Reliance Fresh Arun

A REPORT ON

RELIANCE FRESH

SUBMITTED SUBMITTED BY: PROF. PRAVIN PATIL TIWARI (08BS0000573) SEC-B

TO: ARUN PRIYAN

KA NEEL (08BS0002390) SEC-B DATE: 10-07-2009

RETAIL INDUSTRY IN INDIA An industry which has good representation in Fortune 500 companies list, an industry which is largest employer just after agriculture. India retail industry is the largest industry in India, with an employment of around 8% and contributing to over 10% of the country's GDP. Retail industry in India is expected to rise 25%

yearly being driven by strong income growth, changing lifestyles, and favorable demographic patterns. It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion. India retail industry is one of the fastest growing industries with revenue expected in 2007 to amount US$ 320 billion and is increasing at a rate of 5% yearly. A further increase of 78% is expected in the industry of retail in India by growth in consumerism in urban areas, rising incomes, and a steep rise in rural consumption. It has further been predicted that the retailing industry in India will amount to US$ 21.5 billion by 2010 from the current size of US$ 7.5 billion. Key Players in this sector are as follows: ➢ ➢ ➢ ➢ ➢ ➢ ➢

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Future Group. Trent Ltd. RPG Enterprise. Vishal Retail Ltd. Shoppers Stop Ltd. Bata India Ltd. Provogue India Ltd. Videocon Appliances Ltd. I.T.C. Ltd. Godrej Agrovert Ltd. DCM - Hariyali Kisaan Bazaar. RIL.

Scope of Retail Sector in India The scope of the Indian retail market is immense for this sector is poised for the highest growth in the next 5 years. The organized retailing sector in India is only 3% and is expected to rise to 25- 30% by the year 2010. There are under construction at present around 325 departmental stores, 300 new malls, and 1500 supermarkets. This proves that there is a tremendous scope for growth in the Indian retail market. The growth of scope in the Indian retail market is mainly due to the change in the consumer’s behavior. For the new generation have preference towards luxury commodities which have been due to the strong increase in income, changing lifestyle, and demographic patterns which are favorable. The scope of the Indian retail market is very vast. And for it to reach its full potential the government and the Indian retailers will have to make a determined effort Retail market in the organized sector in India is growing can be seen from the fact that 1500 supermarkets, 325 departmental stores, and 300 new malls are being built. Many Indian companies are entering the Indian retail market which is giving Indian organized retail market a boost. One such company is the Reliance Industries Limited. It plans to invest US$ 6 billion in the Indian retail market by opening 1000 hypermarkets and 1500 supermarkets.

Pantaloons are another Indian company which plans to increase its retail space to 30 million square feet with an investment of US$ 1 billion. Bharti Telecoms an Indian company is in talks with Tesco a global giant for a £ 750 million joint venture. A number of global retail giants such as Walmart, Carrefour, and Metro AG are also planning to set up shop in India. Indian organized retail market will definitely grow as a result of all this investments. The scope of the Indian retail market has been seen by many retail giants and that the reason that many new players are entering the India retail industry. Judging the scope for growth in the India retail industry many global retail giants are also entering the Indian retail market. They are: •

Tesco

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Metro AG

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Wal- Mart

The scope for growth in the Indian retail market is seen mainly in the following cities: ✔ Mumbai ✔ Delhi ✔ Pune ✔ Ahmadabad ✔ Bangalore ✔ Hyderabad ✔ Kolkata ✔ Chennai

Growth Factors in Indian Organized Retail sector Rise in the working population which is young, pay- packets which are hefty, more nuclear families in urban areas, rise in the number of women working, more disposable income and customer aspiration, western influences and growth in expenditure for luxury items. All these are the factors for the growth in Indian organized retail sector. In fact, India retail industry is the fastest growing industry in India and it accounts for 10% of the country's GDP. In 2006, the retail industry in India amounted to US$ 200 billion and out of this the organized retail sector in India amounted to US$ 6.4 billion. By 2010, the Indian organized retail sector is expected to rise to US$ 23 billion. In 2003, the Indian organized retailing sector accounted for more than 4.5 million sq. ft of space absorption by malls. Pantaloons have decided to increase its retail space to 30 million square feet with an investment of US$ 1 billion. Reliance Industries Limited is targeting for annual sales of US$ 25

billion by 2011. It is planning to invest US$ 6 billion in order to open 1,500 supermarkets and 1000 hypermarkets. Bharti Telecoms is planning a joint venture with Telco a global retail giant worth £ 750 million.

