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Project Report
On
Submitted to :- Submitted by :-
Ms. Prachi Kanodia Mayank Bhati
(Lecturer MIGS) (MBA Sem-IV)
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.
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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 Fresh’s 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 create
volunteer ambassadors for Reliance Fresh. The third par of the project was to do
competitor’s analysis by visiting the other stores like Spencer’s, Subhiksha, Big
Bazaar etc. The objective of competitor’s 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
8 SWOT Analysis 76
9 Findings 86
10 SUGGESTIONS 88
11 Conclusions 90
12 Bibliography 91
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Chapter –1
RETAIL –
INDUSTRY
PROFILE
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1.1
INTRODUCTION
India’s GDP growth of 9.4 per cent in 2006-07 is the highest posted for over 18
years, reflecting the booming economy of the country. Growing in tandem with
the economy is the Indian retail sector. The sector is on a high growth trajectory
and is expected to grow by more than 27 per cent over the next 5 to 6 years.
Retail is one of India’s largest industries, contributing to about 10 per cent of
the GDP and providing employment to 8 per cent of the nation’s workforce.
Indian retail business promises to be one of the core sectors of the Indian
economy, with organised retail sector estimated to grow by 400 per cent of its
current size by 2007-08.
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The growth and potential of the sector is being widely acknowledged both in the
domestic as well as international forums. India topped AT Kearney’s Global
Retail Development Index 2007 for the third consecutive year, retaining its
position in the global market as the most preferred retail destination amongst
emerging 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 judged
the world’s most optimistic consumers, with large sections of the population
considering “now” a good time to spend. Indian consumers were also found to
be bullish about their personal finances over the next 12 months.
India’s 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 was
estimated at US$ 1.1 trillion (in PPP terms) in 2005-06. The most significant
period of growth for the sector was between years 2000 and 2006, when the
sector revenues increased by about 93.5 per cent translating to an average
annual growth of 13.3 per cent. The sector’s growth was partly a reflection of
the impressive Indian economic growth and overall rise in income levels of
consumers.
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Source: Datamonitor
Exchange Rate: US$ 1 = INR 41 (Valid through the report)
Even the introduction of Value Added Tax (“VAT”) in April 2005 has not severely
impacted consumer demand for retail goods. Greater exposure to western
products 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 the
large Indian consumer base.
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Modern/Organised retailing is growing at an aggressive pace in urban India,
fuelled by bourgeoning economic activity. Organised retail revenues are
expected to increase from an estimated US$ 12.9 billion per annum in 2005-06
to more than US$ 43 billion by 2009-10. The sector is predicted to grow by 400
per cent, in value terms, by 2007-08. A large number of domestic and
international players are setting up base and expanding their business with
newer organised retail formats and intense competition driving innovation in
formats.
Apparels and consumer durables are the fastest growing verticals in the retail
sector. Mobile phone as a product category has witnessed the highest growth in
consumer demand amongst all retail product offerings, with increasing
penetration of telecommunications in towns and villages.
The Telecommunications sector has been adding on an average 5 million new
users every month.
The other product categories are gaining traction predominantly in the urban
areas and emerging cities, with increasing average income and spending power
of young urban India.
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ORGANISED RETAIL IN INDIA
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 malls
and introduction of several domestic and international apparel brands in the
country.
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 is
poised to gain traction, with several new players planning their entry and the
existing players expanding their business in this segment at a rapid pace. The
Home Décor segment followed suit growing at 18 per cent, with a boom in the
real estate and housing sector.
Footwear segment recorded the highest penetration of 32.84 per cent, primarily
due to the presence of well-established players like Bata, Liberty and Paragon.
These players have been in the market for over three decades, have good
brand recall and a well established distribution network penetrating both rural
and urban areas.
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Consumer durables segment and the books and music segment also witnessed
continued 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 of
domestic and foreign brands mushrooming in the market, and increasing
consumer 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 the
organised retail sector projected to grow to US$ 43.8 billion in the said year. It is
envisaged that modern retail will adapt and absorb some of the traditional
formats in the course of its expansion. Unorganised retail formats are expected
to converge and combine in formats such as mushrooming village malls and
rural 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 rural
areas. The rural retail revenues are estimated to increase by 60 per cent by
2012, with larger share of increase in demand for consumer and household
products.
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Retail giants are set to embrace newer and innovative formats, by giving
modern retail a traditional look in line with consumer needs and expectations.
Pilot test concepts are already being rolled out by players like Indian Tobacco
Company (ITC) and DCM Shriram Consolidated Ltd. (DSCL) with their rural
initiatives of Choupal Saagar and Hariyali Kisan Bazaar, and are exploring
options to increase their customer outreach. Established players like Unilever,
Dabur and Godrej have strengthened their distribution channels and are
increasing their penetration to leverage the higher consumer demand in these
markets. Reliance Retail Ltd, a wholly owned subsidiary of Reliance Industries
Ltd, is set to embark on the establishment of 1,600-odd rural retail hubs by
2010, with the aim to make these hubs the nodal institutions for retailing
activity, 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 India
Against the backdrop of an accelerating modern retail revolution, India offers to
be an attractive destination for global corporations and leading retailers seeking
emerging markets overseas. India presents a significant market, with its young
population just beginning to embrace significant lifestyle changes.
