reliance fresh

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SUPPLY CHAIN OF RELIANCE FRESH

SUBMITTED TO Prof. Dr. L. krishnanand H.O.D. Mech. Dept. N.I.T.warangal SUBMITTED BY SANJEEV SINGH YADAV ROLL NO.133565 M.TECH 1

ST YEAR

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CONTENT 1 History……………………………….………………………..…......03

2 Retail Format in India……………….…………………………..…...06

3 Profile of the company……………….………………………………08

4 Organizational Structure……………………………………………..09

5 Food Retail Chain …………………………………………………...10

6 Competitors of Reliaance Fresh………………………………….......11

7 Future Plans of the company………………………………………....11

10 Challenges for the company………..………………………………..12

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INTRODUCTION TO THE COMPANY :

Reliance Fresh is the convenience store format which forms part of the retail

business of Reliance Industries of India which is headed by Mukesh Ambani.

Reliance plans to invest in excess of Rs 25000 crores in the next 4 years in their

retail division. The company already has in excess of 560 reliance fresh outlets

across the country. These stores sell fresh fruits and vegetables, staples, groceries,

fresh juice bars and dairy products. A typical Reliance Fresh store is approximately

3000-4000 square. feet and caters to a catchment area of 1-2 km

1 HISTORY :

Post launch, in a dramatic shift in its positioning and mainly due to the

circumstances prevaling in UP, West Bengal and Orissa, it was mentioned recently

in news Dailies that, Reliance Retail is moving out of stocking fruits and

vegetables. Reliance Retail has decided to minimise its exposure in the fruit and

vegetable business and position Reliance Fresh as a pure play super market

focusing on categories like food, FMCG, home, consumer durables, IT and

wellness , with food accounting for the bulk of the business.

The company may not stock fruit and vegetables in some states. Though Reliance

Fresh is not exiting the fruit and vegetable business altogether, it has decided not to

compete with local vendors partly due to political reasons, and partly due to its

inability to create a robust supply chain. This is quite different from what the firm

had originally planned.

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When the first Reliance Fresh store opened in Hyderabad last October, not only did

the company said the store’s main focus would be fresh produce like fruits and

vegetables at a much lower price, but also spoke at length about its “farm-to-fork’’

theory. The idea the company spoke about was to source from farmers and sell

directly to the consumer removing middlemen out of the way.

Reliance Fresh, Reliance Mart, Reliance Digital, Reliance Trendz, Reliance

Footprint, Reliance Wellness, Reliance Jewels, Reliance Timeout and Reliance

Super are various formats that Reliance has rolled out.

In addition, Reliance Retail has entered into an alliance with Apple for setting up a

chain of Apple Specialty Stores branded as iStore, starting with Bangalore.

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3 Growth through Value Creation

With a vision to generate inclusive growth and prosperity for farmers, vendor

partners, small shopkeepers and consumers, Reliance Retail Limited (RRL), a

subsidiary of RIL, was set up to lead Reliance Group’s foray into organized retail.

With a 27% share of world GDP, retail is a significant contributor to overall

economic activity across the world. Of this, organized retailing contributes

between 20% to 55% in various developing markets. The Indian retail industry is

pegged at $ 300 billion and growing at over 13% per year. Of this, presently,

organized retailing is about 5%. This is expected to grow to 10% by 2011. RRL

has embarked upon an implementation plan to build state-of-the-art retail

infrastructure in India, which includes a multi-format store strategy of opening

neighbourhood convenience stores, hypermarkets, specialty and wholesale stores

across India.

RRL launched its first store in November 2006 through its convenience store

format ‘Reliance Fresh’. Since then RRL has rapidly grown to operate 590 stores

across 13 states at the end of FY 2007-08. RRL launched its first ‘Reliance Digital’

store in April 2007 and its first and India’s largest hypermarket ‘Reliance Mart’ in

Ahmedabad in August 2007. This year, RRL has also launched its first few

specialty stores for apparel (Reliance Trends), footwear (Reliance Footprints),

jewellery (Reliance Jewels), books, music and other lifestyle products (Reliance

Timeout), auto accessories and service format (Reliance Autozone) and also an

initiative in the health and wellness business through ‘Reliance Wellness’. In each

of these store formats, RRL is offering a unique set of products and services at a

value price point that has not been available so far to the Indian consumer. Overall,

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RRL is well positioned to rapidly expand its existing network of 590 stores which

operate in 57 cities.

During the year, RRL also focused on building strong relationships in the agri-

business value chain and has commenced marketing fruits, vegetables and staples

that the company sources directly to wholesalers and institutional customers. RRL

provides its customers with high quality produce that has better shelf life and more

consistent quality than was available earlier. RRL has made significant progress in

establishing state-of-the-art staples processing centres and expects to make them

operational by May 2008.

Through the year, RRL also expanded its supply chain infrastructure. The

Company is fully geared to meet the requirements of its rapidly growing store

network in an efficient manner.

Recognizing that strategic alliances are going to be a key driver to its retail

business, in FY 2007-08, RRL established key joint ventures with international

partners in apparel, optical and office products businesses. Further, RRL will

continue to seek synergistic opportunities with other international players as well.

This year, RRL will continue its focus on rapid expansion of the existing and other

new formats across India.

