Retail claim: Biyani joins issue with Mukesh Ambani

Reliance Industries chairman Mukesh Ambani's claim that Reliance Retail has become the largest food retailer in the country has left his competitors unimpressed.

Reliance Retail, which started in 2006, runs over 1,000 stores across 86 cities.

Of this, over half (nearly 600) are supermarkets called Reliance Fresh which mainly sell food and grocery items.

The company also runs mini-hypermarkets and hypermarkets under the name Reliance Super and RelianceMart respectively. All the three formats are the in the value segment.

Other retailers in the food and grocery segment say Reliance may be the largest in terms of stores but not in revenues.

"You can check out the numbers to find out who is the largest. They might be large in terms of food and grocery store presence, but we are the largest in terms of revenues," says Kishore Biyani, chief executive of the Future Group.

According to Biyani, his revenues from food and grocery will be over Rs 3,200 crore (Rs 32 billion) in 2010-11 (the financial year for the group's flagship company Pantaloon, ends on June 30).

But that is only marginally more than the Rs 3,132-crore (Rs 31.32-billion) turnover of Reliance Retail.

A quick look at RIL's FY 2011 annual report reveals that Reliance Fresh has posted a turnover of Rs 2,513 crore (Rs 25.13 billion) during the last financial year, while Reliance Hypermart posted revenues of Rs 619 crore (Rs 6.19 billion).

While Reliance Retail's total loss was Rs 351 crore (Rs 3.51 billion) during the year, Reliance Fresh accounted for Rs 159.94 crore (Rs 1.59 billion) and Reliance Hypermart Rs 86.99 crore (Rs 869.9 million).

Comparative numbers for the Future Group's food and grocery business are not published.

According

to a top executive of a food and grocery chain, while Future Group is the largest food and grocery retail chain, Reliance Retail comes second and Aditya Birla Retail third.

Birla Retail, which runs 560 supermarkets and 10 hypermarkets, posted Rs 1,650 crore (Rs 16.5 billion) turnover in 2010-11, of which Rs 1,500 crore (Rs 15 billion) came from retailing of food and grocery products.

Early last year, Reliance brought executives from Tesco Lotus of Thailand to spearhead its value formats.

"Though we have not seen the evidence of good growth, I feel the look and feel of their stores have improved and operations are streamlined. But I do not think they have opened new stores in the last one to two years," the executive said.

In his speech at the company's annual general meeting last week, Ambani said Reliance opened 90 stores in the value and speciality segment in the financial year 2010-11.

"Reliance Retail has made substantial investments over the last five years to establish a vast retail network with a robust supply chain, cutting edge technology and a procurement network reaching directly to tens if thousands of small traders, farmers and manufactures," Ambani said.

Ambani added that every week, 2.5 million customers shop in Reliance Retail's stores and that would increase multi-fold in the years to come on the back of aggressive investment planned to grow the value format.

Biyani's Future group has different formats in the food and grocery segment. It has no-frills stores called KB's FairPrice in the lower end, Food Bazaar and Foodrite in the medium end and recently opened Foodhall in the upper end.

Future Group runs 206 Food Bazaars, 198 KB's FairPrice and one store each in both Foodrite and Foodhall.

Image: Kishore Biyani