Adequate store organization is led by Mukesh Ambani and he is the major part of Reliance Industries’ retail business. Reliance Ltd intends to invest over Rs. 25,000 crore in the retail sector. It also includes more than 560 Reliance Fresh stores all over the country, offering a variety of products like fresh fruits, daily groceries, fruit juices, snacks, and vegetables. A typical Reliance Fresh outlet is about 3,000 to 4,000 square feet in size and covers an area of over three kilometers. The history of Reliance Fresh dates back to its establishment.
Reliance retail faced several challenges before launching Reliance Fresh due to various issues in Orissa, West Bengal, and Uttar Pradesh, as well as the media’s coverage of the shortage of vegetables and fruits. As a result, Reliance’s sale in the vegetable and fruit sectors decreased, leading them to establish a new position as a clean supermarket that focuses on different groups such as IT, consumer durables, home FMCG, and food.
The retail company Reliance may not supply vegetables and fruits in some states. Reliance Fresh has decided not to compete with traders partially due to the harm it can cause to the healthy supply chain. The growth of Reliance Fresh began with the establishment of a store in Hyderabad. The company focuses on providing fresh produce at affordable prices by implementing the farm-to-fork concept.
The main idea behind the corporation was to source products directly from farmers and sell them directly to customers, cutting out intermediaries. To cater to the general public’s needs, Reliance introduced various formats like Reliance Fresh, Reliance Super, Reliance Food, Reliance Digital, Reliance Jewels, and Reliance Wellness. In addition, they established stores such as Reliance Mart. They also partnered with Apple to create specialized Apple outlets called iStores. The first iStore opened in Bangalore. The goal of establishing Reliance Retail was to generate wealth and growth for farmers, customers, small retailers, and partners as part of a larger organized retail venture by the Reliance group.
Reliance’s main focus is on entering the unorganized sector of vegetables and fruits, aiming to provide 100% fresh farm produce in their new grocery store. Alongside this, they plan to incorporate a juice bar and offer puja flowers. The majority of the floor area, over 60%, will be dedicated to displaying fresh fruits and vegetables, while the remaining space will be allocated for other food items like spices and bakery products. Notably, Reliance has chosen not to stock certain items such as bar soap, toothpaste, and detergent—an approach that differentiates them from competitors in the industry like Food World, Big Bazaar, and Nilgiries.
Instead of focusing on small packaged foods, they have launched a new supermarket called Shakhari Bandar. This store offers everything from fasteners to soap. Many of their staples are sold under their own brand, Reliance Select. For example, they have a 500g pack of chenna dal priced at Rs28 and a 500g pack of urad dal priced at Rs39, both under the Reliance Select brand. Despite the presence of popular brands like Nestle Maggi and MTR’s masalas, the supermarket gives more prominence to their own private label products in order to offer better profit margins to the retailer. These stores are relatively small, ranging from 2000 to 500 square feet in size.
A supermarket may need as much as 8000-10000 sq. ft. However, a weakness is that it may miss out on capturing a larger portion of customers’ purchases. It could be difficult for regular customers to shop at multiple stores to find all their essential items. Reliance could address this issue by adding a few small counters for non-food products. Executives believe this change will attract more customers and is not the final setup they are implementing to meet the demands of a larger clientele. Reliance aims to create a highly profitable business and sees this as an opportunity instead of a setback.
The inefficiency of the India food supply chain results from multiple intermediaries adding their own profit margin and significant wastage during transit. However, this also presents an opportunity for savings and profits. To reduce costs and increase profits, the sourcing of requirements has been outsourced to farmers. For instance, leafy vegetables, brinjals, tomatoes, and green chilies in the Bangara Hills area are directly sourced from farmers in Vantimamdi, Chevella, and nearby mandals in Rangareddy district, Andhra Pradesh.
The reliance on the supply chain has already been supported by several hundred farmers, and it is projected to reach millions in the next five years. The main objective of reliance is to eliminate intermediaries in the industry and decrease costs. Having smaller stores offers two advantages, as they lower real estate expenses and increase profits. Finding space for small convenience stores in quiet neighborhoods is easier compared to locating space for supermarkets in busy high streets. However, there are also threats involved. The model is designed to facilitate a faster turnover of inventory, with reliance expecting consumers to visit the store at least twice a week to purchase their top-up groceries.
