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Reliance plans to do a Wal-Mart in India

By Hemangi Balse & Reeba Zachariah in Mumbai
July 30, 2004 09:17 IST
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India's Rs 22,500 crore (Rs 225 billion) retailing industry is set to witness a tectonic shift -- Reliance Industries is leaping into the industry with a vengeance.

If all goes well, the group's retail venture could one day wind up being India's equivalent of Wal-Mart.

The Ambani enterprise is looking at a huge retailing push, which will cover the entire retailing ambit, including perhaps setting up shopping malls and hyper malls all over the country, though no final decision has been taken on this.

The malls will hawk everything, catering not just to mid to high-end customers but also to the mass market. In short, Reliance Industries will try to give consumers a complete shopping experience.

The foray into retailing is expected to start in the next financial year in one state, after the Reliance group completes the first phase of setting up retail petroleum product outlets and Reliance Infocomm shops.

In this connection, Reliance Industries is said to be talking to producers of consumer non-durables and looking at the imported goods market.

It will pick up products from the manufacturer's gate, transport them to its warehouses (these will dot the country) and deliver them to its shopping complexes nationwide. But if goods lie unsold, it will return them to manufacturers.

A Reliance Industries spokesman declined to comment on the matter. But a senior Reliance executive said: "We started with the big challenge -- in the petroleum and telecom industries. We now know where our customers are and where the market is and what customers want. What we are now looking at is: can we sell something more? These could be any products. This might not involve any substantial additional investment."

In a sense, the Reliance group is getting back to its experiences in its initial years. Not very long after it got going in the late 1970s, Reliance launched a chain of retail outlets for its Vimal brand of textiles.

More recently, it launched its Web World for its telecommunication products and has its Java Green cafe chain. But, according to informed industry sources, the difference now is that Reliance is considering all channels of retailing, not just the franchisee model that it adopted for its Vimal outlets.

It is working on a complex model where it will draw on its expertise in logistics, transportation, warehousing and its ability to offer a large basket of products to consumers from which they can pick and choose.

In its retailing foray, Reliance Industries will first try and lure customers, using the novelty factor, and then hook them by offering quality services.

Reliance Industries' push into retailing is, of course, prompted by the prospects that the industry offers. Reliance Industries Vice-Chairman and Managing Director Anil Ambani recently told journalists that at Hazira, where the company has a petrol pump and an adjacent retail outlet, customers came to first to buy other items and bought petrol incidentally.

India has an estimated 4.3 million retail outlets, but the organised retail industry accounts for less than 2 per cent of this.

The organised segment of the industry has grew by 25 per cent last year.
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Hemangi Balse & Reeba Zachariah in Mumbai

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