Reliance FResh: RefReshing Business Strategy Submitted byErum Khan Sahil Gupta

Mayank Badkul Executive Summary The India Retail Industry is the largest among
all the industries, accounting for over 10 per cent of the countrys GDP and around 8
per cent of the employment. The Retail Industry in India has come forth as one of
the most dynamic and fast paced industries with several players entering the
market. But all of them have not yet tasted success because of the heavy initial
investments that are required to break even with other companies and compete
with them. The India Retail Industry is gradually inching its way towards becoming
the next boom industry. The total concept and idea of shopping has undergone an
attention drawing change in terms of format and consumer buying behaviour,
ushering in a revolution in shopping in India. Foreign direct investment (FDI) inflows
between April 2000 and December 2010, in single-brand retail trading, stood at US$
66.69 million, according to the Department of Industrial Policy and Promotion (DIPP
With a vision to generate inclusive growth and prosperity for farmers, vendor
partners, small shopkeepers and consumers, Reliance Retail Limited (RRL), a
subsidiary of RIL, was set up to lead Reliance Groups foray into organized
retail.Since its inception in 2006, Reliance Retail Limited (RRL) has grown into an
organisation that caters to millions of customers, thousands of farmers and vendors.
Based on its core growth strategy of backward integration, RRL has made rapid
progress towards building an entire value chain starting from the farmers to the end
consumers. The following paper first give the general overview of the retail industry
in India, different type of retail format present in India, major players present in the
industry, growth opportunity, difficulties the sector is currently facing. Then it talks
about Reliance Fresh the chain we have chosen to analyse and to revamp its current
strategies. So to revamp the existing model it is obvious that paper talks about how
the chain started, what all strategies are being followed by them,and most
importantly the difficulties it has faced in the past and currently it is facing So by
studying all these factors we suggest our own strategies related to different
management functions which company could adopt and will result them into being
a profitable company INDUSTRY EVOLUTION: RETAIL INDUSTRY Traditionally retailing
in India can be traced to :- The emergence of the neighbourhood Kirana stores
catering to the convenience of the consumers. Era of government support for rural
retail: Indigenous franchise model of store chains run by Khadi & Village Industries
Commission. 1980s experienced slow change as India began to open up economy.
Textiles sector with companies like Bombay Dyeing, Raymond's, S Kumar's and
Grasim first saw the emergence of retail chains. Later Titan successfully created
an organized retailing concept and established a series of showrooms for its
premium watches. The latter half of the 1990s saw a fresh wave of entrants with a
shift from Manufactures to Pure Retailers. For e.g. Food World, Subhiksha and
Nilgiris in food and FMCG; Planet M and Music World in music; Crossword and
Fountainhead in books. Post 1995 onwards saw an emergence of shopping
centers. Mainly in urban areas, with facilities like car parking. Targeted to provide
a complete destination experience for all segments of society. Emergence of hyper

and super markets trying to provide customer with 3 Vs - Value, Variety and
Volume Expanding target consumer segment: The Sachet revolution - example of
reaching to the bottom of the pyramid. At year end of 2000 the size of the Indian
organized retail industry is estimated at Rs. 13,000 crore RETAILING FORMAT IN
INDIA Malls: It is the largest form of organized retailing today. They are located
mainly in metro cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to
7,00,000 sq ft and above. They lend an ideal shopping experience with an
amalgamation of product, service and entertainment, all under a common roof.
Examples include Shoppers Stop, Piramyd, and Pantaloons. Specialty Stores: Chains
such as the Bangalore based Kids Kemp, the Mumbai books retailer Crossword,
RPG's Music World and the Times Group's music chain Planet M, are focusing on
specific market segments and have established themselves strongly in their sectors.
Discount Stores: As the name suggests, discount stores or factory outlets, offer
discounts on the MRP through selling in bulk reaching economies of scale or excess
stock left over at the season. The product category can range from a variety of
perishable/ non-perishable goods. Department Stores: Large stores ranging from
20000-50000 sq. ft, catering to a variety of consumer needs. They are further
classified into localized departments such as clothing, toys, home, groceries, etc.
Departmental Stores are expected to take over the apparel business from exclusive
brand showrooms. Among these, the biggest success is K Raheja's Shoppers Stop,
which started in Mumbai and now has more than seven large stores (over 30,000
sq. ft) across India and even has its own in store brand for clothes called Stop.
Hyper marts/Supermarkets: Large self-service outlets, catering to varied shopper
needs are termed as Supermarkets. These are located in or near residential high
streets. These stores today contribute to 30% of all food & grocery organized retail
sales. Super Markets can further be classified in to mini supermarkets typically
1,000 sq ft to 2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to
5,000 sq ft. having a strong focus on food & grocery and personal sales.
Convenience Stores: These are relatively small stores 400-2,000 sq. feet located
near residential areas. They stock a limited range of high-turnover convenience
products and are usually open for extended periods during the day, seven days a
week. Prices are slightly higher due to the convenience premium MBOs: Multi Brand
outlets, also known as Category Killers, offer several brands across a single product
category. These usually do well in busy market places and Metros. INDIAS NUMBER
OF DOMESTIC GROCERY CHAINS AND EARLY FOREIGN ENTRANTS INDIAN RETAIL
INDUSTRY: AN OVERVIEW The India Retail Industry is the largest among all the
industries, accounting for over 10 per cent of the countrys GDP and around 8 per
cent of the employment. The Retail Industry in India has come forth as one of the
most dynamic and fast paced industries with several players entering the market.
But all of them have not yet tasted success because of the heavy initial investments
that are required to break even with other companies and compete with them. The
India Retail Industry is gradually inching its way towards becoming the next boom
industry. The total concept and idea of shopping has undergone an attention

drawing change in terms of format and consumer buying behaviour, ushering in a

revolution in shopping in India. Modern retailing has entered into the Retail market
in India as is observed in the form of bustling shopping centres, multi-storied malls
and the huge complexes that offer shopping, entertainment and food all under one
roof. A large young working population with median age of 24 years, nuclear
families in urban areas, along with increasing workingwomen population and
emerging opportunities in the services sector are going to be the key factors in the
growth of the organized Retail sector in India. The growth pattern in organized
retailing and in the consumption made by the Indian population will follow a rising
graph helping the newer businessmen to enter the India Retail Industry. In India the
vast middle class and its almost untapped retail industry are the key attractive
forces for global retail giants wanting to enter into newer markets, which in turn will
help the India Retail Industry to grow faster. Indian retail is expected to grow 25
per cent annually. Modern retail in India could be worth US$ 175-200 billion by
2016. The Food Retail Industry in India dominates the shopping basket. The Mobile
phone Retail Industry in India is already a US$ 16.7 billion business, growing at
over 20 per cent per year. The future of the India Retail Industry looks promising
with the growing of the market, with the government policies becoming more
favorable and the emerging technologies facilitating operations. THE INDIAN RETAIL
SCENE India is the country having the most unorganized retail market. Traditionally
it is a familys livelihood, with their shop in the front and house at the back, while
they run the retail business. More than 99% retailers function in less than 500
square feet of shopping space. Global retail consultants KSA Technopak have
estimated that organized retailing in India is expected to touch Rs 35,000 crore in
the year 2005-06. The Indian retail sector is estimated at around Rs 900,000 crore,
of which the organized sector accounts for a mere 2 per cent indicating a huge
potential market opportunity that is lying in the waiting for the consumer-savvy
organized retailer. Purchasing power of Indian urban consumer is growing and
branded merchandise in categories like Apparels, Cosmetics, Shoes, Watches,
Beverages, Food and even Jewellery, are slowly becoming lifestyle products that are
widely accepted by the urban Indian consumer. Indian retailers need to advantage
of this growth and aiming to grow, diversify and introduce new formats have to pay
more attention to the brand building process. The emphasis here is on retail as a
brand rather than retailers selling brands. The focus should be on branding the
retail business itself. In their preparation to face fierce competitive pressure, Indian
retailers must come to recognize the value of building their own stores as brands to
reinforce their marketing positioning, to communicate quality as well as value for
money. Sustainable competitive advantage will be dependent on translating core
values combining products, image and reputation into a coherent retail brand
strategy. There is no doubt that the Indian retail scene is booming. A number of
large corporate houses Tatas, Rahejas, Piramals, Goenkas have already made
their foray into this arena, with beauty and health stores, supermarkets, self-service

music stores, newage book stores, every-daylow-price stores, computers and

peripherals stores, office equipment stores and home/building construction stores.
Today the organized players have attacked every retail category. The Indian retail
scene has witnessed too many players in too short a time, crowding several
categories without looking at their core competencies, or having a well thought out
branding strategy. The Indian retail sector is highly fragmented with more than 90
per cent of its business being carried out by traditional family run small stores. This
provides immense opportunity for large scale retailers to set-up their operations a
slew of organized retail formats like departmental stores, hypermarkets,
supermarkets and specialty stores are swiftly replacing the traditional formats
dramatically altering the retailing landscape in India. India is the third-most
attractive retail market for global retailers among the 30 largest emerging markets,
according to US consulting group AT Kearneys report published in June 2010. Retail
Market Size The total retail sales in India will grow from US$ 395.96 billion in 2011
to US$ 785.12 billion by 2015, according to the BMI India Retail report for the third
quarter of 2011. Robust economic growth, high disposable income with the endconsumer and the rapid construction of organised retail infrastructure are key
factors behind the forecast growth. Along with the expansion in middle and upper
class consumer base, the report identifies potential in Indias tier-II and tier-III cities
as well. The greater availability of personal credit and a growing vehicle population
providing improved mobility also contribute to a trend towards annual retail sales
growth of 12.2 per cent. Indian retail sector accounts for 22 per cent of the
country's gross domestic product (GDP) and contributes to 8 per cent of the total
employment. Rural Retailing on a High Rural retailing enjoys an intense focus from
big brands. Future Group and Godrej Agrovet's joint venture (JV) in rural retailing,
'Aadhar', is all set for a revamp. The group promoter Kishore Biyani has revealed
that the JV is planning to come up with wholesale distribution centers across
different districts and franchisees would be rolled out to local entrepreneurs who
would have a better understanding of the concerned area. They would be able to
source the products from these wholesale centers and then sell it in their villages.
The alliance operates stores in Gujarat, Maharashtra, Haryana and Punjab and
mainly sells wheat and paddy apart from daily need products. The company also
provides farmers with solutions to problems regarding their agricultural output,
which includes what kind of crop can they plant and when, along with technocommercial suggestions to help them give a better output. Meanwhile, Rajkot based
Champion Agro Ltd is planning to come up with single window shopping facility for
farmers. The company already has 35 agri-retailing outlets in the Saurashtra region,
and is expected to open around 400 outlets at a taluka level across Gujarat by
2016. It will open 50 new outlets by the end of 2011with an investment of US$ 3.3
million. The overall investment planned is between US$ 66.7 US$ 88.94 million. On
similar lines, Vadodara based ACIL Cotton Industries is all set to come up with
around 40 outlets of 'ACIL Krishi Store' in Gujarat. Of these, four outlets got
operational in April - May 2011. As for 2011, ACIL has decided to focus on the
Gujarat market. ACIL stores will sell all types of seeds, fungicides, fertilisers,

