Executive Summary

The India Retail Industry is the largest among all the industries, accounting

for over 10 per cent of the country’s 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 Group’s 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

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INTRODUCTION

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 India’s largest industry, accounting for over 10 percent of the country’s

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 2

market is growing, government policies are becoming more favourable and emerging

technologies are facilitating operations.

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.

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INTRODUCTION TO THE COMPANY

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 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.

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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.

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Reliance Group

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 2001–02, 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 2002–03, 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

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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

$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 Chairman’s

Office at Reliance Industries Limited.

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Major subsidiaries and associates

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 2012–13

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.

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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.

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

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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

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 Group’s 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 India’s largest hypermarket ‘Reliance Mart’ in Ahmedabad in August 2007.

This year, RRL has also launched its first few specialty stores for apparel (Reliance Trends),

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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.

During the year, RRL also focused on building strong relationships in the agri-

business 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.

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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

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:

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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:

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.

MBO’s :

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.

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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 company’s outlets also provide vegetables, fruits, and

flowers. It focuses on consumer goods, consumer durables, travel services, energy,

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

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ORGANIZATIONAL STRUCTURE

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ZONAL MANAGER

CLUSTER MANAGER

AREA MANAGER

STORE MANAGER

ASSISTANT STORE MANAGER

SUPERVISOR

COMMERCIAL ASSOCIATE

CUSTOMER SERVICE

ASSOCIATE

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

Rakesh Mehta : Commercial Head – North

Nageswaran c k : VP, Operations

Kanwar Bhawani Singh : Business Head – Reliance Wellness Stores

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PRODUCT MIX AT RELIANCE FRESH

Food Retail Chain at Reliance Fresh

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PRODUCT MIX OF RELIANCE FRESH

FRUITS & VEGETABLES

PF, BEVERAGE, F&V

STAPLE STAPLE

NON-FOOD FMCG

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 Company’s subsidiary Reliance Infrastructure Ltd. is currently

establishing infrastructure facilities such as roads and buildings for the proposed Special

Economic Zone (SEZ) at Jamnagar,

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 Company’s 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

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

Company’s 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

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 it’s 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

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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 RIL’s 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

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 India’s smallest cities before

opening in the country’s 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

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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 India’s smallest cities before opening in the country’s 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).

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 India’s 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.

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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 India’s 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

Reliance’s 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-à-vis purely

urban retail operators.According to some reliable sources the retail business would start with

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.

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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

the last decade on the Global Retail Stage.Apart from Wal-Mart’s dominance, which has

remained the top retailer in the world, there’s little about today’s environment that looks like

the mid-1990s. The global economy has changed,consumer demand has shifted, and

retailer’s 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

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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.

• 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.

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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)

- 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.

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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

The four categories are:

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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

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

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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.

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.

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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:

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:

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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.

To evaluate their sales promotions and working mechanism.

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

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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

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

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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

Retail’s planned investment of Rs 30,000 Crore would be spent on setting up of the

supply chain network. This unprecedented level of investment in building the supply

chain network will become a key differentiator for Reliance’s 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

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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.RIL’s 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

Retail’s apparel operations

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