A SURVEY ON RELIANCE FRESH

PRESENTED BY: GUIDED BY:

SUVANJAN GHOSH Dr.BISWAJIT DAS

VARUN OBEROI

ANKUR MISHRA

RANDHIR RANJAN

DEBAJYOTI RAHA

ACKNOWLEDGEMENT

Survey is an excellent tool for learning and exploration. No classroom routine can

substitute which is possible while working in real situations. Application of

theoretical knowledge to practical situations is the bonanzas of this survey.

Without a proper combination of inspection and perspiration, it’s not easy to

achieve anything. There is always a sense of gratitude, which we express to others

for the help and the needy services they render during the different phases of our

lives. I too would like to do it as I really wish to express my gratitude toward all

those who have been helpful to me directly or indirectly during the development of

this project. We would like to thank our professor Dr.BISWAJIT DAS who was always there

to help and guide us when we needed help. His perceptive criticism kept us

working to make this project more full proof. We are thankful to him for his

encouraging and valuable support. Working under him was an extremely

knowledgeable and enriching experience for us. We are very thankful to him for

all the value addition and enhancement done to us.

Above all we shall thank our friends of section D who constantly encouraged and

us so that we would enable to do this work successfully.

INDEXES

AN OVERVIEW OF RETAIL INDUSTRIES IN INDIA

AN OVERVIEW OF RELIANCE RETAIL

AN OVERVIEW OF RELIANCE FRESH IN BHUBANESWAR

MARKETING MIX OF RELIANCE FRESH

MARKETING INTERMEDIARIES OF RELIANCE FRESH

DAILY ACTIVITIES OF RELIANCE FRESH

FUTURE PLANS OF RELIANCE FRESH

RECOMMENDATION

CONCLUSION

BIBLOGRPHY

AN

OVERVIEW

OF

RETAIL INDUSTRIES

IN

INDIA

RETAIL INDUSTRIES IN INDIA

India is a land of retail democracy- hundreds of thousands of weekly haats and bazaars are locatedAcross the length and breadth of our country by people’s own self-organizational capacities. OurStreets are bazaars – lively, vibrant, and safe and the source of livelihood for millions. India has theHighest shop density in the world, with 11 outlets per 1000 people. This does not include the village haats.Our retail democracy is characterized by1. High levels of livelihoods in retail with nearly 40 million employed which accounts for 8%Of the employment and 4% of the entire population.2. High levels of self - organization.3. Low capital input4. High levels of decentralization

Retail in India has started with the concept of weekly markets, where all the traders gather at oneBig place to sell their products every week. The people come to these weekly markets to buy theHousehold items for the next one week. Village fairs and melas were also common as it had more of an entertainment value. Once the people started getting busy with their lives and when they turned entrepreneurial, there emerged the mom and pop shops and the kiranas in the neighborhood. After independence, came into existence the system of Public distribution of foods through the ration shops, where food grains, sugar and oil for the daily consumption were distributed at subsidized rates through the government ration shops. The modern corporate retail formats are of the exclusive brand outlets, hypermarkets and supermarkets, departmental tores and shopping malls. But still the Indian consumer depends on the self-organized retail shops for their daily needs.

This is largely due to the excellent food retailing system that was established by the kirana (mom and-pop) stores that continue meet with all the requirements of retail requirements albeit withoutthe convenience of the shopping as provided by the retail chains. The Hawkers/lari galla vendorsand the local kiranas are the two main forms of unorganized retail in the country, which almostaccount for 97% of the total retail trade.Giant corporations like Wal-Mart and Reliance have started to try and take over the Indian retailsector. Currently the value of the retail market is estimated at around $ 270 billion with a growthrate of 5.7 per cent per annum according to the Indian retail report. The size of small retail is big, the size of big retail is small, a mere Rs. 250 billion in 2004 or 3% and Rs. 485 billion or 4.7% per cent of the retail market in 2006. However, the large scale corporate retail is projected to grow at the rate of 28% to 30% per annum, reaching Rs. 1000 billion or $ 70 billion by 2010 from the current size of US $ 8.7 billion. The tenfold increase in corporate retail will be at the cost of small scale retail, which employs nearly 10% of India’s population.

The strategy here is to define the small scale self-organized retail as “unorganized” and the largeScale corporate retail as “organized”. The real difference is however not unorganized vs. organized. But it is “self-organized vs. corporate”.