micronutrients. Also, FMCG and retail giants are making good use of technology to
reach out to rural India. From low-cost handsets to tablet PCs, the Indian FMCG and
retail sector is latching on to technology and applications to reach out to rural India.
For instance, Marico is using mobile technology innovatively to arm its field
representatives in their procurement process. The IT team at Marico developed a
mobile-based application for Nokia 5235 series handsets. The company gave these
GPS-enabled phones to 120 of its field representatives, with mapped routes. This
helped the agri-representative to get the exact route and also saved on time. The
mobile application can also get real-time data from farmers. Pictures of crop and soil
taken from the camera are used for monitoring progress of contract farming, seed
information and weather condition. Since the data is available online, this also helps
the company analyse and take decisions quickly. Meanwhile Hindustan Unilever Ltd
(HUL) is experimenting with tablet PCs in its attempt to increase its rural reach. It
has been able to reach to 500,000 outlets in a years time. According to Nitin
Paranjape, managing director, HUL, We put all the villages on an IT map. The name
of the village, its total strength, nearest distributors available, whether it has a
school, a hospital, a primary health centre, all of this was mapped. We used this
information to determine the opportunity the village presented to us. Organised vs
Unorganised Retailing The Indian retail market, over the last decade, has been
increasingly leaning towards organised retailing formats. The pattern in domestic
retailing is altering in the favour of organised modern retailing, a big change from
the traditional plethora of unorganised family-owned businesses. Rapid
urbanisation, changes in shopping pattern, demographic dividend and pro-active
measures by the Government are abetting the growth of the retail sector in India.
Organised retail in India is expected to increase from 5 per cent of the total market
in 2008 to 14 - 18 per cent of the total retail market and reach US$ 450 billion by
2015, according to a McKinsey & Company report titled 'The Great Indian Bazaar:
Organised Retail Comes of Age in India'. Furthermore, according to a report titled
'India Organised Retail Market 2010', published by Knight Frank India, during 201012 around 55 million square feet (sq ft) of retail space will be ready in Mumbai,
national capital region (NCR), Bengaluru, Kolkata, Chennai, Hyderabad and Pune.
Besides, between 2010 and 2012, the organised retail real estate stock will grow
from the existing 41 million sq ft to 95 million sq ft. Driven by the growth of
organised retail coupled with changing consumer habits, food retail sector in India is
set to be more than double to US$ 150 billion by 2025, according to a report by
KPMG. Retail Investment Trends Foreign direct investment (FDI) inflows between
April 2000 and December 2010, in single-brand retail trading, stood at US$ 66.69
million, according to the Department of Industrial Policy and Promotion (DIPP).
Singapore-based CapitaMalls Asia, which develops, owns and manages malls across
Asia, has pledged US$ 400 million to its growth in India up till 2014. Mr Kevin Chee,
CEO and Country Head of CapitaMalls Asia, has said that apart from funding the two
malls that are operational now, this money would be used to develop seven more
malls in India. Reliance Retail will enter the cash and carry market with "Reliance

Market" in Ahmedabad; the first one to be opened by August 2011. Ujala fabric
whitener maker Jyothy Laboratories has bought Henkel AG's 50. 97 per cent stake
in its Indian subsidiary for US$ 137.02 million, including debt and preference shares,
the two companies revealed. The deal includes Henkel's entire portfolio that
includes Henko and Chek detergents, Pril dish cleaners and Fa deodorant, and rights
to the multinational's future launches. With the launch of its first 'Arvind Experience
Store' in Gujarat at Vadodara, denim major Arvind Ltd. is looking at 100 stores by
the end of the financial year 2011-12. The store in Vadodara is the company's
eighth in the country after seven stores in Andhra Pradesh. Quick food service
restaurant chain Subway will set up 45 outlets across the country by 2011- 12
entailing an investment of around US$ 9 million. The company has now 205 outlets
in India and plans to take its count to 250 by the end of 2011-12. Max
Hypermarkets, the food retailing chain of the Dubai-based Landmark Group is
investing US$ 122.14 million for its store expansion business across 30 cities in
India. Retail - Government Initiatives India will announce new rules for foreign
investment in retail by April 2012, paving the way for companies such as Wal-Mart
Stores and Carrefour to open stores, according to Junior Trade Minister Jyotiraditya
Scindia. A government panel has issued a report that recommends easing a law that
prohibits non-Indian companies from operating multi-brand outlets. Allowing foreign
investment in multi-brand retail may help moderate food prices, said Kaushik Basu,
chief economic adviser in the finance ministry, who sits on the panel. India currently
allows 51 per cent FDI in single-brand retail and 100 per cent in wholesale cashandcarry operations. In a landmark decision, the government has eased norms for
investments by foreign companies that are present in India through a joint venture
(JV) or a technical collaboration. Now, the foreign company will not have to seek a
no-objection certificate (NOC) from the Indian partner for investing in the sector
where the joint venture operates. The government has also relaxed norms for
downstream investments and convertible instruments, giving foreign companies
more powers. The changes are part of the third revision of the Consolidated FDI
Policy. Retail Road Ahead There is a huge untapped opportunity in the retail sector,
thus having immense scope for new entrants, driving large investments into the
country. A good talent pool, huge markets and availability of raw materials at
comparatively cheaper costs are expected to make India lead one of the worlds
best retail economies by 2042. The industry is also slated to be a major
employment generator in future. Quick Facts on Indian Retail Sector Indian Retail
sector is the fifth largest global retail destination. India retail market is dominated
by the unorganized sector. The top five companies in retail hold a combined
market share of less than 2%. The Indian retail market has been ranked by AT
Kearney's eighth annual Global Retail Development Index (GRDI), in 2009 as the
most attractive emerging market for investment in the retail sector. Currently the
share of retail trade in India's GDP is around 12 per cent, and is estimated to reach
22 per cent by 2010. According to Government of India estimate the retail sector is

likely to grow to a value of ` 2,00,000 crore (US$45 billion) and could yield 10 to 15
million retail jobs in the coming five years; currently this industry employs 8% of the
working population. India continues to be among the most attractive countries for
global retailers. According to the Department of Industrial Policy and Promotion,
approximately US$ 47.43 million was the amount of Foreign Direct Investment (FDI)
inflow as on September 2009, in single-brand retail trading. More than 80% of the
retail sector in the country is concentrated in the large cities. A study reveals that
among the more than 20 locations, for organized retail in India, Mumbai was found
to be the most preferred location followed closely by Bengaluru in the second
position. Key Players in Indian Retail Sector AV Birla Group has a strong presence in
apparel retail and owns renowned brands like Allen Solly, Louis Phillipe, Trouser
Town, Van Heusen and Peter England. The company has investment plans to the
tune of ` 8000 9000 crores till 2010. Trent is a subsidiary of the Tata group; it
operates lifestyle retail chain, book and music retail chain, consumer electronic
chain etc. Westside, the lifestyle retail chain registered a turnover of ` 3.58 mn in
2006. Landmark Group invested ` 300 crores to expand Max chain, and ` 100
crores on Citymax 3 star hotel chain. Lifestyle International is their international
brand business. K Raheja Corp Group has a turnover of ` 6.75 billion which is
expected to cross US$100 million mark by 2010. Segments include books, music
and gifts, apparel, entertainment etc. Reliance has more than 300 Reliance Fresh
stores; they have multiple formats and their sale is expected to be ` 90,000 crores
($20 billion) by 2009-10. Pantaloon Retail has 450 stores across the country and
revenue of over ` 20 billion and is expected to touch 30 million by 2010. Segments
include Food & grocery, e-tailing, home solutions, consumer electronics,
entertainment, shoes, books, music & gifts, health & beauty care services. Retail
and recession The global economic slump has had its impact on the India retail
sector. One of the earliest players in the Indian retail scenario Subhiksha's
operations came to a near standstill and required liquidity injection. Vishal Retail
secured corporate debt restructuring (CDR) plan from its lenders while other players
like the Reliance Retail run by Mukesh Ambani and Pantaloon led Kishore Biyani by
went slow on expansion plans and even scaled down operations. However, during
the last quarter a bit of confidence was restored as the economy showed signs of
growth. Future Trends Lifestyle International, a division of Landmark Group, plans to
have more than 50 stores across India by 201213. Shoppers Stop has plans to
invest ` 250 crore to open 15 new supermarkets in the coming three years.
Pantaloon Retail India (PRIL) plans to invest US$ 77.88 million this fiscal to add up to
existing 2.4 million sq ft retail space. PRIL intends to set up 155 Big Bazaar stores
by 2014, raising its total network to 275 stores. Timex India will open another 52
stores by March 2011 at an investment of US$ 1.3 million taking its total store
count to 120. In the first six months of the current fiscal ending September 30,
2009, the company has recorded a net profit of US$ 1.2 million. Australia's Retail
Food Group is planning to enter the Indian market in 2010. It has plans to clock

US$ 87 million revenue in five years. In 20 years they expect the India operations to
be larger than the Australia operations. The Road Ahead Industry experts predict
that the next phase of growth in the retail sector will emerge from the rural
markets. By 2012 the rural retail market is projected to have a total of more than 50
per cent market share. The total number of shopping malls is expected to expand at
a compound annual growth rate of over 18.9 per cent by 2015. According to market
research report by RNCOS the Indian organized retail market is estimated to reach
US$ 50 billion by 2011. GROWTH OF RETAIL SECTOR IN INDIA Retail and real estate
are the two booming sectors of India in the present times. And if industry experts
are to be believed, the prospects of both the sectors are mutually dependent on
each other. As the contemporary retail sector in India is reflected in sprawling
shopping centers, multiplex- malls and huge complexes offer shopping,
entertainment and food all under one roof, the concept of shopping has altered in
terms of format and consumer buying behavior, ushering in a revolution in shopping
in India. This has also contributed to large-scale investments in the real estate
sector with major national and global players investing in developing the
infrastructure and construction of the retailing business. The trends that are driving
the growth of the retail sector in India are Low share of organized retailing Falling
real estate prices Increase in disposable income and customer aspiration
Increase in expenditure for luxury items (CHART) Another credible factor in the
prospects of the retail sector in India is the increase in the young working
population. In India, hefty pay packets, nuclear families in urban areas, along with
increasing working-women population and emerging opportunities in the services
sector. These key factors have been the growth drivers of the organized retail
sector in India which now boast of retailing almost all the preferences of life Apparel & Accessories, Appliances, Electronics, Cosmetics and Toiletries, Home &
Office Products, Travel and Leisure and many more. With this the retail sector in
India is witnessing rejuvenation as traditional markets make way for new formats
such as departmental stores, hypermarkets, supermarkets and specialty stores. The
retailing configuration in India is fast developing as shopping malls are increasingly
becoming familiar in large cities. When it comes to development of retail space
specially the malls, the Tier II cities are no longer behind in the race. If
development plans till 2007 is studied it shows the projection of 220 shopping
malls, with 139 malls in metros and the remaining 81 in the Tier II cities. The
government of states like Delhi and National Capital Region (NCR) are very upbeat
about permitting the use of land for commercial development thus increasing the
availability of land for retail space; thus making NCR render to 50% of the malls in
India. Retail, one of Indias largest industries, has presently emerged as one of the
most dynamic and fast paced industries of our times with several players entering
the market. Accounting for over 10 per cent of the countrys GDP and around eight
per cent of the employment retailing in India is gradually inching its way toward
becoming the next boom industry. India is being seen as a potential goldmine for

