RIL plans a big push for private-label brands

Reliance Industries Ltd (RIL) will soon hire distributors to sell private-label brands owned by its retail unit through neighbourhood stores, as billionaire Mukesh Ambani aims to boost the contribution of the company’s consumer business, two people aware of the development said.

RIL will sell its store brands across categories such as staples, food, home and personal care and general merchandise, the people said on condition of anonymity. RIL sells these products through its retail stores under brand names such as Best Farms, Good Life, Masti Oye, Kaffe, Enzo, Mopz, Expelz and Home One.

Ambani, India’s richest man, wants to reduce the company’s reliance on the energy business. He expects the consumer businesses to contribute nearly as much to RIL’s overall earnings as the energy and refining businesses by 2025. As part of this strategy, RIL is taking on online retailers such as Amazon and Flipkart in the e-commerce segment and the likes of Hindustan Unilever Ltd and ITC Ltd in the offline segment.

“RIL is planning to appoint FMCG (fast-moving consumer goods) distributors on a trial basis," said one of the two people cited above.

“A network of FMCG dealers will help RIL meet the logistics and delivery needs from online channels," said the second person cited above. RIL did not respond to an email sent on Friday.

After its fiscal first-quarter earnings on 19 July, RIL executives told investors that the company’s telecom arm, Jio, is likely to roll out its new commerce/kirana initiative and the fibre-to-the-home business this fiscal.

According to the people cited above, the commercial launch of these services is scheduled at the company’s annual general meeting on 12 August.

In the past, RIL has often chosen its annual meetings to make strategic announcements and release new products. While the JioPhone was launched at the 2017 AGM, 2018 saw the launch of JioPhone 2 and the unveiling of JioGigaFiber.

In April, Reliance Retail began testing its food and grocery app among a select group of users, largely comprising its employees. The company has also on-boarded local kirana stores in metro cities to receive orders from customers.

Reliance Retail operates neighbourhood stores, supermarkets, hypermarkets, wholesale, specialty and online stores. RIL has also initiated a pilot for assisted e-commerce at Jio Stores wherein store staff will take orders and the customer can collect/return orders from a Jio Store, RIL told analysts in a presentation on 19 July.

For its e-commerce venture, RIL has signed up local merchants offering them an O2O (online-to-offline) marketplace, a business model pioneered by the Chinese e-commerce giant Alibaba Group Holding Ltd. Under the O2O model, a consumer searches for the product or services online but buys it through an offline channel.

RIL plans to consolidate merchants under an e-commerce platform. The merchants, in turn, will cater to the demand. This will help the company save costs and enter areas currently outside the traditional purview of e-commerce companies.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.