The fast and furious pace of growth of the Indian economy is the driving force
for Indian consumerism; with the Indian consumers confident about their
earnings and are spending a large portion of their high disposable incomes.
Projections by analysts suggest that India has the potential to be labeled the
fastest-growing economy and outpace the developed economies by 2050.
Analysts predict India to sustain an average GDP growth rate of 5 per cent till
the mid of this century, with India projected to outpace the other developed
economy 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 posted
for India, promise a continued robust growth story. Private consumption
accounted for 62 per cent of India’s GDP in 2004-05, comparable to most of the
leading economies around the world.
This trend is projected to continue for the next decade, with the share set to
reach its maximum in 2010. The large proportion of the working-age population
translates to a lucrative consumer base vis-à-vis other economies of the world,
placing India on the radar as one of the most promising retail destinations of the
world.
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POTENTIAL UNTAPPED MARKET
India ranks first, ahead of Russia, in terms of emerging market potential and is
deemed a “Priority 1” market for international retail. Organised retail
penetration 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 from
US$ 1,000 – US$ 4,700, comprising of over 75 million households. A steadily
rising percentage of rich and super rich population and impressive disposable
incomes offers a spectrum of opportunities, spanning from rural retailing to
luxury retailing. The impressive retail space availability and growing trend of
consumerism in the emerging cities and small towns add to the market
attractiveness.
Pantaloon Retail India Limited, one of India’s retail giants captures a mere 0.3
per cent of total market; compared to Tesco Plc, which captures 14.3per cent of
England’s market and Walmart which captures 20 per cent of USA’s market;
giving an insight into the large untapped market potential.
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 over
11,700,000 in 14,000 higher education institutions in 2005-06. With English
being the language for business in India, the language skills of the Indian
workforce score higher than that of emerging economies. Retail Management is
a sought after education stream amongst students, with over 15 premier
institutes offering specialised courses in Retail Management.
These cities offer significant cost advantage in the form of availability of low-
cost skilled human resources. With well-educated small town graduates turning
to 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
1.3
Policy and Regulatory
Environment’
The Government is progressively undertaking reforms and liberalising the retail
sector; thereby attracting significant foreign investments. The regulatory and
supervisory policies are being reshaped and reoriented to meet the new
challenges and opportunities in this sector.
FDI up to 51 per cent is allowed, with prior Government approval for retail trade
in ‘Single Brand’ products with the objective of attracting investment,
technology and global best practices and catering to the demand for such
branded goods in India. This implies that foreign companies can now sell goods
sold globally under a single brand, such as in the case of Reebok, Nokia and
Adidas. However, retailing of multiple brands, even if the goods are produced
by the same manufacturer, is presently not allowed.
Relaxations of FDI restrictions are being vigorously pursued by the business and
trade coalitions and are expected to fall in place over the next 3-5 years. The
most common channels for entry of foreign retailers are the strategic license
agreements, franchising, distribution, manufacturing, joint ventures and cash
and carry wholesale trading.
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This route involves the foreign company entering into a licensing agreement
with a domestic retailer or partnering with Indian promoter owned companies in
the Middle
East (UAE) or South East Asian countries (Singapore, Malaysia, Thailand,
Indonesia).
FRANCHISING
This is a widely taken entry route, with many international brands setting up
shop 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, a
route primarily used by domestic brands
• Master franchisee: Rights are granted for an entire territory to the master
franchisee 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, but
applicable on a larger scale The master and regional franchisee routes are the
most preferred and the oft-adopted routes of entry into India by the
international retailers.
100 per cent FDI is allowed in wholesale trading which involves building a large
distribution infrastructure to assist local retailers and manufacturers.
JOINT ventures
International firms can enter into agreements with domestic players, and set up
base in India. The share of the multinational is restricted to 49 per cent in this
route.
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1.4
Key Opportunities
OPPORTUNITIES ACROSS GEOGRAPHIES
Maturing Metros
Delhi and Mumbai offer an attractive market for luxury and lifestyle retailing
with these cities being home to the highest number of households belonging to
the affluent category (with income greater than US$ 24,000 per annum). Retail
revenues contributed by the affluent category accounted for over 30 per cent of
total revenues in 2005-06. The number of affluent households is expected to
double by 2010-11, projected to trigger high growth in the luxury retailing
segment. The luxury-retail segment is presently concentrated in the five-star
hotels and is slowly drifting into the specialty malls and one-stop outlets.