EMPLOYMENT GENERATION BY INDIAN

ORGANIZED RETAIL SECTOR India is going through a radical economic change. Though it is very infant stage, people can feel the climate is changing. The unorganized retailers takes the lion's share in the Indian retail sector, but the organized retailers are growing at a good pace, and promises an increase of proportion of 9 - 10% by 2010. This is to be the largest sector after the agricultural sector. The increase in the number of consumers twinned with the introduction of organized sector has brought numerous corporate investments in retail sector. The entry of super markets, enormous departmental stores, and shopping malls has encouraged the retailers to look at new business plans of expansion. An economic growth on a monumental scale is offered by the Indian retail sector, equally in the national and international market which in turn will generate a huge source of employment and a variety of options for the consumers. The present employment in the retail business is nearly 4 crores and around 20 crores depends on this sector. There is a scope of better exposure to the international standards with the entry of transnational companies, which in turn is encouraging more & more retail management programs to open up and help bridging the gap of supply & demand of talented professionals for management. An economic growth on a monumental scale is offered by the Indian retail sector, equally in the national and international market which in turn will generate a huge source of employment and a variety of options for the consumers. The Ernst & Young's report 'The Great Indian Retail Story', anticipates that the Indian retail sector would come up with 2 million employment opportunities within the year 2010. Benefits to the economic growth: Better quality products and services would lead to better competition  More exports bring more foreign direct investments  Organized Indian retail sector would encourage tourism  Along with the employment boom there would be a vast development in the expertise of

the human resource There would remain future scope for improvements in agriculture, small, and medium scaled industry.

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. The behavior pattern of the Indian consumer has 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. The biggest challenge facing the Indian organized retail sector is the 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 affecting their overall profitability in retail. Trained manpower shortage is a challenge facing the organized retail sector in India. The Indian retailers have difficulty in finding trained person and also have to pay more in order to retain them. This again brings down the Indian retailers profit levels. The Indian government has allowed 51% foreign direct investment (FDI) in the India retail sector to one brand shops only. This has made the entry of global retail giants to organized retail sector in India difficult. This is a challenge being faced by the Indian organized retail sector. But the global retail giants like Tesco, Wal-Mart, and Metro AG are entering the organized retail sector in India indirectly through franchisee agreement and cash and carry wholesale trading. Many Indian companies are also entering the Indian organized retail sector like Reliance Industries Limited, Pantaloons, and Bharti Telecoms. But they are facing stiff competition from these global retail giants. As a result discounting is becoming an accepted practice. This too brings down the profit of the Indian retailers.

Corporates - Indian Retail Spencers:

Oldest Retailer in India 135 Stores in 27 Cities Plans to open 365 Stores in 365 days.

Big Bazaar:

53 Stores and fast expanding.

Aditya Birla Group:

Acquired 160 stores of Trinetra. Took over Fabmall about 50 stores Plans to set up 15 Hyper Markets in Pune Additional 1000 Super/Hyper markets across the country in

next 3 years

Bharti: Joint Venture with Walmart Plans to begin operations next year.

TATA Group: Has set up Star Bazaar and Westside all over the country.

Reliance fresh BACKGROUND We can see many examples of businesses where, first we grow and then think of expanding but Reliance is quite different. Reliance has developed such huge amount of resources and capital over the years that whenever it steps into any segment it is not required to wait for growing signal, that’s why it always thinks of expanding without any boundaries. Reliance retail is next Step by RIL which will be a pan India project. “Reliance Fresh” is the retail chain division of Reliance Industries of India which is headed by Mukesh Ambani. Reliance has entered into this segment by opening new retail stores into almost every metropolitan and regional area of India. Reliance plans to invest Rs 25000 crores in the next 4 years in their retail division and plans to begin retail stores in 784 cities across the country. The Reliance Fresh supermarket chain is RIL’s Rs 25,000 crore venture and it plans to add more stores across different segments, and eventually have a pan-India footprint by year 2011. The super marts will sell fresh fruits and vegetables, staples, groceries, fresh juice bars and dairy products and also will sport a separate enclosure and supply-chain for non-vegetarian products. Besides, the stores would provide direct employment to 5 lakh young Indians and indirect job opportunities to a million people, according to the company. The company also has plans to train students and housewives in customer care and quality services for part-time jobs. The company is planning on opening new stores with store-size varying from 1,500 sq ft to 3,000 sq ft, which will stock fresh fruits and vegetables, staples, FMCG products and dairy products. Each store is said to be within a radius of 1-2 km of each other, in relation to the concept of a neighbor store. However, this is only the entry roll-out that the company has planned. Bangalore is said to have 40 stores in all by the end of the year. In a dramatic change due circumstances prevailing in UP, West Bengal and Orissa, It was mentioned recently in News Dailies that, Reliance Retail is moving out stocking. Reliance Retail has decided to minimize its exposure in the fruit and vegetable business.

