Professional Documents
Culture Documents
Type Public
Traded as BSE: 500325, NSE: RELIANCE, LSE: RIGD
BSE SENSEX Constituent
CNX Nifty Constituent
Industry Conglomerate
Headquarters Mumbai, Maharashtra, India
Products Petroleum
Natural gas
Petrochemicals
Textiles
Retail
Telecommunications
Media
Services Security services
Website www.ril.com
Reliance fresh
Reliance Fresh is the convenience store format which forms part of the retail business
of Reliance Industries of India which is headed by Mukesh Ambani. Reliance plans to invest
in excess of 250 billion (US$3.9 billion) in the next 4 years in their retail division. The
company already has 1691 Reliance Fresh outlets across the country. These stores sell fresh
fruits and vegetables, staples, groceries, fresh juice, bars and dairy products.
A typical Reliance Fresh store is approximately 3000–4000 square feet and caters to a
catchment area of 2–3 km.
After launch, in a dramatic shift in its positioning and mainly due to the circumstances
prevailing in Uttar Pradesh, West Bengal and Odisha, 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.
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 say the store’s 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 Trends, 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.
Competitors of Reliance
» Strengths are attributes of the organization that are helpful to the achievement of the objective.
» Weaknesses are attributes of the organization that are harmful to the achievement of the
objective.
» Opportunities are external conditions that are helpful to the achievement of the objective.
» Threats are external conditions that are harmful to the achievement of the objective.
After analyzing all the aspects of Reliance retail the TOWS factors are listed below and explained:
Strengths:
The strengths of any organization lies in the different attributes that a firm carries with itself and
makes it a powerful standing in the market. Such attributes of Reliance retail are discussed below:
a) Brand Equity:
Reliance retail is a vertical of Reliance industries limited and one of the leading firm in India. It
is listed among the “Fortune 500 companies of world” by Forbes magazine. A reliance industry
Ltd apart from retail has many SBU’s (Strategic Business Units). Starting with textiles in the
late seventies, Reliance pursued a strategy of backward vertical integration - in polyester, fiber
intermediates, plastics, petrochemicals, petroleum refining and oil and gas exploration and
production - to be fully integrated along the materials and energy value chain. So, the brand
equity is one of its strength.
c) Backward Integration:
Reliance retail is among the few organizations which entered Indian Retail sector with
backward integration. Before discussing the aspect of backward integration as per the Reliance
Retail let’s discuss the concept of backward integration.
Reliance retail has conceptualized the concept of contract farming for their need of agricultural
products and for other identities like they have different SBU’s they are as follows:
Subsidiaries of Reliance retail Ltd Function Reliance Dairy Foods Limited Producing dairy
products under “Dairy Pure” Label. Reliance Integrated Agri Solutions Limited Producing Agri
products under labels ‘Reliance Select and Value’. Reliance Lifestyle Holdings Limited
Producing Home furnishing products under the ‘Home One’ Label. Reliance F&B Services
Limited Producing food and beverages under the label ‘Reliance Select and Value’. Reliance
Food Processing Solutions Limited Producing processed food under ‘Reliance Select’ label.
The strategy of backward integration by Reliance retail endows it with much strength like:
» Minimizing the supplier’s power as explained in the ‘Michael Porter Five forces model.
Reliance retail is among the few organizations which entered Indian Retail sector with Horizontal
integration. Before discussing the aspect of Horizontal integration as per the Reliance Retail let’s
discuss the concept of horizontal integration.
Before entering Indian market Reliance retail acquired ‘Adani Retail’ a famous supermarket chain
in Gujarat. Apart from that the multi-format presence of Reliance fresh is also an example of
horizontal integration.
In today’s world being functional is not important the thing which is important is being efficient.
The areas which make an organization more efficient are the backend operations and usage of IT.
Reliance retail Ltd entered Indian market after doing a research for 2 Years. The backend operations
are strengthen by using specific interface of Information and technology. Reliance Fresh (the SBU
of Reliance retail) was the first retail firm to use SAP in retailing in India, it is an ERP system helps
in Warehouse, Vendor and Supply chain Management.Therefore making backend operations more
efficient.
The POS (Point of Sale) software which is used by reliance retail is “RETALIX” it is one of the
finest retail POS software worldwide and also used by many global players.
Reliance industries Ltd the umbrella company of Reliance industries Ltd. Is working in Indian
market from seventies have a team of experienced and qualified managers. There are many
examples which can be quoted to defend this statement. The examples are as follows:
» Reliance retail entered Indian market with backward integration to reduce the cost and suppliers
dependency.
» When Reliance Fresh outlets are opposed by U.P. (Uttarpradesh) Govt. and were being closed.
The management reacted immediately and utilized the Space, Distribution Centre for the other
formats. For example Opening Reliance Jewel store at Shopprix Mall; Sector-61; Noida..
Weaknesses: Weaknesses are attributes of the organization that are harmful to the achievement of
the objective. A weakness is a opposing forces to a company unable it to achieve its goals and
objectives. There is a quote that there is no success without difficulties. The weaknesses are the
areas which are developed to win because sometime “Even dreaming for roses one has to through
with the thorns’. I tried to find as many as weaknesses I can collect and search but I am unable to
find more than two weaknesses. The weaknesses I am unable to understand are as follows:
a) Multi-Format Presence:
Presence of Reliance retail in horizontal integration is one of the strength but same way it is
weakness too. Having a big organization structure increases following costs: » Increase in the cost
of operations. » Increase in workforce management.
Presence of Reliance retail at prime locations gives it strength of visibility and awareness but the
increasing realestate cost in India is increasing the operating cost of Reliance retail store. Hence,
reducing the profits simultaneously.
Reliance retail has many joint ventures with the foreign retail brands but due to the primecrisis in
US market has slow down the speed of expansions and new product offerings.
Opportunities: Opportunities are external conditions that are helpful to the achievement of the
objective. Opportunities are the platforms where a firm can perform and achieve its objectives and
goals.
Indian retail market is growing with a high speed Indian market is heading the charts for the GRDI
(Global Retail Development Index)as per the AT Kearny. Indian Market is the most preferred
market for retail investments.
b) Increasing buying power of Indian consumers: the buying power of Indian consumers is
increasing. As per the research of Global Retailing 2006, IGD it is around 414 US$ annually and it
is increasing due to the increase in the number of working women’s.
There are many untapped markets which are still waiting the entry of modern retailing. These areas
include the Tier-2, Tier-3 cities and rural India.
Threats:
Threats are external conditions that are harmful to the achievement of the objective. The threats
involved in context to the Reliance retail are as follows:
a) Increasing competition:
increasing competition due to the entry of many national and global players (due to the entry of
FDI). There are many players like Pantaloons Retail, Aditya Birla group; Bharti, Tata, Subhiksha,
RPG and Shrilalmahal etc are some of the national players and some of the global players like Wal-
Mart, Metro, SPAR, Carrefour, and Woolworth etc.
c) Government restriction:
Government restrictions on the concept of contract farming in some states relicts the concept of
backward integration opted by Reliance retail. Apart from that entry of modern players in some of
the states and rural areas of India {Uttarpradesh (state)and Kerala (Rural)} hampering the expansion
plans of Reliance retail.
increase in the operating costs due to increasing price of real estates, Sales tax and petrol
directly increasing the y operating cost and hence a threat.
After analyzing all the aspects of TOWS analysis I conclude that the Reliance retail has more
strength and is able to withstand with the competition and will able to achieve its goal and
objectives.