With the steady rise predicted in the percentage of middle class households and
their affordability, the scope for the neighborhood malls and hypermarkets will
be pronounced in the residential suburbs. However, the lack of space and the
strict bringing down of law on illegal constructions will reinforce the migration
towards organised retailing.
The growing disposable incomes, the consuming class and the increasing
standard of living across these cities translate to opportunities across all the
retailing formats and verticals. The mushrooming lifestyle formats in these
cities is stimulated by the increasing exposure of consumer base to
international brands and willingness to spend for quality. These cities most
often 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 from
the “First-Mover” advantage, and gain a foothold in these cities. These cities
provide ample opportunities, especially for the food and grocery formats, with
lower lease rentals and high availability of retail space, access to farms and
agricultural produce. Consuming class accounts for over 60 per cent of the total
households, offering potential in the food and grocery, consumer goods and
apparel verticals.
More than 72 per cent of India’s population resides in small towns and rural
areas with agri-produce retailing forming the largest share of total retail pie in
these regions, offering immense potential for the food and grocery vertical with
customer preference tuned towards value retailing.
Players like Reliance Retail, Aditya Birla Nuvo Group’s Trinethra Supermarket
etc. have aggressive plans to tap opportunities in these emerging cities in
suitable formats.
Players who have already established their presence in the top metros of the
nation are already planning their establishments in these emerging cities and
regions 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 to
be very successful in the Indian market. The Wedding Malls for instance, stock
the complete range of wedding product offerings from apparel to jewellery. The
retail industry players are successfully blending knowledge from the
experiences of the global retail industry with the unique requirements and
preferences of the Indian consumer. Such customisation to the latent needs of
the Indian consumer has brought about a great deal of innovation in the
product offerings as well the retail formats in which they are being sold.
Khadi & Village Industries Commission is set to roll out a string of swanky
“Khadi Plazas”, which would showcase the traditional handloom textiles in a
completely new form. Over 7,000 existing outlets are to be beefed up to cater
to the changing tastes of the young Indian consumer and thereby provide a
boost 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 local
populations. 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 such
malls.
ONLINE RETAILING
The stated factors are facilitating rapid growth of online shopping with the
industry players scaling up to meet the consumer requirements. Most retailers
are developing and maintaining their own online sale portals for easy consumer
access, facilitating online purchase of merchandise. Tata Indicom’s i-choose.in
and G&B’s godrejlifespace.com are good examples of this trend.
Many smaller retail portals are also thriving on the internet, meeting the niche
Indian consumer requirements such as ethnic apparel, handicrafts and
jewellery. Demand for these portals, which has been primarily driven by the
non-resident Indians, is gaining popularity on the Indian soil as well, with the
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young urban Indian consumer’s increasing exposure to the virtual world of
internet.
• Rediff.com
• Ebay.in
• Indiatimes
• Futurebazaar.com
• Lifespace
• i-choose
RURAL RETAILING
Rural retailing constitutes more than 95 per cent of total retail revenues, with
more than 70 per cent of India’s population concentrated in the rural areas.
Rural hypermarkets are growing at a blistering pace meeting the unique
requirements of the rural consumer. The range of services provided by the rural
retailers extends from creating a platform to buy and sell farm produce, to
banking services, to restaurants etc.
One of the key players in the rural retail segment is ITC with its Choupal Saagar
initiative. ITC has 14 outlets in operation presently and plans to increase the
number to 700 over the next 7-10 years. ITC’s Choupal Saagar retails products
and also acts as a procurement hub for ITC’s e-choupals where farmers are
offered better rates for their agriculture produce, compared with the prevalent
market rates for the same.
Other examples of players and their services in the rural retail segment are
DSCL’s Hariyali Kisan Bazaar and Indian Oil Corporation’s Kisan Seva Kendra.
DSCL’s Hariyali Kisan Bazaar has over 70 outlets presently and the company
proposes to operate a total of 200 outlets over the next 12 months. The outlets
provide a spectrum of offerings including agronomist-consultations, agri-inputs,
and financial services, apart from the conventional retailing services.
Indian Oil Corporation’s Kisan Seva Kendra offerings extend over fuel, agri-
produce, fast moving consumer goods and other value added services. The
company has a network of over 1400 outlets presently. Reliance Retail and
Pantaloon Retail India Ltd. are expected to undertake more ventures to capture
the vast untapped potential in the rural retail segment.
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• Hariyali
Affluent households in India account for just about 4.5 per cent of the national
population. However, the affluent households segment contributes to more than
22 per cent of the total retail sales, translating to US$ 62,340 million of retail
revenues.
The luxury retail segment is hence a substantial opportunity for retail industry
players. Many international investors are actively pursuing an entry route into
India for opportunities in the luxury segment.
Delhi and Mumbai are the prime contributors to the luxury retail revenues and
have the highest density of luxury brand outlets in the country. However,
currently the location of these outlets is primarily limited to five-star hotel mall
spaces, with limited footfalls and consumer exposure.
