Reliance Fresh stores in Noida

Reliance Retail on Monday ushered in a new retail culture in the national capital region by opening nine western-style food stores as it hopes to become the preferred supplier of push-cart vendors and kirana stores.

The launch of nine 'Reliance Fresh' stores in Noida, Greater Noida, Gurgaon, Ghaziabad and Faridabad took the number of such outlets that sell fruits, vegetables, groceries and dairy products to 49 in the country with an investment of close to Rs 3,000 crore (Rs 30 billion).

RIL president and CEO (operations and strategy) Raghu Pillai said 8-10 per cent of the Rs 25,000-30,000 crore (Rs 250-300 billion) that the company has planned for its retail venture by 2010 had been invested so far.

Bigger format stores such as hypermarkets, supermarkets and speciality stores would be opened in the April-June quarter, he said.  Reliance Retail, he said, hopes to earn Rs 1,00,000 crore in revenue in the next five years. 

In addition, the wholesale supply chain business, which includes supply of perishable products and commodities to 'mom and pop' stores and street stall vendors, would also add to the revenues, he said.

He said the company has already tied-up with a few neighbourhood stores in Hyderabad for supplying commodities and the experiment was working fine.

Pillai said Reliance Fresh, which had built a supply chain connecting the farm to the store, was looking to use this network to tap export markets.

"We are looking at exports. But there is this problem of surplus and deficits (of commodities). But exports are a definite possibility," Gunender Kapur, president and chief executive (Foods Business), Reliance Industries, said.

Sanjiv Asthana, president and chief executive of agri and foods business, said the market was big enough for organized players and the 12 million mom and pop stores to co-exist.

But the company's Fresh brand of stores plan to soon launch home delivery services, a move that could rob the advantage that neighbourhood stores have at present.

"The Indian retail market is estimated to be worth $300 billion and will grow by 8-10 per cent a year. Even if we corner the incremental portion of 8-10 per cent in the next five years, there is space for everybody," Kapur said.

Pillai earlier said that Reliance Fresh stores would not compete with the likes of Wal-Mart, but the company's hypermarkets and supermarkets would do. The move to the national capital region after opening the food retail stores in Hyderabad, Jaipur, Chennai, Vijayawada and Guntur comes ahead of plans of its competitor -

Bharti-Wal-Mart - to open hundreds of retail stores. For retail giant Wal-Mart, the tie-up with Bharti has thrown up a huge and one of the world's most attractive retail markets with a population of over one billion.

The country's increasingly wealthy middle-class alone is estimated at over 300 million, which equals the entire population of the US.

Reliance, which launched the first food store in November last year, would open 1,000 such stores across 35 cities this year, said Kamal Nanavati, mentor of Reliance Retail.