Will Mukesh Ambani Succeed in JioMart super app?

Mukesh Ambani led Reliance group is embarking on an ambitious idea to merge two of largest spending categories of Indian Consumers – Digital & Retail. JioMart is an innovative business idea in this regard. Reliance is trying to tap into the most popular communication platform (WhatsApp), enabling subscribers to order from neighborhood kirana (mom-and-pop) stores that leverage Reliance Retail’s supply-chain backend.

If executed well, JioMart will be able to create a strong, scalable platform with an extremely high entry barrier. However some of the issues in this Tri-Party Digital Retailing experiment are as under,

  1.  Grocery business yields a meager 13% gross profit margin, which for this business model has to be divided between three participants: Jio, Facebook and kirana stores. Hence even with a 25% market share of online grocery segments by FY25, the available profit pool for the participants will be relatively small.
  2. The sheer number of intermediaries, SKUs and scale of operations create numerous fault lines.
  3. There are established competitors of varying size bringing in various competencies on the table.

The Big Omni-Channel Reliance Retail Setup
Reliance plans to become the largest (more…)

How COVID-19 Impacts Indian Retail Chains ?

The once in a decade event “Viral Infection – COVID-19” is going to have an unprecedented impact on the organized retail traders in India. With lockdown impacting business completely in April & May and gradual recovery in June across the length and breadth of the country.

Titan’s revenues to be hit nearly ~65% in Q1FY21, along with significant hit to the margins. We anticipate the watches division to be impacted the most (~92% dip YoY), followed by eyewear (~85% dip) and jewelry (~70% dip; for the remainder of the year, we expect a gradual bounce back in jewelry demand to be spurred by festive buying, wedding / occasion-based purchases, which in our view will take time to manifest in revenues, additionally we would watch for commentary on (more…)

Can Reliance Pull Of the Kirana & Jio Omni-Channel Retail Strategy ?

Decade and Half old Reliance Retail Ltd a subsidiary of Reliance Industries Ltd has been toying with several strategies to make its presence felt in several Hundred Billion Dollar Organized Retailing. In order to connect ~30m kirana stores with its own physical and digital infrastructure, Reliance Retail (RRL) launched the Jio PoS machine in 2019. We’ll now explore how has the market received the next generation online & offline retail business strategy.

Our visits to multiple kirana stores that have adopted the Jio PoS device pointed to healthy penetration in the pilot market. RRL has offered attractive pricing for the PoS device (an initial deposit of sub-Rs 4,000 and no recurring fee). This has aided penetration among kiranas. Note that the PoS devices offered by banks often demand an up-front fee of Rs4,000-10,000 and (more…)

Alternate business models for Millennial Consumers

Millennial customers are demanding products that are fresher, natural, and more convenient to use than preexisting products available in market. In order to serve this unique demand, new age companies (ID Fresh Foods and Raw Pressery) with the support of technology and data-analytical tools are creating differentiated brands and distribution networks, which are completely different from the
traditional distribution structure.

Most of the fresh food & beverage companies need to have their manufacturing facilities and procurement centres near their demand centres. This becomes difficult (more…)

Luggage / Backpacks Travel Accessories Organized Market in India

The Indian luggage industry should likely continue to grow at 18-20% p.a. given: increasing per capita consumption per family (implying penetration has increased); replacement cycles have reduced (4-5 years versus 10 years earlier and ~2 years for backpacks versus 3-4years); growth in Tier 2 and Tier 3 cities is disproportionately higher owing to shift in perception; tourism industry/air-passenger traffic is growing (Indians are making ~3 trips every year); and increase in expenditure during marriages.

Shift in favour of organised players has accelerated as consumer (more…)

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