Industry players have aggressive expansion plans in the pipeline, with investor
confidence reinforced by the booming sales in the luxury segment. The two
Louis 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.
• 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
Entertainment retail is redefining Indian lifestyles with the rate of growth in the
number of multiplexes and gaming zones matching the growth story of malls
and retail space. The immense potential in the entertainment and leisure
segment is reflected by fact that there exist 10 screens per million of population
in 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 in
2005-06, a 14 percent increase over 2004-05. The organised entertainment
retail revenues grew at an average rate of 30 per cent over 2004-05, and are
expected to maintain the same pace in the coming years, with Indian players
investing heavily in this market.
Reliance Infotech’s Adlabs, Shopper’s Stop’s Timezone have aggressive
expansion plans in the pipeline, with retailers exploring the joint venture option
with international giants in the sector having a global presence.
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Source: CB Richard Ellis
The joint venture between Shopper’s Stop and The Nuance Group AG has won
the contract for setting up duty-free and duty-paid retailing outlets at the
upcoming Bangalore and Hyderabad International Airports. The Mass
Rapid Transit System, currently in operation in Delhi, and under construction at
other metro cities like Bangalore and Hyderabad is also expected to offer
immense retail potential.
With the Delhi Metro Rail Corporation (DMRC) inviting tenders for retail
development 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 commercial
potential of the retail space.
SEZ SYNERGIES
SEZs offer ample retail opportunities, with a percentage of the SEZ area
earmarked for retailing in the nonprocessing zone. The size of the area in the
retailing space is calculated considering various parameters like the type of
SEZ, projected size of the residential population in SEZ, and population in the
catchment area.
IT/ITes based SEZs offer impressive retailing opportunities; the target segment
for such SEZs would be the urban population with high-disposable incomes.
With tourists’ inflow increasing impressively with each passing year, tourism
holds the key to a large retailing opportunity. In 2005-06, approximately 4.45
million foreign tourists arrived in India, registering a growth of 13.5 per cent
over 2004-05.
Retailing of regional handicrafts and artifacts holds an opportunity to capture
the interest of foreign tourists, given the rich and diverse cultural heritage of
India.
The Indian Tourism Board’s initiatives like Dilli Haat (a crafts bazaar located in
Delhi) retails the regional crafts of various states, attracting a large number of
tourist footfalls. The concept is fast gaining traction in other destinations in
India such as Ajmer, Mumbai and Hyderabad.
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1.5
CONCLUSION
India'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 of
India's largest industries, contributing to about 10 per cent of the GDP and
providing employment to 8per cent of the nation's workforce. Indian retail
business promises to be one of the core sectors of the Indian economy, with
organised retail sector estimated to grow by 400 per cent of its current size by
2007-08.
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$ 12,927
million in 2005-06—with the apparel industry contributing to a lions share of the
organised retail pie, with revenues to the tune of US$ 4,756 million— owing to
the rapidly rising number of malls and introduction of several domestic and
international apparel brands in the country.
India tops the AT Kearney's annual Global Retail Development Index (GRDI) for
the third consecutive year, maintaining its position as the most attractive
market for retail investment. Furthermore a report by PricewaterhouseCoopers
foresees India and China to continue as the top sourcing hubs in retail and
consumer 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 in
2007 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 per
cent by 2010.
Continuing the robust growth of the organised retail in India, according to the
Credit Rating and Information Services of India, the industry raked in US$ 25.44
billion turnover in 2007-08 as against US$ 16.99 billion in 2006-07, a whopping
growth 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 12
million retail outlets present in the country, nearly 5 million sell food and related
products. Thought the market has been dominated by unorganised players, the
entry of domestic and international organised players is set to change the
scenario.
Organised retail segment has been growing at a blistering pace, exceeding all
previous estimates. According to a study by Deloitte Haskins and Sells,
organised retail has increased its share from 5 per cent of total retail sales in
2006 to 8 per cent in 2007. The fastest growing segments have been the
wholesale cash and carry stores (150 per cent) followed by supermarkets (100
per cent) and hypermarkets (75-80 per cent). Further, it estimates the
organised segment to account for 25 per cent of the total sales by 2011.
Retail space
Alongside, Indian cities are witnessing a paradigm shift from traditional forms of
retailing into a modern organized sector. A report by Images Retail estimates
the number of operational malls to more than double to over 412 with 205
million square feet by 2010 and further 715 malls by 2015, on the back of major
retail developments even in tier II and tier III cities in India.
Luxury retail
With consumers for luxury goods more in numbers than adult population of
several countries, the Indian luxury retail market is estimated to leap-frog from
around US$ 3.5 billion to US$ 30 billion by 2015, according to a survey done by
AT 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$ 953
million 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.
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Kids' retail
When it comes to Indian children, retailers are busy bonding -- and branding:
Leading the kids' retail revolution is the apparel business, which accounts for
almost 80 per cent of the revenue, with kids' clothing in India following
international fashion trends. According to research firm KSA Technopak, the
branded 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 annual
growth of 30-35 per cent.
