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.
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

INTRODUCTION
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The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's

largest private sector enterprise, with businesses in the energy and materials value chain.
Group's annual revenues are in excess of US$ 25 billion. The flagship company, Reliance
Industries Limited, is a Fortune Global 500 company and is the largest private sector
company in India.
Backward vertical integration has been the cornerstone of the evolution and growth
of Reliance. Starting with textiles in the late seventies, Reliance pursued a strategy of
backward vertical integration - in polyester, fibre intermediates, plastics, petrochemicals,
petroleum refining and oil and gas exploration and production - to be fully integrated along
the materials and energy value chain.
The Group's activities span exploration and production of oil and gas, petroleum
refining and marketing, petrochemicals (polyester, fibre intermediates, plastics and
chemicals), textiles and retail.

OVERVIEW OF RETAIL INDUSTRY :

The sale of goods or commodities in small quantities directly to consumers is
known as retailing. A "retailer" buys goods or products in large quantities from
manufacturers or importers either directly or through a wholeseller and then sells smaller
quantities to the end user.
Retail is Indias largest industry, accounting for over 10 percent of the countrys
GDP and around eight percent of employment. Retail in India is at the crossroads. It has
emerged as one of the most dynamic and fast paced industries with several players entering
the market. That said, the heavy initial investments required make break even hard to achieve
and many players have not tasted success to date. However, the future is promising; the
market is growing, government policies are becoming more favourable and emerging
technologies are facilitating operations.
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The Indian retail industry in valued at about $300 billion and is expected to grow
to $427 billion in 2010 and $637 billion in 2015. Only three percent of Indian retail is
organised. Retailers of multiple brands can operate through a franchise or a cash-and-carry
wholesale model.
Retailing in India is gradually inching its way to 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. Modern retail has entered India as seen in
sprawling shopping centres, multi-storeyed 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 organised
retail and growth in the consumption by Indians is going to adopt 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 working-women population and emerging opportunities in the services sector are
going to be the key growth drivers of the organised retail sector.

INTRODUCTION TO THE COMPANY

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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 Rs 25000 crores in the next 4 years in their retail division. The
company already has in excess of 560 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 1-2 km

HISTORY
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.

Reliance Group
6

Reliance Industries Limited (RIL) is an Indian conglomerate holding company

headquartered in Mumbai, Maharashtra, India. Reliance owns businesses across India
engaged in energy, petrochemicals, textiles, natural resources, retail and telecommunications.
Reliance is the most profitable company in India, the second-largest publicly traded company
in India by market capitalization and the second largest company in India as measured by
revenue after the government-controlled Indian Oil Corporation. The company is ranked
114th on the Fortune Global 500 list of the world's biggest corporations, as of 2014. RIL
contributes approximately 20% of India's total exports.
In 2001, Reliance Industries Ltd. and Reliance Petroleum Ltd. became India's
two largest companies in terms of all major financial parameters. In 200102, Reliance
Petroleum was merged with Reliance Industries. In 2002, Reliance announced India's biggest
gas discovery (at the Krishna Godavari basin) in nearly three decades and one of the largest
gas discoveries in the world during 2002. The in-place volume of natural gas was in excess
of 7 trillion cubic feet, equivalent to about 1.2 billion barrels of crude oil. This was the first
ever discovery by an Indian private sector company. In 200203, RIL purchased a majority
stake in Indian Petrochemicals Corporation Ltd. (IPCL), India's second largest
petrochemicals company, from Government of India. IPCL was later merged with RIL in
2008. In the years 2005 and 2006, the company reorganized its business by demerging its
investments in power generation and distribution, financial services and telecommunication
services into four separate entities. In 2006, Reliance entered the organised retail market in
India[ with the launch of its retail store format under the brand name of 'Reliance Fresh'. By
the end of 2008, Reliance retail had close to 600 stores across 57 cities in India. In
November 2009, Reliance Industries issued 1:1 bonus shares to its shareholders. In 2010,
Reliance entered Broadband services market with acquisition of Infotel Broadband Services
Limited, which was the only successful bidder for pan-India fourth-generation (4G) spectrum
auction held by Government of India.[ In the same year, Reliance and BP announced a
partnership in the oil and gas business. BP took a 30 per cent stake in 23 oil and gas
production sharing contracts that Reliance operates in India, including the KG-D6 block for
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$7.2 billion.Reliance also formed a 50:50 joint venture with BP for sourcing and marketing
of gas in India. In 2012, RIL set up a joint venture with Russian Company Sibur for setting
up a Butyl rubber plant in Jamnagar, Gujarat. The plant is scheduled to be operational in
2015 Presently, Vivek Lall is the President and CEO of New Ventures in the Chairmans
Office at Reliance Industries Limited.

