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This Retail Billionaire Is Bringing 7-Eleven Convenience Stores To IndiaThis Retail Billionaire Is Bringing 7-Eleven Convenience Stores To India
Kishore Biyani is the founder and group CEO of retail giant Future Group. (Photo: Hemant Mishra/Mint via Getty Images)
Retail pioneer Kishore Biyani has a new pitch for India's consumers–convenience stores.
Biyani's Future Retail has signed a master franchise agreement with Japanese-owned, U.S.-based 7-Eleven to set up small-format stores, according to a filing to the Bombay Stock Exchange. The first store is expected to open in 2019. 7-Eleven is the world's largest convenience store retailer, a relatively new format for India.
A typical convenience store is your go to place to top up your daily needs–most basic staples, personal care products, like shampoos and toothpaste, but also socks and undergarments, ready to eat or cook food, including sandwiches or other items, depending on the country it is in, some over the counter medicines, beer (if local laws permit) and juices, said Arvind Singhal, chairman and managing director retail consultancy Technopak. Some stay open round-the-clock.
"This is not what a typical kirana store in India carries," said Singhal referring to the neighborhood mom-and-pop stores that dot the country. "Those just carry dry groceries."
India's retail market is being largely driven by a young and aspiring population that is turning to modern, organized trade and e-commerce over the traditional mom-and-pop stores and street markets, although both continue to coexist even in the large cities. Technopak estimates the market's size at $750 billion, and expects it to grow to $1,300 billion in the next five years.
The closest that India currently has to a convenience store is a Delhi-based chain called Twenty Four Seven owned by Indian entrepreneur K.K. Modi. (His Modi Enterprises has businesses making cigarettes, tea, beverages, confectionery, and he was last on Forbes' list of the richest Indians in 2012.) Some of the Twenty Four Seven stores are located at gas stations run by state-owned Indian Oil with which the company has a tie-up, according to its website. It has 48 stores at present in the Delhi region and plans to double that in the next five years, it said.
An advertisement for banh Mi sandwiches is displayed as a customer exits a 7-Eleven store in Ho Chi Minh City, Vietnam, on June 20, 2018. For decades, Vietnamese have shopped, snacked and hung out at the country’s traditional markets: colorful, chaotic mazes of open air stalls where vendors hawk everything from fruits and vegetables to sandwiches and sodas. Now a full-scale convenience-store flood is coming. Japanese-owned 7-Eleven opened its first outlet in August. (Photo: Maike Elan/Bloomberg)© 2018 Bloomberg Finance LP
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"These stores can be in office complexes, gas stations, housing colonies–wherever people are, right next to them," said Singhal. "But they won't replace supermarkets. It's a good concept to have in big cities....The top 10 to 12 cities in India are ready for this, but I'm not sure if this will find much traction beyond that."
Biyani's Future Retail is sure to benefit from the tie-up. 7-Eleven is the most successful chain in this domain, and can offer a lot in terms of how to plan for the peculiarities of this format, Singhal said. For his part, Biyani, India's retail mogul, has a good grasp on the Indian customer, crucial insights for any retailer, he added.
As of the financial year ending March 2018, Biyani's Future Retail had 1,035 stores in 321 cities which netted $1.7 million on revenue of $2.8 billion.
The news of the deal also comes at a time when the Indian government has introduced policies that forbid foreign-owned e-commerce firms like Amazon and Flipkart from selling goods through companies in which they have an ownership stake.
"It shows that interest from foreign retailers is still there," Singhal said.