Discount Malls
Even as the organized retail market is starting to take off, there has been a
concomitant surge in branded discount outlets in India. Top realtors and local
retail chains are developing malls in regional boroughs, specifically to sell
premium branded goods. At least 50 such malls are to come up in the next two
years across the country positioned in the middle-to-the-premium end of the
market.
For example, Royal Palms is developing Orchard Road Mall in the western
suburbs of Mumbai. Similarly, Akruti Nirman, which is planning to brand its
discount malls in Kanjurmag, Ghatkopar, Mumbai and Thane as 'Cityworld', has
decided to develop similar malls in Tier II and Tier III cities. Some of the other
prominent discount retailers include Pantaloon Retail (India) Ltd's Brand
Factory, Arvind Mills Ltd's Megamart andand Provogue (India) Ltd's Promart
among others.
E-tailing
The increase in the PC and internet penetration along with the growing
preference 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 the
total e-commerce market is accounted by e-tailing.
With today's, net-savvy Indians making online purchases like never before, both
the number and variety of products sold online has grown exponentially.
According to the Indian Marketing Research Bureau (IMRB) and Internet and
Mobile Association of India (IAMAI), the e-tail market is estimated to grow by 30
per 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 the
internet. According to online research and advisory firm JuxtConsult's 'India
Online 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 retail
market has been the concept of retail franchising. According to industry
estimates, retail franchising has been growing at the rate of 60 per cent in the
last 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 need
to meet the increasing consumer expectations of quality, ambience and brand
experience. In addition, this route also helps the big retailer players to rapidly
foray into the tier II and III towns and rural areas.
Rural retail
32
International Retailers
With international brands like Tommy Hilfiger, Esprit and Puma (that have
entered the country) growing well over 100 per cent, many others are also
planning to foray into the Indian retail market. India's vast middle class with its
expanding purchasing power and its almost untapped retail industry are key
attractions for global retail giants wanting to enter newer markets.
• The world's largest retailer, Wal-Mart, has tied-up with Sunil Mittal's Bharti
Enterprises to enter Indian retail market.
• Microsoft's first shop-in-shop pilot has been launched with the Tata Group
subsidiary Infiniti Retail's multi-brand consumer durables retail format, Croma.
• The Walt Disney Company, consumer product retailing arm of global
animation giant, will soon add 135 new stores to its existing 15 stores.
• World's leading coffee chain, Starbucks' enters India through a tie-up with
the country's leading multiplex operator PVR Limited.
• Apple Inc has entered into an exclusive marketing and
distribution deal with Reliance Retail through "iStore by Reliance
Digital".
• The UK-based international coffee chain, Costa Coffee, plans to double the
number of retail outlets by the end of 2008.
• British retailer Marks & Spencer's has tied with Reliance Retail and plans
to open at least 50 new stores in India over the next five years, with an initial
investment of up to US$ 58 million.
• UK's largest home textile retail chain, Rosebys, which was acquired by
Gujarat Heavy Chemicals in 2006, is set to foray into the domestic market this
year with a slew of stores.
• German sportswear and Apparel Company, Adidas is going in for a major
expansion across India, and plans to have a total of about 450 franchisee
outlets in the country.
Some of the international players that have already entered India include
McDonald's, Pizza Hut, Dominos, Levis, Lee, Nike, Adidas, TGIF, Benetton,
Swarovski, Sony, Sharp, Kodak, Medicine Shoppe among others.
33
Chapter – 2
RELIANCE
INDUSTRIES
LTD.
34
2.1
RELIANCE GROUP
Founder 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.
35
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.
36
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 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
of Reliance 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
37
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:
38
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 member
of the Shareholders'/ Investors' Grievance Committee of the Company.
Major Subsidiaries:
Reliance Petroleum Limited
Reliance Netherlands BV (including Trevira)
Reliance Retail Limited
Ranger Farms Private Limited
Retail Concepts and Services Private Limited
39
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
40
2.2
RELIANCE RETAIL LIMITED
41
Growth through Value Creation
42
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 retail
domain. 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
43
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.
44
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.
45
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
46
fresh fruit and vegetables besides staples (dal, atta, rice) as well the company’s
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 company’s 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
47
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 company’s 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 in
each store open from 8 a.m. to 10 p.m. on all seven days of the week.
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
48
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 be
christened Reliance Retail Limited.
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
49
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.
50
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 various
verticals & 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. British’s 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 will
operate initially in Mumbai, Delhi, and other major cities. M & S planned for global
expansion pinned around India & China & is now initiating with India. M & S plans to grow
its international business to 15-20% group revenues in next five years.
51
After the successful launch of Relaince Fresh, Reliance Mart is launched.
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.
52
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 company’s 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 RIL’s 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 country’s 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.
53
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.