Major subsidiaries and associates

8

On 31 March 2013, the company had 123 subsidiary companies and 10

associate companies.
Reliance Retail is the retail business wing of the Reliance Industries. In March 2013,
it had 1466 stores in India. It is the largest retailer in India. Many brands like Reliance
Fresh, Reliance Footprint, Reliance Time Out, Reliance Digital, Reliance Wellness,
Reliance Trends, Reliance Autozone, Reliance Super, Reliance Mart, Reliance Store,
Reliance Home Kitchens, Reliance Market (Cash n Carry) and Reliance Jewel come
under the Reliance Retail brand. Its annual revenue for the financial year 201213
was 108 billion (US$1.6 billion) with an EBITDA of 780 million (US$12 million).
Reliance Life Sciences works around medical, plant and industrial biotechnology
opportunities. It specializes in manufacturing, branding, and marketing Reliance
Industries' products in bio-pharmaceuticals, pharmaceuticals, clinical research
services, regenerative medicine, molecular medicine, novel therapeutics, biofuels,
plant biotechnology, and industrial biotechnology sectors of the medical business
industry.
Reliance Institute of Life Sciences (RILS), established by Dhirubhai Ambani
Foundation, is an institution offering higher education in various fields of life sciences
and related technologies.
Reliance Logistics is a single-window company selling transportation, distribution,
warehousing, logistics, and supply chain-related products, supported by in-house
telematics and telemetry solutions. Reliance Logistics is an asset based company with
its own fleet and infrastructure. It provides logistics services to Reliance group
companies and outsiders. Merged content from Reliance Logistics to here. See Talk:
Reliance Industries Merge proposals.
Reliance Clinical Research Services (RCRS) a contract research organisation (CRO)
and wholly owned subsidiary of Reliance Life Sciences, specialises in the clinical
research services industry. Its clients are primarily pharmaceutical, biotechnology and
medical device companies.
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 Reliance Solar, the solar energy subsidiary of Reliance, was established to produce
and retail solar energy systems primarily to remote and rural areas. It offers a range of
products based on solar energy: solar lanterns, home lighting systems, street lighting
systems, water purification systems, refrigeration systems and solar air conditioners.
Merged content from Reliance Solar to here. See Talk:Reliance Industries#Merge
proposals.
Relicord is a cord blood banking service owned by Reliance Life Sciences. It was
established in 2002. It has been inspected and accredited by AABB, and also has been
accorded a license by Food and Drug Administration (FDA), Government of India.
Reliance Jio Infocomm Limited (RJIL) previously known as Infotel Broadband, is a
broadband service provider which gained 4G licences for operating across India. Now
it is wholly owned by RIL for 48 billion (US$720 million). Sandip Das, former CEO
of Maxis Malaysia, is the current group president of Reliance Jio Infocomm.
Reliance Industrial Infrastructure Limited (RIIL) is an associate company of RIL.
RIL holds 45.43% of total shares of RIIL. It was incorporated in September 1988 as
Chembur Patalganga Pipelines Limited, with the main objective being to build and
operate cross-country pipelines for transporting petroleum products. The company's
name was subsequently changed to CPPL Limited in September 1992, and thereafter
to its present name, Reliance Industrial Infrastructure Limited, in March 1994. RIIL is
mainly engaged in the business of setting up and operating industrial infrastructure.
The company is also engaged in related activities involving leasing and providing
services connected with computer software and data processing. The company set up
a 200-millimetre diameter twin pipeline system that connects the Bharat Petroleum
refinery at Mahul, Maharashtra, to Reliance's petrochemical complex at Patalganga,
Maharashtra. The pipeline carries petroleum products including naphtha and kerosene.
It has commissioned facilities like the supervisory control and data acquisition system
and the cathodic protection system, a jackwell at River Tapi, and a raw water pipeline
system at Hazira. The infrastructure company constructed a 71,000 kilo-litre
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petrochemical product storage and distribution terminal at the Jawaharlal Nehru Port
Trust (JNPT) Area in Maharashtra.