retail investors from over the world and latest research has rated India as the top
destination for retailers for an attractive emerging retail market. Indias vast middle
class and its almost untapped retail industry are key attractions for global retail
giants wanting to enter newer markets. Even though India has well over 5 million
retail outlets, the country sorely lacks anything that can resemble a retailing
industry in the modern sense of the term. This presents international retailing
specialists with a great opportunity. The organized retail sector is expected to grow
stronger than GDP growth in the next five years driven by changing lifestyles,
burgeoning income and favorable demographic outline. TRENDS OVER PAST FEW
YEARS Retailing in India is witnessing a huge revamping exercise as can be seen in
the graph . India is rated the fifth most attractive emerging retail market: a
potential goldmine. Estimated to be US$ 200 billion, of which organized retailing
(i.e. modern trade) makes up 3 percent or US$ 6.4 billion . As per a report by
KPMG the annual growth of department stores is estimated at 24% Ranked second
in a Global Retail Development Index of 30 developing countries drawn up by AT
Kearney. Multiple drivers leading to a consumption boom: o Favorable
demographics o Growth in income o Increasing population of women o Raising
aspirations: Value added goods sales Food and apparel retailing key drivers of
growth Organized retailing in India has been largely an urban phenomenon with
affluent classes and growing number of double-income households. More
successful in cities in the south and west of India. Reasons range from differences
in consumer buying behavior to cost of real estate and taxation laws. Rural
markets emerging as a huge opportunity for retailers reflected in the share of the
rural market across most categories of consumption . o ITC is experimenting with
retailing through its e-Choupal and Choupal Sagar rural hypermarkets. o HLL is
using its Project Shakti initiative leveraging women self-help groups to explore the
rural market. o Mahamaza is leveraging technology and network marketing
concepts to act as an aggregator and serve the rural markets. IT is a tool that has
been used by retailers ranging from Amazon.com to eBay to radically change
buying behavior across the globe. slowly making its presence felt. RETAIL SALES IN
INDIA MAJOR ISSUES CONCERNING THE INDIAN RETAIL INDUSTRY Overambitious
expansion, squeezed profit margins, and unsustainable operational costs have
adversely affected Indias organized retail sector Till recently, the government and
the industry alike were betting big on the countrys organized retail sector, touting it
as the growth engine for job creation and economy. However, the faltering of
Subhiksha, which had 1,600 stores till December 2008, seems to have shattered the
hopes. Before Subhikshas debacle came into public glare, it was the shining
example of a successful retail venture. Its founder R Subramanian was the blueeyed boy of the industry. So what went wrong? Does it mean that the business
model that supports discounted small-stores format is flawed or is Subhiksha only
an exception? The retail scene The Indian retail sector is largely dominated by
nearly 12 million unorganized players, who constitute nearly 90 to 95% of the

sector, which is the highest in any country. On the other hand, the organized retail
sector accounted for only 5 to 7% in 2008. Of these, nearly 80% of such outlets are
small family-owned businesses. In 2008, the size of the retail industry was pegged
at US$ 353 billion in an ASSOCHAM-KPMG joint study. The retail sector can broadly
classified into four major categoriesfood and groceries, consumer durables,
apparel, and pharmaceuticals. These together account for almost 60 to 70% of the
total retail market. Of these four categories, food and groceries account for the
largest share of 74%, according to India Brand Equity Foundation (IBEF). The food
and groceries segment is estimated at $152 billion. However, organized retail in this
sector is just about 1% of the total share, which also indicates the lowest
penetration level amongst other major categories. This had prompted many big and
small players to grab a pie in the organized retail sector. The major players are
Subhiksha, Spencers, Reliance Fresh, More etc. Retail Facts Total Indian retail
market is estimated to grow from $353 billion in 2008 to $416 billion by 2010 Share
of organized retail sector is ~7% and is expected to be 12% by 2010 Size of
organized retail sector is estimated to reach $51 billion by 2010 The Indian retail
industry can be broadly classified into food and grocery, pharmaceuticals, consumer
durables, apparel Some major players in food and grocery sectorReliance Fresh,
Spencers, Big Bazaar, More etc. Source: ASSOCHAM-KPMG study The big question
Let us consider two points at this stage. One, a typical Indian household of two
spends nearly 10% of its budget on purchasing grocery, vegetables and fruits. Two,
products such as rice, wheat and pulses are utility items that are non-elastic.
Several consumers whom DARE spoke to said the slowdown had not affected their
spending on grocery, fruits and vegetables. A customer, Rekha Sharma said, The
recession has not made a big difference to my household budget on grocery, fruits
and vegetables. According to Piyush Sinha, Professor of Marketing and
Chairperson, Centre for Retail at Indian Institute of Management, Ahmedabad,
Even during a recession, basic utility items like grocery and medicines will be
bought and most retailers look at this segment. The Subhiksha story is not an
exception but just a reflection of things to come. If such is the case, then what is
ailing Indias organized retail and is causing the closure of such outlets?
Unorganized Retail Vs Organized Retail Unorganized Stores Discounted Small-stores
Characteristics Small store, household business generally employing family
members Comparatively large, shelving branded products, approximately 15
employees per 2,000 sq ft Driving factors Unplanned purchases, round the corner
location, consumers purchase perishable goods like milk and curd, home-delivery,
monthly accounts, discounts to regular customers, familiarity with the store for
years Planned purchase, availability of several brands of a particular product,
discounts, deals, ambience, visual merchandising Challenges Not all brands are
available, price comparison always not possible, small Availability of in-house
brands is not always good because consumers may not associate with them,
parking, freshness, distantly located compared to mom-and-pop stores A flawed
model? When the era of organized retail started in India, a lot of players entered
this segment. In the food and groceries section itself, players like Subhiksha,

Reliance Retail, Big Apple, Sabka Bazaar, Spencers, More etc started opening
outlets and most of them adopted the discounted small-store format. An industry
insider says the model that these companies adopted was flawed because their
expenses far outstripped profit margins. Thus, more money was seeping out in the
form of discounts and operational costs, while less was coming back into the kitty.
Their expenses, which included rentals, employee salaries, inventory, cost of
monitoring etc, were higher than their margins. These stores were making money
but were not profitable, he says. Brands Vs In-house Brands Brands In-house brands
Advantages Brand name Consumers associate them with quality Advertisements,
hence better visibility Prestige associated with owing the brand From the point of
view consumers: ~30-40% cheaper than brands From the point of view of retailers:
Only production cost involved and no advertisement or distribution charges involved
Disadvantages Expensive Must live up to expectations Consumers may not
associate with it, especially when placed with a branded item Less visibility
Available only at the retail store Some Examples Tea Red Label, Lipton, Taj Mahal
Reliance Value (Reliance Fresh) Handwash Dettol, Lifebuoy Caremate (Big Bazaar)
Jam Kissan, Tops Smart Choice (Spencers) Noodles Maggi, Top Ramen Reliance
Select (Reliance Fresh) The situation worsened with the expansion spree. Another
reason is that they thought customers would be attracted by discounts, for which
they eliminated the middlemen and started dealing directly with big fast-moving
consumer good (FMCG) players. The FMCG players have their own vested interest
and in the long run they would like to be in a commanding position than in a
negotiating position, which would have been the case with organized retail players.
Sinha substantiates the point and says, If you give more discounts, your margins
will further shrink and therefore you need more customers. A bigger store may not
necessarily mean more footfalls. And if you do not have more consumers, your
inventories will suffer because you will have the burden of more stocks to clear.
Unmindful expansion strategy This one seems to be the biggest demon of all. This
is a factor that has impacted all retailers. It is just that some have been impacted
more and some less. The fact is that almost everybody has grown far too soon too
quickly. The growth is far much more than they could have managed, says Sinha.
Till recently discount store Subhiksha, which is currently neck-deep in debt of more
than Rs 750 crore, was reportedly planning to add two million sq ft by the end of the
fourth quarter of 2009. On the contrary, the company has closed its 1,600 stores
across 110 cities, with R Subramanian reportedly saying that his company owes Rs
45 crore to suppliers, Rs 20 crore to employees and Rs 24 crore as rentals for
various stores! Subhikshas troubles started when it began expanding at a rate of
800 stores a year on debt capital. The situation is not very different with Reliance
Retail, with rumors afloat that a number of stores have been shut and several
employees have been sacked. Large Retail Format Retailers sell their in-house
brands at a price that is significantly less than branded products They keep on
adding and deleting in-house brands so that even if the customer finds a product
wanting in quality after purchase, the negativity is limited to the brand, not the
outlet A visit to a prominent, large-format retail store, in Delhi was an eyeopener of

sorts. The store was located in a mall, which hardly boasted any big brands being
newly built, but in contrast, the retail store was very crowded! Here is what DARE
found: Customers: Belonged to the middle class or upper middle class, unlike
customers visiting small organized retail outlets, it was a family visit or they were
accompanied by friends A Pen Picture: One-stop shopping experience; the store
stocked everything from apparels to consumer goods to grocery; had different floors
for each category A lot of variety in terms of products; a lot of deals and discounts
were available Had various brands both in-house and other labels; in-house brands
were mixed with other known brands to an extent that it was not identifiable Had
many staff members who were helpful The store was clean and organized Had
parking space as the store was located in a mall Sinha says, Everybody is trying to
give a good value to customers. However, the cost that is incurred in the process
takes time to be re-couped. The market may not grow at that rate. What has
happened is in the wake of growth is that players have focused on opening more
stores than consolidating the older ones. The process of expansion has to be
supported with adequate funds, inventory, and service, which was clearly lacking in
the case of Subhiksha. Does this mean that other retailers are also following the
footsteps of Subhiksha in unmindful expansion? Customers unprepared?
Vijaylakshmi Menon, a housewife who prefers to purchase grocery from the kirana
store says, I do go to organized retail outlets, but not that frequently. I am aware
that these stores do provide some discounts, but I do not mind spending one or two
rupees extra at the nearby kirana store where I have been a regular for almost the
last three years. One of the reasons behind the attractiveness of kirana stores over
organized retail outlet is the nearness of these stores and this supports unplanned
and sudden purchases. Also, the rapport that customers develop with mom-and-pop
stores also plays an important role in affecting consumer behavior. The customers
take time to migrate from these stores. Retail does not merely mean distribution. A
lot of work has to happen before customers start patronizing the stores. And it takes
time for customers to understand a lot of things like whether they are getting the
right deal or not. You cannot ask customers to shift by giving them the lure of better
environment. It is the value that one delivers overtime that drives consumers. That
ensures whether the customer will stick to you or not, says Sinha. No localized
approach The business of retail (food and grocery) is very localized. The consumer
behavior in a particular area, for example Delhi, may not be the same as those of
consumers in another city such as Chennai. Thus, the consumer needs differ widely
across the country. Therefore, distinct strategies should have been adopted for
different regions. What one must keep in mind is that if you are opening a store
such as a grocery store then you have a catchment area. It is a very localized
business that has to be built bottom up. It is not a business that can be pushed from
top to down. So, macro strategies may not work all the time. You need customized
strategies, says Sinha. Freshness: A concern For most of the customers DARE
spoke to, freshness of the commodity was a major concern. Unlike the West, Indian
consumers lay huge importance to the freshness of food especially milk, vegetables
and fruits. Even loyal customers of organized retail stores purchased these items

