Mukesh Ambani's Reliance Retail kicked off in the National Capital Region (NCR) on Monday by opening nine food and grocery stores in the satellite towns of Ghaziabad, Faridabad, Gurgaon and Noida, enlisting small stores and pushcart vendors in a business war pitted against the likes of Kishore Biyani's Pantaloons and Sunil Mittal's Bharti Retail.
Significantly, the company has a plan to turn itself into the preferred supplier of goods to pushcart vendors and neighbourhood kirana stores. Effectively, this means that the company aims to blend direct sales to customers with a wholesale price model that offers to rope in as partners worried shopkeepers who see giants like a Reliance as a threat to their traditional livelihood.
Reliance Retail is a subsidiary of group flagship Reliance Industries Ltd (RIL). Its convenience stores, branded under the Reliance Fresh banner, offers a host of products, including fresh fruits and vegetables, grocery items and dairy products. These stores would also offer free home delivery services within a radius of three kilometres.
RIL President and CEO (Operations and Strategy), Raghu Pillai, told reporters that a pilot project of supplying goods to neighbourhood “mom and pop” stores in Hyderabad had proved successful and the company hoped to replicate the model in other cities as well.
Pillai said that larger format stores such as hypermarkets, supermarkets and speciality stores offering products such as apparel, consumer durable goods and drugs and pharmaceuticals will be opened in the April-June quarter.
Reliance at present has 49 stores, including the nine opened on Monday, spread across Rajasthan, Andhra Pradesh, Tamil Nadu and the NCR.
Company officials said they plan to set up 100 such stores in the next 120 days in Delhi and NCR.
Pillai said that the company expects to earn Rs 1,00,000 crore in revenue in the next five years.
Gunender Kapur, president and chief executive (foods business), of RIL said that the company was also looking at exports. “Exports are a definite possibility," he said.
Reliance Retail’s roll-out plan, which began from Hyderabad in November last year, involves a total investment of Rs 25,000 crore over a three-year period.
RIL recently acquired about 5 lakh square feet of commercial space spread over seven locations in Delhi in a highly competitive auction of properties belonging to the Delhi Development Authority (DDA) for more than Rs 1,100 crore.
India has emerged as the most attractive destination for mass merchant and food retailers. AT Kearney's Global Retail Development Index (GRDI), which ranks 30 emerging countries based on a set of 25 variables including economic and political risk, retail market attractiveness and retail saturation levels, has retained India's position at the top for the second successive year.
Almost all top Indian business conglomerations have firmed up retail plans. Global giant Walmart has entered into a strategic alliance with the Bharti group and is expected to unveil its roadmap shortly.