GIANT CORPORATIONS

Giant corporations like Wal-Mart and Reliance have started to try and take over the Indian retail sector. The entry of the giant corporate retail in India’s food market will have direct impact on India’s 650 million farmers and 40 million people employed in tiny retail. More than 6600 mega stores are planned with Rs. 40,000 crore by 2011.Our case is intended to cover two primary objectives which are:

First, when experts and giants like future group Wal-Mart and Reliance they are ready to start operations in retail what kind of strategies and structure they would be having to get the competitive edge over each other and established small and unorganized retailers. Second, what kind of impact has been on other retailers including unorganized ones with the opening of Reliance Fresh stores.

In the following case findings about Reliance Fresh were quite awakening and exemplary. Even after recent shutdown of Reliance fresh stores from UP and unwelcoming vibes from states like Kerala, West Bengal, Orissa and Jharkhand for its retail format (which was allegedly capturing the unorganized sector and leaving thousands of self employed people jobless) Reliance was not in any mood to hamper its 25000 crore plan. Reliance responded with superb strategy in which it shifted its focus from retailer to being a supplier i.e. targeting hawkers, vendors, Push cart wheelers instead of customers.

Big retailers like Reliance have huge resources and network which directly impacted many of the retailers some of whom are

planning to quit. In our sample size of 75 retailers more than 30 agreed to have lost as much as 50% of their sales.This case also discusses pros and cons of contract farming which on one part assures farmers of price for their crop and knowledge aboutFertilizers and seed but on other side has some obvious drawbacks like monopoly of big retailers.

As a big market in which organized sector is poised to grow with 25% - 30% annually our government must come with appropriate regulations to save small retailers and our agricultural sector.

AN

OVERVIEW

OF

RELIANCE

RETAIL LIMITED

RELIANCE RETAIL LIMITED

Reliance Retail is the retail chain division of Reliance Industries of India which is headed byMukesh Ambani. Reliance Industries Chairman Mukesh Ambani has unveiled a Rs. 25,000-crore($5.60 billion) retail plan for the company on June 26, 2006. Mukesh Ambani has called thisStarting of reliance retail as an idea which has the potential to revolutionize the Indian socioeconomic framework. He said "Conceptually, Reliance is creating a virtuous circle of prosperity by bringing farmers, small shopkeepers and consumers in a win- win partnership.” "A new company, Reliance Retail Ltd. (RRL) will spearhead this revolution. Reliance Industries will have a 100 percent stake in RRL, save for employee stock options".

THE RELIANCE EMPIRE

Reliance being the all encompassing company has entered into all the sectors, retail being their latest.

Reliance Industries Limited

Chairman and Managing Director : Mukesh Ambani

Market Capitalization : INR 39,609,150,020 (Sept, 2006)Total Shares Outstanding : 22,405,900 (Sept, 2006)Closely Held Shares : 11,365,943 Sales : INR 10,512,963,000According to the company website "1 out of every 4 investors in India is a Reliance shareholder. RIL is ranked at 342 in the 2006 Fortune Global 500 list among the world’s largest corporations.

Reliance recorded a profit of 8.9% on assets - first among the 38 chemical companies in Asia.

In terms of market cap, Reliance Industries ranks third among chemical companies in Asia, with a market cap of $6087.2 million as on October 19, 2001.

Reliance's total sales, at $6232 million, ranked eighth among the 38 Asian chemical companies.Reliance's total sales have gone up substantially from 1996 when the company recorded 2.5 billion.

Company with the highest refining capacity in India-60mpta.

At Jhajjar, Haryana (Area covered 25, 000 acres) (Nature of SEZ-Multi product)Reliance SEZ in Raigad (Area covered- 10,000 hectares)

Reliance Fresh is the convenience store format which a part of Reliance Retail

limited, a fully subsidiary of Reliance Industries Limited. Reliance plans to invest

Rs 25000 crores in the next 4 years in their retail division.

RRL launched its first store in Hyderabad in November 2006; major focus was on

selling fresh fruits and vegetables at lower prices by eliminating the middle men

and intermediaries. Now it has more than 560 reliance fresh outlets across the

country of which 117 are in Delhi and plans to increase this number to 784 to have

pan-India presence by 2011. These stores sell fresh fruits and vegetables, staples,

groceries, fresh juice bars dairy products and non vegetarian products.

Stores, size varying from 2000-4000 sq ft, are located in the radius of 1-2 km of

each other providing a good coverage of the area. Reliance retail has decided to

reduce its exposure to fruit and vegetable business and position itself as a pure play

super market and will focus on categories like food, auto accessories, FMCG, with

food accounting for most of its business.

