Reliance Industries Limited (RIL) is a Fortune 500 company and the largest private sector corporation in India. Reliance’s products and services portfolio touches almost all Indians on a daily basis, across economic and social spectrums. The company has evolved from being a textiles and polyester company to an integrated player across energy, materials, retail, entertainment and digital services.
The home-grown crude-to-yarn-to-telecom-to-e-commerce conglomerate, RIL, has purchased the 259-year-old British toy store chain Hamleys from C.Banner International Holdings for Rs 620 crore. This buyout, including a host of other stake purchases or outright acquisitions in the past six months, is the strategy of Mukesh Ambani to push for consumer business, which he feels will contribute nearly as much as to the conglomerate’s total earnings as its core energy business by the end of 2028. Globally, too RIL aspires to be among the top 20 companies and along with refining and petrochemicals and new age businesses – Reliance Jio and Reliance Retail.
After establishing Reliance Jio as one of India’s leading telecom players, it turned profitable less than a year and a half since its launch, RIL has been chalking out plans for a retail expansion to combine its traditional outlets with an online foray to take on global giants like Amazon and Walmart in India. In fact, Mr. Ambani had outlined his plan to shareholders in July last year that he wants to scale up the online retail business by getting onboard the millions of mom-and-pop stores that dominate the Indian retail market. He has also figured out that Indian consumer is all about technology, social media and entertainment and that these will help in scaling up the retail space.
Retail in India
India’s retail sector offers an immense opportunity with just 10% share in organised retail. A study by McKinsey Global Institute says that digital applications could proliferate across most sectors of India’s economy. It estimates that e-commerce sales in India would grow faster than sales at brick-and-mortar outlets, allowing digital retail to
increase its share of trade from 5% currently to about 15% by 2025.
In fact, total e-commerce sales in India are likely to grow at 32% CAGR from 2017 to 2021, according to EY. The tax consultancy firm says the rural market for e-commerce in India is likely to be a $10-12 billion opportunity in the next four years on the back of rising household income leading to an increase in consumption expenditure, diversified income sources from non-agricultural activities, positive agricultural outlook, increase in internet penetration, high propensity to spend and rising number of nuclear families in rural India, the report said. In the e-commerce in the country, the key players are Amazon India and Walmart-owned Flipkart, with ShopClues and Snapdeal on the sidelines. Even Chinese-giant Alibaba is gradually making its presence felt through Paytm.
India is one of the largest and fastest-growing markets for digital consumers, with 560 million internet subscribers in 2018, second only to China. India will have around 850 million smartphone users by 2022 from 500 million now and that will push online services faster such as food, entertainment, gadgets, apparels, lifestyle products, etc.
Another report by Deloitte India and Retailers Association of India has projected that e-commerce market is likely to grow to $1.2 trillion by 2021, And that is what the Asia’s second richest businessman is aiming at. While most retailers are trying to bank on an omnichannel strategy, Reliance Retail is working on a unique Offline-to-Online model, that would be integrated with Jio’s ecosystems.
Large companies always prefer to acquire startups because it is where innovation happens, value creation is done and the cost of acquisition is also cheaper. The engagements with startups and the acquisitions also fits into RIL’s future roadmap of creating new opportunities through new and emerging technologies like artificial intelligence and robotics. Globally, too many tech giants are integrating network technologies
into their product portfolio. While some are doing through in-house R&D, others are simply acquiring startups, to build scale faster.
Reliance strategy to become global relevant retailer both
online and offline
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