ECONOMY

Spooked Distributors Protest HUL’s Tie-Up With JioMart – Exclusive

General trade—as distribution through bulk dealers and stockists is called—dominates India’s retail supply chain with nearly 90% share. It’s a conduit for staples to shampoos from the factory gate to millions of small stores in every corner of Asia’s third-largest economy. Now, the channel faces a real threat.

JioMart plans to take orders online and fulfill through kirana stores across India. It’s also luring these small outlets with incentives to buy inventory from it. Reliance Retail offers 3-4% higher margins, according to distributors BloombergQuint spoke with. It already supplies to shops in 100 cities, and is expanding aggressively.

Others like Udaan, an e-commerce platform for businesses to buy goods in bulk, and Tata Group-owned BigBasket’s wholesale unit, too, are formalising business-to-business retail.

The latest pact between Reliance and HUL threatens to completely exclude distributors, at least the smaller ones, from the equation.

The distributors are considering a daylong protest against the tie-up, according to Dhairyashil Patil, president at the lobby. And they have also written to Piyush Goyal, minister of commerce and industry, consumer affairs, and food & public distribution and textiles, said Patil.

Emailed queries to Goyal’s office remained unanswered.

Reliance Retail will put distributors out of business as JioMart takes over the distribution of HUL, according to the letter cited earlier. It will create a conflict as both parties supply to the same set of mom-and-pop stores and could put them out of business as they have invested in putting an infrastructure in place, it said.

In an emailed response, HUL said, “While new channels continue to evolve, general trade continues to be the largest channel and our distributors (redistribution stockists) continue to be our valued partners.”

The country’s largest consumer goods maker said it has taken several actions to strengthen general trade, including technology to place orders through its B2B app. During the pandemic, HUL said, it has “specially tailored programmes for its distributors to help them hone their business skills and be future-ready”.

Reliance Industries Ltd., the parent of Reliance Retail, said it’s working “towards enriching and empowering kiranas and merchants with our end-to-end digital and physical distribution stack”. This will deliver “significant new value by linking producers, traders, small merchants, consumer brands and consumers”.

Distributors have also urged other consumer goods makers to not supply products to large business-to-business suppliers, reiterating that it will put them out of business, according to another letter sent to FMCG companies.

Nestle India Ltd., in an emailed response, said, “We are in receipt of the letter and will be going through its content.”

Mondelez India Pvt. Ltd., Britannia Industries Ltd. Godrej Consumer Products Ltd., Marico Ltd. and ITC Ltd. have yet to respond to emailed queries.

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