Reliance Retail expands its Smart Bazaar locations in rural areas

7 Nov 2023 , 11:17 AM

To keep up with demand, Reliance Retail is expanding the number of Smart Bazaar locations in communities with 50,000 or fewer residents.

In an interview with ET, Damodar Mall, the CEO of Reliance Retail (value format), stated that feeder markets, or small towns, are where the consumer growth narrative is most compelling.

‘In the Supermarket India that I see – in modern stores or on digital apps – there are no signs of any downward impact on discretionary spending,’ he claimed. ‘The narrative of some players that non-food is not growing is not a macro consumer concern, but maybe an insight that they are possibly not updating their operating models enough.’

Mall’s statement runs counter to the opinions of certain analysts and retailers who believe that discretionary spending has been squeezed recently.

‘General merchandise, personal care, and home goods are all expanding more quickly than the business as a whole. Positive demand trends are observed in feeder markets in smaller towns like Nokha, Sikar in Rajasthan, Armoor and Banswada in Telangana, and Raygada and Simliguda in Odisha, according to Mall.

The retail division of Reliance Industries is called Reliance Retail. It is the biggest grocery store chain in the nation, running 7-Eleven, Fresh Signature, Freshpik, Smart Superstore, Smart Point, and Smart Bazaar outlets.

‘We are seeing uptrading across categories and FMCG companies facing a slowdown in modern trade may need to do more to grow in tune with the market,’ Mall explained.

There are several reasons why demand in rural markets has been weak. Analysts note that persistent inflation has hurt rural demand, which accounted for over one-third of FMCG sales, as people are still cutting back on discretionary spending following irregular rainfall.

Along with soft drinks under the Sosyo Hajoori brand, confections under Lotus Chocolates, biscuits under Maliban, Campa Cola, Glimmer beauty soaps, Get Real natural soaps, Puric hygiene soaps, Dozo dishwash bars and liquids, HomeGuard toilet and floor cleaners, and Enzo laundry detergent powder, liquid, and bars, Reliance Retail has also been driving sales of these FMCG products.

‘We do not do private labels, or white labels, as they are conventionally approached,’ Mall stated. ‘Our customers buy SnacTac snacks or besan laddoo because they are good things, and most of them may not even know that SnacTac is our brand.’

The Smart and Smart Bazaar formats lead Reliance Retail’s grocery division, which saw 33% annual growth in the second quarter. The business emphasized that there was a lot of demand during the quarter’s festivities. This year’s June quarter saw a 59% year-over-year gain in the grocery industry.

Leading FMCG companies, including HUL, ITC, and Nestle, voiced concerns about uneven rainfall, crop output, and rising prices for commodities like wheat, maida, sugar, potatoes, and coffee in their September quarter earnings.

‘FMCG companies are learning to think of premiumisation differently for urban, modern trade and rural consumers,’ Mall stated. ‘We need more of this to happen.’

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