The company may not stock fruit and vegetables in some states, Orissa being one of them. 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. A typical Reliance Fresh store is approximately 3000-4000 square Feet and caters to a catchment area of 1-2 km. 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. 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 2007-08. 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 centers and expects to make them operational by May 2008. 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 2007-08, 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. When the store was launched it had some initial problems Post launch, in a dramatic shift in its positioning and mainly due to the circumstances prevailing 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 minimize 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. 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.

CORPORATE SOCIAL RESPONSIBILITY Today when most of the companies are busy in making profits by any means, there are few Ones who are focused to return this society, a part of what they have earned through this society. Reliance retail is one of them. Following efforts of reliance retail are aimed at benefiting the society making reliance socially responsible. I. Reliance Retail aims at recruiting people from the underprivileged community in society. Hence, they are planning to train students from corporation schools and schools run by NGOs. And, they consider this as a part of the corporate social responsibility. The company is planning to charge a "small fee" from those who want to join the course as they want to bring in some discipline and regularity among the students, and will reimburse that once they are inducted into service. II. Farming in India is highly fragmented and subject to harsh climatic conditions once harvested, it is very difficult to keep fruits and vegetables fresh. To secure high quality, Reliance Retail is directly sourcing fresh agricultural produce from thousands of farmers from villages through Collection Centers. With this concept, Reliance has built a business model generating shared value that links the company supply chain more closely to poor farmers in Indian villages. Reliance is providing a guaranteed market for the farmers’ produce, reducing transaction costs and training the farmers in better and sustainable farming practices. This initiative results in higher income and upgrading of skills for the farmers, and reduced spoilage of produce (up to 35 percent) and better quality products f or Reliance retail stores. III. Reliance retail has adopted “farm to fork” theory which means it is procuring directly from the farmers thus offering them quite reasonable prices for their produce as now no intermediaries are involved. In return Reliance is giving farmers information about how can farmers improve their productivity. They have centers in villages who apart from providing information make farmers aware of market rates of different crops so that farmers can choose crops they want to sow to become profitable. Farmers are provided technical help as well like information about quality of seeds and fertilizers

FARM TO FORK The Reliance retail company sources say it is setting aside Rs 50,000 crore to build its farm-tofork linkage. Reliance has drawn up plans for a presence in 784 towns and 6,000 mandi (wholesale market) towns with 1,600 rural business hubs to service these. It has already rolled out 177 Reliance Fresh stores across major towns in 11 states. According to a company report, RIL is targeting a turnover of Rs 40,000 crore in the next few years.

After Future Group, Reliance Retail plans to introduce private label sale to kirana stores Reliance Retail is understood to be exploring ways to supply its private labels in food and groceries to kirana stores and small retailers in the country. A separate entity, most likely to be named Reliance Foods, will carry out the private label business. Reliance Fresh head Gunender Kapur was made head of private labels business in the company. Once, they entirely cater to the demands of their stores, and then they can certainly look at supplying them to other retailers since they have required infrastructure, process and systems in place. It is said that after launching private labels in food and groceries, Reliance Retail is also expected to launch soaps, detergents, cosmetics and non-FMCG products under its private labels segment with a new brand name. The company’s flagship chain Reliance Fresh sells staples and food items under Reliance Select and Reliance Value brands, dairy products under “Dairy Pure” brand. Kishore Biyani Future Group, too, also have plans to sell its private labels to stores outside the group and it has already carried out pilot studies for this venture and is expected to start the business soon. Future Logistics, the logistics arm of the group, also has plans to foray into wholesale distribution of products such as food, apparel, grocery to organized retail chains in the country, which is expected to start from this month.

