Reliance Retail’s foray into the fast-moving consumer goods (FMCG) business has the potential to disrupt the sector, opined industry experts.
At the 45th annual general meeting (AGM) of Reliance Industries Limited (RIL) on Monday, Isha Ambani, Director, Reliance Retail has announced that the subsidiary of RIL will enter the FMCG business to provide high quality and affordable consumer goods.
“Reliance has the potential to disrupt the entire sector as they had done the same earlier in the telecom sector,” said angel investor and business strategist Lloyd Mathias.
“Reliance is buying brands at bargain prices for now which is giving them leverage. It will be interesting to see if they expand their footprint or bring more brands under their house roaster,” Mathias added.
Anuj Kapoor, Assistant Professor, IIM Ahmedabad said that Reliance entering the FMCG space would be a worrying news for the incumbents.
“Brands and retailers are tracking and serving customers both online and offline and Reliance has captured digital space with Jio and Jiomart. By partnering with merchants, Reliance will augment its physical presence as well,” said Kapoor.
According to Kapoor, the company will be in a position to provide a range of options in the FMCG market by working directly with merchants and consumers across geographies.
“Reliance will be able to offer personalised product recommendations and promotional offers to consumers using granular data,” he added.
Low penetration of retail sector
Analysts further said that new players have enough opportunities to grow as penetration of retail sector is still low in the country.
“Compared with developed countries, organised retail penetration in India is still low. New organised sector players, with pan India distribution channels, and strong capabilities are well positioned to grow their business, given the low penetration rates. Competitive intensity remains high among existing players, regional players, as well as e-commerce players who are also promoting private labels. Over time they are expected to take market share from the unorganised segment,” said Anuj Sethi, Senior Director, CRISIL Ratings Limited