Reliance adds 7-Eleven to portfolio
This comes after Future Group mutually ended its agreement to open 7-Eleven stores.
Mukesh Ambani’s Reliance Retail Ventures Ltd scooped a deal to open 7-Eleven convenience stores in India just two days after Future Retail Ltd terminated a similar pact with the US retailer, citing its inability to pay franchise fees.
The first 7-Eleven store will open on Saturday in Andheri East, Mumbai. A “rapid rollout” of stores will follow in key neighbourhoods and commercial areas across the Greater Mumbai cluster to start with, the company said in a statement on Thursday.
The master franchise agreement with 7-Eleven will cement Reliance Retail’s position as the largest offline retailer in India’s $850 billion retail market, where retail giant Amazon.com Inc. has challenged billionaire Ambani’s attempt to buy the assets of troubled Future Retail.
A legal battle between Future Group and Amazon.com over the sale of assets to Reliance Retail is being fought in Indian and Singapore courts.
Future Group signed the agreement with 7-Eleven Inc. in early 2019 but failed to open any stores as the pandemic battered consumer spending and accelerated the shift to online shopping, hitting indebted companies such as Future Retail.
Reliance Retail will open 7-Eleven stores through its unit 7-India Convenience Retail Ltd. Reliance Retail already operates 3,500 stores, including Reliance Fresh, JioMart, Reliance Digital and Reliance Trends, sell apparel, grocery, electronics, among other items.
The agreement with 7-Eleven will further strengthen Reliance Retail’s presence in small-format stores that form the bulk of the country’s unorganized retail trade.
Analysts tracking the retail industry said the move is “interesting” given Reliance Retail is also working closely with kirana shops.
Last year, it launched JioMart, a hyperlocal retail platform that enables the retailer’s network of stores and kiranas to fulfil orders.
“Neighbourhood convenience stores in India have been quite challenging with many failures. This step is negative for other retailers like Avenue Supermart as Reliance Retail becomes all-encompassing,” said Abneesh Roy, executive director, institutional equities, Edelweiss Securities.
The convenience store format may need to be tweaked, depending on their location in India, said other analysts.
“Convenience stores only work where you have a high density of these stores,” said Harminder Sahni, founder and managing director, Wazir Advisors. Such stores typically appeal to office goers and those on the move, but the format will need to be altered for residential areas, he said.
7-Eleven’s expansion is expected to significantly contribute to local employment and building the ecosystem for convenient foods in India, the company said.
“7-Eleven is among the most iconic global brands in the convenience retail landscape. The new pathways we build together with SEI will offer Indian customers greater convenience and choices within their neighbourhoods,” Isha Ambani, director, Reliance Retail Ventures, said in a statement.
Based in Irving, Texas, 7-Eleven operates, franchises and licenses more than 77,000 stores in 18 countries. It also offers shoppers an online delivery platform in over 1,300 cities. 7-Eleven stores offer a range of beverages, snacks, and delicacies curated to appeal to local tastes and refill daily essentials.