Nearly 2 years ago, Reliance Industries announced an ambitious plan to invest Rs 25,000 crore to expand its stores in the country to take the advantage of organized retail in the country. Initially, the company was planning to open 2,000 stores by 2008, and 5,000 stores by 2010, 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 is said by Naimish Dave, director with OC & C Strategy Consultants. .Business consultancy Techno Park Purnendu Kumar says retailers can sell their products to mom-and-pop stores only through their cash and carry ventures as reaching out to individual stores would be tough preposition. Supplying to kiranawalas is a tedious job as you need to have different points of sale, enough manpower and transport and delivery systems. But selling products through cash and carry stores is a viable preposition, said Purnendu Kumar.

Reliance Retail expanding Fresh and Hyper value stores Reliance Retail will focus on its value formats such as Fresh, Hyper and Super, to scale up rapidly to take its store count by end of the next financial year to at least twice the stores has as of now. With 645 stores around the country, Reliance Fresh is the largest part of the business. Given Reliance ambitions in terms of turnover and scale. Reliance is talking of a multi-million dollar business, a large part of it has to be grocery-led and in the value space, so it’s Fresh, Hyper and Super will have to scale up if it has to achieve the goals it has set for itself. Apart from these formats, its digital format, dealing in consumer durables, the jewellery and some part of the home format, are expected to be scaled up rapidly.

Today, Reliance Retail’s 920 stores are spread across 20 formats in 80 cities and 14 States covering almost 4.5 million sq. ft. of consumer-facing retail space. Its Hypermart encompasses a million sq ft as of now, and this year will see a few more opening up. Employee strength However, like other retailers are, Reliance too, is grappling with the slowdown which has impacted its plans. In the last one year, because of the slowdown, say these sources, there have been some cut backs. While there have been reports of cutting back of staff strength in RRL, industry sources say that of Reliance Retail 25,000 employees, around three to five per cent of managerial staff were rendered surplus and were either redeployed or moved out. Earlier, RRL had decided not to go ahead with its wholesale cash ’n carry business and the team, led by Mr Harsh Bahadur, who came in from Metro, had to move out.

Biometric cards for Reliance Fresh vendors Union Bank of India and FINO has enrolled 1,600 vegetable and fruit vendors who are regular suppliers to Reliance Fresh. These vendors will soon be issued biometric cards using which they can avail themselves of small loans from the bank. The project will be launched in Gurgaon on a pilot basis, as said Mr Laxman Rao, general manager, priority sector. The bank has enrolled 1,200 hawkers from the Chandni Chowk area in Delhi and has given loans of up to Rs 65 lakh under two products “Saubhagya” and “Bhagya”. These loans are in the range of Rs 15-20,000 and the repayment amount is about Rs 200-300 per week. The rate of interest works out to 12 per cent per annum. The scheme for the vendors of Reliance Fresh will follow the same lines. In the first tranche, each vendor will be given loans of Rs 5,000 each and depending on the response, the amount will be increased.

Cash flow assurance Reliance will not provide guarantee of repayment, but the association of a large corporate house does give a certain moral guarantee. For the corporate, the advantage is the assured cash flow for their vendors through the bank loans, which in turn will ensure that the supply to their stores is not hampered.

Reliance Retail expecting to break even by “September” Reliance Retail reportedly, is expecting to break even at the store level in all cities, except Mumbai, this September. It will be able to generate cash at the stores by September, except in Mumbai, where real estate cost for the stores are still high. At present, RRL operates over 900 stores (including 50 in Mumbai) and has already achieved a break even at the store level in around one-third of the 80 cities it operates in. Stores in Chennai, Bangalore, Hyderabad, Orissa and half the ones in Delhi have broken even. Stores in the other metro, Kolkata, however, may fail. The companies value formats, comprising convenience store Reliance Fresh, supermarket Reliance Super and hypermarket Reliance Mart, together constituted around 590 stores in 13 states, according to the company’s 2007-08 estimates.

Supply chain model of reliance fresh Reliance started its retail operations of reliance fresh stores with following supply chain model. Procuring directly from the farmers and operating with moderate margin but mass selling was key to reliance fresh operations for first few months. The following figure depicts the reliance fresh model

MODEL 2 Model 2: Whole Sale Trading (WST) Reliance formalized its second supply chain model to shift itself from grocery retailer to grocery supplier by focusing and establishing itself in Mandi’s. STEPS IN WTS MODEL 1. Reliance has owned farms on contract basis for production of specific crop which is decided after extensive research depending on •SOIL CONDITIONS.

•CLIMATE CONDITIONS. •RETURN OVER COSTS INCURRED.

