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Reliance retail's exit policy: Good or bad?

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October 01, 2007 09:26 IST

Raghu Pillai, Reliance Retail's chief executive (operations and strategy) made a tough decision last week when he decided to pull the company out of Uttar Pradesh, the country's most populous state. The company sacked nearly 900 employees and shelved its investment plans in the state, which included nearly 200 Reliance Fresh stores over three years and a back-end logistics chain.

"The protests have been vicious and discriminatory and barring UP, all state governments and local bodies have lent a sympathetic ear to Reliance Retail," says Pillai. He says there has been no forward movement by the state government and the entire situation is far too unpredictable for the company's liking. Under these circumstances, Reliance Retail decided that the best option was to exit the state. With this, the company has also sent out a very strong message to all other states and local bodies: support us or lose out on jobs and crores of rupees of investment.

While Pillai didn't say so, overcoming the massive and organised protests in several states (by trade unions, fruits and vegetable vendors and even local politicians that have quickly jumped at the opportunity of reaching center stage) against Reliance Retail will probably be one of the toughest challenges in his entire career.

He is after all in charge of the company's operations and strategy, a post that requires Pillai to decide on the company's roll out strategy, which format should be opened where, the entire process of property acquisition, and then the actual running of the stores. Pillai looks as if he has a huge task on his hand -- as against the target of 3,000 outlets in three years, he's built just around 350 in the first ten months of operations, and the opposition is getting shriller with each passing day.

Pillai says his main challenge at Reliance Retail has been in execution, and not in getting resources. "Reliance is different in its thinking — the scale and the way it operates. It thinks at a the blitzkrieg speed and money, the best of technology and the appetite for risk are not the challenges here. It is in ensuring that everything gets executed to plan," he said.

While Pillai is considered a veteran in retail, he entered the sector by accident. He was based out of Kolkata with the RPG group (with whom he worked with for 22 years in various posts) as the vice president of marketing with HMV. Pillai wanted to return to Chennai in 1995 for personal reasons and the only opening was available in retail which he grabbed.

Pillai was given a formidable task: as the CEO of Spencer's, he was responsible for growing a retail chain from scratch and that too without any experience in the field. Pillai learnt practically everything on the job and through trial and error (and, of course, a bit from books and travel). He put a team together that had to compete with Pantaloon Retail and Shoppers' Stop -- the only other players to reckon with in the mid-1990s. This is a team that Pillai is still proud of.

Pillai was responsible for growing Spencer's from scratch to a well- entrenched retail chain that included 120 outlets of FoodWorld, around 100 of MusicWorld and four hypermarkets. The RPG group was probably pleased as well since Pillai was given a ticket to the main board in 2001. Though on hindsight, Pillai says Spencer's "could and should have grown faster".

From the RPG group, Pillai moved on to Pantaloon Retail in February 2005 and was in charge of Home Solutions. Pantaloon's promoter Kishore Biyani continues to be Pillai's "guru" even today, even though he worked with the company for just a year.

Nayantara Rai in New Delhi