from traditional stores, street hawkers and mandis. Their recent purchase pattern
indicated that even though they bought pre-processed food, pulses, spices etc from
the organized retail stores, perishable items such as milk, curd, vegetables and
fruits were bought from the local stores. Says Vijaylakshmi, I buy fruits and
vegetables from the local market. This is because they are fresh and I can negotiate
prices. Moreover, these items are bought in small quantities and therefore for
many consumers, traditional stores, street hawkers and mandis make more sense
because of convenience. Home deliveries There are some services that are provided
exclusively by kirana stores that drive consumers to these stores, such as homedelivery. In India, groceries are purchased in bulk mostly at the beginning of the
month and home delivery facilitates this. Also, selling on credit has long been the
forte of the kirana stores. This ensures that customers stick to with them for long.
In-house brands vs private brands For customers like Monica Chawla, who prefers
retail chains over the nearby mom-and-pop store, it is the availability of branded
goods that matters the most. Unlike the kirana stores, the organized stores stock up
a number of brands of a single product. However, these stores also have a generous
supply of in-house brands. On an average, in-house brands come at a discount of up
to 30 to 40%, which is due to the absence of advertising and distribution costs.
However, this also means that these private labels lag behind the branded products
in terms of visibility and hence, sale. Moreover, when such products are placed vis-vis branded items, consumers may opt for a branded product than a private label.
The discounts caused a major hit at profit margins STRATEGIES, TRENDS AND
OPPORTUNITIES Retailing in India is gradually inching its way toward becoming the
next boom industry. The whole concept of shopping has altered in terms of format
and consumer buying behavior, ushering in a revolution in shopping in India.
Modern retail has entered India as seen in sprawling shopping centres, multi-storied
malls and huge complexes offer shopping, entertainment and food all under one
roof. The Indian retailing sector is at an inflexion point where the growth of
organized retailing and growth in the consumption by the Indian population is going
to take a higher growth trajectory. The Indian population is witnessing a significant
change in its demographics. A large young working population with median age of
24 years, nuclear families in urban areas, along with increasing workingwomen
population and emerging opportunities in the services sector are going to be the
key growth drivers of the organized retail sector in India. CHALLENGES &
OPPORTUNITIES Retailing has seen such a transformation over the past decade that
its very definition has undergone a sea change. No longer can a manufacturer rely
on sales to take place by ensuring mere availability of his product. Today, retailing is
about so much more than mere merchandising. Its about casting customers in a
story, reflecting their desires and aspirations, and forging long-lasting relationships.
As the Indian consumer evolves they expects more and more at each and every
time when they steps into a store. Retail today has changed from selling a product
or a service to selling a hope, an aspiration and above all an experience that a
consumer would like to repeat. For manufacturers and service providers the

emerging opportunities in urban markets seem to lie in capturing and delivering

better value to the customers through retail. For instance, in Chennai CavinKares
LimeLite, Maricos Kaya Skin Clinic and Apollo Hospitals Apollo Pharmacies are
examples, to name a few, where manufacturers/service providers combine their
own manufactured products and services with those of others to generate value
hitherto unknown. The last mile connect seems to be increasingly lively and
experiential. Also, manufacturers and service providers face an exploding rural
market yet only marginally tapped due to difficulties in rural retailing. However,
manufacturers and service providers will also increasingly face a host of specialist
retailers, who are characterized by use of modern management techniques, backed
with seemingly unlimited financial resources. Organized retail appears inevitable.
Retailing in India is currently estimated to be a US$ 200 billion industry, of which
organized retailing makes up a paltry 3 percent or US$ 6.4 billion. By 2010,
organized retail is projected to reach US$ 23 billion. For retail industry in India,
things have never looked better and brighter. Challenges to the manufacturers and
service providers would abound when market power shifts to organized retail.
CONCLUSION The retail sector has played a phenomenal role throughout the world
in increasing productivity of consumer goods and services. It is also the second
largest industry in US in terms of numbers of employees and establishments. There
is no denying the fact that most of the developed economies are very much relying
on their retail sector as a locomotive of growth. The India Retail Industry is the
largest among all the industries, accounting for over 10 per cent of the countrys
GDP and around 8 per cent of the employment. The Retail Industry in India has
come forth as one of the most dynamic and fast paced industries with several
players entering the market. But all of them have not yet tasted success because of
the heavy initial investments that are required to break even with other companies
and compete with them. The India Retail Industry is gradually inching its way
towards becoming the next boom industry. . RELIANCE FRESH History of Reliance
Fresh Post launch, in a dramatic shift in its positioning and mainly due to the
circumstances prevaling in UP, West Bengal and Orissa, it was mentioned recently
in news dailies that, Reliance Retail is moving out of stocking fruits and
vegetables[ . Reliance Retail has decided to minimise its exposure in the fruit and
vegetable business and position Reliance Fresh as a pure play super market
focusing on categories like food, FMCG, home, consumer durables, IT and wellness ,
with food accounting for the bulk of the business. The company may not stock fruit
and vegetables in some states. Though Reliance Fresh is not exiting the fruit and
vegetable business altogether, it has decided not to compete with local vendors
partly due to political reasons, and partly due to its inability to create a robust
supply chain. This is quite different from what the firm had originally planned.
When the first Reliance Fresh store opened in Hyderabad last October, not only did
the company said the stores main focus would be fresh produce like fruits and
vegetables at a much lower price, but also spoke at length about its farm-to-fork
theory. The idea the company spoke about was to source from farmers and sell

directly to the consumer removing middlemen out of the way. Reliance Fresh,
Reliance Mart, Reliance Digital, Reliance Trendz, Reliance Footprint, Reliance
Wellness, Reliance Jewels, Reliance Timeout and Reliance Super are various formats
that Reliance has rolled out. In addition, Reliance Retail has entered into an alliance
with Apple for setting up a chain of Apple Specialty Stores branded as iStore,
starting with Bangalore The Reliance Retail had to face various difficulties before
the launch of Reliance fresh, because of the various circumstances prevailing in
Orissa, West Bengal and UP, along with the news focusing on the dearth of
vegetables and fruits stocks. The retail business of Reliance then minimized its
exposure in vegetable and fruit business, as a result established Reliance fresh
positioning a pure super market play focusing on various categories like IT,
consumer durables, home, FMCG and food. The retail company of Reliance may not
supply the vegetables and fruits in a few states, the Reliance Fresh decided to not to
race with local wholesalers partly because of the political reasons as well as its
incapability to maintain a healthy supply chain VISION Of RELIANCE RETAIL Growth
through Value Creation With a vision to generate inclusive growth and prosperity for
farmers, vendor partners, small shopkeepers and consumers, Reliance Retail
Limited (RRL), a subsidiary of RIL, was set up to lead Reliance Groups foray into
organized retail. Since its inception in 2006, Reliance Retail Limited (RRL) has grown
into an organisation that caters to millions of customers, thousands of farmers and
vendors. Based on its core growth strategy of backward integration, RRL has made
rapid progress towards building an entire value chain starting from the farmers to
the end consumers. Reliance Retail continued to expand presence of its value and
specialty formats. During the year, Reliance Retail opened 90 new stores spanning
across 'value' and 'specialty' segments. In-store initiatives, wider product choice and
value merchandising enabled the business to achieve robust growth during this
period. Its presence in the optics business is in partnership with Grand Vision. 51
new stores were added during FY-11 taking the total presence to 100 stores across
key markets in the country. The retail chain offers single brand optical products
including Vision Express frames, lenses, contact lenses, sunglasses, solutions and
accessories. For the very first time, consumers in India got the opportunity to
experience Hamleys, which is considered to be the world's most wonderful toy shop.
The brand was launched in India with opening up of 2 stores during the year. iStore
by Reliance Digital is a one-stop-shop for all Apple products and services. Reliance
Brands also announced exclusive licensing arrangement with two leading
international brands: Steve Madden, a leading designer, wholesaler and retailer of
fashion-forward footwear and accessories for women, men and children.
Quiksilver, a leading outdoor sports lifestyle company to launch their core brands
'Quiksilver' and 'Roxy'. Across India, Reliance Retail serves over 2.5 million
customers every week. Its loyalty programme, "Reliance One", has the patronage of
more than 6.75 million customers. A subsidiary of Reliance Industries of India that is
headed by Mukesh Ambani, Reliance Fresh is primarily a supermarket that strives to
provide all the essential household commodities under one roof. In addition to fresh

fruits and vegetables, the store also sells staple food items, diary products,
packaged food products, baby products, electrical goods, and the like. The size of a
typical Reliance Fresh store varies between 3,000 and 4,000 square feet, and it can
easily cater to an area of 2 to 3 Kms in its vicinity. In the present day, there are 560
outlets of Reliance Fresh across the country, and in the next 4 to 5 years the
company plans to invest Rs. 25,000 crores in this venture. BACKGROUND Reliance
Fresh a convenient store format, is governed by the Mukesh Ambani and is the
most important part of Reliance Industries retail Business. Reliance Ltd. has planned
to invest more than Rs. 25000 crores in the retail division. It also comprises more
than 560 reliance fresh stores all over the country. The outlet sells fresh fruits,
staples, dairy products, fresh juice bars, groceries and vegetables. A distinctive
Reliance Fresh outlet is around 3000 to 4000 sq. feet and accommodates
catchment area of one to three Kilometers. The super marts will sell fresh fruits and
vegetables, staples, groceries, fresh juice bars and dairy products and also will
sport a separate enclosure and supply-chain for nonvegetarian products. Besides,
the stores would provide direct employment to 5 lakh young Indians and indirect job
opportunities to a million people, according to the company. The company also has
plans to train students and housewives in customer care and quality services for
part-time jobs. The company is planning on opening new stores with store-size
varying from 1,500 sq ft to 3,000 sq ft, which will stock fresh fruits and vegetables,
staples,FMCG products and dairy products. Each store is said to be within a radius
of 1-2 km of each other, in relation to the concept of a neighbour store. However,
this is only the entry roll-out that the company has planned. Bangalore is said to
have 40 stores in all by the end of the year. In a dramatic change due
circumstances prevaling in UP, West Bengal and Orissa, It was mentioned recently in
News Dailies that, Reliance Retail is moving out stocking. Reliance Retail has
decided to minimise its exposure in the fruit and vegetable business and position
Reliance Fresh as a pure play super market focusing on categories like food,FMCG,
home, consumer durables, IT, wellness and auto accessories, with food accounting
for the bulk of the business. The company may not stock fruit and vegetables in
some states, Orissa being one of them. Though Reliance Fresh is not exiting the
fruit and vegetable business altogether, it has decided not to compete with local
vendors partly due to political reasons, and partly due to its inability to create a
robust supply chain. This is quite different from what the firm had originally
planned. When the first Reliance Fresh store opened in Hyderabad last October, not
only did the company said the stores main focus would be fresh produce like fruits
and vegetables at a much lower price, but also spoke at length about its farm-tofork theory. The idea the company spoke about was to source from farmers and
sell directly to the consumer removing middlemen out of the way. Reliance may exit
some businesses if the business does not increase by March 2008. OBJECTIVES The
chief objective of Reliance Fresh stores is :- 1) To provide customers first-rate
household products at affordable rates. 2) At the same time, the company spares no