Each Reliance retail store will have an investment ranging from Rs50 Lakh to Rs60 lakh. Unlike global retailers who operate with thin profit margins, Reliance retail is adopting a high-margin business model. Rather than establishing a full-fledged supermarket, they have intentionally opted for a limited focus on food and grocery convenience stores. However, customers can still find similar amenities at other existing supermarkets, such as Food world and Nilgiries, which offer food, beverages, and personal care products. These conveniences are currently not available in Reliance retail stores. Description:
The retail industry in India is currently booming, presenting an ideal opportunity for RIL to establish new farm retail stores and shift away from its convenience store image. By adopting this strategy, RIL can attract a wider customer base. One major player in the Indian retail market, Reliance fresh, has completely transformed the industry through several approaches. These include sourcing supplies directly from farmers, allowing for the acquisition of fresh products at lower prices and passing on these benefits to customers by reducing prices. Furthermore, Reliance has made substantial advancements in various other aspects.
S. R is concerned about recruiting individuals from underprivileged backgrounds to provide them with stable employment and an improved quality of life. To ensure commitment and dedication among the students, they charge a nominal fee for training, which is refunded upon recruitment. Additionally, S.R has a well-organized supply chain that ensures efficient unloading and placement of goods within 2-3 hours of their arrival at the stores.
Reliance fresh is planning to introduce their private label products in select kirana stores, thereby reaching a new market of consumers. With most of their outlets located in residential areas, Reliance fresh successfully caters to the needs of people within a 1-2 km radius. The store emphasizes its private label inputs and edibles sections.
Reliance retail company is allocating Rs 50,000 crore for the development of its farm-to-fork linkage. They have also provided biometric cards to regular suppliers, enabling them to access loans up to Rs 15,000. This ensures a steady cash flow for the farmers and reliable supplies for Reliance. By September, reliance fresh stores are expected to break even, excluding Mumbai where high real estate prices pose challenges.
The reliance fresh supply chain model is robust enough to ensure year-round supplies. Their ambitious growth plans enable them to capitalize on the rapidly growing sector in India. Their future plans include introducing a new format of food cafe, launching a pharmacy, and investing 20,000 crores with expected sales of 21 lakh crores. These projects highlight the importance for retail outlets or companies to secure their supplies for growth and cost efficiency. Additionally, companies should prioritize corporate social responsibility (CSR) for long-term success. In conclusion, Reliance Fresh is a pioneering retail industry leader in India, with a large number of stores nationwide. Most of their stores are expected to break even in September, except for those in Mumbai due to high real estate prices.
They procure supplies directly from farmers to ensure good quality at reasonable prices. They pass on bulk purchase benefits to customers through reduced prices. Some suppliers have been given bio-metric cards to avail loans for a steady supply of materials, ensuring regular supply at stores. While Reliance does not guarantee loan payments, they have retail outlets in residential areas within a 1-2 km radius, catering to local needs. They have ambitious plans for future expansion, aiming to reach every Indian customer. They also plan to launch their private label in different kirana stores.
They employ individuals from underprivileged communities to enhance their living conditions. A nominal fee is charged for this service, but it is reimbursed upon employment. Their supply chain is highly efficient, resulting in shorter delivery times for their vehicles to stores. Moreover, they have established a model that enables them to buy materials from farmers at affordable rates all year round.
References
The following is a list of websites related to Reliance Fresh:
1. http://www.scribd.com/doc/22196191/Reliance-Fresh
2. http://www.scribd.com/doc/13926351/Swot-Analysis-on-Retail-Industries
3. http://www.2dix.com/ppt-2011/swot-analysis-of-reliance-fresh-ppt.php
4. http://pdfcast.org/search/all/pestle-analysis-of-reliance-fresh
5. http://www.caseforest.com/case-study-Reliance-Fresh.aspx
6. http://hubpages.com/hub/Reliance-Fresh
7. http://www.squidoo.com/reliance-fresh
8. http://en.wordpress.com/tag/reliance-fresh/
9. http://www.ril.com/html/aboutus/aboutus.html
10. http://www.oppapers.com/essays/Reliance-Fresh/184778