2. Different vegetables and fruits from such farms are collected through reliance own logistics

and brought to collection Processing centers where quality check and other required processing is done. In processing centers workers wearing balaclavas, woolen trousers and bulky jackets work inside a room kept at a constant 3 0 celcious, peeling and chopping vegetables, spinning them dry and then heaping them in small plastic packets before placing them in plastic transport crates. At the other end of the 5,000-sq-m warehouse, men unload crates of fruits from a truck pulled up to a spotless loading dock. A quality-control expert samples every tenth crate; if the fruits are good a team will ready them for delivery within hours to Reliance fresh stores around different places like U.P and as far away as Hyderabad and even Mumbai (formerly Bombay). If they are not, workers will inspect the entire shipment and discard anything below standard.

3. Merchandise from these collection processing centers are collected and loaded for Wholesale

mandi’s. As this merchandise is to be made available by 4 A.M in morning thus deliveries in trucks are sent at time depending upon: TRANSIT TIME. – Time required reaching destination i.e mandi’s. MARGIN TIME. – Time period between a truck reaching mandi and then Unloads. Can be 2 to 3 hours. 4. From mandi’s where the trucks have been unloaded, roadside vendors and pull carters buy

fruits and vegetables to supply in households. 5. In case still some vegetables and fruits are not sold reliance logistics own send them to reliance fresh stores

Transportation

Product range of reliance fresh 

Vegetables and fruits: this is the specialty of the store as they provide fresh fruits and vegetables at a rate lower than the market price.

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Households Items: In the stores we can get items which are at slight premium rate than market price, but usually of high quality.

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Food and Beverages: This area of the product line they stock all the premier brands and also their private label.

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Groceries: In this sector reliance is promoting its private label as they are promoting

their own brands and they do the packaging of the product and then label it privately and then sell it at premium as compared it to the loose items. 

Dairy Products: The dairy products in some locations are procured from the farmers themselves and some places they procure it from the manufacturers.

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Refrigerated products: This product line is dominated by the brands available in market and very less private labeling is done.

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Non food items: Here we get many petty non food items at a premium than market price.

SWOT analysis on the Reliance Fresh. STR ENG TH S : Reliance is the first into enter into this unorganized sector of vegetables and fruits. According to them its intentions to have100% farm fresh foods in their new retail stores. It is also adding shortly a juice bar, and even a large counter for puja flowers. In fact, over 60 per cent of the floor space has been dedicated to fresh fruits and vegetables, the rest to other food products

like staples, spices, bakery, etc. But reliance has decided not to add any bar soap or toothpaste and detergent in its shelves. So by using this strategy they are positioning themselves different from other players of the industries like Food world, Big Bazaar and Nilgiris. But over come the short comings of these specialized stores they are also introducing new Reliance full-fledged supermarket called Shakhari Bhandar which offers each and everything from the staple to soap. Most of the staples are under its own private label brand — ‘Reliance Select’. There is a 500g channa dal pack priced at Rs 28, a 500g urad dal pack for Rs 39, all under Reliance’s own brand. Excepting a few packets of Nestle’s Maggi, or MTR’s masalas or Pepsi’s Lays chips, there is very little shelf space given to the big brand owners in the country. Reason: private labels offer far better profit margin to the retailer than branded products of FMCG companies. Most of these outlets will need only 2,000-5,000 sq. ft. A supermarket may need as much as 8,00010,000sq.ft.

Weakness : This is definitely an interesting business venture but it may miss out on the opportunity to capture a greater share of the customer’s wallet. For customers, too, this could be irksome, as they would have to visit another store to pick up essentials. Reliance could easily fix this problem by adding a few small counters for some basic non-food products. According to their official this format is not final one they are accepting the new changes which are required to attract the large number of customers.

Opp ortu nities Reliance wants to build a high-profitability business and food is, perhaps, the best venture to start. That is because the Indian food supply chain is grossly inefficient. There are several intermediaries, each of whom adds his own profit margin to the cost. Besides, there is huge wastage in transit. This offers potential for savings and profits. To reduce the cost and increase the profit it has been sourcing out its requirements from the farmers. For example, the leafy vegetables, brinjals, tomatoes and green chilies in the Banjara Hills outlet were sourced directly from farmers in Vantimamdi, Chevella and nearby mandals in Ranga Reddy district of Andhra Pradesh. The supply chain already has been backed by few hundred farmers the number is estimated to touch million in next five years. The main aim of the reliance is to eliminate the intermediaries in the sector and reduce the cost. Smaller stores have two advantages. They bring down the cost of real estate (and increase profits). It is easier to find space for small convenience stores in a quiet neighborhood than for supermarkets in high streets.

