Mukesh Ambani Opens India's First 7-Eleven Store in Mumbai
The first 7-Eleven store will open in Mumbai on Saturday, followed by a "rapid rollout" across India's financial capital.
Mukesh Ambani, Asia's richest man, will introduce 7-Eleven Inc. convenience stores to India, expanding his enormous retail empire in the world's only consumer market with a population of more than a billion people that are open to international companies.
Mr Ambani's Reliance Retail Ltd. landed the deal just days after Future Retail Ltd., a failing supermarket operator, cancelled a deal with one of the world's largest convenience chains. The first 7-Eleven store will open Saturday in a Mumbai suburb, and will be followed by a further "rapid rollout" starting across India's financial hub, Reliance Retail said in a statement Thursday, without providing financial details.
After bankrupt Future Retail said this week that it had mutually terminated its arrangement with 7-Eleven in 2019 due to its inability to open stores or pay franchise fees, Reliance snatched the deal. Mr Ambani is in a legal struggle with Amazon.com Inc. over the assets of Future Retail, one of India's largest brick-and-mortar retailers.
The move is part of the wealthy tycoon's larger plan to take advantage of India's booming structured retail market. Mr Ambani noted at a shareholders' meeting in June that Reliance is rapidly growing its footprint, adding 1,500 additional stores last year for a total of roughly 13,000 locations. The shares of Mr Ambani's flagship Reliance Industries rose as much as 1.6% Thursday.
"India is the second-largest country in the world and has one of the fastest-growing economies," 7-Eleven's President and Chief Executive Officer Joe DePinto said in the statement. "It's an ideal time for the largest convenience retailer in the world to make our entry into India."
7-Eleven's entry also comes at a fortuitous moment as India enjoys a relative lull of Covid-19 infections after a devastating wave-battered the country just months ago. Daily cases are now hovering near a 7-month low and lockdown restrictions have largely been lifted across the country as India's vaccination drive gains momentum.
Many foreign companies have long desired access to India's 1.4 billion-strong market, where discretionary spending is on the rise. However, they have encountered significant barriers to entry, and political opposition has contributed to the Kirana store's ubiquity, which accounts for around three-quarters of India's retail environment.
"Reliance will need similar penetration over time to make a difference," said Utkarsh Sinha, managing director of Mumbai-based Bexley Advisors Ltd. "The market's fondness for brands will be a tailwind in their favour: as long as they can build it up, they can trigger a shift in shopping behaviour."
The deal between the two companies is a "good fit" that can harness Reliance's digital reach and gives Mr Ambani a "last-mile linkage to the consumer," according to Saloni Nangia, president of retail consultancy Technopak Advisors Pvt.
"The landscape is evolving, with kiranas being digitally aided as well, and that will be India's fastest-growing area," she added. Mr Ambani's partnership with 7-Eleven is yet another evidence of a handful of powerful Indian businesses gaining a stranglehold on India's retail sector, as they increasingly serve as a doorway to large international investment.
Many international corporations, like Facebook Inc. and Starbucks Corp., have gained access to India's huge market in recent years through mergers with sprawling Indian players such as Reliance and Tata Group, which have also aggressively purchased home-grown startups."The larger business groups who are well funded are taking a larger share," Ms Nangia said. "It is getting consolidated between four and five players -- Reliance has the largest share."