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.
With a 27% share of world GDP, retail is a significant contributor to overall
economic activity across the world. Of this, organized retailing contributes between 20% to
55% in various developing markets. The Indian retail industry is pegged at $ 300 billion and
growing at over 13% per year. Of this, presently, organized retailing is about 5%. This is
expected to grow to 10% by 2011. RRL has embarked upon an implementation plan to build
state-of-the-art retail infrastructure in India, which includes a multi-format store strategy of
opening neighbourhood convenience stores, hypermarkets, specialty and wholesale stores
across India.
RRL launched its first store in November 2006 through its convenience store
format Reliance Fresh. Since then RRL has rapidly grown to operate 590 stores across 13
states at the end of FY 2014-15. RRL launched its first Reliance Digital store in April 2007
and its first and Indias largest hypermarket Reliance Mart in Ahmedabad in August 2007.
This year, RRL has also launched its first few specialty stores for apparel (Reliance Trends),
footwear (Reliance Footprints), jewellery (Reliance Jewels), books, music and other lifestyle
products (Reliance Timeout), auto accessories and service format (Reliance Autozone) and
also an initiative in the health and wellness business through Reliance Wellness. In each of
these store formats, RRL is offering a unique set of products and services at a value price
point that has not been available so far to the Indian consumer. Overall, RRL is well
positioned to rapidly expand its existing network of 590 stores which operate in 57 cities.
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During the year, RRL also focused on building strong relationships in the agribusiness value chain and has commenced marketing fruits, vegetables and staples that the
company sources directly to wholesalers and institutional customers. RRL provides its
customers with high quality produce that has better shelf life and more consistent quality
than was available earlier. RRL has made significant progress in establishing state-of-the-art
staples processing centres and expects to make them operational by May 2015.
Through the year, RRL also expanded its supply chain infrastructure. The
Company is fully geared to meet the requirements of its rapidly growing store network in an
efficient manner.
Recognizing that strategic alliances are going to be a key driver to its retail
business, in FY 2014-15, RRL established key joint ventures with international partners in
apparel, optical and office products businesses. Further, RRL will continue to seek
synergistic opportunities with other international players as well. This year, RRL will
continue its focus on rapid expansion of the existing and other new formats across India.

Retailing formats in India

Malls :

The largest form of organized retailing today. 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
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lend an ideal shopping experience with an amalgamation of product, service and

entertainment; all under a common roof. Examples include Shoppers Stop, Piramyd,
Pantaloon..

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. Further classified into localized departments such as clothing, toys, home, groceries,
etc.

Hypermarts/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.examples Big Bazar, Reliance hypermart.

Convenience Stores:
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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.

PROFILE OF COMPANY

Reliance Retail, Ltd. operates retail outlets in India. Its retail outlets offer foods,
groceries, apparel and footwear, lifestyle and home improvement products, electronic goods,
and farm implements and inputs. The companys outlets also provide vegetables, fruits, and
flowers. It focuses on consumer goods, consumer durables, travel services, energy,
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entertainment and leisure, and health and well-being products, as well as on educational
products and services. The company was founded in 2006 and is based in Mumbai, India.
Reliance Retail, Ltd. operates as a subsidiary of Reliance Industries, Ltd.

Headquarters

: Bombay Area, India

Industry

: Retail

Type

: Public Company

Status

: Operating Subsidiary

Company Size : 10,001 or more employees

Founded

: 2006

ORGANIZATIONAL STRUCTURE

ZONAL MANAGER

CLUSTER
MANAGER

AREA MANAGER

STORE MANAGER
COMMERCIAL
CUSTOMER
SUPERVISOR
ASSOCIATE
SERVICE

ASSISTANT STORE
MANAGER

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Popular Profiles at Reliance Retail :

Madhumita Mohanty : Deputy General Manager
Abhijit Sanyal : EVP & CE - Reliance Home Products Pvt Ltd
Prashant Narula : General Manager
Devendra Chawla : Vice - President - Business Head , Merchandising Head
Prasun Bhadani : Manager - Store operations and NSO
Sriram Mahadevan : Concept Head - Reliance Marts & Supers
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Rakesh Mehta : Commercial Head North

Nageswaran c k : VP, Operations
Kanwar Bhawani Singh : Business Head Reliance Wellness Stores