54
Farmers
Collection center
Chapter – 3
PROJECT
INTRODUCTION
55
PROJECT INTRODUCTION:
The best way to study the consumer behavior is to take Feedbacks from the
customers 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 their
different problems by making necessary plans so that more customers can be
attracted and a long term relationship can be build.
The project was undertaken as a part of summer training in Reliance Retail for
45 days.
56
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-à-vis its Competitors
This was basically focusing on the customer satisfaction level. The purpose of
this part of the project was to get feedback from the customers by interacting
with them personally about their needs, requirements and problems when they
visit Reliance Fresh store. It includes:
This was one the very important parts of the project which helps to connect with
the 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 the
Reliance Fresh’s unique offers which were only for its customers and no other
retail outlet were providing such kind of offers and schemes. It helps to attract
more & more customers and to retain those customers for long time by
providing these kinds of benefits.
57
COMPETITIVE ANALYSIS OF RELIANCE FRESH VIS-À-VIS ITS
COMPETITORS:
Competitive analysis gives the real picture of competition available in the retail
market. It provides the necessary information to Reliance Fresh so that it can
take the competitive advantage. Competitive analysis gives a basis to make an
action plan to take necessary steps to improve the services of the store.
58
Chapter – 4
OBJECTIVE
OF THE
STUDY
59
OBJECTIVES OF THE STUDY
The objectives of the study are as follows:
To identify the loyal customers for Reliance Fresh and provide extended
services to them.
Identifying the problem areas and addressing them personally with the
help of the floor manager.
60
Chapter – 5
METHODOLOG
Y
61
METHODOLOGY:
Business Research, as is a systematic inquiry that provides
information to guide managerial decision. This chapter collaborates
on the research strategy adopted for caring out research.
Research methodology is a systematic way, which consists of series
of action steps, necessary to effectively carry out research and the
desired sequencing of these steps. The marketing research is a
process of involves a no. of inter-related activities, which overlap
and do rigidly follow a particular sequence. It consists of following
steps:
Objective of study
Research Design
Sample design
Data Collection
Data Analysis
62
Reporting the Finding
Research Design
Research Design specifies the methods and procedures for
conducting a particular study.
A Research Design is the arrangements of conditions for
collection and analysis of the data in a manner that aims to
combine relevance to the research purpose with economy in
procedure.
The researcher has used descriptive sort of research. It includes
surveys & fact findings. It is basically concerned with findings out
who, what, when or how much.
I have chosen Descriptive Research Design.
Sample Design
A Sample Design is a definite plan for obtaining a sample from a
given population. It refers to the technique to the procedure
adopted in selecting items for the sampling designs.
Sample universe:
63
Sample universe in statistics denotes the aggregate from which
the sample is to be taken. In our case, population of Ajmer city.
Sample frame:
Sample Size:
COLLECTION OF DATA
For the purpose of analyzing the data it is necessary to collect the
vital information.
1. Primary Data
Primary Data:
Primary data can be collected through following methods:-
a. Survey through questionnaire:-
64
• Open ended questions
• Dichotomous questions
For competitive analysis retail stores like Vishal Mart, Big Bazaar,
Subhiksha,
V- Mart etc. were visited to make comparison with Reliance Fresh
on the basis of offers, schemes, prices, customer engagement
activities, staff services etc.
A questionnaire was filled to know the position of Reliance Fresh
in comparison with its competitors.
The sample size was 100.
65
Different Promotional activities were organized for regular
customers of Reliance Fresh on different occasions like
Membership card, Point card etc.
Chapter – 6
LIMITATION
S
66
LIMITATIONS:
Problems faced in:
1. Time Constrain: Time period was too short to cover all the stores in Ajmer.
2. Most suitable time for the survey was late in the evening and it was
difficult to find a customer at the day time
3. Customers are not able to provide any type of suggestion
II – Competitive Analysis:
67
Chapter – 7
PROJECT
ANALYSIS
68
7.1
Comparative analysis of
Reliance Fresh Vis-à-vis its
Competitors
69
ANALYSIS OF QUESTIONNAIRE:
A survey was done to know the brand preference of people i.e. to know, which is
the most and the least preferred brands.
This was done with the help of a questionnaire.
The survey aimed to find out the perception of people about Reliance Fresh and
analysis of Reliance Fresh with its competitors.
70
The results of the study were as follows:
Table 1
Local Vendor
R.R. Mart
Series2
V-Mart
Series1
Apna Bazar
Subhiksha
Reliance Fresh
0 10 20 30 40 50 60
No.of respondent
RESULT – This question aimed at finding out the reasons that make people
visit a store. The main reasons a customer visited a retail store were the
location of the store and the range and variety of product available at the
store.
71
Promotional
Activities
11
Price Range 53
Location 54
Range of
Products
54
Services 50
Brand Name 53
0 10 20 30 40 50 60
No. of Respondents
RESULT – This is to find out which is the most and which is the least preferred
brand
The brand, which is mostly preferred by people, is Reliance Fresh, followed by
Apna Bazar.
