Reliance Fresh - The Building Of The Brand

Dinesh G. Mhatre. EMBA – III, Roll No. 6

Topic: Reliance Fresh – the building of the brand

Objective: •

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To To To To To

review the emergence of Reliance Fresh. understand the Farm to Fork concept. understand the product range. understand the private label strategy in Kirana Stores. review CSR initiative of Reliance by recruiting people from under privileged section.

Philosophy: Reliance Fresh 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.

Methodology used: The relevant data was collected from secondary sources i.e. Internet.

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Dinesh G. Mhatre. EMBA – III, Roll No. 6

Content 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 a dramatic change due circumstances prevailing in UP, West Bengal and Orissa, 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 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

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Dinesh G. Mhatre. EMBA – III, Roll No. 6 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. Farm to Fork Concept

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Dinesh G. Mhatre. EMBA – III, Roll No. 6

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. • Households Items: In the stores we can get items which are at slight premium rate than market price, but usually of high quality. • Food and Beverages: This area of the product line they stock all the premier brands and also their private label. • 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. • Refrigerated products: This product line is dominated by the brands available in market and very less private labeling is done. • Non food items: Here we get many petty non food items at a premium than market price.

Recapitulation 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.

Conclusion 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. 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.

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