BOARD OF DIRECTORS

   

Mukesh D. Ambani Chairman & Managing Director

 

Nikhil R. Meswani Executive Director

Hital R. MeswaniExecutive Director

H.S.Kohli Executive Director

AN

OVERVIEW

OF

RELIANCE FRESH

IN

BHUBANESWAR

RELIANCE FRESH

India’s Fortune 500 private sector giant, Reliance Industries Ltd, has, in fact, been

first off the blocks by launching its first Reliance Fresh outlets in Hyderabad,

Reliance fresh is the retail chain division of reliance industries of India which is

headed by Mukesh Ambani. Reliance has entered into this segment by opening

new retail stores into almost every metropolitan and regional area of India.

Reliance plans to invest rs 25000 crores in the next 4 years in their retail division

and plans to begin retail stores in 784 cities across the country. The reliance fresh

supermarket chain is ril’s rs 25,000 crore venture and it plans to add more stores

across different g, and eventually have a pan-India footprint by year 2011. The

super marts will sell fresh fruits and vegetables, staples, groceries, fresh juice bars

and dairy products and also will sport a separate enclosure and supply-chain for

non-vegetarian products. Besides, the stores would provide direct employment to 5

lakh young Indians and indirect job opportunities to a million people, according to

the company. The company also has plans to train students and housewives in

customer care and quality services for part-time jobs.

Reliance Fresh will…

Forge strong and lasting bonds with millions of farmers and will transform

the relationship with customers to a new level

Offer unmatched affordability, quality, convenience, service and choice

Offer our customers the widest range of fruit and vegetables at the best

prices in the neighborhood.

Provide for the daily needs of our customers by offering staples, grocery and

household products at great price.

SWOT ANALYSIS

STRENGTH Private label sales-own products(RELIENCE SELECT)Contract farmingNetwork-1600 channels in village.

WEAKNESS Poor inventory controlStaff-lack knowledge about products Parking

OPPORTUNATIES Farmer to fork no middlemen farmer-customersHundreds of farmer-1million farmer next 5 years.

THREAT International retail giants Carrefour, metro A.G.tesco.Bharti-Wallarmart (Farm to fork) opening costs are too high.

RELIANCE FRESH IN BHUBANESWAR

Bhubaneswar the capital of Orissa has a population of 1000000 as per the 2009 census with a fair average income. Therefore undoubtedly Bhubaneswar is the target of many retail chains and reliance is not a exceptional to it. The population and purchasing habit of Bhubaneswar has resulted in 7 reliance store in Bhubaneswar. For the convince of the project the store situated near Ravi talkies square has been selected.

PROUCT AVAILABILITY

Although Reliance fresh is mainly concerned about stocking fresh vegetable and fruits but due to some political controversy they mainly focus on the household products and MCG products.

THE PRODUCTS DETAILS ARE LISTED BELOW:

Fresh fruitsVegetablesChocolatesConfectionariesCold drinksFreeze items like butterIce-creamHouseholds productsToilet ItemsSpecial and Dry foodsOffice Stationeries

The products are displayed in selves in such a height so that they can be easily availed by the customers can compare the product specifications and price.

STORE DESIGN

The store is designed and maintained in a very systematic manner. Like as the chocolates are loved to have some at last moment of their shopping.

MARKETING MIX

OF

RELIANCE FRESH

MARKETING MIX

In order to satisfy the needs of customer each and every business house must have an appropriate marketing mix. According to Stanton, “Marketing mix is the term used to described the combination of 4 inputs which constitute the core of the company’s marketing system- The product, the price structure, the promotional activities and the distribution system”The 4 elements of marketing mix are closely interrelated because decision in one area usually effect actions in other J.Mc Carthy refers to 4 key variables in marketing mix which he called the 4 P’s product, price, place, promotion.

PRODUCT RANGE:

The most powerful instrument in the hands of the marketing manager is the product mix.

Vegetables and fruitsHouse hold itemsFood and beverages – All premiere brand + Private label Groceries – only private label Dairy productsNon veg food itemsReady to eat items

PLACE:A marketing manager has to develop and institutional structure for making the product available.

Located in small commercial complexes close to 3-4 residential areasObservation: Close to cross roads Almost in all Major areas like N4 IRC village, Khordha Buddha Nagar,Gopabandhu Nagar, Shaid Nagar, Baramunda

PRICE:

Price is an important consideration that would make the organization success.

Low prized private labelsDiscount on bulk buying

PRIVATE LABELS:

Maximum Space: Own ProductsLess Space: Nestle Maggi, MTR Masala, Pepsi, and Lay’s Chips.Reasons: High Margin

PROMOTION:

Promotion deals with informing and persuading the customers regarding the products of the firm.