PRODUCT MIX AT RELIANCE FRESH

PRODUCT MIX OF RELIANCE FRESH

FRUITS & VEGETABLES

STAPLE
STAPLE

PF, BEVERAGE, F&V

NON-FOOD FMCG

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Food Retail Chain at Reliance Fresh

COMPETITORS OF RELIANCE FRESH

1. BIG APPLE
2. MORE
3. SABKA BAZAAR
4. FAIR PRICES
5. SUBHIKSHA
6. SPENCERS

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PRODUCTS AND BRANDS

The Company expanded into textiles in 1975. Since its initial public offering in
1977, the Company has expanded rapidly and integrated backwards into other industry
sectors, most notably the production of petrochemicals and the refining of crude oil. The
Company now has operations that span from the exploration and production of oil and gas to
the manufacture of petroleum products, polyester products, polyester intermediates, plastics,
polymer intermediates, chemicals and synthetic textiles and fabrics. The Company from time
to time seeks to further diversify into other industries. In January 2006, the Company
approved a plan to establish a retail business through a subsidiary Reliance Retail Limited
that will operate, among other things, supermarkets, convenience stores and specialty stores
across India. The Company approved initial expenditure of US$ 750 million to fund the
initial stages of this plan. The Companys subsidiary Reliance Infrastructure Ltd. is currently
establishing infrastructure facilities such as roads and buildings for the proposed Special
Economic Zone (SEZ) at Jamnagar,

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Gujarat. The Company's major products and brands, from oil and gas to textiles
are tightly integrated and benefit from synergies across the Company. Central to the
Company's operations is its vertical backward integration strategy; raw materials such as
PTA, MEG, ethylene, propylene and normal paraffin that were previously imported at a
higher cost and subject to import duties are now sourced from within the Company. This has
had a positive effect on the Company's operating margins and interest costs and decreased
tjihe Companys exposure to the cyclicality of markets and raw material prices. The
Company believes that this strategy is also important in maintaining a domestic market
leadership position in its major product lines and in providing a competitive advantage. The
Company's operations can be classified into three segments namely:
Petroleum Refining and Marketing business
Petrochemicals business

Others (including Crude Oil and Natural Gas Exploration & Production business. The

Companys refinery at Jamnagar is the third largest refinery at a single location in the world.
The Company is:

The world's largest producer of Polyester Fiber and Yarn

4th largest producer of Paraxylene (PX)

5th largest producer of Purified Terepthalic Acid (PTA)

7th largest producer of Polypropylene (PP)

The living standards of the people in India are experiencing a paradigm shift. The
impetus behind it is the boom in the Indianeconomy, which is growing at a rate of nearly 8
percent. Moreover thefactors like income dynamics; favorable demographics and growth
inconsumption also provide propulsion for the same. As a result the country is witnessing an
unprecedented consumption boom.Although retailing in India is not a new concept, the
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system oforganized retailing is still at a nascent stage. According to the latest figures retailing
in India is estimated to be US $ 200 billion. Out of this the proportion of organized retailing
is merely 3 percent or US $ 6.4 billion. Moreover its going to bolster at 25-30 percent per
annum, and the prognostication is that it will attain US $ 23 billion by 2010. It means that
organized retail would constitute up to 9 percent of overall retail sales. To make the most of
this opportunity the Indian retail players need to be well prepared for quick sales up across
dimension of people, processes and technology in addition to identifying the right formats
and propositions for the Indian customer.
The Indian consumer is changing rapidly. In the present days the average customer
is richer younger and ambitious. They have more purchasing power than ever before. The
consumer today can have an access to the latest news in terms of the most advanced
technology used in different products and the latest brands available in the market
for varied products. The consumer today aspires to buy the state of the art products to make
his life better. But in this aspiration he/she is not ready to compromise on quality front. In
fact they pay great emphasis to the value delivered by the product in terms of psychic cost,
time cost, energy cost etc. Customer segments, already diverse, have been sub-divided with
joint families giving way to nuclear families, and the increasing number of working couples.
So as far as the Indian context is concerned, to succeed in retail marketing, diverse customer
segments, including nuclear families, working women etc ve to be enticed to come to the
retail malls. A suitable method of attracting these customers is to provide them a wide range
of choice and the convenience of shopping under a common roof. So the only way the retail
industry can prosper is by being innovative and taking cognizance of the need of the
customers. Reliance industries entry into retail with $ 5.6 billion investment has started a
new chapter in the Indian Retail sector. Reliance Industries Ltd

