brands will most likely be given the space to build strong individual identities.

This is not the company’s first foray into the e-commerce space. ABFRL shut down its e-commerce venture, ABOF (All About Fashion) in 2017, though in August last year, it said the brand would be made available on Flipkart and Myntra.

A concept like ‘house of brands’ is potentially beneficial to both — the large conglomerates and also to the smaller, emerging brands that are acquired. In a D2C framework, niche brands that would otherwise find it difficult to navigate the established multi-layered distribution and retail channels see greater feasibility in connecting with their customers directly through digital channels.

According to Devangshu Dutta, CEO of retail consultancy Third Eyesight, this makes it viable to launch a product range, which would not be immediately entertained in established channels, and allows them to retain their distinctiveness. With the passage of time and with their growth, some of these brands could also expand into established modern retail and traditional retail formats and to a more mainstream audience.

“Large companies, on the other hand, can find it difficult to grow their existing brands beyond a certain pace, and often may not be able to break new ground in terms of product development and customer experience. At some point, inorganic growth by acquiring other businesses and brands becomes an important element of their strategy,” Dutta said.

The house of brands model, to be sure, comes with its fair share of challenges. Angshuman Bhattacharya, EY India partner and national leader – consumer products and retail, said the strategy must have clear synergies from an operations and distribution perspective. “Possible challenges could emanate out of the non-compatibility of categories with the distribution. Another potential challenge could be in supporting multiple brands with marketing investments, failing which the realisable value envisaged during acquisition could stay unfulfilled,” Bhattacharya said.

The other downside, as Dutta pointed out, is that over time there is consolidation of market power within a handful of companies. This has happened across the globe and across sectors, and can negatively impact consumer choice, supplier dynamics and pricing.

Source: financialexpress

Written By Akanksha Nagar

Having acquired Patanjali Ayurved’s food retail business, the company has ambitious plans

While its edible oil business has been its mainstay, Ruchi Soya’s CEO Sanjeev Asthana is confident that the share of FMCG revenue could touch 20% this fiscal.

Ruchi Soya has its sights set on clocking `20,000 crore- `22,000 crore in revenue over the next five years from its FMCG business, after recently having acquired Patanjali Ayurved’s food retail business worth `690 crore. The Patanjali food portfolio comprises 21 major products, including top-selling items such as ghee, honey and juices, besides staples such as atta and spices.

To achieve its target, Ruchi Soya plans to launch a D2C (direct-to-consumer) channel in the next two months for its nutraceuticals business, with more categories to follow, while also increasing its investment on e-commerce and expanding its offline footprint. It is quite active across all key online marketplaces including Flipkart, Amazon and JioMart.

According to the latest Statista report, India’s FMCG market was valued at $110 billion in 2020, and by 2025, it is expected to touch $220 billion, as more brands adopt the D2C route. Several top FMCG makers, including Hindustan Unilever, Dabur and Emami, have launched D2C brands in the past two years.

Oiling other products

While its edible oil business has been its mainstay, Ruchi Soya’s CEO Sanjeev Asthana is confident that the share of FMCG revenue could touch 20% this fiscal. It is targeting `7000 crore in revenue from FMCG and `25,000 crore from commodity sales by the end of FY23. “Over the next five years, the revenue split between FMCG and commodities will be equal,” he says.

Furthermore, Ruchi Soya plans on consolidating and rationalising the Patanjali food portfolio, while simultaneously revamping some of its existing products. “The aim is to reposition the entire company towards being a food FMCG major,” says Asthana.

Following the acquisition, Ruchi Soya will be renamed Patanjali Foods (after regulatory approvals). Asthana says that brands such as Nutrela, Mahakosh, Ruchi Gold and Sunrich will continue to be marketed under their existing names, while all the businesses that are coming in from Patanjali will use the Patanjali brand in exchange for a brand licensing fee

evangshu Dutta, chief executive, Third Eyesight, says the company name change may work in its favour, since there is a large audience aligned with the image and values of Patanjali Group and its founder Baba Ramdev.

Casting a wide net

But not all is smooth-sailing. Alagu Balaraman, CEO, Augmented SCM, suggests for the company to scale up, it needs to build a robust traditional distribution network, since a bulk of sales still happens through these channels. “The cost of doing e-commerce delivery is significantly high,” he notes.

Ruchi Soya is working on those lines. Asthana says besides utilising Patanjali’s existing distribution muscle, it is expanding its offline retail footprint by adding 10,500 non-exclusive modern grocery stores and 4,500 exclusive ones every month.

Source: financialexpress