effort to safeguard the interest of the farmers and manufacturers. 3) The producers
get a chance to sell their products directly to the merchandiser, and that too at the
best price. Thus, it is a win-win situation for all, the merchandiser, producer and
consumer. CORPORATE SOCIAL RESPONSIBILITY Today when most of the companies
are busy in making profits by any means, there are few ones who are focused to
return this society, a part of what they have earned through this society. Reliance
retail is one of them. Following efforts of reliance retail are aimed at benefiting the
society making reliance socially responsible: 1)Reliance Retail aims at insociety.
They are planning to train students from corporation schools and schools run by
NGOs and they consider this as a part of their corporate social responsibility They
will take students on an employment basis and pay them a stipend during the
course period in return they are planning to charge a "small fee" from those who
want to join the course "as we want to bring in some discipline and regularity
among the students", and will reimburse that once they are inducted into service. 2)
Farming in India is highly fragmented and subject to harsh climatic conditions: once
harvested, it is very difficult to keep fruits and vegetables fresh. To secure high
quality, Reliance Retail is directly sourcing fresh agricultural produce from
thousands of farmers from villages through Collection Centers. With this concept,
Reliance has built a business model generating shared value that links the company
supply chain more closely to poor farmers in Indian villages. Reliance is providing a
guaranteed market for the farmers produce, reducing transaction costs and training
the farmers in better and sustainable farming practices. This initiative results in
higher income and upgrading of skills for the farmers, and reduced spoilage of
produce (up to 35 percent) and better quality products for Reliance retail stores.
Growth of Reliance Fresh The first ever a Reliance Fresh store was established in
Hyderabad, wherein the company, mainly focused on the fresh produced
vegetables and fruits at comparatively low price along with an introduction of farm
to fork theory. This was the idea, which was anticipated by the company was to
take the supply direct from the farmers and then sell straightaway to the
consumers removing the middle-men off the beaten track. Reliance introduced
several formats in the marketplace to cater to needs of common people, which
includes Reliance Fresh, Reliance Super, Reliance Footprint, Reliance Timeout,
Reliance Jewels, Reliance wellness, Reliance Mart and Reliance Digital, to name a
few. In addition to this, the Reliance Retail also entered into a treaty with Apple,
which is a leading Information Technology company, to set up a series of Apple
Specialty Outlets branded as IStore, with its first ever store in Bangalore. With an
idea to produce inclusive prosperity and growth for farmers, consumers, small
shopkeepers and vendor partners, Reliance Retail was set up in order to lead the
foray of Reliance Group into an organized retail. NEWS ARTICLES ON RELIANCE
FRESH WHEN RELIANCE FRESH OPENED Monday, Nov 06, 2006 , Financial Express :
Reliance Retail, the 100% subsidiary of Reliance Industries, on October 28 unveiled
Reliance Fresh, the first of its multi-format retail foray involving an investment of Rs
25,000 crore. Reliance Fresh is the companys brand for neighbourhood freshfood

outlets. It will also sell kitchen equipment and other edibles. Besides, it has planned
hypermarkets, supermarkets, discount stores, department stores, convenience
stores and specialty stores, to be unveiled shortly. The next stop for Reliance Retail
will be Ahmedabad, where the company will launch an outlet on December 28, the
birthday of RIL founder Dhirubai Ambani. After that, it will move to West Bengal and
Punjab, followed by simultaneous launches in Delhi and Mumbai. These stores,
ranging from 2,000 to 5,000 sq feet, will provide customers with a variety of fresh
fruits, vegetables, staple foods and other products in a world-class ambience, said
Gunender Kapur, president, foods business, at the unveiling ceremony. The strategy
is to open one Reliance Fresh store in a radius of three to four km to serve 1,0002,000 families. This means about 30-40 stores in the major metros. The airconditioned stores recorded combined sales of Rs 22 lakh on the inaugural day
itself. Reliance Fresh is selling vegetables and fruits sourced from farmers through
the companys agri hubs. AN HOUR AT RELIANCE FRESH Reliance Fresh has opened
up retail supermarkets selling fruits and vegetables in major cities of India. A few
days ago, we visited the local Reliance Fresh supermarket in New Friends Colony
and this is what we observed - 1. Range of Products - Regular vegetables, fruits,
Reliances' own brands of packed pulses, Maggi products and Pepsi. 2. Prices - The
price was marked in paisas just like at American stores. For example - Potatoes were
priced at 5.90 per kg while onions were 15.90 per kg. Yeah right, what difference
does 10p make? 3. Comparable Cost - The rate of vegetables like onions and
potatoes were 10p less than that of local vegetable sellers. The rate of other
products were however much higher than they should have been. Seems like
Reliance Fresh applied the same strategy that McDonalds uses to attract customers
- ice cream for Rs. 7 and Cola for Rs. 20. 4. Customer Service - The staff in red shirts
were mainly checking to see if people were shoplifting and did'nt seem to know
much about the products or company. The guards kept yelling at everyone to have
their bags checked before leaving. 5. Checking Out - There was a long queue that
moved very slowly. VAT or value added tax was added to the bill which increased
the cost of the vegetables just bought. 6. Parking - Absolutely zero parking. The
guard was yelling at local rickshaw pullers to move away from the entrance. 7.
Customers - were middle class folk from my apartment block. They kept touching
and turning around each vegetable before selecting them just like they do at the
regular vegetable sellers. This looked really out of place and added to a huge crowd
Reliance eyes retail JV with Marks & Spencer Reliance Industries chairman Mukesh
Ambanis deal-making spree to get the best domain expertise in the retail sector is
poised for the big one now. Reliance Retail (RRL), is locked in substantial
discussions to float an equal joint venture with iconic UK fashion retailer Marks &
Spencer (M&S) for apparel, gourmet food and cafes, multiple sources said. The deal,
slated to be clinched in the next three weeks, would see the UK retailer bringing in
new formats like food and cafes into India. M&S core business apparel and
lingerie is already operational in the country. According to a source close to the
deal, the gourmet food format is likely to be integrated with Reliance Fresh
wherever possible, (upmarket localities) as a shop-in-shop format. This would help

M&S get immediate scale in food business. There are 491 Reliance Fresh stores that
sell food, FMCG and fruits and vegetables and this figure is likely to touch 1,400 by
the end of next fiscal. The implications of this particular JV are much deeper. Its
much more holistic in nature and therefore taking long to seal, the source added.
The $16-billion M&S, operating in the country through a franchisee arrangement
with Planet Retail since 2001, is in the midst of charting a new India strategy aimed
at accelerating expansion in the domestic market. It recently slashed prices by 20%
to attract more footfalls in the stores and taking prime space in malls to open more
stores Reliance Retail ties up with UK's Wincanton for back-end biz NEW DELHI: After
having signed up at least half-a-dozen partnerships for specialty formats, Reliance
Retail is now entering into a joint venture with leading European supply chain
specialist Wincanton for its food and grocery and hypermarket businesses. The
synergy would enable Reliance to efficiently run its critical back-end operations,
which essentially include warehousing of goods and transporting them to stores on
time. The latest move by Indias largest corporate house, which jumped on the retail
bandwagon two years ago by promising to do everything on its own, seems to
suggest that it now needs a partner for almost every retail initiative. Industry
observers believe that the company has expanded very fast and has managed to
set up over 600 stores across various retail formats in less than two years, but its
supply chain is in a mess. How to get the right merchandise to the stores on time
has been its biggest problem. Youd often not find the goods you want in Reliances
food and grocery outlets, said a source. Porter 5 force model for the existing
Reliance fresh Business model Threat of New entrants This threat is at maximum at
this point as it is most likely that government would allow 100% FDI in single brand
retail outlets which is going to further make things difficult for Reliance Fresh
Bargaining power of buyers This is the pressure a customer can place on a business.
If there are few buyers then they are able to dictate the terms with increasing
access to technology, increase in number of choices and customers are always
connected to each other through various social networking sites more than ever
before which make bargaining power of buyers even stronger Bargaining power of
suppliers A company to manufacture its products requires raw material, labour
etc.This creates a buyersupplier relationship in an ind
ry. If there are few suppliers providing material essential to make a product then
they can set the price high to capture more profit. Again due to increase in number
of players in organized retail sector bargaining power of suppliers is also on the rise
as they have many options where they can negotiate their prices Competitive
rivalry within the industry is also on the rise.This describes the competition between
the existing firms in an industry. Greater the competitive rivalry (companies
providing equally good products or services) lesser are the profit margin.With entry
of foreign players it would make the competition even more intense Problems faced
by Reliance Fresh The following graphs are a clear indicator that Reliance Retail of
which Reliance Fresh is a major arm that Reliance Fresh is even at current state
facing problems As the winds of economic reform have swept across the Indian

economic landscape since the 1990s, the slow pace of retail liberalisation has
become increasingly conspicuous. Most notably, foreign direct investmentfreely
permitted in most sectorscontinues to be banned in the retail sector, with the
exception of single-brand retailing. Now it was the turn of domestic corporate
retailers to face the heat. The trouble began in late August 2008 , in Uttar Pradesh,
Indias most populous state, when the state government cited law-and-order
problems to order the shutdown of all stand-alone corporate retail outlets selling
fruit, vegetables and groceries. This was in response to violent protests against new
Reliance Fresh stores set up in the cities of Lucknow and Varanasi by Reliance
Industries, an Indian corporate giant with ambitious retailing plans. As of midOctober, protestors against organised retail had targeted Reliance and other
corporate retailers in Uttar Pradesh, Kerala, West Bengal, Mumbai and Orissa.
Though counter-productive in terms of efficiency and modernisation, this opposition
to organised retail is easy to explain. Before Indias recently acquired image as an
economic powerhouse, it was sometimes disparagingly referred to as a nation of
small shopkeepers. Indeed, there are currently over 12 million retailers in India, and
the sector provides a livelihood for a huge number of people. Most of these shops
are tiny family-run businesses operating with meagre capital. There is also an
enormous number of retailers selling fruit and vegetables from carts or on the
roadside. Meanwhile, Indian corporate giants such as Pantaloon Retail, Reliance
Industries and RPG Group, seeking to profit from the forces of consumerism
unleashed by economic growth and liberalisation, have been scrambling to expand
their retailing operations. Not unreasonably, small retailers feel threatened by the
big companies plans. EXPECTATION IN FUTURE a) Small scale industries and
existing brands will not be able to compete with these behemoth international
players with enormous amount of capital: Most of the economies have developed
their industry, agriculture and services in order to increase their pace of
development. In case of India, manufacturing has seen hardly any growth since our
economy has opened up. This has lead to unemployment at one end, and at the
other end it has lead to huge setback to the existing industries. Many of the national
brands have been lost, decreasing the number of employment in manufacturing
sector. When the retail chain takes over, it will have access to all the products of the
world, and will sell the best at the cheapest, leading to further closure of existing
industries which in turn will lead to loss of economy and massive unemployment.
Small scale industries will suffer the most in this present context, where at one end,
MNCs are allowed to have 100% FDI in small scale industries in SEZ and on the
other hand cheap goods could be imported by the retail giants. Our SSI is not
properly organized, and suffers the economies of scale, thus will never be able to
compete with the retail giants on the price aspect, which seems to be a matter of
serious concern for the existence of SSI in India. In a situation where the existing SSI
is already going through a very tough time, this would serve as a fatal blow. b)
Impact on farmers and consumers Influence on farmers After independence there
was a general feeling that agricultural markets do not function in a proficient
manner. Apart from inefficiencies in distribution, including wastage of agricultural