Of these, franchisee

partners will run 1,500 outlets, a stark departure from RILs current policy. Entry of Reliance
in this sector is a well thought decision. Driven by changing life style, strong income growth,
favorable demographic patterns and the extent to which organized retailers succeed in
reaching lower down the income scale to reach potential customers towards the bottom of
the customer pyramid, organized retail growth in the coming five years is expected to be
21

stronger than GDP growth. Growing customer credit will also provide impetus in boosting
customer demand.
One of the main subsidaries of reliance include Reliance Retail. Reliance Retail
opened its first store, a food and grocery format store, in Hyderabad on October 18, 2006.
The company plans to have 784 supermarkets in some of Indias smallest cities before
opening in the countrys 10 largest metro . In an encouraging spate of retail outlets opening
in the National Capital Region in the last six months, Reliance Fresh can claim hands down
that it is on top and rising. The sales have exceeded all estimates with average sale by a store
being of the order of Rs five lakhs, while the company had estimated the same to be around
Rs Two lakhs.The footfalls are also high being 4,000 per day Without wanting to be
identified, sources within the Reliance group of companies say the company has so far
opened Reliance Retail. Reliance Retail opened its first store, a food and grocery format
store, in Hyderabad on October 18, 2006. The company plans to have 784 supermarkets in
some of Indias smallest cities before opening in the countrys 10 largest metro .Also, back
end sourcing has been strengthened so that the demand is not left unattended or not met. The
effort also is to step up quality controls and checks. and help the existing vendors by
providing them quality products. Additionally, it is stated that the mother company of
Reliance Fresh, Reliance Industries Ltd is pitted to start in the National Capital Region a
hyper market that will sell electronics goods as part of project.
The company is truly emerging as a well diversified conglomerate with global
competence in technology, management and financial capabilities to meet the needs of a
rapidly growing Indian market.
With domestic market shares ranging from 40-80 per cent, RIL is also ranked
among the top 10 producers globally, for all its major product segments. It is one of India's
largest business conglomerates with total revenues of Rs 1,00,650 crore (US$ 22.6 billion).

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It is being speculated within the industry that the ROIs made by RIL in the retail
space will far out-shadow its existing core flagship businesses and very soon retail will
become the core business for the Mukesh Ambani-controlled Reliance empire.
On the occasion of the 60th Independence anniversary of India, RRL launched its
3rdand much awaited format of stores the hypermarket format, under the brand name of
RelianceMart at the Iscon Mall in Ahmedabad. RelianceMart is Indias largest
hypermarket spread across 165,000 square feet of shopping area.
The hypermarket has a range of over 95,000 products from a wide array of
categories from fresh produce, food & gross. Fully integrated business model to add
tremendous value to the Indian consumer in multiple formats on a pan-India basis.

VISION
Reliance plans to make it big. The strategy is to set up a chain of hypermarkets,
supermarkets, discount stores, specialty stores, and convenience store formats in 800-odd
cities and towns across the length and breadth of the country at an investment of around Rs
30,000 Crore (US$ 8 billion).RIL has set a revenue target of Rs 90,000 (US$ 20 billion) from
its retail operations, almost 10 percent the size of the current organized retail business in the
country. It dwarfs Indias current numero uno in organized retail chain, Pantloon Retail,
which currently has an annual turnover of US$ 240 million from its 84 outlets spread over 30
cities and has projected revenues of US$ 2 billion. The retail foray will have almost all the
leading ndian andinternational brands, and possibly a sizeable presence of private labels as
well, and ould clearly try and build a loyal customer base with tens of millions of consumers
from across the country. While the sheer scale of operations will ensure Reliances retail
business a 20 per cent return on investment over a span of five years, its rural low cost-high
return investment will ensure sufficient competitive edge vis--vis purely urban retail
operators.According to some reliable sources the retail business would start with
23

20 destination points in A-class cities in India. On an average these retail centers would
spread over 100 acres of land that would house leisure and entertainment facilities, small
hospital complex, eateries and a big mall.
GOALS
To lead the Retail Revolution by bringing to the Indian consumer a destination
where he gets a choice of products and services limited only by his imagination and create an
experience that is joyful and lasting. To be a trusted destination for the consumer, a place
where he finds his needs understood, requirements met and satisfaction guaranteed.

