Reliace fresh

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A

Project Report

On

Survey of Reliance FreshCustomer Satisfaction& its

Competitors

Submitted in Partial fullfilment for the Award of degree ofMaster of Business Administration

Submitted to :- Submitted by :-

Ms. Prachi Kanodia Mayank Bhati

(Lecturer MIGS) (MBA Sem-IV)


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MANAGEMENT & COMMERCE INSTITUTE OF GLOBAL SYNERGY

(Approved by AICTE, Affiliated to Rajasthan Technical University of Kota)

Certificate

This is to certify that Mr. Mayank Bhati is a student of MANAGEMENT &

COMMERCE INSTITUTE OF GLOBAL SYNERGY which is affiliated to Rajasthan

Technical University, Kota.

The project undertaken by her is prepared as per my knowledge and the work has been

completed by him under my guidance.

Date Supervisors name:-

Ms. Prachi Kanodia

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ACKNOWLEDGEMENT

"Gratitude is not a thing of expression, it is more matter of feeling."

There is always a sense of gratitude which one express towards others for their help

and supervision in achieving the goals. This formal piece of acknowledgement is an

attempt to express the feeling of gratitude towards people who helpful me in

successfully completing of my training.

I would like to express my deep gratitude to Ms. Prachi Kanodia my supervisor for

her constant co-operation. She was always there with her competent guidance and

valuable suggestion throughout the pursuance of this research project.

Special thanks to Dr. N.S. Kothari our Principal who guided me to work honestly and

to give valuable suggestion for improving my work last but not least I would also like

to place of appreciation to all the respondents whose responses were of utmost

importance for the project.

Above all no words can express my feelings to my parents, friends all those people

who supported me during my project. I am also thankful to all the respondents whose

cooperation & support has helped me a lot in collecting necessary information. I

would also like to thank almighty God for his blessings showered on me during the

completion of project report.

(MAYANK BHATI)

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EXECUTIVE SUMMARY

The Project Report is all about to check the customer satisfaction level, by

acknowledging them, knowing the different problems they are facing in Reliance

Fresh, to find out the solutions of their problems by making necessary action plan so

that more customers can be attracted and a long term relationship can be build. For

this the work was divided into three parts. The first part was the Customer

Accompanied Shop, which is related with Reliance Freshs move to diagnose

consumer behavior for business process transformation in Ajmer. The topic itself

suggests that Reliance wants to establish a shop that is customer oriented and the best

way to make a customer oriented shop is to implement the desires of the consumers by

taking feedback from them about their experiences and expectations. To have

maximum & accurate feedback opportunities, mall intercept survey technique has

been used, where feedback have been taken from the customers visiting the stores.

The objective of taking customer feedback is to check the customer satisfaction level,

customer acknowledgment by taking Personal Interview. The second part was

consisted of customer engagement program, which is basically promotional activity.

The objective of the program is to attract more & more people and make them aware

about the Reliance Fresh, to build goodwill among the customers & to createvolunteer ambassadors for Reliance Fresh. The third par of the project was to do

competitors analysis by visiting the other stores like Spencers, Subhiksha, Big

Bazaar etc. The objective of competitors analysis is to know different schemes,

offers, facilities provided by the other stores. On the basis of all three parts a SWOT

analysis has been prepared to know the strengths & weaknesses of Reliance Fresh,

where it is lagging and where is it strong.

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INDEX

CHAPTERS PARTICULARS PAGE NO.

11.11.21.31.4

1.5

Retail Industry ProfileIntroductionAdvantage IndiaPolicy and Regulatory EnvironmentKey Opportunities

Conclusion

34121719

262

2.12.22.3

Reliance industries Ltd.Reliance GroupReliance Retail Ltd.Reliance Fresh

31333742

3 Project Introduction 514 Objectives of the Study 545 Methodology 56

6 Limitations 617

7.1Project AnalysisComparative Analysis of Reliance Freshwith its Competitors (Questionnaire)

6364

8 SWOT Analysis 769 Findings 86

10 SUGGESTIONS 8811 Conclusions 9012 Bibliography 91

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Chapter 1

RETAIL INDUSTRY

PROFILE

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1.1

INTRODUCTION

Indias GDP growth of 9.4 per cent in 2006-07 is the highest posted for over 18years, reflecting the booming economy of the country. Growing in tandem withthe economy is the Indian retail sector. The sector is on a high growth trajectoryand is expected to grow by more than 27 per cent over the next 5 to 6 years.

Retail is one of Indias largest industries, contributing to about 10 per cent ofthe GDP and providing employment to 8 per cent of the nations workforce.Indian retail business promises to be one of the core sectors of the Indianeconomy, with organised retail sector estimated to grow by 400 per cent of itscurrent size by 2007-08.

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The growth and potential of the sector is being widely acknowledged both in thedomestic as well as international forums. India topped AT Kearneys GlobalRetail Development Index 2007 for the third consecutive year, retaining itsposition in the global market as the most preferred retail destination amongstemerging markets.

For the fifth time, India also topped the Global Consumer Confidence Index June 2007 conducted twice a year by The Nielsen Company. Indians were judgedthe worlds most optimistic consumers, with large sections of the populationconsidering now a good time to spend. Indian consumers were also found tobe bullish about their personal finances over the next 12 months.

The economics of Indian consumerism is buoyant, with India ranking as thefourth largest economy in terms of Purchasing Power Parity (PPP), next only toUnited States, Japan and China. India is expected to outpace Japan by the year2010 to become worlds third largest economy. With 54 per cent of the Indians

aged below 25, the young Indian consumer is buying big to look good and feelgood.

THE INDIAN RETAIL REVOLUTION

Retailing in India is evolving rapidly, with consumer spending growing byunprecedented rates and with increasing number of global players investing inthis sector. Organised retail in India is undergoing a metamorphosis and isexpected to scale up to meet global standards over the next five years.

Indias retail market has experienced enormous growth over the past decade,more than doubling in size to US$ 311.7 billion in 2005-06. The market wasestimated at US$ 1.1 trillion (in PPP terms) in 2005-06. The most significantperiod of growth for the sector was between years 2000 and 2006, when thesector revenues increased by about 93.5 per cent translating to an averageannual growth of 13.3 per cent. The sectors growth was partly a reflection ofthe impressive Indian economic growth and overall rise in income levels ofconsumers.

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Source: DatamonitorExchange Rate: US$ 1 = INR 41 (Valid through the report)Even the introduction of Value Added Tax (VAT) in April 2005 has not severelyimpacted consumer demand for retail goods. Greater exposure to westernproducts and lifestyles has helped drive consumerism. The sector also benefited

considerably by the rising popularity of satellite television since the early 1990s,which provided a highly effective mass marketing route, reaching out to thelarge Indian consumer base.

TRADITIONAL AND MODERN RETAILING: THE INDIA STORY

Traditional retailing continues to be the backbone of the Indian retail industry,with traditional/unorganized retailing contributing to over 95 per cent of totalretail revenues. The quintessential mom-and-pop retailing outlets or thecornerstore formats constitutes a major part of Indian retail store formats. Over12 million small and medium retail outlets exist in India, the highest in anycountry. More than 80 per cent of these are run as small family businesses.

Prevalence of traditional retailing is highly pronounced in small towns and citieswith primary presence of neighborhood kirana stores, push-cart vendors,melas and mandis. Organised formats are only in the initial stages ofadoption in these regions. Leading retail players in the industry are beginning toexplore these markets and the rural consumers are slowly beginning toembrace the newer organised retail formats.

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Modern/Organised retailing is growing at an aggressive pace in urban India,fuelled by bourgeoning economic activity. Organised retail revenues areexpected to increase from an estimated US$ 12.9 billion per annum in 2005-06to more than US$ 43 billion by 2009-10. The sector is predicted to grow by 400per cent, in value terms, by 2007-08. A large number of domestic and

international players are setting up base and expanding their business withnewer organised retail formats and intense competition driving innovation informats.

GROWTH ACROSS SEGMENTS

Retail sector in India is primarily categorised by the type of products retailed, asopposed to the different retail formats in operation. The Food and Beveragesvertical accounts for the largest share of revenues at 74 per cent of the totalretail market. This category has the highest consumer demand across all income levels and various retail formats. The Indian consumer behavior of

preferring proximity to retail formats is highly pronounced in this sector, withfood, grocery and allied products largely sourced from the local stores or push-cart vendors.

