Reliance Retail best placed to win share in fresh food, rapidly accelerate store rollout

Sarkaritel
By Sarkaritel June 21, 2021 18:30

Reliance Retail best placed to win share in fresh food, rapidly accelerate store rollout


New Delhi, June 21  Reliance Retail is best placed to win share in fresh food, rapidly accelerate store rollout and target the widest assortment through multiple formats and channels, Goldman Sachs said.

“We see three drivers for Reliance Retail’s grocery business: (1) Omni-channel push with online share gains driven by Jiomart while leveraging its large offline store network; (2) Expanding presence in fresh, where Reliance is the largest player but remains under-indexed as a proportion of customer spending through organized retail and (3) Private label push beyond just packaged staples,” Goldman Sachs said in a report.

Organised grocery retail has seen two major shifts due to the pandemic-a shift to online and omni-channel and entry into large, new categories, which pre-Covid had been considered less profitable, like fresh food and dairy, the report added.

“However, in our view, the success of the entry into new categories will ultimately determine the scalability of the e-commerce or the omni-channel model. For offline retail, early Google trends data suggests almost a full return to normalcy in visits to grocery stores and supermarkets as the lockdowns have eased in most major towns. In some rural dominated states like Bihar or Uttar Pradesh, the recovery in supermarket visits has been even steeper,” the report said.

Share wins in fresh food and dairy, categories traditionally dominated by small local vendors, are key for increasing the average basket value. For perspective, Reliance Retail, the largest fresh food retailer in India, sold 0.66 mn tonnes of fruits, vegetables and staples in FY21, only about 0.1 per cent of the total production in India.

Supermarkets, hypermarkets, dark stores, pick-up only stores and local store tie-ups will be key to driving penetration of organised grocery retail, especially in smaller towns.

Even for e-commerce players, we believe having a store front will be a key competitive advantage, especially for grocery.

The two leading offline retailers follow different assortment strategies with Dmart having a much smaller and localised assortment compared with Reliance Retail, which has different formats to allow for varied assortment.

Within grocery e-commerce, the pure-play grocery players generally have better assortment and availability than the horizontal e-commerce players, the report said.

Sarkaritel
By Sarkaritel June 21, 2021 18:30