This global convenience store is coming to India at a time when the government is asking everyone to support local stores. What does this entry mean?
Reliance Retail Ventures Limited (RRVL), the retail arm of Reliance Industries Limited, announced that it has entered a franchise agreement with U.S.-based *7-Eleven Inc (SEI) to open convenience stores in India. The first 7-Eleven store is set to open on October 9 in the Andheri East area of Mumbai. (*7-Eleven is a Japanese-owned, U.S.-headquartered has more than 92,000 stores and other retail formats at a group level. The convenience store chain is known for offering on-the-go food products and beverages.)
In a press release, the company said that the launch will be followed by a rapid rollout in key neighbourhoods and commercial areas across the Greater Mumbai cluster. The press release said, “With the launch of 7-Eleven stores, RRVL as the country’s largest retailer, takes a step further in its journey of offering a superior shopping experience and compelling value proposition for Indian customers.” SEI President and CEO Joe DePinto said, as mentioned by IndiaToday, “It’s an ideal time for the largest convenience retailer in the world to make our entry into India.”
What Happened To Future Retail?
Earlier in February 2019, a master franchise agreement was signed by Future Retail with 7-Eleven to develop and operate convenience stores in India. During that time, it was proposed that 7-Eleven’s first store will be opened in India in early 2020. However, 2020 turned out to be a bad year for India’s offline retail sector due to the pandemic. On top of the pandemic, the company’s mounting debt eventually delayed plans to open 7-Eleven’s stores in India.
Then, in August, the Future Group decided to sell its retail, wholesale, and other assets to RRVL to pay off its debt. However, the deal was challenged by Future Group partner Amazon, leading to a legal battle. Earlier in October, RRVL extended the deal’s deadline by six months. Later, Future Retail said that the master franchise stands terminated after executing the mutual termination agreement on October 5.
The launch of 7-Eleven in India will give Reliance Retail a stronger foothold in India’s $850 billion retail market. The company already operates stores for different categories like apparel, grocery, electronics with chains such as Reliance Fresh, JioMart, Reliance Digital and Reliance Trends, among others. Reliance Retail has more than 3,500 outlets.
The association with 7-Eleven will boost Reliance Retail’s capacity of small front stores that form the bulk of India’s unorganised retail trade. However, it is interesting to note that Reliance Retail launched JioMart, a hyperlocal retail platform, that allows the retailer’s own network of stores and local stores to fulfil orders.
Why is that interesting? Because 7-Eleven is a US-based multinational chain of convenience stores. Hence, they would become a competition for the local convenience stores. Abneesh Roy, executive director, institutional equities, Edelweiss Securities told Livemint, 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,”
7-Eleven’s arrival in India through Reliance Retail gives a boost to the businesses of both these companies. However, Mukesh Ambani, the chairman & MD of Reliance Industries, and Reliance have been supporting local businesses in order to show their support for Prime Minister Narendra Modi’s ‘Vocal For Local’ campaign.
But, the move to bring 7-Eleven to India will affect local kirana stores, and since 7-Eleven is a huge company, they will target millions of Indians. Hence, this is making a lot of people question what happened to Ambani’s passion of supporting local businesses. We have to wait and see how 7-Eleven changes the retail landscape in India, and what happens to the small businesses in the country.