produce, the farmers suffer due to exploitation by traders on different accounts. To

overcome such problems different state governments enacted their respective
APMC Acts. These Acts made stringent provisions to save the farmers from
exploitation, promoted efficiency, etc. Structure of Agricultural Produce Marketing
Committee (APMC), the apex decision making body in respective mandis was made
such that farmers were in overwhelming majority and chairman of the Committee
would also be a farmer. It also ensures the transparency of trade and accountability
of the trader and mandis towards the society. Every day the rates of the products
are fixed in the mandi depending upon demand and supply and no trader can buy
more than a certain limit( to avoid hoarding). There is no question of monopoly here
as there are a number of buyers and sellers; this in turn keeps the prices of the
commodities fair. Moreover there is a government check on all the trading that
happens through mandi, so that no unfair practices can take place. The Model APMC
Act leads to de-democratisation of agricultural markets and therefore limits the
rights of the farmers to control agricultural markets. The experience world over and
even in the states where private yards have been allowed to be established by the
companies, heavy profits have been made by these companies without giving any
benefit to the farmers. For instance the average price of Soya paid by ITC to the
farmers in Madhya Pradesh was around Rs. 1150/- per quintal, it was sold by the
company at an average price of Rs. 1555/- per quintal. Even the rules of contract
farming, given by Model APMC Act and adopted by various state governments also
favour multinational agribusiness firms. Small and marginal farmers, which
constitute 90% of the farming community, have been left at the mercy of these
firms. Not only this, even the definition of an agriculturist have been changed to suit
the best interests of these corporations. In earlier Acts agriculturist was defined as
one whose livelihood depends directly on farming. Now a change in the definition of
agriculturist is contemplated as - A person who is a resident of the notified area of
the market and who is engaged in production of agricultural produce himself or by
hired labour or otherwise. In the case of these huge retail chains, there is lesser
possibility of transparency of prices paid and the amount stocked. They are
permitted to stock huge amounts of food supplies, as per their business model,
without having mechanisms for transparence. In such conditions it is not very
difficult for them to hoard and act unfair. For example let us see two commodities
wheat and apple. Private corporations had bought huge quantities of wheat from
the farmers directly last year and we had to import wheat from other countries and
all of us know about the hike in the price of wheat this year. Similar is the case of
apple, in last season, these companies had bought around 30% of the apple
production straight from the local mandis of Himachal and Kashmir, and we can see
the prices of apple this year are very much higher compared to earlier years, even
though there was good production of apples last season. ii) Consumer In due course
of time if these retail outlet completely overtakes the traditional system, we would
see a series of change. First if the traditional system is gone, we will have only one
mega retail outlet in the vicinity, and the choices given by the outlet, has to become
choices of the consumer. In such a case there is an expectation of formation of

cartel amongst the chain and the prices of the commodities will shoot up. But at
that time we will have no other option but to procure our goods from one of these
outlets, at whatever prices they demand from us. We have seen this in the case of
UK, where the average spending on food and beverages as a percentage of the total
income of an average household has shot up since these giant corporations have
come into retailing. Moreover the choices the consumers are left also decrease with
the coming up of these stores; every thing is standardized the personal choices of
the consumers are not taken care of. This is a system where the consumer adjusts
himself to the product and not the vice versa. Public Perception and Movements
Protests and demonstrations by the local vegetable and fruit vendors since they
would lose their livelihood The fear was basically due to the following advantages
they think corporate players had at the same time, corporate retailers have several
advantages that are making it possible for them to attract growing numbers of
customers. For instance, there are many inefficiencies in the traditional supply chain
in India. Fruits and vegetables typically reach the Indian consumer only after
passing through various middlemen, few of whom possess adequate capital to
invest in cold chains and other infrastructure. Corporate retailers are hoping that
their business modelwhich combines direct sourcing from farmers (including
contract farming), large volumes and substantial investments in infrastructurewill
enable them to offer fruit and vegetables at considerably lower prices.Modern retail
outlets also offer a pleasant and comfortable ambience for shopping, enable easy
comparison of a wide range of products, ensure the quality of products, and offer
self-service. These benefits are likely to woo many Indian customers, even though
some products may be cheaper in traditional stores. Too much Hype and they seem
to be aggressive The best example they could learn from in this case could be their
competitots though not existing then is from Bharti-Walmart collobaration.Walmart
we all know is the big daddy of retail business all over the world and collaboration
with them is a pride for any company, but Bharti on the other side did not create a
hype about it and are successfully running their cash and carry stores in Punjab and
will soon expand too. Although many companies are now being targeted by
protesters, the current uproar is based in perceptions of a single company, Reliance
Retail. One reason for this is that Reliances retail-sector plans are perhaps the most
ambitious among the corporate retailers. In June 2006, while informing shareholders
about the groups retailing initiative, Reliances chairman, Mukesh Ambani,
announced plans for anenormous investment of Rs250bn(US$6.4bn) to setup a
retail network that is unprecedented in scope.The companys objective is to
establish a pan-Indian, multi-format presence covering 1,500 cities and towns, and
employing over 500,000 people.Reliance has been implementing its plans
aggressively.Between November 2006when the company opened its first store in
Hyderabadand September 2007, Reliance Retail set up over 300 stores in more
than 30 cities and towns in 12 states.It has also established 108 collection centres
in 16 states for sourcing, processing and selling agricultural produce, while signing
up around 1.5m customers for its RelianceOne loyalty scheme. Until now, Reliance
has also focused on the storeformat that is most likely to compete with traditional

retailers. While most Indian corporate retailers have set up supermarkets that sell a
wide range of groceries, household goods and personal items in addition to fruit and
vegetables, the Reliance Fresh chain consists of considerably smaller
neighbourhood convenience stores that focus mainly on food, including fruit and
vegetables. Through its supplychain initiatives, Reliance Fresh has been able to sell
its produce at significantly lower prices than traditional retailers. As a result, many
traditional retailers of groceries, fruit and vegetables have found themselves
competing directly with a nearby Reliance store. Political Pitfalls Protests by local
fruit vendors and vegetable shop owners slowed the expansion of corporate
retailers planning to set up new stores in the states where opposition has surfaced.
However, most of the announcements made by these state governments were
designed to appease the anger of small retailers and their political supporters,
rather than to express strong ideological opposition to organised retailing. In Uttar
Pradesh, for instance, the closure of retail outlets has been restricted to those
selling fruit, vegetables and groceries in stand-alone stores. Reliance Fresh and
Spencers borne the brunt of the closure. Moreover, the shutdown is temporary and
the state government has set up a committee to examine this issue. Given the huge
number of small retailers in democratic India, no political party can afford to ignore
their views. Reports indicate a major softening of the governments stand on the
nuclear deal to avoid a snap poll at that time and was hardly an appropriate time to
upset such a significant constituency, and relevant government agencies were
currently debating the introduction of various policies to protect small storessuch
as licensing of big retail outlets by local bodies in cities and towns. Nevertheless,
there were enough supporters of organised corporate retailing in India to ensure
that no permanent roadblocks are created. Obvious beneficiaries of organised-retail
growth include the corporate sector, consumers and farmers, but there is also
widespread support among (non-leftist) politicians, policymakers and intellectuals,
who realise that a modern and efficient retail sector is an important part of
economic development. As a result, it is likely to be just a matter of time before the
government actually relaxes its restrictive policy on foreign investment in retailing
by permitting foreign companies to invest freely in the sector. Reliance Retail put on
hold its expansion plans in the states where opposition to organised retailing has
surfaced. Reliance is known for the speed and aggression with which it enters new
businesses, as demonstrated by its blitzkrieg marketing campaign when it began
mobile telecom services in 2002, catalysing a sharp reduction in Indian mobile call
tariffs. But now the company has painfully realised that in politically sensitive
sectors like retailing a much more cautious approach is advisable. Contrasting
advantages that small players had However, the fears that organised retailing will
put small retailers out of business were vastly exaggerated. Traditional small
retailers in India have many strengths that will ensure their continued survival and
growth despite the emerging competition from corporate retail chains. For one, they
have the advantage of location, servicing the needs of families located in their
vicinity. Indian housewives typically do not possess personal transport; they prefer
to walk to nearby stores for their daily shopping, rather than to make longer trips to

supermarkets located farther away. Adding to their convenience, neighbourhood

grocery stores in India often offer a number of additional services such as credit and
home delivery, and they typically keep very long hours. They are also able to run on
wafer-thin margins because they rely on family or cheap, untrained labour; incur low
rental costs (or operate from their own property); and spend very little on display
and interiors. These practices enable neighbourhood retailers to keep prices low and
offer attractive discounts. Neighbourhood retailers are also willing to sell tiny
quantities of loose (unpacked) grocery items, which is a major attraction for poor
families. Given these factors, its not surprising that corporate retail continues to
account for only a tiny proportion (estimated at less than 4%) of retail sales in India
even though they began operations many years ago To sum up and what would
support our business plan following is the reality Given their respective strengths,
however, corporate and traditional retailing can co-exist and growin India for a long
time to come. In fact, many customers already frequent both types of stores; much
of corporate retails growth may represent enhanced consumption as a result of
rising incomes and the growing variety of consumer goods, rather than the decline
of traditional retailers. Until recently, moreover, Indian corporate retailers have
faced little popular opposition, which indicates that most traditional retailers have
not felt seriously threatened by them. In this light, the recent upsurge in protests
against corporate retailing has come as a bit of a surprise The retail revolution that
has ushered in modern retailing is yet to make significant in-roads into almost 15
million kirana outlets (small mom-and-pop shops) throughout the length and
breadth of the country. The diversity of population in terms of demographics
(income ranges included), shopping patterns of different segments of consumers,
the "every day" shopping mindset of a majority of consumers, the dominance of
groceries and food purchases of consumers in the total retail purchases and the
infeasibility of modern retail outlets in diffusing themselves to completely replace
kirana outlets are some of the reasons why retailing in India needs to be probed
with insightful consumer behaviour Latest Policies followed by Reliance Fresh FARMTO-FORK MODEL ADOPTED BY RELIANCE FRESH Traditional Model Of Retailing
Reliance Farm to Fork Reliance is leaving no stone unturned and is poised to hit
back aggressively and is taking following steps and adopting policies to turn itself
into a profitable venture and compete effectively with its competitors Reliance is
trying cash and carry model again in retail From grocery, Reliance Retail plans shift
to supply : Refereed as Farm to Folk model by Ambani Reliance Retail was faced
with massive opposition from the trading community. But like every great visionary
Reliance had a prepared back-up, and this time it was much more powerful than the
earlier one, throwing solutions to every previous dilemma . In a dramatic shift, it
decided to turn into a trader itself. It entered the food-trading business as part of a
major restructuring of its food and grocery initiative. On 3 June 2011, at the 37th
annual general meeting of RIL, chairman Mukesh Ambani announced that Reliance
Retail would launch its cash-and-carry stores this year. RILs past experience in the
retail business has not quite had the same success that its other businesses oil