Whereas Subhiksha is the least preferred brand
72
Percentage
Reliance Fresh
Subhiksha
Apna Bazar
V-Mart
Vishal Mega Mart
R.R. Mart
Local Vendor
73
Parameters Most Preferred Store Least Preferred Store
74
Whereas remaining 22 people visit a store on more than one occasion in a
week.
22% 29%
Once a month
Once a week
75
RESULT – 29 respondents spend less than Rs.500 per month on purchasing
And the no. of people who spent between Rs.501-1,000 are 53. Whereas 11 and
7 people spend Rs1,001-2,500 and more than Rs.2500 per month, respectively
7%
11%
29%
< Rs.500
Rs.501-1000
Rs.1001-2500
> Rs.2500
53%
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Other Products 8
Electronic items 8
Grocery Items 29
0 10 20 30 40 50 60 70 80
No. of Respondents
* Respondents have selected more than one item they purchase from a
retail store
77
RESULT – Almost two-third of the respondents agreed with the fact that
advertisements do play a vital role in selecting a particular retail outlet.
Rest one-third of the respondent said that they are not persuaded by the
advertisements.
No
24%
Yes
76%
78
RESULT – 90 percent of the respondents visited the Reliance Fresh store at
least once. Only 10 percent people haven’t visited Reliance Fresh store
anytime.
No
10%
Yes
90%
79
Parameter Result
General Feedback:
80
Parameter No. Of Respondents
Excellent 8
Good 43
Average 13
Satisfied 34
Poor 2
Total 100
Poor Excellent
2% 8%
Satisfied
34%
Good
43%
Average
13%
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Chapter – 8
SWOT
ANALYSIS
Strengths Weaknesses
Opportunities Threats
SWOT Analysis:
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As per the observation following are the SWOT analysis of Reliance Fresh, Ajmer
STRENGTHS:
Brand Reliance:
Due to the attachment of Brand Reliance, which is symbol of quality, trust
& transparency gives an edge to the Reliance Fresh as people know that
this brand will never deceive them at any point of time. This name itself
earns lots of customers for the retail venture of Reliance.
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This store provides opportunity to the customer to shop many different
commodities at one place and this saves their time & money and thus
enhances their utility.
Good Ambience:
Hygiene, cleanliness, housekeeping & friendly behavior of the staff makes
the store ambiance perfect for shopping.
Cordial Staff:
Cordial & Cooperative staff makes the shopping experience of the
customers excellent and makes customer a delighted customer as he or
she returns home with a smiling face.
Promotional Schemes:
Excellent promotional schemes attract the customers towards the retail
outlets. When the promotional schemes are attached with the different
activities then it becomes the best tool to showcase that the company is
customer oriented.
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The basic structure of Reliance’s retail format is to provide goods &
services in correlation with corporate social responsibility. It starts with
procurement of raw materials i.e. directly purchasing from the farmers
and giving them the best return for their produce and it ends with
customer engagement activities where children are taught how to be
healthy throughout their life.
Other Value Added Services:
Membership Cards
Mobile Recharge
Health Insurance
Two & Four Wheeler Insurance
Prepaid Voucher
85
WEAKNESSES:
Products are sold only at MRP:
All the products are sold at their MRP only and this may hamper sales as,
many customers wants the products at discounted rate and thus this may
drive the customers towards other retail formats & competitors. So this
weakness has to be tackled with utmost importance, as the customer
always wants maximum utility at the lowest prices.
Un-Trained Staff:
This is the major drawback in the service industry, as ill equipped staff
cannot render the required quality of services. It was observed that many
a times they do not have complete knowledge about the rates &
promotional schemes at different sections of the stores for different
products. They are sometimes not aware of what product is kept where.
86
It was observed that many a times the quality of products was not up to
the mark especially in F & V sections. It has also been observed that the
old and bad stocks lay on the shelf for the sale with new stock due to
which new stock also gets perish in very short time.
87
OPPORTUNITIES:
Provides Online Shopping:
Most of the customers buy their products by home delivery service
because going & buying the products from the store is very time
consuming, therefore Reliance has the opportunity to provide online
shopping to such customers. Through a centralized online system,
Reliance can render services to any customer living anywhere in the
town, state or in the country, provided that Reliance Fresh has a store in
that particular area. Through the centralized system, orders can be taken
at a particular place and through an automatic system; the order is
passed to the nearest Reliance store.
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Innovative promotional schemes which make the products and services
more attractive and appeals the consumers to visit the stores to avail the
scheme. For example –If Reliance gives discount to the customers for off
time shopping then not only the consumers will visit the stores during
lean time but will also stores to manage the peak hours.
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Increase in Purchasing Power of Consumers provides a
huge potential in this sector.
THREATS:
Competition from the local vendors:
Local vendors posses a major threat to the booming retail industry as
they provide the cheapest goods & services, the only difference is the
hygiene & quality of the goods and services being provided. Local vendors
often had strong political support and thus may influence the decision
makers.
