The coming retail boom
By Mohini Bhatnagar | 16 Nov 2006
In Hyderabad where Reliance Retail has begun operations, existing retailers like Spencers (RPG group), FoodWorld (Dairy Farm) and FoodBazar (Pantaloon Retail) have suddenly started offering competitive deals to counter Reliance Fresh's pricing. As it had promised, Reliance Fresh is offering deals that range from the good to the very good. The focus is on fresh fruits and veggies and groceries priced at a good 25 per cent to 30 per cent discount to the stores mentioned.
However, Reliance Fresh does not compete with the local vegetable mandis that go by the name of Rythu Bazar or farmer's market where local farmers can sell their produce directly instead of depending on middlemen. (See: )
New entrants to the city include Tamil Nadu based retailer Subiskha and ITC's Choupal Fresh. With the big name of ITC behind it, Choupal Fresh operates a 2,500-sq ft store positioned on hygiene freshness and economy. It is the first of 140 stores that ITC plans to open in 54 cities over the next three years at an investment of Rs800 crore. The company has got Ingersoll Rand to design its climate-control shelves, the freezer trucks in which farmers send produce and the pre-coolers, while Snowman manages the logistics.
Subhiksha is positioned on the discount plank and offers everything from toothbrushes to flour and rice at a substantial discount over the maximum permissible retail price. Subiksha has opened 28 stores in Hyderabad while Choupal operates a single outlet as of now.
Reliance has opened eleven pilot stores and is using these to smoothen out its critical supply chain and back-end operations, which will enable it to offer the cheapest rates and the widest choice of products. Reliance Fresh's pilot farm-to-fork project currently uses 16 collection centres in and around Hyderabad to collect fresh produce.
Singhal says Reliance has promised to keep prices of staple vegetables uniform through the year, partly through storage and also by working closely with farmers and encouraging them to change the cropping cycles.
In the next few months at least 30 Reliance Fresh stores are expected to come up in Hyderabad selling at least five tonnes of fruits and vegetables a day. The produce, all priced to market, will be sourced from all over the country, as well as the hinterland of Andhra Pradesh and Maharashtra where the group has tied up with several farmers.
While the Fresh stores will span 4,000-sq ft, its Fresh Plus stores, which will retail grocery and consumer goods apart from vegetables, will be larger formats ranging between 4,000-sq ft and 10,000-sq ft. After Hyderabad, Chennai is expected to be the next to see Reliance Fresh stores in a month from the Andhra launch.
Reliance will open six clusters in Andhra Pradesh, across major cities of the state that will serve as the hubs for its retail operations. Following this will be Reliance Mart the group's planned hypermarket chain, the first of which will open in Ahmedabad in December in 1.5 lakh sq ft of space.
The group expects to have at least 20 hypermarkets up and running in a year, say sources and company executives say that Reliance is positioned itself on `value shopping, will challenge everybody's prices.