exploration, refining and petrochemicals Reliances re-entry into the business

assumes significance even as global retailers such as Walmart, Tesco, Metro and
Carrefour are expanding their presence in India, and amid anticipation that the
government is likely to ease foreign direct investment (FDI) norms in retail.
Currently, FDI is allowed only in the cash-and-carry business. But I think Cash-andcarry is, as yet, at a nascent stage in India. Third Eyesight, a retail consulting firm
said Its a modernisation and organisation of the wholesale business, and an
intermediate step needed in modernising the fragmented retail business.
Something that Ambani has said he always believed in, which he called farm-tofork. Most cash and carry operations are targeted at hotels, restaurants and
cafeterias the so-called Horeca market, which accounts for close to 60 per cent of
sales. Package sizes of goods are larger (meaning more per sq. ft sales and greater
volume growth). Reliance Retail officials say that the Horeca segment will not be the
primary focus of their cash-andcarry business. Rather, their target audience apart
from their own chain of Reliance Fresh stores will be other retailers, or the kirana
stores. The cash-and-carry business is an integral part of a retail supply chain in a
country like India, where distribution and logistics are major problems and
Reliances entry into the segment will help improve its other retail formats.
Typically, retailers attempt to own the supply chain to give them control and better
prices that benefits the end consume It would thus be able to profit from commodity
trading as well without worrying about the steep overheads and discounts that tied
its hands in its avatar as RelianceFresh.. Company has already signed up with
Spencer retail chains to supply cut fruits and vegetables. Establishing itself in
Mandis WHOLESALE TRADING (WST) : Reliance formalized its second supply chain
model to shift itself from grocery retailer to grocery supplier by focusing and
establishing itself in Mandis STEPS IN WTS MODEL: 1) Reliance has owned farms on
contract basis for production of specific crop which Is decided after extensive
research depending on :- SOIL CONDITIONS, CLIMATE CONDITIONS, RETURN
OVER COSTS INCURRED. So as to yield best possible results. 2) Different vegetables
and fruits from such farms are collected through reliance own logistics and brought
to collection Processing centers where quality check and otherrequired processing is
done.In processing centers workers wearing balaclavas, woolen trousers and bulky
jackets work inside a room kept at a constant 30 degree Centigrade, peeling and
chopping vegetables,spinning them dry and then heaping them in small plastic
packets before placing them in plastic transport crates. At the other end of the
5,000-sq-m warehouse, men unload crates of fruits from a truck pulled up to a
spotless loading dock. A quality-control expert samples every tenth crate; if the
fruits are good a team will ready them for delivery within hours to Reliance fresh
stores around different places like U.P and as far away as Hyderabad and even
Mumbai.If they are not, workers will inspect the entire shipment and discard
anything below standard. 3) Merchandise from these collection processing centres
are collected and loaded for wholesale mandis. As this merchandise is to be made
available by 4 A.M in morning thus deliveries in trucks are sent at time depending
upon 4 ) From Mandis where the trucks have been unloaded ,roadside vendors and

pull carters buy fruits and vegetables to supply in households Recruiting best of
talent in retail from all around the world Recently in August 2011 Mukesh Ambani
did a 3rd rejig of his top management at Reliance Retail. Rob Cissell of Walmart will
be taking over as chief executive officer (CEO) of Reliance Retail. Cissell has been
with Walmart in China for several years and has recently resigned. He will be
accompanied by one of his former colleagues from Walmart China called Shwan
Gray. He will be taking over as chief operating officer (COO) of the Reliance Retail
business. Their mandate is to turn the business around and make it profitable within
the next two years.Initial contract has been signed for two years only. They will have
to focus primarily on food, FMCG and electronics business. Secondly, they will also
have to focus on the big plans for the cash and carry segment that Mukesh Ambani
announced during his speech in the last AGM. These core focus areas which are
expected to turnaround the retail business for Reliance. Early last year Gwyn
Sundhagul who was with Tesco team in Thailand was hired to takeover Reliance
Retail business. He along with 20 senior managers moved in from Tesco Thailand to
take over the business. They restructured the entire value format and started
focusing on the big format of Reliance Retail. However, things did not match up to
the expectations of the top management of Reliance Industries. So lets see how
much success the new management team could bring to the loss suffering chains of
Reliance Retail Door to door selling by Reliance Fresh Reliance Retail is the first
national retailer to try direct selling Basic motive is to increase the sales of its
private labels which always had higher margins than national brands as in previous
years private labels of Reliance has not been such a success compared to its
competitors Future Group Reliance Retail has begun door-to-door direct selling
through housewives and housing societies to boost sales of its private brands such
as Sudz detergent, Amara soaps and Healthy Life food items.Its subsidiary Reliance
Home Products has launched a 'Home Club' initiative on a pilot basis to sell products
at consumers' doorsteps at 30% discounts through members-primarily housewiveswho will earn 10% of their sales amount as commission.This is an attempt to sell our
products at wholesale prices which could not only exhaust the inventory that has
been piling up but also create a new sales channel Competitors Move: The following
are the reasons for changes in Reliance Freshs Strategy and some of the
highlighting news articles related to the competitor: Future Groups Big Bazar
Pantaloon earmarks Rs900 crore for retail space news Leading retailer Pantaloon
Retail India Ltd (PRIL) has allocated Rs900 crore over the next three years on 9
million square feet of retail space, which it had already booked for expansion across
India for expansion. The move by the Kishore Biyani-promoted Future Group is being
seen as a measure to ensure it had enough expansion space in the event of
multinational firms expanding their footprint into the Indian retail sector with the
entry of FDI in multi-brand, when it is allowed. "Supply of fresh quality real estate
space within large Indian metropolises is increasingly becoming scarcer. The
demand for this space is also expected to increase significantly in the near future as
more retail companies vie for this space," PRIL said in an investor document. The
group said, envisaging the future scenario, it launched an aggressive strategy of

securing quality real estate for its future expansion plans and had booked over 9
million square feet of retail space. Sources say, the group had set aside Rs800-900
crore for the purpose. Around 60 per cent of the total retail space that the group
had booked would be used to set up Big Bazaar stores. Big Bazaar Assists Tata
Motors Increase Nano Sales Kishore Biyani's discounted retail format Big Bazaar,
which commenced the idea of 'Sabse Sasta Din' some years back, is now selling
Tata Motors produced worlds cheapest car Nano. In a new move, Tata Motors has
inked a deal with Future Group to sell the smallest car in Big Bazaar outlets. Future
group's Customer Strategy president Sandip Tarkas, who heads this initiative at Big
Bazaar satted, There is a lot of commonality between Big Bazaar consumers and
prospective Nano buyers. Big Bazaar as a concept appeals to the masses and with
over 150 million footfalls every year, we are trying to see how we can sell Nano,
which has a similar positioning. This is the initial time Big Bazaar is selling a car in
India. As per industry functionaries, Big Bazaar has already sold over 450 Nanos
since the trial started a month ago. IDBI Securities research head Sonam Udasi said,
Tata Motors may have now realised that for a product like Nano, conventional
distribution system such as car showrooms can only help to an extent. Big
Bazaar's customers, mostly value conscious people, will directly fit in the profile of
Nano buyers," Sonam added Walmart in talks to pick up stake in Future Group's Big
Bazaar MUMBAI: At a time momentum is building to allow foreign players into frontend retail, senior officials of the Future group and Walmart have met at least five
times in the past four months, raising the possibility of an alliance between India's
largest retailer and the world's largest retailer. If the alliance fructifies, it could
reconfigure organised retail in India. Four executives from the two camps with
knowledge of the talks confirmed that Future Group owner Kishore Biyani visited
Walmart's headquarters in Bentonville, US, last December where he met Doug
McMillon, president and CEO of the American company. Biyani was accompanied by
B Anand, director of finance, and Damodar Mall, director of integrated food strategy
at the Future group. Since then, Hong Kong-based Leigh Hopkins, vice-president
(M&A Asia) of Walmart, has visited the Future group's office in South Mumbai at
least thrice, the latest being last week, said three of those officials. Biyani declined
comment on the talks with Walmart saying, "There are too many issues". "There is
nothing there," he added. Walmart India President Raj Jain denied the talks. "At the
moment, we are not in any alliance talks with the Future group," he said after a long
pause, carefully measuring his words. Walmart US did not respond to an email sent
last Friday. The meetings between the two sides could have an impact on their
respective partnerships in India an existing one for Walmart and a prospective
one for the Future group, both of which have been beset by issues. Walmart has had
an equal joint venture with the Bharti group since 2006: Bharti Walmart. However,
this partnership is 'non-exclusive' in nature, which means Walmart can forge other
alliances in India. Bharti Walmart operates in the wholesale and back-end segments
the two areas in retail where foreign players are currently allowed. Walmart, the
world's largest company with revenues of $408 billion in 2010, has reportedly been
frustrated by the joint venture's slow pace of expansion. So far, it has opened five

wholesale stores under the brand name 'Best Price Modern Wholesale'. In calendar
2009, according to data from the Registrar of Companies, the JV lost Rs 151 crore on
revenues of Rs 198 crore. "Maybe Bharti is not investing so much as Walmart would
like it to do," said Harminder Sahni, founder, Wazir Advisors, a boutique consultancy.
"So, there is a possibility of Walmart bringing another equity partner to ramp up."
Big Bazaar special offers for different events (Cricket World Cup) VIJAYAWADA: With
the aim of connecting cricket lovers to the ICC Cricket World Cup 2011', retail major
Big Bazaar unveiled a range of merchandise at a fashion show held on Wednesday.
Ranji cricketer Swaroop unveiled the collection during the show. Store manager K.
Bhanuprakash said that lovers of cricket around the world were gearing up for the
ICC Cricket World Cup 2011 with just about 44 days to go for the start. We are
delighted to be associated with the ICC as the authorised retailer for the World Cup
merchandise. Through our range of offerings in apparel, home and personal care,
we attempt to cement a strong relationship with our customers by enabling them to
express their appreciation and cheer for cricket by sporting the fan look, he said.
Cricketer Swaroop said: It has been a pleasure to be associated with this event at
Big Bazaar. I would like to invite all cricket lovers to show their spirit for their
favourite team and the player by wearing the authorized ICC CWC 2011 fan
merchandise available at Big Bazaar stores. Mr. Bhanuprakash said Big Bazaar
offers specially designed cricket merchandise for men, ladies and kids. The range
includes sports tees, active dry tees, track pants, shorts, sweatshirt, caps, head
bands and more. Future Group To Open 30 Big Bazaar Outlets By 2012 Future Group
promoted by Kishore Biyani , which runs Indias largest retail chain in both value
and lifestyle formats, on Thursday said it plans to open 25-30 Big Bazaar outlets by
June 2012, and will invest Rs 300-crore for the same. We are planning to add 25-30
stores on the Big Bazaar front. Our target for this year is 30 stores for Fashion at Big
Bazaar and we already have 13 stores, so real estate provided we should be able to
achieve our target, Future Group Future Value Retail Joint CEO (East & South)
Sadashiv Nayak told PTI. The Future group currently owns 152 Big Bazaar stores in
the country. We will be investing Rs 300 crore for Big Bazaar and for the standalone (Fashion) it should be another Rs 70- 80 crore, he said on the sidelines of
Amar Chitra Katha (ACK Media) scholarship event. Revamping Reliance:: Our own
Business Plan In context of India we consider ourselves no less than people hired
from Walmart ,no is sure whether they would we able to turn Reliance Fresh into
profits but we are confident about ourselves that our plan would definitely make
Reliance one of the top three players in organized Retail business Though reliance is
there on the top in terms of market capitalization in our stock market,and have a
very operates in different kind of businesses ranging from oil and gas to
communications , retail,construction and many more.But from past one year it is
also seen the share of Reliance Industries Limited is on a decline though this point
may not be directly related with our case but somehow it is evident that people are
loosing hope in Reliance as a brand There we cannot be sure about the reasons for
it as Reliance as a whole.in some businesses like marketing operations in Petroleum
was a complete failure.Now coming to retail it is already discussed in the case the