OBJECTIVES
Be the single largest organised retailer in the country. Range of products from
durables to perishables, basics to luxury, hearth and health, finance to fantasy. A procurement
& delivery system ensuring availability of the right product at the right time so the consumer
need is met always Introducing new products either imported or own brand to fulfill unfelt
needs. Educate on products and services that bring value to the consumer Be the outlet of
choice for the consumer. The best value to the consumer, quality at lowest prices. Consumer
connect initiatives

Industry analysis
GLOBAL TRENDS
With the rise in income, the consumers all over the globe sought both convenience
and new tastes and stimulations. As a result the supermarkets were able to expand their scope
of business. It led to the emergence of supermarkets as the dominant grocery retail form in
the latter half of the 20th century, in both Europe and North America.Much has changed over
24

the last decade on the Global Retail Stage.Apart from Wal-Marts dominance, which has
remained the top retailer in the world, theres little about todays environment that looks like
the mid-1990s. The global economy has changed,consumer demand has shifted, and
retailers operating systems today are infused with far more technology than was the case six
years ago. The opening up of the economies by the various Governments in the mid 1990s
has been a major boost for the retailers. Saturated home markets, fierce competition and
restrictive legislation have relentlessly pushed major food retailers into the globalization
mode. From an operational point of view, active practitioners have voiced their opinion that
retailer concerns have turned to deflation, lack of pricing power, global over-capacity, low
interest rates, economic stagnation, slump in world tourism and declining consumer
confidence.But, even before the global economic slowdown that forced the retailers into
monitoring costs more effectively, technological advances were a way of life in retail
organizations. With all the emphasis on The situation analysis here shows the position of
retail business.It depicts that the retail sector is booming aand the reliance contribution to the
scenario. technology and cost cutting, a major thrust of retailers continues to be demand
based: finding new markets through globalization efforts.; about 53 percent of the top 200
retailers operated in only one country. Today, only 44 percent remain single country
merchants. The benefits of increased sales and greater economies of scale are too large to be
ignored. Today the world wide retail sales is valued at $ 7 trillion. The top 200 retailers alone
account for 30% of worldwide demand. The household consumption worldwide increased
68% between 1980 and 2003. The leader has in-disputably been USA where some two-thirds
or $ 6.6 trillion out of the $ 10 trillion American economy is consumer spending. Retail
turnover in the EU is approximately Euros 2000 billion and the sector average growth looks
to be following an upward pattern. The Asian economies (excluding Japan) have grown at
6% consistently till 2014-2015. Positive forces at work in retail consumer markets today
include high rates of personal expenditure, low interest rates, low employment and very low
inflation.

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Some quick facts on the Indian retail industry

India's retail sector is estimated to be worth $350 billion, of which organized retail
accounts for only $8 billion. This organized part of the retail industry is growing at 30%
annually.

MARKET DATA

An estimated $412 billion is likely to be investing in the retail sector over the next

five years.

Food, beverages and tobacco make up 40% of the retail sector.

The organized food retail sector is estimated to be worth $666 million and likely to

reach $33.3 billion by 2015.

Branded apparel segment is estimated to be worth $422 million and is growing

strongly at 20% annually.

Major metro's such as Mumbai, Delhi, Chennai, Kolkata, Bangalore and Hyderabad is

where 68% of organized retail is located.

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There will be an estimated 220 malls by 2007, a significant rise from 30 in 2003.

Current lease rates in major cites vary from Rs. 88 - 120 per sq ft per month.

India's retail industry is the 2nd largest employer, after the agriculture sector,

employing 21 million people, roughly 6% of the country's total workforce and contributes
13% of the GDP.
Foreign Investment:

Foreign companies are permitted to hold only 51% of equity in a single brand format

only, whose products are sold under the same brand internationally.

PRODUCT PORTFOLIO
Categories will bhbe defined as 10 Segments
-

Foods (Staples, F&V, Chilled, Frozen, Bakery, Processed Food)-Destination in width,

depth and Price

FMCG (Non Food , HPC)- Destination/dominant- Range and Price

Gen Merchandise (Plastics,Steels,etc) Destination/dominant , full,wide and new
range

Home ( Furnishings, Furniture)- Destination/dominant in the value segment.

