In the ever-evolving investment landscape of India’s retail industry, Zomato is staying ahead of the curve by taking transformative steps to enter the kirana market, the small, local, mostly mom-and-pop stores that represent the backbone of daily life for millions of the nation’s consumers, explains Fidelity Portfolio Manager John Chow, who also favors the company based on its newly enhanced focus on environmental, social and governance practices.
“Kiranas are a staple in India, catering to the basic household and grocery needs of consumers there,” points out Chow, who manages Fidelity® Sustainable Emerging Markets Equity Fund (FSYJX). “Zomato is a name synonymous with restaurant delivery, and now it has taken a bold step to broaden its appeal among kirana shoppers.”
In helming the diversified emerging-markets equity strategy since its inception in 2022, Chow invests primarily in emerging-markets stocks he believes have either proven or improving sustainability practices based on an evaluation of their environmental, social and governance profile.
With Zomato’s foray into the market for providing consumers with a wide array of essentials, such as rice, sugar and soap, the company is rolling out digitized versions of the traditional kirana and significantly broadening the range of products available to consumers, according to Chow.
“Imagine a seamless blend of groceries, consumer electronics, and household merchandise, all optimized through advanced inventory management and a state-of-the-art quick-delivery system,” he says.
Keeping in mind Zomato already boasts roughly 50% market share in the food-delivery business, Chow notes that the company’s strategic move in the kirana market is nothing short of impressive, with an average of 1.5 new stores opening daily.
In fact, the firm’s management expects to almost double the number of stores in the coming six months, and perhaps even double again in 2026.
While certainly ambitious, this vision remains a realistic goal, in Chow’s view, given that quick-commerce stores occupy a mere 1% of the kirana market, leaving plenty of room to expand.
“Beyond business growth, Zomato has set new standards in its ESG practices,” he contends, specifically citing The Shelter Project, which he considers a pioneering initiative to support its delivery partners, who are predominantly gig workers and related contractors.
It entails building a series of waystations, strategically placed along delivery routes, that offer essential amenities such as clean drinking water, phone-charging stations, washrooms, high-speed internet, a 24-7 help desk and first-aid support.
This commitment to both physical and mental well-being not only enhances productivity, but also aligns with the organization’s broader vision of sustainable and responsible business practices, according to Chow.
While the notion of diversification always carries some risk for companies, Chow is optimistic that this venture should pay off for Zomato – a notable fund holding as of November 30.
“Backed by solid fundamentals, a clear vision by management, an established quick-delivery system and the growing popularity of its digitized stores, the firm appears well-positioned for a bright future, though I will continue to closely monitor the stock's valuation and market dynamics,” he concludes.
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John Chow is a portfolio manager in the Equity division at Fidelity Investments.
A member of the Select Portfolio Management team since 2011, Mr. Chow serves as the lead manager of FIAM Select Emerging Markets strategy and Fidelity Series Emerging Markets Fund. He also manages Fidelity Sustainable Emerging Markets Equity Fund.
Prior to assuming his current responsibilities, Mr. Chow managed several U.S.-focused institutional equity portfolios. Additionally, he contributed to strategy formulation for, and management of, U.S. equity portfolios for institutional clients, blending Fidelity fundamental research with quantitative inputs, and managed the equity portion of Fidelity Asset Manager Income Fund. During his tenure, Mr. Chow also managed Canadian equity portfolios available exclusively to Canadian investors. He joined Fidelity as a member of the Quantitative Equity group in 1994, where he developed quantitative stock selection models for U.S. and international markets.
Mr. Chow earned his bachelor of science degree in computer engineering from the Massachusetts Institute of Technology (MIT). He is also a CFA® charterholder and a member of CFA Society Boston.