Apparels and consumer durables are the fastest growing verticals in the retailsector. Mobile phone as a product category has witnessed the highest growth inconsumer demand amongst all retail product offerings, with increasingpenetration of telecommunications in towns and villages.The Telecommunications sector has been adding on an average 5 million newusers every month.

The other product categories are gaining traction predominantly in the urbanareas and emerging cities, with increasing average income and spending powerof young urban India.

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ORGANISED RETAIL IN INDIA

Organised retail clocked revenues of US$ 12,927 million, compared to totalretail sales estimated at US$ 311,731 million in 2005-06.

The apparel industry contributed to the largest share of the organised retail pie,with revenues of US$ 4,756 million, owing to the rapidly rising number of mallsand introduction of several domestic and international apparel brands in thecountry.

The Food and Beverages segment recorded the highest growth over 2004-05,with the proliferation of supermarkets, hypermarkets and the entry of major

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players like Reliance Fresh (promoted by Reliance Retail Ltd). This segment ispoised to gain traction, with several new players planning their entry and theexisting players expanding their business in this segment at a rapid pace. TheHome Dcor segment followed suit growing at 18 per cent, with a boom in thereal estate and housing sector.

Penetration of organised retail was at 4.15 per cent in 2005-06, an increasefrom the 3 per cent estimated for 2004-05, and is projected to increase to 9.52per cent in 2009-10, with revenues from organised retail expected to touch US$43,829 million in 2009-10.

Footwear segment recorded the highest penetration of 32.84 per cent, primarilydue to the presence of well-established players like Bata, Liberty and Paragon.These players have been in the market for over three decades, have goodbrand recall and a well established distribution network penetrating both ruraland urban areas.

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Consumer durables segment and the books and music segment also witnessedcontinued growth. Entry of players like Crossword and Music world has given

the segment strong impetus.

Apparel is one of the fastest growing verticals, with the highest number ofdomestic and foreign brands mushrooming in the market, and increasingconsumer willingness to pay for brand and quality of products.

FUTURE OUTLOOK

Retail sector revenues is pegged to reach US$ 460.6 billion by 2010-11, with theorganised retail sector projected to grow to US$ 43.8 billion in the said year. It isenvisaged that modern retail will adapt and absorb some of the traditional

formats in the course of its expansion. Unorganised retail formats are expectedto converge and combine in formats such as mushrooming village malls andrural retailing ventures.With the rural retail revenues forming the largest share of total retail revenues,increasing number of players are in the fray to explore opportunities in the ruralareas. The rural retail revenues are estimated to increase by 60 per cent by2012, with larger share of increase in demand for consumer and householdproducts.

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Retail giants are set to embrace newer and innovative formats, by givingmodern retail a traditional look in line with consumer needs and expectations.Pilot test concepts are already being rolled out by players like Indian TobaccoCompany (ITC) and DCM Shriram Consolidated Ltd. (DSCL) with their rural

initiatives of Choupal Saagar and Hariyali Kisan Bazaar, and are exploringoptions to increase their customer outreach. Established players like Unilever,Dabur and Godrej have strengthened their distribution channels and areincreasing their penetration to leverage the higher consumer demand in thesemarkets. Reliance Retail Ltd, a wholly owned subsidiary of Reliance IndustriesLtd, is set to embark on the establishment of 1,600-odd rural retail hubs by2010, with the aim to make these hubs the nodal institutions for retailingactivity, ushering in a new era of organised-rural retail.

With modest store formats being pursued to attract the average rural customer,as opposed to the plush and vibrant formats adopted for the urban retailing,

rural retailing is set to provide a new dimension to the Indian retail scenario.

India

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1.2

Advantage IndiaAgainst the backdrop of an accelerating modern retail revolution, India offers tobe an attractive destination for global corporations and leading retailers seekingemerging markets overseas. India presents a significant market, with its youngpopulation just beginning to embrace significant lifestyle changes.

RAPID ECONOMIC GROWTH

The fast and furious pace of growth of the Indian economy is the driving forcefor Indian consumerism; with the Indian consumers confident about theirearnings and are spending a large portion of their high disposable incomes.

Projections by analysts suggest that India has the potential to be labeled thefastest-growing economy and outpace the developed economies by 2050.Analysts predict India to sustain an average GDP growth rate of 5 per cent tillthe mid of this century, with India projected to outpace the other developedeconomy markets by 2050.

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The average annual growth rate for 1994-2004 was pegged at 6.1 per cent,second only to China. The more recent growth rates of over 9 per cent postedfor India, promise a continued robust growth story. Private consumptionaccounted for 62 per cent of Indias GDP in 2004-05, comparable to most of theleading economies around the world.

THE YOUNG INDIA

Against the backdrop of an ageing world, India possesses the advantage ofhaving a largely young population. 35 per cent of Indias population is under 14years of age and more than 60 per cent of the population is estimated toconstitute the working age group (15-60) till 2050. Two-thirds of Indianpopulation is under 35, with the median age of 23 years, as opposed to theworld median age of 33. India is home to 20 per cent of the global populationunder 25 years of age.

This trend is projected to continue for the next decade, with the share set toreach its maximum in 2010. The large proportion of the working-age populationtranslates to a lucrative consumer base vis--vis other economies of the world,

placing India on the radar as one of the most promising retail destinations of theworld.

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POTENTIAL UNTAPPED MARKET

India ranks first, ahead of Russia, in terms of emerging market potential and isdeemed a Priority 1 market for international retail. Organised retailpenetration is on the rise and offers an attractive proposition for entry of new

players as well as scope for expansion for existing players.

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India is home to a large base of consumers with annual incomes ranging fromUS$ 1,000 US$ 4,700, comprising of over 75 million households. A steadilyrising percentage of rich and super rich population and impressive disposableincomes offers a spectrum of opportunities, spanning from rural retailing toluxury retailing. The impressive retail space availability and growing trend of

consumerism in the emerging cities and small towns add to the marketattractiveness.

Pantaloon Retail India Limited, one of Indias retail giants captures a mere 0.3per cent of total market; compared to Tesco Plc, which captures 14.3per cent ofEnglands market and Walmart which captures 20 per cent of USAs market;giving an insight into the large untapped market potential.

ABUNDANT AVAILABILITY OF SKILLED LABOUR

India has a vast resource base of talent and skilled labour. Over 37,000,000

students were enrolled in about 150,000 pre-college institutes and over11,700,000 in 14,000 higher education institutions in 2005-06. With Englishbeing the language for business in India, the language skills of the Indianworkforce score higher than that of emerging economies. Retail Management isa sought after education stream amongst students, with over 15 premierinstitutes offering specialised courses in Retail Management.

LOW COST OF OPERATIONS

The most attractive component of Indias value proposition is its cost

attractiveness. Existing players are increasingly turning to Tier II and Tier IIIcities for retail establishments and for manpower sourcing.

These cities offer significant cost advantage in the form of availability of low-cost skilled human resources. With well-educated small town graduates turningto the urban cities for employment, these graduates are ideal candidates for

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sales and marketing executive roles in modern organised retail formats. Source:Department of Industrial Policy and Promotion

1.3Policy and Regulatory

EnvironmentThe Government is progressively undertaking reforms and liberalising the retailsector; thereby attracting significant foreign investments. The regulatory andsupervisory policies are being reshaped and reoriented to meet the newchallenges and opportunities in this sector.

To facilitate easier flow of Foreign Direct Investments (FDI) inflow, instead ofhaving to seek Foreign Investment Promotion Board (FIPB) approval, FDI up to100 per cent is allowed under the automatic route for cash and carry wholesaletrading and export trading.

FDI up to 51 per cent is allowed, with prior Government approval for retail tradein Single Brand products with the objective of attracting investment,technology and global best practices and catering to the demand for suchbranded goods in India. This implies that foreign companies can now sell goodssold globally under a single brand, such as in the case of Reebok, Nokia andAdidas. However, retailing of multiple brands, even if the goods are producedby the same manufacturer, is presently not allowed.

Relaxations of FDI restrictions are being vigorously pursued by the business andtrade coalitions and are expected to fall in place over the next 3-5 years. Themost common channels for entry of foreign retailers are the strategic licenseagreements, franchising, distribution, manufacturing, joint ventures and cashand carry wholesale trading.