Apparel (including Leather Accessories)- Value/Design lead wide range.

Life Style ( Jewellery, watches, etc) Value segment/ fast moving designs.

CDIT ( Electrical and Electronics) Destination in Appliances. Branded-offer driven

Footwear - Destination- Design lead, and Value Segment.

Auto Accessories & Services (to cover 4 and 2 wheelers needs, car wash)

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SIS ( shop-in-shop- a means of increasing range- Food counters- chat/local sweets,)

Services ( ATM, Banks, Photo shops, Artisan Village, Laundry, KFC/McDonalds,

Others- electronic greeting cards, Internet etc etc)

Private Label- Cuts across all Categories- As good or better at cheaper prices.

The BCG Growth-Share Matrix of RELIANCE RETAIL

We try to represent the different formats of retail stores if adopted by RELIANCE
RETAIL using the BCG Matrix. This analysis helps analyze the growth potential of different
formats of stores adopted by RELIANCE RETAIL and helps to allocate necessary resources.

BCG Growth-Share Matrix

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The four categories are:

Dogs - Dogs have low market share and a low growth rate and thus neither
generate nor consume a large amount of cash. However, dogs are cash traps because of the
money tied up in a business that has little potential. In this category we will include
RELIANCE WELLNESS, RELIANCE TIMEOUT, RELIANCE I STORE as DOG
category because, as they have less market and low growth rate, but they little potential to
grow in the market.
Question marks - Question marks are growing rapidly and thus consume large
amounts of cash, but because they have low market shares they do not generate much cash.
The result is large net cash consumption. We can take RELIANCE TRENDZ, RELIANCE
FOOTPRINT, and RELIANCE DIGITAL in question mark category because, as they
newly in the market, they will take more cash & time to expand there market. But have
capacity to become STAR for RELIANCE RETAIL.

Stars - Stars generate large amounts of cash because of their strong relative market
share, but also consume large amounts of cash because of their high growth rate. In this
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categories we can take RELIANCE MART, RELIANCE SUPER, RELIANCE JEWELS

as there are more than thousand of stores spreading all over country therefore they generates
large amount of cash & it have high growth rate.

Cash cows - As leaders in a mature market, cash cows exhibit a return on assets
that is greater than the market growth rate, and thus generate more cash than they consume.
Such business units should be "milked", extracting the profits and investing as little cash as
possible. Here we can take RELIANCE FRESH as there are more than thousand of stores
of RELIANCE FRESH in this country therefore it generates large amount of cash & it have
high growth rate.
CORE COMPETENCIES
Largest in-house pool of intellectual capital
Attracting and retaining the best people, and nurturing the intrapreneurial spirit
Unique financial engineering capabilities
Demonstrated ability to implement complex, multi-billion dollar projects in record time
frames
Ability to create world class assets at 30%+ capital cost advantage compared to peer group
Absorption of diverse and complex technologies and optimal operation of plants

Future Plans :
The company's flagship chain Reliance Fresh sells staples and food items under
Reliance Select Nearly 30 months ago, Reliance Industries announced an ambitious plans to
invest Rs 25,000 crore (Rs 250 billion) to expand its stores in the country to take the
advantage of organised retail in the country.
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Initially, the company was planning to open 15,000 stores by 2016, and 16,000
stores by 2017, but due to a delay in delivery of properties, economic downturn and demand
slump the company had to scale back its expansion plans.
Reliance Retail runs over 850 stores, which include stores for food and grocery,
consumer durables, beauty and wellness, jewellery, footwear, among others.
Its formats such as apparel chain Reliance Trends, beauty and wellness format
Reliance Wellness, consumer durable chain Reliance Digital have private labels or are in the
process of launching private labels.
"The whole idea of private labels is based on pricing and retailers get enough
volumes on their shelf at marginal costing. Retailers have an opportunity to sell their private
labels to kirana stores.
But it depends on their strategy on pricing and marketing right products," said
Naimish Dave, a director with OC & C Strategy Consultants.

