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Indian salesmen threaten supply disruptions in protest against Reliance

Stock MarketsDec 05, 2021 08:35PM ET
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© Reuters. FILE PHOTO: A shopkeeper selling consumer goods displays Reliance's JioMart point-of-sale machine that he uses to order supplies for his store in Sangli, in the western state of Maharashtra, India, October 21, 2021 Picture taken October 21, 2021. REUTERS/

By Aditya Kalra and Abhirup Roy

NEW DELHI (Reuters) -India's household goods salesmen have threatened to disrupt supplies to mom-and-pop stores if consumer companies provide products at lower prices to Reliance Industries, according to a letter seen by Reuters.

Reuters reported last month https://reut.rs/3FAVZKK Indian salesmen representing companies such as Reckitt Benckiser, Unilever (NYSE:UL) and Colgate-Palmolive (NYSE:CL) said their sales had dropped 20-25% in the last year as mom-and-pop stores were increasingly partnering with Indian billionaire Mukesh Ambani's Reliance.

Ambani's deeply discounted offerings were prompting more stores to order digitally from his JioMart Partner app, posing an existential threat to more than 450,000 company salesmen who for decades served every corner of the vast nation by going store-to-store to take orders.

Citing the Reuters story, the All India Consumer Products Distributors Federation - which has 400,000 members - has written to consumer companies demanding a level playing field, saying they must get products at same prices like other big corporate distributors such as Reliance.

If the pricing-parity demand is not met, the group said in its letter, its salesmen will stop distribution of products to mom-and-pop stores, and will also not supply newly launched consumer goods if such partnerships continue beyond Jan 1.

"We have earned reputation and goodwill amongst our retailers by giving them good service for many years ... We have decided to call a 'Non-cooperation' movement," said the letter.

The group's president, Dhairyashil Patil, said the letter was sent to Reckitt, Hindustan Unilever, Colgate and 20 other consumer goods companies.

None of the three consumer companies, as well as Reliance, responded to requests for comment.

Mom-and-pop stores, or "kiranas", account for 80% of a near-$900 billion https://reut.rs/2OYLmMV retail market in India. About 300,000 such stores in 150 cities order goods from Reliance, with the company setting a target of 10 million partner stores by 2024.

Traditional distributors have told Reuters they have been forced to cut vehicle fleet and staff as their business has been suffering because they can't match Reliance's pricing.

Jefferies (NYSE:JEF) in March estimated kiranas will "steadily increase the share of procurement" from Reliance "at the cost of traditional distributors". Such sales for Reliance could mushroom to $10.4 billion by 2025 from just $200 million in 2021-22, Jefferies estimates.

Indian salesmen threaten supply disruptions in protest against Reliance
 

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Comments (6)
Johnny Crash
Johnny Crash Dec 05, 2021 11:51PM ET
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First Reliance kills off all the small guys and when they are near monopolist, they will increase prices like crazy so they can take over the stores for nearly free
Roger Miller
Roger Miller Dec 05, 2021 10:43PM ET
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A countries quality of life is directly dependant on it’s productivity, and in it’s improvement. Increase and improvement require change. Better productivity also results in lower carbon footprint.
James White
James White Dec 05, 2021 9:16PM ET
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Good for them!
Monu Shah
Monu Shah Dec 05, 2021 4:37AM ET
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Some creep who has enough to live 10,000 lifetimes in luxury, trying to put hundreds of thousands out of their livelihoods for more of what he already has more than enough of. On the other hand, guys like that get filthy rich, because people always want cheaper, but in the long run, they end up with fewer consumers who can afford to buy their goods.
Ankit Jain
Ankit Jain Dec 05, 2021 2:51AM ET
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but at the end the jiomart will have the same end what jio is having no growth and low profit
Viv Chow
vchow Dec 05, 2021 2:51AM ET
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Possibly, the damage would have been done by then
Paras Goel
Paras Goel Dec 05, 2021 2:51AM ET
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Reliance has no growth but their thinking is first demolish than monopoly
Paras Goel
Paras Goel Dec 05, 2021 2:51AM ET
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thanks to airtel and Vi still standing tall
Todd Gray
Todd Gray Dec 05, 2021 12:47AM ET
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Some creep who has enough to live 10,000 lifetimes in luxury, trying to put hundreds of thousands out of their livelihoods for more of what he already has more than enough of. On the other hand, guys like that get filthy rich, because people always want cheaper, but in the long run, they end up with fewer consumers who can afford to buy their goods.
Suggandese Nutz
Suggandese Nutz Dec 05, 2021 12:47AM ET
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$ is the root of all evil yet it makes the world go round... humans have set up a weird way of life
Dave Jones
Dave Jones Dec 05, 2021 12:47AM ET
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yeah once you make a boatload of money you don't need 1000 more boatloads because that means more people will have less
Viv Chow
vchow Dec 05, 2021 12:47AM ET
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I wonder how the Indian government doesn't see this simple fact and keeps encouraging corporates, especially Reliance to impact such a basic thing.. What is they monopolise in 5 years ?
 
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