STRATEGIC LICENCE AGREEMENTS

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This route involves the foreign company entering into a licensing agreementwith a domestic retailer or partnering with Indian promoter owned companies inthe MiddleEast (UAE) or South East Asian countries (Singapore, Malaysia, Thailand,

Indonesia).

FRANCHISING

This is a widely taken entry route, with many international brands setting upshop via this provision. The franchising routes operable in India are: Unit franchisee: Franchisee is granted rights to operate a single business unit Multiple franchisee: Individual unit franchises are given to multiple outlets, aroute primarily used by domestic brands Master franchisee: Rights are granted for an entire territory to the masterfranchisee and the master franchisee can in turn grant unit and multiple

franchisees in that territory Regional franchisee: This route is similar to that of the master franchisee, butapplicable on a larger scale The master and regional franchisee routes are themost preferred and the oft-adopted routes of entry into India by theinternational retailers.

CASH-AND-CARRY WHOLESALE TRADING

100 per cent FDI is allowed in wholesale trading which involves building a largedistribution infrastructure to assist local retailers and manufacturers.

JOINT ventures

International firms can enter into agreements with domestic players, and set upbase in India. The share of the multinational is restricted to 49 per cent in thisroute.

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1.4

Key OpportunitiesOPPORTUNITIES ACROSS GEOGRAPHIESMaturing Metros

Delhi and Mumbai offer an attractive market for luxury and lifestyle retailingwith these cities being home to the highest number of households belonging tothe affluent category (with income greater than US$ 24,000 per annum). Retailrevenues contributed by the affluent category accounted for over 30 per cent oftotal revenues in 2005-06. The number of affluent households is expected to

double by 2010-11, projected to trigger high growth in the luxury retailingsegment. The luxury-retail segment is presently concentrated in the five-starhotels and is slowly drifting into the specialty malls and one-stop outlets.

With the steady rise predicted in the percentage of middle class households andtheir affordability, the scope for the neighborhood malls and hypermarkets willbe pronounced in the residential suburbs. However, the lack of space and thestrict bringing down of law on illegal constructions will reinforce the migrationtowards organised retailing.

Metros on the growth lane

The growing disposable incomes, the consuming class and the increasingstandard of living across these cities translate to opportunities across all theretailing formats and verticals. The mushrooming lifestyle formats in thesecities is stimulated by the increasing exposure of consumer base tointernational brands and willingness to spend for quality. These cities mostoften also serve as the test beds for any innovative store formats.

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Metros-in-the-making

Many metro retailers are expected to open outlets in these cities to benefit fromthe First-Mover advantage, and gain a foothold in these cities. These cities

provide ample opportunities, especially for the food and grocery formats, withlower lease rentals and high availability of retail space, access to farms andagricultural produce. Consuming class accounts for over 60 per cent of the totalhouseholds, offering potential in the food and grocery, consumer goods andapparel verticals.

The FIRST-mover advantage

More than 72 per cent of Indias population resides in small towns and ruralareas with agri-produce retailing forming the largest share of total retail pie inthese regions, offering immense potential for the food and grocery vertical with

customer preference tuned towards value retailing.Players like Reliance Retail, Aditya Birla Nuvo Groups Trinethra Supermarketetc. have aggressive plans to tap opportunities in these emerging cities insuitable formats.

Players who have already established their presence in the top metros of thenation are already planning their establishments in these emerging cities andregions to gain the first-mover advantage over other entrants.

INNOVATIVE FORMATS

Formats like Wedding Malls, which are unheard of in the far west are found tobe very successful in the Indian market. The Wedding Malls for instance, stockthe complete range of wedding product offerings from apparel to jewellery. Theretail industry players are successfully blending knowledge from theexperiences of the global retail industry with the unique requirements andpreferences of the Indian consumer. Such customisation to the latent needs ofthe Indian consumer has brought about a great deal of innovation in theproduct offerings as well the retail formats in which they are being sold.

Khadi & Village Industries Commission is set to roll out a string of swankyKhadi Plazas, which would showcase the traditional handloom textiles in acompletely new form. Over 7,000 existing outlets are to be beefed up to caterto the changing tastes of the young Indian consumer and thereby provide aboost to the presently stagnant sales of the khadi textiles.

The latest addition to the list of diverse retail formats are the Village Malls,with the fair price shops being revamped to cater to larger needs of localpopulations. The Government of Gujarat has spearheaded one such initiative

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with 512 Village malls launched in the state with further plans for 508 suchmalls.

EMERGENCE OF INDIA AS THE RETAIL SOURCING HUB

Riding on the back of a strong manufacturing industry, India is fast emerging asan important global sourcing hub for top international brands India has had acontinued presence in the global scenario as one of the leading exporters ofapparels and textiles. The expiry of the Multi Fiber Arrangement has furtherwidened the global markets for apparel. Many international brands haveidentified India as one of the important supply centers for procurement oftextiles and apparels.

Wal-Marts sourcing operations was estimated at US$ 1 billion, Tescos aroundUS$ 100 million and Marks & Spencer around US$ 145 million from India for theyear 2005- 06. Unilever sources major portion of their fast moving consumer

goods from its wholly owned Indian subsidiary, Hindustan Unilever Limited.Adidas, Next and Calvin Klein are expected to follow suit, with Adidas openingits first office in Bangalore.

ONLINE RETAILING

The Click-to-buy phenomenon is fast catching up in India, with increase innumber of broadband and dial-up internet connections, limited personal time

for shopping, increased use of plastic money and large base of youngpopulation that spends a considerable time online.

The stated factors are facilitating rapid growth of online shopping with theindustry players scaling up to meet the consumer requirements. Most retailersare developing and maintaining their own online sale portals for easy consumeraccess, facilitating online purchase of merchandise. Tata Indicoms i-choose.inand G&Bs godrejlifespace.com are good examples of this trend.

Players like Rediff.com, eBay.in, Indiatimes.com were some of the earlyentrants in the Indian online retail space, clocking impressive revenues through

online transactions. Some of the more recent players to enter this niche marketinclude Pantaloons Retail India Ltd., through its Futurebazaar.com venture.

Many smaller retail portals are also thriving on the internet, meeting the nicheIndian consumer requirements such as ethnic apparel, handicrafts andjewellery. Demand for these portals, which has been primarily driven by thenon-resident Indians, is gaining popularity on the Indian soil as well, with the

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young urban Indian consumers increasing exposure to the virtual world ofinternet.

With value-added services like cash-on-delivery to facilitate online transactionsby consumers without credit/ debit card, unique bidding schemes etc, e-

commerce is fast gaining acceptance in India.

Rediff.com Ebay.in Indiatimes Futurebazaar.com Lifespace i-choose

RURAL RETAILING

Rural retailing constitutes more than 95 per cent of total retail revenues, withmore than 70 per cent of Indias population concentrated in the rural areas.Rural hypermarkets are growing at a blistering pace meeting the uniquerequirements of the rural consumer. The range of services provided by the ruralretailers extends from creating a platform to buy and sell farm produce, tobanking services, to restaurants etc.

One of the key players in the rural retail segment is ITC with its Choupal Saagarinitiative. ITC has 14 outlets in operation presently and plans to increase thenumber to 700 over the next 7-10 years. ITCs Choupal Saagar retails productsand also acts as a procurement hub for ITCs e-choupals where farmers are

offered better rates for their agriculture produce, compared with the prevalentmarket rates for the same.

Other examples of players and their services in the rural retail segment areDSCLs Hariyali Kisan Bazaar and Indian Oil Corporations Kisan Seva Kendra.

DSCLs Hariyali Kisan Bazaar has over 70 outlets presently and the companyproposes to operate a total of 200 outlets over the next 12 months. The outletsprovide a spectrum of offerings including agronomist-consultations, agri-inputs,and financial services, apart from the conventional retailing services.

Indian Oil Corporations Kisan Seva Kendra offerings extend over fuel, agri-produce, fast moving consumer goods and other value added services. Thecompany has a network of over 1400 outlets presently. Reliance Retail andPantaloon Retail India Ltd. are expected to undertake more ventures to capturethe vast untapped potential in the rural retail segment.

Kisan Sewa Kendra E-Chaupal

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Hariyali

THE RESPLENDENT LUXURY MARKET

Affluent households in India account for just about 4.5 per cent of the nationalpopulation. However, the affluent households segment contributes to more than22 per cent of the total retail sales, translating to US$ 62,340 million of retailrevenues.

