Review 2007 / Retail Ahoy : Reliance spreads wings wide, despite setbacks

Backlash in some States, consolidation in other states and spreading of wings

by Neeta Nair
Published - January 03, 2008
6 minutes To Read
Review 2007 / Retail Ahoy : Reliance spreads wings wide, despite setbacks

Backlash in some States, consolidation in other states and spreading of wings into apparel, jewellery, footwear, pharma, electronics, food and groceries and vegetables, as also wholesale arenas made the last year hectic for the retail super power Reliance Retail which had unveiled a mega Rs 25,000-crore mega pan-India retail strategy that hinges on a farm-to-fork strategy. Though the year started on a high note after the first Reliance Fresh store was opened sometime late November 2006 in Hyderabad, and then to other states, Reliance Retail had to spend more time on firefighting instead of consolidation as the year progressed. But it could finally wriggle out of the crisis, though with a subdued aggression, as the year drew close. Trouble started in Uttar Pradesh with traditional traders and supporters of the Samajwadi Party, after losing power to BSP, kicking off protests, leading to ransacking of some stores and culminating with the closure of its retail outlets. Chief minister Mayawati had the last laugh as supporters of Mulayam, a close friend of Mukesh Ambani bundled the mega player out of the state. While the first attack began in Lucknow, it spread to rest of the state and finally all the stores, including those in the NCR region were closed, even though Mayawati ordered a committee to study the impact of modern retail is awaited. Interestingly, Ambani who opened 30 stores in the state including those in Noida and Ghaziabad, faced the music while RPG Spencer and Big Bazaar could escape harmless. Similar was the fate for Ambani in states like Bengal, Kerala and Orissa  too. While in Bengal the pro-capitalist neo-Marxist chief minister Buddadeb Bhattacharya wanted modern retail in, he could not stop his RSP and Forward Bloc allies from fanning out the ire against retail chains, in Kerala ironically, the local Communist MLA who opened a store in Kochi had to finally eat the humble pie after the state also put a ban on the biggies. Also, the merchant community threw their weight in the ring to lead protests and all political parties soon backed them, just for vote bank reasons. In Orissa too bad time dawned on Reliance, as similar protests and vandalism took place under the patronage of political parties. But, Reliance proved that they are fighters and wanted to go stronger when going gets tough. The setback failed to douse their fire for growth under the belly. They moved on by entering more segments and tying up with lots of suppliers. By spreading wings into more areas from apparel to footwear, Reliance ended the year having different formats—Reliance Fresh, Reliance Digital, Reliance Hypermart, RelianceMart, Reliance Trends, Reliance Jewels, Reliance Footprints, Reliance Super, and Reliance Timeout. Sensing the growing potential in the pharma retail, already being tapped by players like Fortis and Apollo, Reliance too made the bold venture this year. It tied up with Cipla for drug retailing and opened the first outlet—RelianceMart in Ahmedabad in August. Cipla is supplying the generic products. Its first exclusive health and wellness club known as Reliance Health and Wellness Store came up in Hyderabad. The company is planning to start its private label business in pharma sometime in 2008. In the frozen food category, the company tied up with Himalya International. The Italian style specialty cheeses and premium sweets were launched under the Himalya brand name. As Bharti-Wal-Mart signed the agreement to set a new revolution in the retail market, Reliance Retail announced its plans to enter the wholesale arena as well. The cash-and-carry outlets from Reliance may happen anytime next year, as the world leader Wal-Mart makes the delayed entry. It launched RelianceTrends, the stand-alone apparel outlet stocking apparel for the whole family, at Gurgaon in October and started itself off with Reliance Jewels from Bangalore in November. "In the apparel business there is a lot of scope to get our products across to consumers in different cities, different segments, and different formats. We have got hundred plus brands in the store including our private labels," apparel division head Arun Sirdeshmukh said. The new venture has stocks of all popular brands such as Buzz by Blackberry, Contra by Indigo Nation, Dresscode by Shades, John Players, Peter England etc. Reliance Jewels is spread over three floors in 6,000sqft store offers over 10,000 designs of exquisitely crafted jewellery from across the country to make it a one-stop shopping destination for fine jewellery offering consumers wide range in gold and diamond jewellery. According to the CEO of lifestyle vertical at Reliance Retail Bijou Kurien,  "it has always been our endeavour to provide consumers with a wide range of high quality products at competitive prices. Reliance Jewellery is another milestone in our effort in bringing unique shopping experience with assured purity of gold and certification of diamond." The gold jewellery range encompasses Kolkata filigree, Rajkot Minakari jewellery, Kundan from Jaipur, temple jewellery from Kerala, and Jadau from Amritsar among others. In diamonds, it offers a wide range of design, ranging from daily wears to party wear and even for weddings. Company is planning to roll out at least 300 jewellery outlets with the next three years. The company also launched yet another specialty store Reliance Footprint in Hyderabad and Bangalore to cater to the footwear, handbags and accessories segment. The stores have over 25,000 items, including footwear in every category ranging from formals, casuals, ethnic and sports. The company also plans to open over 15 more such large speciality stores in the next 12 months. By the end of the decade, the company is planning to open 100 such stores in tier I and tier II cities. Reliance Retail made the entry into consumer durable retailing through the launch of Reliance Digital in April in Ghaziabad which would sell over 150 international and domestic consumer durable brands to begin with. In the next couple of quarters, the company intends to get into private labels and the process of creating a sourcing mechanism has already begun. "In the next three-four years, we aim to take this number up to 150," Reliance Retail CEO for consumer durables Ajay Baijal said opening the store. The arm may also take up consumer finance and travel services. Reliance is eyeing a turnover of around $5.5 billion from durables vertical by 2011, when its it would have 150 Reliance mega stores across. Reliance Retail has now specialised in virtually every segment of retail business—from books and music to fresh vegetables and groceries. It plans to open about 2,000 stores by 2011.