90
bad quality and even the rates are high according to the quality and thus
make them dissatisfied with the services of the store. So the customers
are now searching a place from where they can buy good quality products
at reasonable prices.
Economic Factors
Economic factors like inflation, recession, etc., heavily hampers the
normal functioning of the business and leads to heavy losses to the
industry as well as to the companies operating in that economy.
91
Small vendors and retailers takes undue benefits of the
scheme offered at Reliance Fresh store, thus normal
customer suffers due to this.
Chapter – 9
FINDINGS
92
FINDINGS:
Most of the Customers are regular visitor but there frequency of visit is
less.
93
Customer service, quality, range is good but not creating shopping as an
experience
Customer doesn’t know the current updates, what is happening and what
is coming next.
Majority of the Customer Class is working and have different social and
Chapter – 10
94
SUGGESTIO
NS
SUGGESTIONS:
Effective utilization of storage space is possible.
95
Possibility of Non-Food FMCG
Effective utilization of empty Shelves
Consistency in quality should be maintained
Proper training should be imparted to CSAs.
Sample of wheat and other staple items can be kept for better exposure.
More promotional activities
Update of New Arrivals: Send timely update to the customers through the
database, it will create awareness in the mind of customers.
There should be a centralized complaint system
More billing counters should be added to save time during peak hours
There should be separate billing counters for Credit Card Holders, Aged
People and for customers who purchase few items
Membership Card should be made up of plastic instead of paper
Staff should be well trained and has up-to-date information
Home delivery facility need to be improved
More staff need to be recruited
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Chapter – 11
CONCLUSIONS
CONCLUSIONS:
Most of the consumers are satisfied with the current services.
Customers are ready to buy even at same rate or more than as compared
to outside if we provide them a quality.
Customer has no time. They don’t want to waste their time in selecting
good vegetables.
Many a times even after so many good experiences, a customers stop
visiting the stores just because of one bad incident or experience
Overall customers had a good experience of shopping in
Reliance Fresh Store
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Chapter – 12
BIBLIOGRAPH
Y
98
BIBLIOGRAPHY:
Books\Magazines\Journals:
o Kotler, Philip 2000, Marketing Management, 10th Ed.
o Chandrasekhar, Priya 2001, ‘Retailing in India: Trends and Opportunities’,
Business Line Catalyst, February 15.
o Kotler Philip, ‘Marketing Management’, New Delhi, Pearson education Inc,
2006
o Kothari, C.R., Research Methodology Methods and Techniques, New Delhi,
New Age International (P) Ltd, 1990
o Bajaj-Tulsi-Srivastava, Retail Management, Oxford University Press
o Kotler Philip, Marketing Management (12th Edition), Pearson Pub.
o Annual Report Reliance Industries Ltd.
o Annual Report of Reliance Fresh, Ajmer
Websites:
o http://ibef.org/download/Retail_220708.pdf
o www.merceroliverwyman.com, ‘Retail Banking Industry: Challenges’
o www.retailyatra.com
o www.ril.com
o www.econoictimes.indiatimes.com
o www.thehindubusinessline.com
99
QUESTIONNAIRE (SAMPLE SIZE - 100)
Name: __________________________________________________
Gender: __________ Age: ____________ Contact No: ____________
(1) Which of the Retail Stores do you visit generally? (Select one or more options)
(2) What influence your decision in selecting a Retail Outlet for purchasing? (Select one or more
options)
(____) Brand name (____) Services
(____) Range of products (____) Location
(____) Range of prices (____) Promotional Activities
(____) Any other reason ________________________________________
(3) Order of preference of brands (1 for the most preferred brand and 7 for the least preferred
brand)
a) Reliance Fresh _____
b) Subhiksha _____
c) Apna Bazar _____
d) V-Mart _____
e) Vishal Mart _____
f) R.R Mart _____
g) Local Vendors _____
(4) Rank the following Retail Stores on a 1 to 7 scale (1 for very good and 7 for poor) for the
following attributes:
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Location of the
store
Promotional
Activities
After Sales
Services
Once a month
Once a week
More than once a week
< Rs.500
Rs. 500 – 1000
Rs. 1,000 – 2,500
> Rs. 2500
(8) Does advertisement play an important role in selection of a particular Retail outlet?
Yes
No
(9) Do you have any other suggestions about how would you like a Retail Store to be?
_______________________________________________________________________________
_____________________________________________________________
101
Yes
No
(13) Rate your nearest Reliance Fresh Store on the following parameters (Please tick the option
based on your experience)
Store
Ambience
Offers &
Schemes
Range &
Variety of products
Product Quality/Freshness
of the Products
Price of
the Products
Parking
Facility
Credit
Facility
Near to home/
Easy to reach
Brand
Name
Home
Delivery
Return or
Exchange Policy
Loyalty
102
Points
Checkout
Experience
103