The number of affluent households is estimated to increase by 8.5 per cent by2010-11. The contribution of affluent households to retail revenues is alsoestimated to increase to 33 per cent by the said year. Thereby in 2010-11,affluent households are expected to generate retail revenues worth US$152,000 million.

The luxury retail segment is hence a substantial opportunity for retail industryplayers. Many international investors are actively pursuing an entry route intoIndia for opportunities in the luxury segment.

Delhi and Mumbai are the prime contributors to the luxury retail revenues andhave the highest density of luxury brand outlets in the country. However,currently the location of these outlets is primarily limited to five-star hotel mallspaces, with limited footfalls and consumer exposure.Industry players have aggressive expansion plans in the pipeline, with investorconfidence reinforced by the booming sales in the luxury segment. The twoLouis Vuitton stores in Mumbai and Delhi averaged monthly sales of US$ 13

million in 2005-06. Hugo Boss is expanding to other metros in the country,encouraged by 30 per cent increase in its India sales in the past year.

INTERNATIONAL LUXURY RETAILING BRANDS IN INDIA

BVLGARI UBL GUCCI Cerruti Swarovski Omega Mont Blanc Hugo Boss Chanel Vacheron Constantin SA Dior Vertu

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Harman Kardon Florsheim John Balliano Versace Rado

Louis Vuitton Dolce & Gabbana Denon Do Daks Donna Karan Morgan Longines Tiffany & Co. Canali Bose Cartier

Fendi Tommy Hilfiger Prada Chopard The Samile Row

LEISURE AND ENTERTAINMENT MARKET

Entertainment retail is redefining Indian lifestyles with the rate of growth in thenumber of multiplexes and gaming zones matching the growth story of malls

and retail space. The immense potential in the entertainment and leisuresegment is reflected by fact that there exist 10 screens per million of populationin India as compared to 40 screens in the European market and 117 in the US.

The total leisure and entertainment revenues were pegged at US$ 8 billion in2005-06, a 14 percent increase over 2004-05. The organised entertainmentretail revenues grew at an average rate of 30 per cent over 2004-05, and areexpected to maintain the same pace in the coming years, with Indian playersinvesting heavily in this market.Reliance Infotechs Adlabs, Shoppers Stops Timezone have aggressiveexpansion plans in the pipeline, with retailers exploring the joint venture optionwith international giants in the sector having a global presence.

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Source: CB Richard Ellis

CASHING IN ON THE TRANSIT CHANNELS

Infrastructure sector in India is booming with several capacity buildingmeasures being undertaken aggressively by the central and state governments.Construction of new airports and development of metro rail systems equalingpremium global standards is opening a new realm of retailing opportunities inthese transit points. Airports Authority of India has commenced the upgradationof 9 metro airports and 15 non-metro airports, with emphasis also ondevelopment of retail space in the airports.

The joint venture between Shoppers Stop and The Nuance Group AG has won

the contract for setting up duty-free and duty-paid retailing outlets at theupcoming Bangalore and Hyderabad International Airports. The MassRapid Transit System, currently in operation in Delhi, and under construction atother metro cities like Bangalore and Hyderabad is also expected to offerimmense retail potential.

With the Delhi Metro Rail Corporation (DMRC) inviting tenders for retaildevelopment in the 53 metro stations in operation and 79 stations proposed to

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come up by 2010 in Delhi, retailers are in the fray to exploit the commercialpotential of the retail space.

SEZ SYNERGIES

Special Economic Zones are government driven initiatives attracting higherinvestment into India, with about 154 Special Economic Zones notified as on Oct3, 2007 spread over states and union territories of India.

SEZs offer ample retail opportunities, with a percentage of the SEZ areaearmarked for retailing in the nonprocessing zone. The size of the area in theretailing space is calculated considering various parameters like the type ofSEZ, projected size of the residential population in SEZ, and population in thecatchment area.

IT/ITes based SEZs offer impressive retailing opportunities; the target segment

for such SEZs would be the urban population with high-disposable incomes.

TOURISM RELATED OPPORTUNITIES

With tourists inflow increasing impressively with each passing year, tourismholds the key to a large retailing opportunity. In 2005-06, approximately 4.45million foreign tourists arrived in India, registering a growth of 13.5 per centover 2004-05.Retailing of regional handicrafts and artifacts holds an opportunity to capturethe interest of foreign tourists, given the rich and diverse cultural heritage ofIndia.

The Indian Tourism Boards initiatives like Dilli Haat (a crafts bazaar located inDelhi) retails the regional crafts of various states, attracting a large number oftourist footfalls. The concept is fast gaining traction in other destinations inIndia such as Ajmer, Mumbai and Hyderabad.

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1.5CONCLUSIONIndia's retail market has experienced enormous growth over the past decade,more than doubling in size to US$ 311.7 billion in 2005-06. Retail is one ofIndia's largest industries, contributing to about 10 per cent of the GDP andproviding employment to 8per cent of the nation's workforce. Indian retailbusiness promises to be one of the core sectors of the Indian economy, withorganised retail sector estimated to grow by 400 per cent of its current size by2007-08.

India's retail sector revenues are estimated to touch US$ 460.6 billion by 2010-11, and the organised retail sector is projected to grow to US$ 43.8 billion in the

said year. The organised retail sector clocked revenues worth US$ 12,927million in 2005-06with the apparel industry contributing to a lions share of theorganised retail pie, with revenues to the tune of US$ 4,756 million owing tothe rapidly rising number of malls and introduction of several domestic andinternational apparel brands in the country.

Organised retail penetration is on the rise and offers an attractive propositionfor entry of new players both domestic and foreign, as well as scope forexpansion for existing players. With a number of domestic and internationalbrands available in stores, metros and smaller cities in addition to a wide rangeof product offerings from food and grocery to furniture and fixtures, the Indian

consumer is fast embracing modern retail.

India tops the AT Kearney's annual Global Retail Development Index (GRDI) forthe third consecutive year, maintaining its position as the most attractivemarket for retail investment. Furthermore a report by PricewaterhouseCoopersforesees India and China to continue as the top sourcing hubs in retail andconsumer sector in the coming years.

The Indian retail market, which is the fifth largest retail destination globally,according to industry estimates is estimated to grow from the US$ 330 billion in2007 to US$ 427 billion by 2010 and US$ 637 billion by 2015. Simultaneously,

modern retail is likely to increase its share in the total retail market to 22 percent by 2010.

Continuing the robust growth of the organised retail in India, according to theCredit Rating and Information Services of India, the industry raked in US$ 25.44billion turnover in 2007-08 as against US$ 16.99 billion in 2006-07, a whoppinggrowth rate of 49.73 per cent.

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India has one of the largest number of retail outlets in the world. Of the 12million retail outlets present in the country, nearly 5 million sell food and relatedproducts. Thought the market has been dominated by unorganised players, theentry of domestic and international organised players is set to change thescenario.

Organised retail segment has been growing at a blistering pace, exceeding allprevious estimates. According to a study by Deloitte Haskins and Sells,organised retail has increased its share from 5 per cent of total retail sales in2006 to 8 per cent in 2007. The fastest growing segments have been thewholesale cash and carry stores (150 per cent) followed by supermarkets (100per cent) and hypermarkets (75-80 per cent). Further, it estimates theorganised segment to account for 25 per cent of the total sales by 2011.

Retail space

Driven by changing lifestyles, strong income growth and favourabledemographic patterns, Indian retail is expanding at a rapid pace. Mall space,from a meagre one million square feet in 2002, is expected to touch 40 millionsquare feet by end-2007 and an estimated 60 million square feet by end-2008,says Jones Lang LaSalle's third annual Retailer Sentiment Survey-Asia.

Alongside, Indian cities are witnessing a paradigm shift from traditional forms ofretailing into a modern organized sector. A report by Images Retail estimatesthe number of operational malls to more than double to over 412 with 205million square feet by 2010 and further 715 malls by 2015, on the back of majorretail developments even in tier II and tier III cities in India.

Luxury retail

With consumers for luxury goods more in numbers than adult population ofseveral countries, the Indian luxury retail market is estimated to leap-frog fromaround US$ 3.5 billion to US$ 30 billion by 2015, according to a survey done byAT Kearney. India's luxury market, estimated to be the 12th largest in the world,has been growing at the rate of 25 per cent per annum.

Already Indians splurge US$ 2.9 billion on luxury assets, spend another US$ 953million on luxury services and top it by buying luxury goods worth US$ 377

million. And with a rapidly expanding population of high net worth individuals,India could emerge as the next hub for luxury goods consumption.