2 Retailing formats in India

Malls:

The largest form of organized retailing today. Located mainly in metro

cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7,00,000 sq ft

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and above. They lend an ideal shopping experience with an amalgamation of

product, service and entertainment; all under a common roof. Examples include

Shoppers Stop, Piramyd, Pantaloon..

Specialty Stores:

Chains such as the Bangalore based Kids Kemp, the Mumbai books retailer

Crossword, RPG's Music World and the Times Group's music chain Planet M, are

focusing on specific market segments and have established themselves strongly in

their sectors.

Discount Stores:

As the name suggests, discount stores or factory outlets, offer discounts on

the MRP through selling in bulk reaching economies of scale or excess stock left

over at the season. The product category can range from a variety of

perishable/Non-perishable goods

Department Stores:

Large stores ranging from 20000-50000 sq. ft, catering to a variety of

consumer needs. Further classified into localized departments such as clothing,

toys, home, groceries, etc.

Hypermarts/Supermarkets:

Large self service outlets, catering to varied shopper needs are termed as

Supermarkets. These are located in or near residential high streets. These stores

today contribute to 30% of all food & grocery organized retail sales. Super

Markets can further be classified in to mini supermarkets typically 1,000 sq ft to

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2,000 sq ft and large supermarkets ranging from of 3,500 sq ft to 5,000 sq ft.

having a strong focus on food & grocery and personal sales.examples Big Bazar,

Reliance hypermart.

Convenience Stores:

These are relatively small stores 400-2,000 sq. feet located near residential

areas. They stock a limited range of high-turnover convenience products and are

usually open for extended periods during the day, seven days a week. Prices are

slightly higher due to the convenience premium.

MBO’s :

Multi Brand outlets, also known as Category Killers, offer several brands

across a single product

category. These usually do well in busy market places and Metros.

3 PROFILE OF COMPANY :

Reliance Retail, Ltd. operates retail outlets in India. Its retail outlets offer foods,

groceries, apparel and footwear, lifestyle and home improvement products,

electronic goods, and farm implements and inputs. The company’s outlets also

provide vegetables, fruits, and flowers. It focuses on consumer goods, consumer

durables, travel services, energy, entertainment and leisure, and health and well-

being products, as well as on educational products and services. The company was

founded in 2006 and is based in Mumbai, India. Reliance Retail, Ltd. operates as a

subsidiary of Reliance Industries, Ltd.

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4 SUPPLY CHAIN OF RELIANCE FRESH

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4 Organizational structure:

ZONAL

MANAGER

CLUSTER

MANAGER

AREA MANAGER

STORE MANAGER

ASSISTANT STORE

MANAGER

SUPERVISOR

COMMERCIAL

ASSOCIATE

CUSTOMER SERVICE

ASSOCIATE

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5 Food Retail Chain at Reliance Fresh:

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6 COMPETITORS OF RELIANCE FRESH :

1. BIG APPLE

2. MORE

3. SABKA BAZAAR

4. FAIR PRICES

5. SUBHIKSHA

6. SPENCERS

7 Future Plans :

The company's flagship chain Reliance Fresh sells staples and food items under

Reliance Select

Nearly 30 months ago, Reliance Industries announced an ambitious plans to invest

Rs 25,000 crore (Rs 250 billion) to expand its stores in the country to take the

advantage of organised retail in the country.

Initially, the company was planning to open 2,000 stores by 2008, and 5,000 stores

by 2010, but due to a delay in delivery of properties, economic downturn and

demand slump the company had to scale back its expansion plans.

Reliance Retail runs over 850 stores, which include stores for food and grocery,

consumer durables, beauty and wellness, jewellery, footwear, among others.

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Its formats such as apparel chain Reliance Trends, beauty and wellness format

Reliance Wellness, consumer durable chain Reliance Digital have private labels or

are in the process of launching private labels.

"The whole idea of private labels is based on pricing and retailers get enough

volumes on their shelf at marginal costing. Retailers have an opportunity to sell

their private labels to kirana stores.

But it depends on their strategy on pricing and marketing right products," said

Naimish Dave, a director with OC & C Strategy Consultants.

8 Challenges facing the Indian Organized Retail sector :

The challenges facing the Indian organized retail sector are various and these are

stopping the Indian retail industry from reaching its full potential.

I) Changing Consumer Purchasing Patterns:

The behaviour pattern of the Indian consumer have undergone a major change.

This has happened for the Indian consumer is earning more now, western

influences, women working force is increasing, desire for luxury items and better

quality. He now wants to eat, shop, and get entertained under the same roof. All

these have lead the Indian organized retail sector to give more in order to satisfy

the Indian customer.

II) Lack of Retail Space:

With real estate prices escalating due to increase in demand from the Indian

organized retail sector, it is posing a challenge to its growth. With Indian retailers

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having to shell out more for retail space it is effecting there overall profitability in

retail.

III) Shortage of Trained Man Power:

The Indian retailers have difficultly in finding trained person and also have to pay

more in order to retain them. This again brings down the Indian retailers profit

levels.

IV) Poor Supply Chain

It is the supply chain that ensures to the customer in all the various offerings that a

company decide for its customers, be it cost, service, or the quickness in

responding to ever changing tastes of the customer.

The infrastructure in India in terms of road, rail, and air links are not sufficient.

This make a poor supply chain and companies have to depend upon warehousing.