1.

Introduction:

Reliance Retail Limited (RRL) has started its retail business in India from 2006. The
reliance retail limited is one of the top ranking retail company in India function under the
giant Reliance industries Ltd.
RRL increased its footprint to more than 900 stores in 80 cities across 14 states in India.
Keeping in sync with its big super and hyper store strategy, RRL added new formats to
its spectrum in the last years to form of specialty store such as Reliance Fresh,
Reliance Digital , Reliance Trends , Reliance Wellness (health, wellness & beauty),
Reliance Footprint (footwear), Reliance Timeout (books, music & entertainment),
(automotive products & services) and Reliance home furnishing .
The objective of this report is to analysis external retail business environment in India
and notice business strategy of company that will affect the business operation in future.

2. PEST analysis of RRL:

As per the current analysis of Indian retail industry it found that there are some external
environment factors that influence the RRL business in India. They are as follows:

2.1. Political influence:

The political influences on the retail industry are probably the most burning concern in
India. The Indian government has increased the FDI (foreign direct investment) about
51% in retail sector is disappointing for domestic player.
Several political parties particularly the ones espousing socialism have opposed the
opening of the retail store and supporting to give reservation of the traditional retail
shops. This has resulted in targeted attacks on many retail store including RRL in
different state such as Uttar Pradesh, West Bengal and Kerala.

Political influence • New FDI in Indian retailing

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 • Ambivalence between political groups.
• Tremendous resistance between enchanted groups for
any changes brought by government

Economical influence • Economic down turn

• Inflation
• Bank interest rate
• Different Tax in different state
• Government spending

Social influence • Consumer awareness

• Low income
• Abundance of local shop
•
Technological • poor infrastructure
influence • customer relationship
• technological distribution

(PEST analysis of RRL)

2.2. Economic influence:

The economic down turn has severely hit the business of Reliance retail in all over
India. The company has closed some warehouse and reduces the employee in different
retail stores in India. Moreover, due high inflation in the market the margin on the
product has come down, that reduces the average profit of stores.
The bank interest rate has increased last couple of years which restrict the borrower to
get money from bank. Moreover different state has different tax policy in India, even the
transportation taxes of goods are varied into different state.
The Indian government has not spending sufficient money to promote the Indian retail
sector.

2.3. Social influence:

The Indian retail market is highly fragmented market. There are different social class
people living in the different parts of India. Majority of population of Indian is living small
town and village, and they are not very aware about organize retailing.
Future more, the average income to people is very low so they are more dependent on
local mom and pop shops.
They local Indian market in full of local small retail, they give regular credit to local
people and make good relationship, thus the local customer feel more comfortable to
buy product from unorganized local shop rather than organize retail store like Reliance.
2.4. Technological influence:

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The Indian technology is growing very fast but the distribution of technology in India is
not uniform. It mean the maximum customer is not able access these technology. That
create problem to reliance retail of connect with customer.
The reliance retail is not working in customer relationship especially in rural area than
other retailer, like ITC group, Nestle etc. These retailers have been adopt new strategy (
E-choupal) in which they connect the rural area customer through internet to teach
them about new agriculture practices, market and weather report .

3. External environment analysis of RRL:

3.1.Opportunities:

The Reliance retail wants to build a high-profitability business from different specialty
store .There are some points that seem to be more profitable in future business of
reliance retail. They are as follows:
• The company has strong infrastructure and management.
• The company has got strong brand image in the market.
• Joint venture with international players and strong linkage with first tier supplier
• Sufficient fund to investment in the market

3.2. Threats:

There some important point has noticed in during last couple years in the strategic
business planning that could be a threat for RRL future performance.
• High market capturing policy: due to this policy company has faced problem in
the Uttar Pradesh (Name of a state). They acquired stores in the Uttar Pradesh
but due to political reason company has closed their operation in this state.
• Recruitment of employees on high salary
• Poor back hand linkage with supplier such as farmer etc.
• No self or contract manufacturing practice
• Fully dependent on other manufacturers
•
4. Five Force’s Analysis
The external environment of Reliance retail ltd (RRL) definitely looks competitive.
Although RRL uses its clout around and bargains at the best possible lowest prices
stretching suppliers beyond the limit, moreover some giant FMCG supplier like
Hindustan uniliver Ltd, P&G, Godrej etc are trying to join RRL for increasing the market
share. Thus the bargaining power of supplier is very low in market.
The Buyer are more sensitive toward the price, they usually buy cheap product from
intense bargaining. They are much local option present in the market.

Power of Supplier • Large number of supplier

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 • Supplier like Godrej and HUL (Hindustan uniliver Ltd) are
welling to integrate forward
• More option available in the market

Power of Buyer • Customer are more price sensitive propensity to pay low
•

Threat of new • International player looking to foray in India

entrants • Current change in FDI policy
• Domestic player looking to start retail store

Threat of • Customer has more option

substitute • Local product availability
product
Completive • Sufficient number of competing firm in organize retailing
rivalry within an • Glut of mom and pop shop in the market
industry • Competitor use various new strategy of attract the customer

Five force analysis of RRL

The recent change in the FDI in Indian retail sector has become more problem for RRL.
The international players are entering in Indian market through joint venture, e.g. Tata
and Tesco, Bharti and Wal-Mart etc. Some domestic players are looking to start retail
business in the local market.
The local Indian market is full of mom and pop stores. They sell product on credit to
local customer without taking any extra charge. In addition, some producer like former,
bakeries etc. are selling product directly to the local maker on cheap price. They do not
have any overhead expense to sell that product so that they give stiff competition to
Reliance.
The other giant retailer such as Bhatri, ITC group and Nestle has started new concept
like E-choupal, E-procuring etc. in the market. They are not only procuring the product
from local market but also helping the local producer in their production. These types of
new business concept are giving more completion to RRL.

BCG analysis Of RRL:

The reliance retail is dealing in various product categories such as FMCG, consumer
durable, home furnishing etc. As per BCG analysis of RRL the performance of RRL is
as follows:
The market growth of FMCG product such as detergents, cosmetics etc are very good
in India. That is star for reliance to generate good money from their high market share.
On the other hand from cut vegetable and fruit company is earning low profit form high
market investment.
Reliance retail has recently diversified its retail business in consumer durables,
furniture, food ware and health care area in the form of specialty store. And the market
of these product is growing very fast due to urbanization and change in life style of
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Indian people. So the company needs more investment in this area to increase its
market share with demand.

High Low
Market share
• Home base daily use
H FMCG product
ig
h • Apparels and

Clothing • Consumer durable e.g.

TV, mobile etc

• Furniture and home

M furnishing
ar
ke • Footwear
t
• Medicine and health
Gr care
o
wt

• Cut vegetable product

• Jewellery and gold
L • fruits
o
w

(BCG analysis of RRL)

Future business perspective of RRL:

From the observation of last couple years performance of RRL in the market. it seems
that RRL has been not achieve the market pace, what they want. The current down turn
in the market RRL has done massive change in its business strategy. The concept of

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specialty store such as jewellery store, mobile store, etc. would be the power full in the
future of RRL business.

Moreover, RRL should give more attention to strengthen its backhand process with first
and second tier supplies, through contact farming, joint venture etc. this type of
integration would definitely give extra potential to RRL to grow in the market.

Conclusion:

In the conclusion, it seems that the future of retail business of India is bright. The India
has got high customer base in different segment and the product demand in the market
is also growing very fast. The RRL is very strong business group in India. They have
also got strong brand image in the market. But in retail business Reliance is not very
expertise. So RRL has to change some of its business strategies in the current
operation to get edge over others in retail business.