Consequently, a number of foreign brands including French Connection, Sanrioof Hello Kitty fame, Jimmy Choo, La Pearla and Calvin Klein among others havealready lined up for permission to infuse foreign direct investment through thesingle-brand retail window.

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Kids' retail

When it comes to Indian children, retailers are busy bonding -- and branding:

Monalisa, the Versace of kids, is coming to India.

International brand Zapp tied up with Raymond to foray into kids' apparel. Disney launched exclusive chains, which stock character-basedstationery. Pantaloon's joint venture with Gini & Jony will set up a retail chain tomarket kids' apparel. Swiss kidswear brand Milou is collaborating with Tirupur-based SreejaHosieries. French furniture brand Gautier is all set to hit the Indian retail market bythe end of the year with a comprehensive range of furniture for children andinfants. The UK based retail chain, Marks & Spencer, is launching its kids' wear

categories in India.

Leading the kids' retail revolution is the apparel business, which accounts foralmost 80 per cent of the revenue, with kids' clothing in India followinginternational fashion trends. According to research firm KSA Technopak, thebranded segment comprises US$ 701.7 million of the total kids' apparel market-size of over US$ 3 billion. Industry experts say kids' retailing will touch annualgrowth of 30-35 per cent.

Discount Malls

Even as the organized retail market is starting to take off, there has been aconcomitant surge in branded discount outlets in India. Top realtors and localretail chains are developing malls in regional boroughs, specifically to sellpremium branded goods. At least 50 such malls are to come up in the next twoyears across the country positioned in the middle-to-the-premium end of themarket.

For example, Royal Palms is developing Orchard Road Mall in the westernsuburbs of Mumbai. Similarly, Akruti Nirman, which is planning to brand itsdiscount malls in Kanjurmag, Ghatkopar, Mumbai and Thane as 'Cityworld', hasdecided to develop similar malls in Tier II and Tier III cities. Some of the other

prominent discount retailers include Pantaloon Retail (India) Ltd's BrandFactory, Arvind Mills Ltd's Megamart andand Provogue (India) Ltd's Promartamong others.

E-tailing

The increase in the PC and internet penetration along with the growingpreference of Indian consumers to shop online has given a tremendous boost to

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e-tailing-the online version of retail shopping. An estimated 10 per cent of thetotal e-commerce market is accounted by e-tailing.

With today's, net-savvy Indians making online purchases like never before, boththe number and variety of products sold online has grown exponentially.

According to the Indian Marketing Research Bureau (IMRB) and Internet andMobile Association of India (IAMAI), the e-tail market is estimated to grow by 30per cent to US$ 273.02 million in 2007-08, from US$ 210.01 million in 2006-07.

In fact, there has been a continuous rise in the number of people accessing theinternet. According to online research and advisory firm JuxtConsult's 'IndiaOnline 2008', there are over 49 million internet users in India. Significantly,internet penetration (as a percentage of population) has grown to 12 per cent,up 3 per cent from last year's 9 per cent.

Retail Franchising

Along with e-tailing another perceptible trend in the growth of organized retailmarket has been the concept of retail franchising. According to industryestimates, retail franchising has been growing at the rate of 60 per cent in thelast three years and is set to grow two-fold in the next five years.

A number of companies have been taking this route driven mainly by the needto meet the increasing consumer expectations of quality, ambience and brandexperience. In addition, this route also helps the big retailer players to rapidlyforay into the tier II and III towns and rural areas.

In fact, according to Mr Rod Young, Executive Director, DC Strategy, franchisedoutlets of leading brands in India are estimated to sell 20 per cent more thanthe company-owned ones. And with immense potential seen in this segment,the US$ 4 billion franchising industry is likely to see almost two-fold rise in thenumber of franchisees (from 0.2 million) by 2010.

Rural retail

Led by the rising purchasing power, changing consumption patterns, increasedaccess to information and communication technology and improvinginfrastructure, rural retail market is estimated to cross US$ 45.32 billion mark

by 2010 and US$ 60.43 billion by 2015, says a study by CII and YES BANK.

Consequently, Corporate India is already firming up concrete plans to tap therural retail market, which is growing at double the rate of urban markets, withinnovative schemes and human resource policies. And with 87 per cent of ruralmarkets not having access to any sort of organised marketing and distribution,this segment has tremendous potential for growth.

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International Retailers

With international brands like Tommy Hilfiger, Esprit and Puma (that haveentered the country) growing well over 100 per cent, many others are alsoplanning to foray into the Indian retail market. India's vast middle class with its

expanding purchasing power and its almost untapped retail industry are keyattractions for global retail giants wanting to enter newer markets.

The world's largest retailer, Wal-Mart, has tied-up with Sunil Mittal's BhartiEnterprises to enter Indian retail market. Microsoft's first shop-in-shop pilot has been launched with the Tata Groupsubsidiary Infiniti Retail's multi-brand consumer durables retail format, Croma. The Walt Disney Company, consumer product retailing arm of globalanimation giant, will soon add 135 new stores to its existing 15 stores. World's leading coffee chain, Starbucks' enters India through a tie-up withthe country's leading multiplex operator PVR Limited.

Apple Inc has entered into an exclusive marketing anddistribution deal with Reliance Retail through "iStore by RelianceDigital". The UK-based international coffee chain, Costa Coffee, plans to double thenumber of retail outlets by the end of 2008. British retailer Marks & Spencer's has tied with Reliance Retail and plansto open at least 50 new stores in India over the next five years, with an initialinvestment of up to US$ 58 million. UK's largest home textile retail chain, Rosebys, which was acquired byGujarat Heavy Chemicals in 2006, is set to foray into the domestic market thisyear with a slew of stores.

German sportswear and Apparel Company, Adidas is going in for a majorexpansion across India, and plans to have a total of about 450 franchiseeoutlets in the country.

Some of the international players that have already entered India includeMcDonald's, Pizza Hut, Dominos, Levis, Lee, Nike, Adidas, TGIF, Benetton,Swarovski, Sony, Sharp, Kodak, Medicine Shoppe among others.

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Chapter 2RELIANCE

INDUSTRIESLTD.

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2.1RELIANCE GROUPFounder Chairman of Reliance Group

"Growth has no limit at Reliance. I keep revising my

vision.Only when you can dream it, you can do it."

Dhirubhai H. Ambani

Founder Chairman Reliance Group

December 28, 1932 - July 6, 2002

Shri Dhirubhai Ambani was an exceptional human being and an outstanding

leader. He dared to dream on a scale unimaginable before in Indian industry.

His life and achievements prove that backed by confidence, courage and

conviction, man can achieve the impossible. From a humble beginning, he went

on to create an enviable business empire within a span of just 25 years. The

US$ 54 billion Reliance Group is a living testimony to his indomitable will,single-minded dedication and an unrelenting commitment to his goals.

The Group's track record of consistent growth is unparalleled in Indian industry

and perhaps internationally too. Today, the Group's turnover represents nearly

3 percent of India's GDP.

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The corporate philosophy he followed was short, simple and succinct - "Think

big. Think differently. Think fast. Think ahead. Aim for the best". He inspired the

Reliance team to do better than the best - not only in India but in the world. He

was probably the first Indian businessman to recognize the strategic

significance of investors and discover the vast untapped potential of the capital

markets and channelise it for the growth and development of industry. He was

supremely confident that finance would never be a constraint in executing his

projects because, as he said proudly, Indian investors would provide him with

the necessary resources. For him, his people were his most important asset.

He scouted around for the best and most talented professionals, nurtured them

and continuously propelled them to aim for still higher goals. These highly

motivated people comprise the core of what he named: "The Reliance Family".

Shri Dhirubhai Ambani visualized the growth of Reliance as an integral part of

his grand vision for India. He was convinced that India could become an

economic superpower within a short period of time and wanted Reliance to play

an important role in realizing this goal.

The Bhagavad Gita states, "The actions of a great man are an inspiration for

others. Whatever he does, becomes a standard for others to follow." This

certainly applies to Shri Dhirubhai Ambani.The Reliance Group is India's largest private sector enterprise, with businesses

in the energy and materials value chain. Group's annual revenues are in excess

of USD 22 billion. The flagship company, Reliance Industries Limited, is a

Fortune Global 500 company and is the largest private sector company in India.