problems they faced. But According to me the only major problem Reliance Fresh
had was the protests from local vendors and vegetable sellers. Some how they
failed to understand the political environment which plays an important role in
doing a business in India.But again that was much of an exaggeration and hype
created by Reliance about their future plans.But now the whole scenario has
changed , now there are many more players in organized retail and there is no
protest from local sellers as the market is big enough so that both the segments
could flourish well successfully. Once I was thinking that no retail chain work on
certain factors which could make them successful in business and have them to
have a competitive edge .That certain factors have already been acted upon by
Reliance in recent past and that we have done in modern policies adopted by the
chain ,If you analyze them carefully you would see they are not leaving a single
stone unturned and you name a management function whether its supply chain,
direct selling they are good in it and somewhere better than their competitors too
But where as other chains such as Big Bazaar are much ahead of Reliance Fresh
both in terms of profits and revenue. So definitely the chain need to be revamped.
So critically analyzing the case we came out with our following plan on which they
could work upon . Reliance need to work upon a term known as Value which never
reflect in any of their business.You cannot be successfully just by hiring top people
that Reliance Fresh itself knows from their past experiences. Customer should get
something more by coming to your store and just not the product they are coming
for. There should be a feel good factor as we are just selling hopes in the market
and not the product or services. So following things could be done by Reliance Fresh
in order to revamp itself. An extensive Market Research They could hire a firm who
could research for them on following aspects: Are people aware about Reliance
Fresh? Whether they have visited the store or not? Were they satisfied or not? If
not satisfied why not? What all improvements could Reliance Fresh do? What is
the most important factor that motivates you to go to a particular grocery and fruit
and vegetable chain? As we know market research takes a time till then following
actions could be taken by Reliance Fresh in order to revamp itself WAREHOUSES A
lot need to be done to create a brand image about the chain and as talked earlier
also about the value generation, so if Reliance fresh is successful in doing it by
some value to the society it would have a lasting effect and position our brand in
customers mind Though our plan for this value creation might seem aggressive but
is absolutely feasible keeping in mind the potential of Reliance group as a whole. As
we all are aware about the fact there is shortage of warehouses in India which every
year result in wastage of thousands of tonnes of wheat, rice etc and also somewhat
a cause of food inflation in India. So Reliance could collaborate with government
that is a PPP model and set up warehouses in various parts of the country where
government would let the farmers and even other local retailers store their grains in
exchange of a minimal charge. In return the government would give the grains to
Reliance at subsidised rates which it would sell to people below poverty line people
through their special counters in front of Reliance Fresh stores and people above

poverty line will also get grains at discounted prices. So this will create a wave in
India about Reliance as a valuable brand and point of sales being Reliance fresh will
revamp the image of chain and customer will definitely some other products also
will they come to buy grains at discounted prices So this single activity could benefit
Reliance Fresh in following ways 1.Positive word of mouth about Reliance Fresh 2.
Good contacts and positive relations with government agencies and local vendors ,
the main cause of shutdown of its various stores in 2008 3. Definitely a noble
cause for BPL people and could be termed as a greatest CSR activity by any
company in recent past Venue to Launch Good/Service As we could see majority of
players are only playing on Pricing strategies, discounts and promotions and none of
them is focussing on the customer feel good factor. So here we have a strategy : As
you know there are beverages, biscuits or any ready to eat dishes which are being
launched everyday by various companies. So we would allow them to distribute free
samples in our store to the people shopping or they during initial month of the
launch they could have a kiosk give the product at discounted price to make
customer try your product and it is always difficult to make the customer buy your
product first time, if your product is good then definitely he will buy it even without
discounts. The company who is putting its stall have a benefit here that the
customer is already in a mood to shop which is not always when they display a new
product at road side They are getting air conditioned space for their stall or
salesman giving samples free of cost Reliance Fresh is benefiting as it would create
a brand recall and some customers would come just to get free samples and will
land some other products from the chain also Customers would feel happy obviously
when they come tired from somewhere and on the entry they get a energy drink as
a free will obviously lift their motives to buy something and would make them feel
special which should be the ultimate goal of any business You might be thinking that
is not always that some brands would be there to give drinks and other products as
free samples then this strategy would not work but then also we have chalked a
plan and that is positioning your Private Labels whether it is biscuits, jam, butter ,
bread or drinks. As a retailer everybody wants their private labels to be successful
as it always had 15-20% more margin than national brands, but as stated in the
case private labels of Reliance Fresh have not been that successful and people are
still hesitant to buy them so it would be a great way to promote them Never
Experienced Comfort in Retail This is a concept I guess never had been done by any
retail chain the world It is usually we Indians imitate the models of business run in
western countries, but we know consumer behaviour of Indian people is one of the
most complex and not easy to understand Take the case of Restaurants we still
prefer the food to be served at our Table instead of self service , even in a buffet
system people prefer some things like Tea or toasted breads to be served at table
rather than do it themselves and now take the case of our houses we have maids
for washing clothes, dishes and cleaning home something different from our
western counterparts so we are somewhat spoilt or we could say we could afford it
due to cheap labour available in India So why not introduce this concept in a retail

store. Suppose I just need bread and butter and that too of a size and brand I
always tale so there is no other brand I want to see and I am coming tired from our
office and I dont want to go to the other side of the big retail store just for these 2
products Here comes our plan to the rescue Why not there could be some helpers
standing near the cash counters or the main entrance of the store and could take
your order and bring you the necessary items and in the same time I could be there
in the cash counter line which also sometimes take time. So it benefitted the
customer in the following ways Saved from the physical labour Saved time A
feel good factor Now I would like to answer the possible questions which would
come in your mind after reading this point of ours Everybody will order the goods to
the helper standing there and will result in chaos? But you should not forget that
everybody have not decided exactly which product, brand ,size , quantity they have
to buy so it is not meant for them , some people just come to these outlets for these
purposes only that the goods here are properly displayed and they properly
compare the prices and other features and then only buy What type of customers
are you targeting by this policy? Who usually are tired after coming from their
businesses or jobs and does not want to roam in the store Who are usually short
on time Who have pre decided on the product, brand, size and quantity of product
they want to buy Who are too old to learn and does not fit themselves in this
concept of buying product, I would like to give my example of my parents itself. I
am from Roorkee and recently an Easy Day store opened there and my parents was
quite satisfied with the availability of goods there, that time I was with them and
searched all the items what my mother told me she wants, now when I came to
hostel my mother said she never went there again as she does not want to search
the products there and just dont like the concept as she is used to her early habit of
ordering the goods. So there is a large class of people we are targeting here which
is still left by almost every grocery and fruit retail chains present in India While I was
writing this point an another concept came in my mind that is somewhat related to
the ordering thing only but its ordering pre ordering on the phone or through
internet. It would again save a lot of time and would be convenient for todays tech
savvy generation for sure. Customer could just order the products we want on the
phone or internet and the store would keep them ready in a bag and the they can
pay for it while collecting the goods from the store or could just pay also through
their net banking accounts or debit/credit cards In addition to this mobile application
could be developed for ordering and even payment delivery. As we know with
changing lifestyle and increase in smart phones it is the most convenient method
for many nowadays. Even the concept of mobile wallet has come in which you could
have pay your various bills or avail other facilities without having a banking account
and just having balance in your mobile wallet . So possible collaborations could be
done in this field too. Wi fi Enabled Stores Again we are leveraging on the
technology and targeting youth generation and office goers by this policy Though it
may sound a very small policy but I am sure it would be again a first in a food and
grocery retail chain. Though for you and me internet might not be so important that

it might urge you to go to a Reliance Fresh store to access it but for some it is
definitely For someone access to share market is an essential every minute , for
some an e-mail might change their fortunes and more some just to update a status
on Facebook or to see what people have commented on the picture I recently
uploaded on their facebook accounts.. So its for sure todays generation feel
handicapped without Internet and we are their support or just a motivating factor
for a child to accompany his parents to a reliance fresh store Now the reader have a
question in mind that what if people would come to just access internet and not buy
anything??? Definitely it would happen but again on the positive side we sell hopes
and even if just 1 customer buys from 5 who just came to access internet it is a
success for our chain and definitely do not forget again the +ve word of mouth and
brand value it would create Special assistant for pregnant women and senior
citizens Just after reading this point it comes in your mind that usually pregnant
women and senior citizens do not go to shop alone but then you are not aware
about the changing demographic patterns and lifestyle in India. It is usually seen in
metros the concept of joint families in almost coming to an end and more and more
nuclear families are coming into picture and even both husband and wife are
working. So keeping this in mind there would be employees that too ladies
employed to keep care of such strata of people and would assist them in buying
anything they needed and even bring goods from them if it is located somewhere
far in a store A whole new re branding need to be done Though it would be
expensive on the companies part but still it is essential once and they could
leverage it benefits in long term. It could include Sponsoring a sports event
preferably a cricket series a first by a retail chain of its kind They could also rope a
brand ambassador Designing an ad which highlights the points discussed above
like its Ready to help Have something for everyone whether you are student,
working professionals, housewife, senior citizens Availability Tie up with big stores
in semi urban areasIt is essential for any chain to widen its reach and expand itself
to more and more cities But according to us retail is all about Space and People. So
with ever increasing property prices it is not feasible for any chain to keep buying
land in which ever city they want to enter, even getting land on lease at appropriate
place is not always easy in a city /town So they could have a tie up with the popular
store of a town which should have following criterias fulfilled Should be big
enough Should be popular among local citizens Should be credible and reliable
So how did local store benefit from it? They get to use the name of Reliance Fresh
which is a big brand in itself in return of a margin they have to give to Reliance
Renovation of shop and new paint and boards free of cost They would have a
flexibility to use supply chain of Reliance Fresh or he could his own suppliers
Management tips from Reliance on various aspects of business He would be able
to sell the goods at cheaper rates compared to other stores in the town How did
Reliance Fresh benefit from it? Help them to extend their chain in semi urban cities
Saves the cost of buying land and setting up a store Access to the customer base

which already trust their local shopkeeper Feedback System As said in service
sector a dissatisfied customer never complaints but does not returns back So a
proper feedback system needs to be there to ask people Whether they are satisfied
with the services given by the chain or not ? What all could be improved in our
existing model? What is the most important factor you consider in a while going to a
particular grocery and vegetable retail chain? Transparency and surprise audits at
regular intervals There should be surprise inspections at various stores to keep in
check Whether inventory is properly handled or not No goods should go out of the
store without proper bills that is to stop leakage Employees are properly trained or
not to handle various queries of customers and are courteous to the customers No
employee is leaving the store before time or taking leave without permission
Immediate action should be taken against an employee if he is found guilty This
fear of surprise checks will help Reliance Fresh to keep things in control References
www.ril.com www.economictimes.com www.financialexpress.com www.ibef.com
www.premium-papers.com/post/retail www.ehow.com/pricing-strategy
www.businessknowhow.com/marketing www.vainteractive.com/inbusiness/editorial/sales