Reliance Retail has been riding the crest of the wave of India's retail revolution. Since its first store opened in November 2006, the vehicle launched by telecoms conglomerate Reliance Industries has opened 100 stores under the Reliance Fresh banner. This month there were reports it planned to open more than 180 new stores over the next six months in the Gujarat region. It has also publicly set out its stall to open 1,000 stores every year until 2011.
Despite analysts' scepticism about its ability to meet such ambitious targets, the chain's CEO of operations, Raghu Pillai, remains confident. "The first few stores have been a trial, but feedback shows customers are ready. Our Fresh format will be in 55 cities by December, which will mean about 1,000 stores this year."
However, he concedes there are challenges. "When you open stores quickly some pieces of the jigsaw may fall away, but everyone here will experience that. For the first five years, the main challenge will be about internal processes and getting the execution right."
Another issue is India's poor supply infrastructure. Though the government is redressing this with a new £76bn infrastructure fund, supply chains are still slow and unreliable.
Store manager Kunal Gupta runs the 3,300 sq ft Reliance Fresh store in Noida, just outside Delhi. Storage space is virtually non-existent. When he ordered extra potatoes, onions and tomatoes for his store opening on 1 February he had to store them on the street. Lack of space means deliveries have to be taken daily. "We haven't had too many problems but we want to build relationships with our customers," he says.
Reliance's strategy is based on price. Potatoes, onions and tomatoes make up 20% of sales, with fresh produce making up 50% of floorspace and 40% of sales. Local kirana shops near the Noida store sell potatoes, onions and tomatoes for 7 rupees (8p), 19 rupees and 12 rupees per kg, so Reliance sells them for 5, 15 and 10.
It also offers a range of own-label products, including tea, water, natural food and cosmetics.
The strategy appears to be working. In its first two weeks, the Noida store had 1,500 customers per day on average and sales of 342,000 rupees (£4,050). Home delivery and phone shopping are now available.
Pillai says the Reliance Fresh stores will be joined by bigger Fresh+ stores, and hypermarkets are also on the agenda this year. "We would rather go for bigger stores now. Our minimum size was 3,000 sq ft, but I think we will bump this up to 5,000. And we need to build collection and distribution centres to develop the back end. I think we will build 50 in total to supply our 50 main cities."
He doesn't dismiss the idea of a partnership but says: "I doubt we would want to be an investor; we want to be in the driving seat." n
Despite analysts' scepticism about its ability to meet such ambitious targets, the chain's CEO of operations, Raghu Pillai, remains confident. "The first few stores have been a trial, but feedback shows customers are ready. Our Fresh format will be in 55 cities by December, which will mean about 1,000 stores this year."
However, he concedes there are challenges. "When you open stores quickly some pieces of the jigsaw may fall away, but everyone here will experience that. For the first five years, the main challenge will be about internal processes and getting the execution right."
Another issue is India's poor supply infrastructure. Though the government is redressing this with a new £76bn infrastructure fund, supply chains are still slow and unreliable.
Store manager Kunal Gupta runs the 3,300 sq ft Reliance Fresh store in Noida, just outside Delhi. Storage space is virtually non-existent. When he ordered extra potatoes, onions and tomatoes for his store opening on 1 February he had to store them on the street. Lack of space means deliveries have to be taken daily. "We haven't had too many problems but we want to build relationships with our customers," he says.
Reliance's strategy is based on price. Potatoes, onions and tomatoes make up 20% of sales, with fresh produce making up 50% of floorspace and 40% of sales. Local kirana shops near the Noida store sell potatoes, onions and tomatoes for 7 rupees (8p), 19 rupees and 12 rupees per kg, so Reliance sells them for 5, 15 and 10.
It also offers a range of own-label products, including tea, water, natural food and cosmetics.
The strategy appears to be working. In its first two weeks, the Noida store had 1,500 customers per day on average and sales of 342,000 rupees (£4,050). Home delivery and phone shopping are now available.
Pillai says the Reliance Fresh stores will be joined by bigger Fresh+ stores, and hypermarkets are also on the agenda this year. "We would rather go for bigger stores now. Our minimum size was 3,000 sq ft, but I think we will bump this up to 5,000. And we need to build collection and distribution centres to develop the back end. I think we will build 50 in total to supply our 50 main cities."
He doesn't dismiss the idea of a partnership but says: "I doubt we would want to be an investor; we want to be in the driving seat." n
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