Backward vertical integration has been the cornerstone of the evolution and

growth of Reliance. Starting with textiles in the late seventies, Reliance pursued

a strategy of backward vertical integration - in polyester, fiber intermediates,

plastics, petrochemicals, petroleum refining and oil and gas exploration and

production - to be fully integrated along the materials and energy value chain.

The Group's activities span exploration and production of oil and gas, petroleum

refining and marketing, petrochemicals (polyester, fiber intermediates, plastics

and chemicals), textiles and retail.

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Reliance enjoys global leadership in its businesses, being the largest polyester

yarn and fiber producer in the world and among the top five to ten producers in

the world in major petrochemical products.

The Group exports products in excess of USD 7 billion to more than 100

countries in the world. There are more than 25,000 employees on the rolls of

Group Companies. Major Group Companies are Reliance Industries Limited

(including main subsidiaries Reliance Petroleum Limited and Reliance Retail

Limited), Indian Petrochemicals Corporation Limited and Reliance Industrial

Infrastructure Limited.

Mr. Mukesh Ambani

Chairman & Managing Director

Mr. Mukesh D. Ambani, age 49, is a Chemical Engineer from the University of

Bombay and pursued MBA from Stanford University, USA. He is the son of Mr.

Dhirubhai H. Ambani, Founder Chairman of the Company

Mukesh Ambani is the chairman, managing director and the largest shareholder

ofReliance Industries, India's largest private sector company and a Fortune 500

Company. His personal stake in Reliance Industries is 48%. His wealth is US$

20.1 billion as of March 2007, making him the world's 14th richest person and

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the second richest person in India. Mukesh and younger brother Anil are sons of

the late founder of Reliance Industries.

Mukesh Ambani joined Reliance in 1981 and initiated Reliance's backward

integration from textiles into polyester fibres and further into petrochemicals. In

this process, he directed the creation of 60 new, world-class manufacturing

facilities involving diverse technologies that have raised Reliance's

manufacturing capacities from less than a million tonnes to twelve million

tonnes per year.

Mukesh Ambani is also steering Reliance's initiatives in a world scale, offshore,

deep water oil and gas exploration and production program, a pan-India

petroleum retail network involving 5,800 outlets and a research-led life sciences

initiative covering medical, plant and industrial biotechnology.

Mr. Mukesh D. Ambani joined Reliance in 1981 and initiated Reliance's

backward integration from textiles into polyester fibers and further into

petrochemicals. In this process, he directed the creation of several new and

large world-class manufacturing facilities involving diverse technologies that

have raised Reliance's petrochemicals manufacturing capacities from less than

a million tones to over thirteen million tones per year. He directed and led the

creation of the world's largest grassroots petroleum refinery at Jamnagar, India,with a present capacity of 660,000 barrels per day (33 million tones per year)

integrated with petrochemicals, power generation and port and related

infrastructure. He had set up the Reliance's communications technology

initiative that is the largest and most complex information and communications

technology initiative in the world.

Mr. Ambani is steering Reliance's initiatives in a world scale, offshore and

onshore oil and gas exploration and production program, creation of a pan-India

petroleum retail network and setting up of a new export oriented refinery

through RIL's subsidiary Reliance Petroleum Limited (RPL) with a capacity of

approximately 580,000 barrels per stream day integrated with a 0.9 MMTPA

polypropylene plant.

Mr. Ambani's Achievements include:

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Conferred 'ET Business Leader of the Year' Award by The Economic Times

(India) in the year 2006.

Had the distinction and honor of being the co-chair at the World Economic

Forum Annual Meeting 2006 in Davos, Switzerland.

Ranked 42nd among the 'World's Most Respected Business Leaders' and second

among the four Indian CEOs featured in a survey conducted by Pricewaterhouse

Coopers and published in Financial Times, London, November 2004.

Conferred the World Communication Award for the 'Most Influential Person in

Telecommunications in 2004' by Total Telecom, October 2004.

Chosen 'Telecom Man of the Year 2004' by Voice and Data magazine,

September 2004.

Ranked 13th in Asia's Power 25 list of 'The Most Powerful People in Business'

published by Fortune magazine, August 2004. 30 Growth is Life Conferred the

'Asia Society Leadership Award' by the Asia Society, Washington D.C., USA, May

2004.

Ranked No.1 for the second consecutive year, in The Power List 2004 published

by India Today, March 2004.

Mr. Mukesh D. Ambani is the Chairman of Indian Petrochemicals Corporation

Limited, Reliance Petroleum Limited and Reliance Retail Limited. He is memberof the Shareholders'/ Investors' Grievance Committee of the Company.

Major Subsidiaries & Associates:-

The Reliance Industries Limited is the flagship company of Reliance Group

which has ownership interest in the following subsidiaries & associates

Major Subsidiaries:Reliance Petroleum Limited

Reliance Netherlands BV (including Trevira)

Reliance Retail Limited

Ranger Farms Private Limited

Retail Concepts and Services Private Limited

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Reliance Retail Insurance Broking Limited

Reliance Dairy Foods Limited

Reliance Retail Finance Limited

RESQ Limited

Reliance digital Retail Limited

Reliance Service Solutions Limited

Reliance Jamnagar Infrastructure Limited

Reliance Haryana SEZ Limited

Reliance Industrial Investment & Holdings Limited

Reliance Ventures Limited

Reliance Strategic Investments Limited

Reliance Exploration & Production - DMCC

Reliance Industries (Middle East) DMCC

Reliance Global Management Services (P) Limited

Reliance Commercial Associates Private Limited

RIL (Australia) Pty Limited

Major Associates

Indian Petrochemicals Corporation Limited

Reliance Industrial Infrastructure Limited

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2.2RELIANCE RETAIL LIMITED

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Growth through Value Creation

Reliance is gearing up to revolutionize the retailing industry in India. Towardsthis end, they are aggressively working on introducing a pan-India network of

retail outlets in multiple formats. A world class shopping environment, state of

art technology, a seamless supply chain infrastructure, a host of unique value-

added services and above all, unmatched customer experience, is what this

initiative is all about.

The retail initiative of Reliance will be without a parallel in size and spread and

make India proud. Ensuring better returns to Indian farmers and manufacturers

and greater value for the Indian consumer, both in quality and quantity, will be

an integral feature of this project. By creating value at all levels they will

actively endeavor to contribute to India's growth.

The project will boast of a seamless supply chain infrastructure, unprecedented

even by world standards. Through multiple formats and a wide range of

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categories, Reliance is aiming to touch almost every Indian customer and

supplier.

The magnitude and strategy of RIL's retail foray is sure to have far reaching

social and economic implications by directly influencing the lifestyles of

hundreds of millions of consumers, besides indirectly impacting the livelihood of

tens of millions. This indirect impact will be on those engaged in a wide range of

economic activities including farming, consumer goods manufacturing, and a

host of myriad other services that bring hundreds of categories of goods and

services from the producers to the final consumers.

Business analysts feel that Mukesh Ambani's advantage is his huge financial

strength coupled with a track record of implementing mega projects in record

time, at globally competitive capital costs. Mukesh Ambani has learned to

dream big from his great visionary father, the late Dhirubhai H Ambani, who is

acknowledged as one of India's tallest, most ambitious and successful business

leaders for his sharp business acumen and skilled people management ability. If

the announced retail project is any indication, Mukesh Ambani has indeed

inherited all these skills from his father. Re-writing the rules of business

has been the forte of Dhirubhai and Mukesh is attempting the same in retail.

Quite clearly, RIL is now all set and ready to conquer the organized retaildomain. The Indian retail scene is now going to witness some real fast-paced

action, with the consumer as always having the best deal.

So, as they say, let the action begin!

Reliance Digital

Mukesh Ambani's Reliance Industries Ltd launched a second group of retailstores called RELIANCE DIGITAL which will sell consumer electronics and other

household appliances. Reliance Digital Store has been launched five months

after the company first introduced its fresh food format outlets, Reliance Fresh,

that stock its own label of groceries under the brand, Reliance Staple.

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The first of the stores was unveiled at the Shipra Mall at Indirapuram in

Ghaziabad on the outskirts of the national capital

New Delhi April 24 Reliance Retail Ltd, the mega retail venture from the Mukesh

Ambani stable, marked its foray into speciality retail with the launch of its first

consumer durable outlet, Reliance Digital, in the NCR region.

