Being a follower of the retail industry, I typically keep abreast when time permits of news on this. However, I have to confess, the speed and scope of Reliance’s initiatives in retailing have completely taken me by surprise. I first saw Reliance “fresh” stores mushrooming all over Bangalore – the long/ traffic stopping queues bore testimony to their popularity – we heard of the “sabzi mandi” (wholesale fresh produce markets) vendors cribbing because they were suffering big time losses. Within no time, we saw the Reliance Footprint store springing up at strategic locations, the Reliance Wellness format (with tie ups for eye care), as well as the Jewelry store. All this happened within the space of a month in Bangalore.
But, on reflection, I am not surprised. The large Indian companies (whether it be Reliance, Tata Steel, Infosys/ Wipro or ICICI) have learnt to think and act scale – in fact, they seem to be following Jack Welch’s principles avidly – get into a business only if you want to/ and can, become a leader there. Look at what Reliance states on its Web-Site - “The retail initiative of Reliance will be without a parallel in size and spread and make India proud….Through multiple formats and a wide range of categories, Reliance is aiming to touch almost every Indian customer and supplier.”
It is however, unfortunate (maybe even inevitable) that this scale/ ramp up almost invariably is less than perfect – call it teething troubles/ call it inadequate planning – or maybe its just smart business – jump first/ over engineer the financing/ fill the gaps and misses only later – whether it is ICICI bank ATMs’ reported less-than-adequate back up; or the bugs in the RelianceOne Membership card as well as its pricing, apparently the secret to the success of the big companies’ scale plans is the fact that they (much like Microsoft) work on a ‘version’ philosophy – i.e., launch first, tweak later.
Meanwhile, there is no getting away from the fact, that only today’s news said that Mukesh Ambani is India’s “Billionaire of the Year”. Size, DOES matter, eh?
Friday, December 7, 2007
Think BIG – Reliance in Retailing
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5 comments:
Talking about big plans - I am very impressed with Subhiksha's plans - these are the early pioneers of the cost model in Indian grocery retailing (as opposed to Foodworld - which was the 'value' model). They were localised in Chennai/ TN, and one didn't hear much about them for a while. BUt now, at a claimed 1000 odd outlets nationwide, they are already the largest grocery retailer in India in terms of number of stores.
Recently, I read about expansion plans - an IPO with a 300 crore investment planned.
I would love to see how well they make it work.
One problem I see with Subhiksha is that their inventory is pathetic. They almost always NEVER have things that you need and their shelf spaces are thoroughly underutilized. At an organized grocery retail outlet, consumers always want a one stop solution for all their grocery, OTC medication, beverages, etc, needs. However, my experience with Subhiksha has left me very disappointed. Despite attracting people like me with their advertising to go and visit their store, I'm not sure the chain is doing very well in terms of retaining customers as it is just too frustrating to go there time and time again and not find some of the most commonplace grocery items. It has certainly not attained the status of a one stop grocery store with me!
With every locality having retail outlets (Reliance Fresh, Spencer’s Daily, Fresh@...and many more….), local vendors have been cribbing right from day one of the launch of these so-called “One-Stop Shopping Stores”. But, one can never ignore the fact that retail industry is booming in India….and there is much more to come.
You would be amazed to know or in fact just see how many throng these outlets….and, ask anyone of them….why this and not the “sabzi mandi”…and, probably you would get various answers.
Mukesh Ambani launched the retail foray a year ago, saying he wanted to build the Indian equivalent of Wal-Mart and setting an ambitious annual sales target of 25 billion dollars by 2011.
Organized retail or chain stores account for only around 4% of India's $350 billion retail industry, making the sector an alluring prospect for big domestic and foreign corporations……so, get set to see or experience the lengthy traffic shopping queues more and more …..
Going by the trends in the Indian Market it would be worth while how many retailers try to achieve what Future Group achieved with its "26 Ko 26" initiative, wherein they kept a huge target of arnd 26 crores on Jan 26 sometime back. The stores were flooded and the Company had to extend its offer to over 3 days instead of 1. Going forward there would be a day when the retailers could do something like this everyday specially when retail giants like Wal Mart open up....no matter what the consumer be a winner---what say????
Its my personal view point, but I find Reliance's initaives to be aggressive and unethical. Their general tendency is: capture a big pie in the market in lesser piece of time, regardless of the consequences over the market and then if they succeed in doing so they work according to their terms and conditions.
Why organizations in Retail Industry are only thinking about 25% of the population who is living in urban areas.
There is great potential in rural areas, where this present concept of retailing is not praticable.
Constructive thinking would be to capture that segment. Something like Kurian of GCMMF did....
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