Thr ea ts : This model is engineered to clock a faster turnover of inventory — Reliance expects consumers to visit the store at least twice a week for their top-up groceries. Each store will have an investment of Rs 50 lakh to Rs 60 lakh. Unlike global retailers who operate on thin margins, Reliance Retail is looking at a fairly high-margin business model. Deliberately stopped short of being a full-fledged supermarket rather, it has limited itself to a food and grocery convenience store. They also have a threat from the existing supermarkets which provides all the services to

its customers. For Example Food world and Nilgiris also provides food and beverages with other personal care products. These convince are not existed in the present Reliance retail stores.

RELIANCE FRESH Retail industry is in booming phase particularly in India, thus to reap this benefit RIL should come up with new form of retail stores and should shed it convenient store image. By doing so they will be able to attract a large customer base.  Reliance fresh is a major player in the retail market and has brought revolution in the retail industry in India.

 It has done a new thing by procuring supplies from the source i.e farmers therefore it can procure fresh goods at less rates and pass on the benefit to the customers in form of reduced price.  Reliance has also done a good job as far as C.S.R is concerned as it recruits people from the underprivileged section so that they have a fixed job and can lead a better life. For this propose they charge nominal fees for training and refund it when they are recruited as the fees will ensure regularity and sincerity among the students.  They have a good supply chain which ensures that once the goods arrive in the stores 

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within 2-3 hours gets unloaded and placed at its allotted place. Reliance fresh outlets are located mainly in residential areas which cater the need of people in radius of 1- 2 km. This store promotes its private label in foods and edibles sections. Reliance Fresh is planning to launch their private label products in some kirana storesthere by exploring the new market of consumers. The Reliance retail company sources say it is setting aside Rs 50,000 crore to build its farm-to-fork linkage. They have issued Biometric card to the farmers who supply them regularly the products so that they can avail loans up to Rs 15,000 so that they have a flow of cash and reliance has flow of supplies. According to officials of reliance by September reliance fresh stores will have break even except for Mumbai as the real estate prices are very high there. Supply chain model of reliance fresh is strong enough to grantee them supplies round the year. They have a bullish growth plans ahead so that they are able to capture on this rapidly growing sector in India. FUTURE PLANS : Bring new format of food and café, ready to launch pharmacy and invest 20k cr expected sales of 2 lkh cr

From this project we come to know that any retail outlet or company should secure their supplies which will help them in growth and will also guarantee the low cost. Companies should also have a concern on Corporate Social Responsibility (CSR) as it works in long run.

PRIYANKA NEEL (08BS0002390)

SEC- B

RELIANCE FRESH Reliance fresh a pioneer in retail industry in India it has achieved many mile stones to name few are that it has large number of outlets all over India. ∞ In the month of September almost all the stores will Break even except for the stores in Mumbai as it was not possible for the stores there due to high Real Estate price.

∞ They are procuring their supplies from the source itself that is from the Farmers so that they have good quality at reasonable price. ∞ They pass on the benefit of bulk purchase to customers in form of reduced price. ∞ They have given Bio-metric cards to some of the suppliers so that they can avail loans through it so that they have a regular supply of materials and the stores have regular supply of the goods. ∞ Although Reliance does not grantees the payment of the above mentioned loan. ∞ They have retail outlets in residential areas and catering to the need of people of within the radius of 1- 2 km. ∞ They have a mega plan for future expansion and have a target to reach to every Indian consumer. ∞ They have also planned to launch their private label in various Kirana Stores. ∞ They employee people from underprivileged section of society to improve their living conditions. ∞ They charge nominal fees for the same which is refundable once he is recruited. ∞ They have a strong supply chain which has reduced their turnaround time for their vehicles supplying the products to stores. ∞ They also have a different model which assures supplies of materials round the year from the farmers at cheap rate. ∞ They have a “Farm to Fork”in which they finance the farmers for their crops production and procure them when they are ready for selling. As a student of retail we can learn that if a company has a backing of Big Business House like RIL then they can have an extensive growth plan. By assuring supplies company can go for expansion as the chances of stock outs is very less in such case. A company also should give due importance to Corporate Social Responsibility.

ARUN TIWARI (08BS0000573) SEC-B