Reliance is planning to open a total of 150 Reliance Digital stores across 70

cities with investment of Rs 1,000 crore over the next three to four years

One-stop shops

The stores size approx 15,000-30,000 sq. ft, will function as one-stop shops for

all technological solutions in the consume durables and IT telecommunications

segment to cater to the tastes and requirement of customers.

Reliance Digital stores would sell everything from TV sets, home theatres,

refrigerators, cooking ranges, dishwashers to computers and mobile phones

from across brands. Each store would be set up at an investment of Rs4 to Rs7

crore and also provide after-sales services

On private labels, RELIANCE DIGITAL has on offer of more than 4,000 products

from over 150 brands. As part of their overall business strategy they will have

their own consumer durable private labels, but not immediately. With its own

labels in the consumer durables segment, Reliance Retail will be fighting for a

share of the $5.6-billion domestic market, which is dominated by South Korean

brands LG and Samsung and Japan's Sony.

The domestic consumer electronics market is growing by 10 per cent annually

and is split between imported South Korean brands such LG and Samsung andJapans Sony on the one hand and Indian market leaders like Videocon and BPL

The prices being offered at the Reliance Digital stores will be most competitive

and if any consumer finds a cheaper product in the market within 30 days they

will not hesitate to match the offer.

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Besides, the stores will also provide pre- and post sales services through its in-

house RelianceresQ vertical.

The stores will also offer finance schemes for consumers for which the retail

majors are in talks for tie-ups with several financial institutions, Citi Financial

being one of them.

Reliance Digital will also be offering customers Reliance One, a common

membership and loyalty Programme across all its formats, which means users,

would be able to redeem points earned on purchases. Other formats of Reliance

Retail such as supermarkets and hypermarkets are soon to launch.

Reliance Industries had last year announced an investment of Rs 25,000 crore

for the retail business, which it hopes would help the company earn around Rs

100,000 crore revenues in the next five years, 10-15 per cent of which will be

contributed through retailing of consumer durables at its Reliance Digital stores

and hypermarkets.

Industry estimates suggest India's retail market is worth $320 billion, of which

organized retail accounts for $7.5 billion and expected to grow to $21.5 billion

by 2010.

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2.3

RELIANCE FRESH

Reliance Industries launched its first retail format called Reliance Fresh in

Hyderabad. Spread over 2,000-5,000 sq ft, 11 such Reliance Fresh

neighborhood convenience stores were come up in the city. These stores sell

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fresh fruit and vegetables besides staples (dal, atta, rice) as well the companys

in-house brand Reliance Select and Reliance Value.

Reliance is gearing up to revolutionize the retailing industry in India. Towards

this end, we are aggressively working on introducing a pan-India network of

retail outlets in multiple formats. A world class shopping environment, state of

art technology, a seamless supply chain infrastructure, a host of unique value-

added services and above all, unmatched customer experience, is what this

initiative is all about.

The retail initiative of Reliance will be without a parallel in size and spread and

make India proud. Ensuring better returns to Indian farmers and manufacturers

and greater value for the Indian consumer, both in quality and quantity, will be

an integral feature of this project. By creating value at all levels, we will actively

endeavor to contribute to India's growth.

The project will boast of a seamless supply chain infrastructure, unprecedented

even by world standards. Through multiple formats and a wide range of

categories, Reliance is aiming to touch almost every Indian customer and

supplier.

The Fresh stores at Hyderabad are part of a pilot project, which will help

company understand customer needs. The pilot for this format will be taken to

many other cities over the next few months. Next on the companys list are

bigger cities including Delhi and Mumbai

RIL intends to invest close to Rs 25,000 crore over the next five years in the

retail business. The company plans to establish 4,000 retail outlets across

various formats by then, and is eyeing sales of Rs 1,00,000 crore over the 5-

year period from the retail business.

Besides Reliance Fresh, the company also plans to launch larger format stores

called Feel Fresh Plus which will be spread over 10,000-15,000 sq ft. The

Fresh Plus stores will stock fruit and vegetables as well as apparel, consumer

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electronics, FMCG items and even medicines. From Hyderabad, these stores will

travel to Mumbai and Delhi where Reliance has identified up to 80 locations

each.

But even as the retail debut kicks off with fruit and vegetables, it seems the

company is doing a rethink on whether to get into the larger formats such as

hypermarkets and supermarkets. These two formats require over 1 lakh sq ft of

space and may not come up at prime city locations. Instead, Reliance is

contemplating tapping alterative sites such as the SEZs for opening

hypermarket

The strategy is to open one Reliance Fresh store in a radius of three to four km

to serve 1,000-2,000 families. This means about 30-40 stores in the major

metros. Reliance Fresh is selling vegetables and fruits sourced from farmers

through the companys agri hubs.

Reliance Fresh would carry fresh fruits and vegetables, staples, top-up grocery,

non-food items and dairy products and a whole lot of other categories at very

competitive prices. All the stores opened have an average area of about 1,800

sq ft and an average of about 20 sales associates attending to customers ineach store open from 8 a.m. to 10 p.m. on all seven days of the week.

A targeted sales turnover of Rs 90,000 crore (US$ 20 billion) by 2010 with a

planned investment of Rs 30,000 crore over the next five years that's the

retail vision of Mukesh Ambani and his RIL retail team. RIL's retail venture

seems all set to achieve the status of being the flag-bearer of India Retail Inc,

and that too in record time!

Culling information from all possible sources, Images F&R Research attempts to

put the Reliance Retail jigsaw in order and see how the concept and strategy

differentiates from the existing competition, how it impacts the intermediaries

and consumers, and more interestingly, how will it stand up to the real

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competition from global retail powerhouses like Wal-Mart, Carrefour, Target,

Metro, Sears and Tesco that are eager to enter the Indian retail arena once the

FDI barrier is lifted. Read on for the full story

It's been in the news for quite some time now. Earlier, about a year ago, it was

only whispered in close industry circles. Slowly the whispers become louder,

and the word gained ground that India's largest private sector company,

Reliance Industries Limited (RIL), is entering the Indian retail sector in a real big

way.

But with virtually nothing coming from anyone in the know inside RIL about

their retail plans, this has to be one of the most closely guarded secrets of

India's corporate story.

Amidst all sorts of speculations in the media circles about RIL's intended retail

foray, the word finally came out on January 23, 2006, when the Mukesh Ambani-

controlled Reliance Industries Limited presented the mega retail initiative plans

to its board of directors who subsequently gave their consent to pursue the

retail business through a wholly-owned subsidiary of the company likely to bechristened Reliance Retail Limited.

The Reliance Retail blueprint envisages nation-wide chains of hypermarkets,

supermarkets, discount stores, department stores, convenience stores and

specialty stores, in about 800-odd cities and towns across the length and

breadth of India. The RIL board of directors approved the initial phase of the

retail foray at an estimated cost of Rs 3,350 crore (US$ 750 million).

That was big news for both the national and international media, which went all

agog again with intense speculation. Giving full respect to the importance of

this announcement, more than one leading international daily chiefly, The

Financial Times gave this news a front-page treatment, speculating (like many

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others) that this investment could just be an initial tranche of a much larger

commitment from Reliance Industries towards the retail project.

Just how big and grand this investment is for the Indian retail sector can be

gauged by the simple fact that the entire Indian retail sector is estimated to be

at Rs 1050,000 crore (US$ 233 billion) growing at five per cent annually and

the estimated share of organised retail is only Rs 36,000 crore (US$ 8 billion), at

present, albeit growing at over 30 per cent every year.

That makes Reliance Retail's proposed investments equivalent to about 10 per

cent of India's organised retail market such a level of investment in the Indian

retail arena has been unprecedented in the country's most promising sunrise

industry retail.

So much so, projections by the Images-KSA India Retail Report 2005 of an

organised retail market of Rs 100,000 crore (US$ 22 billion) by 2010 now

appears conservative, likely to be achieved much earlier than 2010.

If Indian retail was lacking a whole-hearted and full-blooded thrust from a big

and large corporate house (apart from the lukewarm investments made by theTatas and ITC), it is now all set to change. Mukesh Ambani, who has been

nourishing retail ambitions for quite some time now, has clearly positioned

himself in to the role of redefining the entire landscape of Indian retail.

RIL Set To Become World's Largest Real Estate Property Owner

What is even more interesting is that Reliance Industries Limited will far out-

surpass the Catholic Church in becoming the world's largest owner of real-

estate property by virtue of its mega Retail and Satellite Township plans, in the

next two to three years!