Challenges facing the Indian Organized Retail sector :

The challenges facing the Indian organized retail sector are various and these are
stopping the Indian retail industry from reaching its full potential.
I) Changing Consumer Purchasing Patterns:
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The behaviour pattern of the Indian consumer have undergone a major change.
This has happened for the Indian consumer is earning more now, western influences, women
working force is increasing, desire for luxury items and better quality. He now wants to eat,
shop, and get entertained under the same roof. All these have lead the Indian organized retail
sector to give more in order to satisfy the Indian customer.
II) Lack of Retail Space:
With real estate prices escalating due to increase in demand from the Indian
organized retail sector, it is posing a challenge to its growth. With Indian retailers having to
shell out more for retail space it is effecting there overall profitability in retail.
III) Shortage of Trained Man Power:
The Indian retailers have difficultly in finding trained person and also have to pay
more in order to retain them. This again brings down the Indian retailers profit levels.
IV) Poor Supply Chain
It is the supply chain that ensures to the customer in all the various offerings that a
company decide for its customers, be it cost, service, or the quickness in responding to ever
changing tastes of the customer.
The infrastructure in India in terms of road, rail, and air links are not sufficient.
This make a poor supply chain and companies have to depend upon warehousing.

OBJECTIVES

To get a sense of how well your company is serving customers.

To quickly reveal customer service problems that need to be addressed.
To evaluate the pro activeness of management in daily problems.
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 To evaluate their sales promotions and working mechanism.

To find potential opportunities for serving your clients that you may be missing.

STRATEGIES ADOPTED BY RELIANCE RETAIL

At the type of inception the company used three strategies :
Farm to fork a unique value proposition for the Indian farmer and consumer
1. Total investment of Rs 25,000 crore envisaged over the next few years
RIL could invest Rs 10,000 crore in the equity capital of Reliance Retail
in the next few years
2. 24 stores operational in Hyderabad and Jaipur
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By using this strategy the company tried to benefit by establishing a relationship

with the farmers and benefit them as well make profits by capitalising on it. And reliance did
make profits from this innovative thinking. Reliance fresh came with this concept and it
worked for them. The Farmer-Corporate relationship has helped both the farmers and the
corporates in bringing the high quality low cost product to the retail shelf. To ease the burden
of the corporate in setting up farm management services, several leading NGO bodies have
taken up this activity essentially due to the fact that their operations are mostly at the farm
end. In future these farmer-corporate models would be replicated and extended to all the
farm end products. With the emergence of Private Label, they would soon find even the retail
chains to work with the farm community in developing an efficient supply chain and to
leverage on the cost advantage at both ends. The Farmer-Corporate relationship has helped
both the farmers and the corporates in bringing the high quality low cost product to the retail
shelf. To ease the burden of the corporate in setting up farm management services, several
leading NGO bodies have taken up this activity essentially due to the fact that their
operations are mostly at the farm end. In future these farmer-corporate models would be
replicated and extended to all the farm end products. With the emergence of Private Label,
they would soon find even the retail chains to work with the farm community in developing
an efficient supply chain and to leverage on the cost advantage at both ends.

FUNCTIONAL STRATEGY
Superior supply chain to ensure rapid scalability
1. Successful execution of sourcing, processing and retailing of farm fresh in
less than 6 months
2. Tremendous response resulting in over 150,000 customers signing up for
the loyalty programme
3. Rapid scaling up of sourcing, logistics and locations for Reliance Fresh
stores
4. Senior management team in place with a total employee strength of 7500.
According to an estimate more than a quarter over Rs 8,000 Crore of Reliance
Retails planned investment of Rs 30,000 Crore would be spent on setting up of the
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supply chain network. This unprecedented level of investment in building the supply
chain network will become a key differentiator for Reliances Retail project.Reliance
Retail is planning to purchase fresh vegetables and farm produces from various states
and transport the same to its warehouses, which will subsequently transport the same
to the interconnected Reliance Retail centers. This will make sure that farmers and
growers get a fair price for their produce and the huge cost benefits of wholesale
procurements gets passed on to the endconsumer. It is believed that RIL will feed the
whole retail chain through seven large wholesale terminals. It includes plans for over
150 warehouse clubs or distribution centers, catering to the supply and requirements
of its speciality stores, hypermarkets, supermarkets, department and discount stores.
In the consumer durable sector, Reliance Retail is reported to have entered into
agreements and contracts with the leading manufacturers to produce merchandise
directly from their factories.RILs huge warehousing facilities are to be dotted all over
the country and expected to be the nub, the nerve center for the supply base that will
feed the network of stores. Banglore, for instance, is likely to be the base for Reliance
Retails apparel operations

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