Now what exactly does this mega retail plan portend for the Indian retail sector?

In fact, what exactly are RIL's plans, in terms of retail strategy? How will RIL

differentiate its stores and concept from existing players who have already

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moved into the retail space earlier, and have already established a good

foothold? How will this impact the existing retail majors the likes of Pantaloon

Retail, Trent India, Shoppers' Stop, RPG, etc? How will the consumer benefit

from RIL's venture and how will intermediaries like traders, suppliers and

farmers all along the supply chain network benefit? What will be the USP of

Reliance Retail?

And, more significantly, how will this impact the major international retailers

who plan to enter the Indian retail market? Reliance Retail is in fact giving India

for the first time a real feel of the scale at which these global retail

powerhouses actually operate, it is preparing India to stand up to the ensuing

competition and in the process, allow consumers the full benefits of modern

retail.

Highlights of 2008

During the year, Reliance Fresh Ltd. continued its rollout of stores across variousverticals & formats. RRL today operates over 590 stores in 57 cities. Spanning 13 states,with over 8.5 million square feet of trading space.

As announced on April 18th, 2008. Britishs larger retailer, Marks & Spencer ( M & S)will open atleast 50 stores across India over the next five years after signing a path

breaking agreement with Mukesh Ambani-led Reliance Retail Ltd.(RRL)

M & S will hold 51% stake in Joint Venture, while the remaining will be held by RRL.The new firm will be named Marks & Spencer Reliance India Pvt Ltd. These firms willoperate initially in Mumbai, Delhi, and other major cities. M & S planned for globalexpansion pinned around India & China & is now initiating with India. M & S plans to growits international business to 15-20% group revenues in next five years.

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After the successful launch of Relaince Fresh, Reliance Mart is launched.

Retail Will Become Core Business of RIL

Reliance Industries Limited is the largest and one of the fastest growing private sector

companies in India, with business activities encompassing almost all major growth sectors

of the Indian economy. The company manufactures and markets a wide range of products

with market leadership in almost all its businesses.

All of Reliance Group production and services ventures have one common feature global

scale operations employing state-of-the-art technology in all fields. The company is truly

emerging as a well diversified conglomerate with global competence in technology,

management and financial capabilities to meet the needs of a rapidly growing Indian

market.With domestic market shares ranging from 40-80 per cent, RIL is also ranked among the

top 10 producers globally, for all its major product segments. It is one of India's largest

business conglomerates with total revenues of Rs 1,00,650 crore (US$ 22.6 billion).

It is being speculated within the industry that the ROIs made by RIL in the retail space will

far out-shadow its existing core flagship businesses and very soon retail will become the

core business for the Mukesh Ambani-controlled Reliance empire.

Future Planning:-

Company plans to have a pan-India presence by opening stores in 784 cities and 600 small

towns and achieve a target of Rs.10 billion revenue by 2010 by which time it hopes to

complete Phase 1. In the first phase company plans to employ 500,000 people. It is

following an all-inclusive model giving the right affordability across all income groups.

Company is aggressively partnering farmers by following a farm-to-fork strategy in its

supply chain management model and ensures that it delivers fresh fruits and vegetables at

affordable prices to consumers. Currently, Reliance Fresh has over 100 stores across the

country.

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Reliance Fresh also offers a membership and loyalty programme - Reliance One - to

deliver customized benefits to frequent shoppers. Currently, it has 200,000 loyalty

customers across Hyderabad, Ajmer and Chennai.

Reliance Retail, the 100% subsidiary of Reliance Industries, on October 28 unveiled

Reliance Fresh, the first of its multi-format retail foray involving an investment of Rs 25,000

crore.

Reliance Fresh is the companys brand for neighborhood fresh-food outlets. It will also sell

kitchen equipment and other edibles.

Besides, it has planned hypermarkets, supermarkets, discount stores, department stores,

convenience stores and specialty stores, to be unveiled shortly.

The Reliance Fresh supermarket chain is RILs Rs 25,000 crore venture and it plans to add

more stores across different geographies, 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.

Currently, selling through company-owned stores currently totals just $8 billion in India.

Industry estimates say that the countrys retail industry is worth $300 billion, that is about

Rs 13, 50,000 crore. This stands a chance to blossom to $427 billion in the next four years.

Organized retail accounts for just over Rs 35,000 crore. Reliance Fresh bids to tap the

potential for organized retail in the country.

Point of Sale Software System

Retalix StoreLine is an open-standards, fully integrated and cross-functional

Point of Sale (POS) and store management software system. Its uniqueness is in

the functionality, world-wide install base, and hardware independence.

Multi-Concept Functionalitythat delivers a fully integrated POS solution to meet

all of your business needs

Open by Design supports industry standards and is hardware independent plus

integration with other third-party retail applications is straightforward,

affordable and low risk

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Advanced Promotion Features enable a single point of update for pricing and

promotions across all retail formats

Graphical, Easy to Use flexible intuitive user interface, touch-screen capabilities

and even graphical customer screens, means that cashier training is minimal

and customer interaction is effortless

Quick Service Deli, provides a powerful method of managing fresh-made

sandwiches and deli items

Fuel provides full support for operating an onsite fuel station, supporting a full

range of fuel station and supermarket services

Retalix BackOffice is tightly integrated with Retalix StoreLine, and offers POS

item management and reporting, DSD receiving, label and sign printing,

handheld RF communications, host communications and in-store ordering

Retalix PocketOffice is a mobile platform that enables users to manage store

operations anywhere in the store, taking the application to the business

decision point, while on the sales floor or receiving dock.

Retalix StoreLine is installed in more than 250,000 POS terminals worldwide,

and is the selected POS solution of top-tier retailers such as Tesco, Publix,

Sainsbury's, Woolworths Australia, Delhaize Group, Hy-Vee, and the A.S. Watson

Group.

Supply Chain Management

A supply chain is a network of facilities and distribution options that performs

the functions of procurement of materials, transformation of these materials

into intermediate and finished products, and the distribution of these finished

products to customers. Supply chains exist in both service and manufacturing

organizations, although the complexity of the chain may vary greatly from

industry to industry and firm to firm.

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From the above pictorial representation of supply chain management of

reliance fresh it is clear that raw material is procured from vendors, transformed

into finished goods in a single step, and then transported to distribution centers,

and ultimately, customers. Realistic supply chains have multiple end products

with shared components, facilities and capacities. The flow of materials is not

always along an arborescent network, various modes of transportation may be

considered, and the bill of materials for the end items may be both deep and

large.

Chapter 3

PROJECTINTRODUCTION

Farmers

Collectioncenter

Distribution centerReliance Fresh

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PROJECT INTRODUCTION:

The best way to study the consumer behavior is to take Feedbacks from thecustomers visiting the stores & data is collected about their satisfaction level.To check the customer satisfaction level, by acknowledging them, knowing the

different problems they are facing in Reliance fresh, to find out solutions of theirdifferent problems by making necessary plans so that more customers can beattracted and a long term relationship can be build.

The project was undertaken as a part of summer training in Reliance Retail for45 days.

PURPOSE OF THE PROJECT

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To achieve the objective of the project, the project was divided into three main

parts:

Customer Accompanied Shop

Customer Engagement Activity

Competitive Analysis of Reliance Fresh vis--vis its Competitors

CUSTOMER ACCOMPANIED SHOP:

This was basically focusing on the customer satisfaction level. The purpose ofthis part of the project was to get feedback from the customers by interacting

with them personally about their needs, requirements and problems when theyvisit Reliance Fresh store. It includes:

Feedback of the customers on the quality of products andservices offered at the store

Identifying the problem areas and addressing them personallywith the help of the floor manager

To know the purchase pattern of the customers

CUSTOMER ENGAGEMENT ACTIVITY:

This was one the very important parts of the project which helps to connect withthe customer for a long time or to retain the customers for a long time. The

purpose of this part of project was to make aware the customers about theReliance Freshs unique offers which were only for its customers and no otherretail outlet were providing such kind of offers and schemes. It helps to attractmore & more customers and to retain those customers for long time byproviding these kinds of benefits.

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COMPETITIVE ANALYSIS OF RELIANCE FRESH VIS--VIS ITSCOMPETITORS:

Competitive analysis gives the real picture of competition available in the ret

Reliace fresh

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Transcript of Reliace fresh