Main idea – make bulk purchase Discount scheme days – Saturday and Sunday Reliance fresh membership card – Reliance One

MARKET INTERMEDIATERIES

OF

RELIANCE FRESH

MARKET INTERMEDIARIES

Market intermediaries are either business houses or individuals who come to the aid of the company in promoting, selling and distributing the goals to the ultimate consumers. They are middleman (wholesalers, retailers, agents) distributing agencies, market service and financial institutions. The various kinds of market intermediaries are agents, brokers, retailers wholesalers, commission houses, Industrial stores.

ROLES OF MARKET INTERMEDIARIES

Market intermediaries reduce transactions to an optimum number.Market intermediaries are capable of eliminating discrepancies in quality that is distributed.The producer can concentrate on the production function leaving the marketing problem to the intermediaries who specialize in the line.The chief function of selling intermediaries is to assemble the goods from many producers in such a manner that a customer could effect purchase with ease.The matching process is undertaken by performing the functions.Contracting, Sorting, Inventory, Transmitting, Marketing information.

Marketing intermediaries collect huge order and purchase in bulk from the producers. These enable a manufacturer to undertake a large-scale production.Market intermediaries help to stabilize the price too. By stocking goods, constant flow of goods to the market is assured. This equalizes demand and supply factors which stabilizes prices not only in single market but also maintains the same price level in all markets.

RELIANCE OWNLOGISTICS

RELIANCE FRESH OUTLETS RELIANCE FRESH OUTLETS RELIANCE FRESH OUTLETS

PROCESSING UNIT/POINT

COLLECTION POINT/UNIT

Farmers Own Transportation

Reliance own Logistics Reliance own Logistics

Farmers Own Transportation

RFRF

SUPPLY CHAIN

The supply chain is a longer channel stretching from raw materials to components to final products that are carried to final buyers. Reliance started its retail operations of Reliance Fresh stores with following supply chain model. Procuring directly from the farmers and operating with moderate margin but mass selling was key to Relience fresh operation for

First few months. The following figure depicts the first Reliance fresh model:

MODEL 1

But things always don’t turn out to be the same as planned. Opposition against Reliance fresh outlets in U.P soon interrupted the momentum .Reliance wished to go with. Bowing to mass opposition from local shopkeepers, the company closed down 20 Reliance Fresh stores in Noida and Ghaziabad. A company insider said that Reliance Retail was being forced to exit UP owing to what he described as the “vindictive approach” of the state government. Within the month company started operations in Luck now and Varanasi with 14 stores, stores had to be soon closed down following violent protests by local traders. After the protests, the state government instructed all standalone food & grocery stores run by corporate to close down. Similar things followed in NCR and Ghaziabad. The strategic importance of UP for a large-scale retailer like Reliance was not limited to it being a large consumer market. The state is extremely important from the sourcing point of view as well. The Gangetic plain in the state is considered to be one of the most fertile agricultural belts in the country. Reliance’s food & grocery business was in the line of fire, because of the popular perception of Reliance being the most ‘powerful’ business conglomerate in the country. This is evident from the fact that widespread political protests to corporate participation in retail started only after Reliance announced its roll-out plans. Companies like Kishore Biyani’s Future group, Subhiksha and Spencer’s have had operations in this format long before without encountering major problems. Moreover, the positioning of the Reliance Fresh format (small convenience stores) puts it in direct competition not only with neighborhood kirana stores, but also with small fruit and vegetable vendors. At this point of time future and ambitions of 25000 Crore Reliance retail started falling under clouds.

UPDATED POLICY

From grocery, Reliance Retail plans shift to supply:

Reliance Retail was faced with massive opposition from the trading community.But like every great visionary Reliance had a prepared back-up, and this time it was much more powerful than the earlier one, throwing solutions to every previous dilemma. In a dramatic shift, it decided to turn into a trader itself. It is entering the food-trading business as part of a major restructuring of its food and grocery initiative. The split has occurred because Reliance has realized that there is money to be made, may be more, in simple commodity trading, especially with food prices likely to go through the roof next year. As a result of this restructuring, Reliance Retail is setting up shop in mandis to sell fruits, vegetables and staples. It would thus be able to profit from commodity trading without worrying about the steep overheads and discounts that tied its hands in its avatar as Reliance Fresh. It would also allow the company to sell to a wide range of customers, including wholesalers, other traders, and retailers. A source said the company has already signed up with Spencer retail chains to supply cut fruits and vegetables. Till now, the Reliance supply chain was dedicated to meeting the needs of Reliance Fresh shops.

Reliance Own Logistics

RELIANCE OWNLOGISTICS

RELIANCE FRESH OUTLET RELIANCE FRESH OUTLETS RELIANCE FRESH OUTLETS

PROCESSING UNIT/POINT

FARMERS

Reliance own LogisticsReliance own Logistics

Reliance Own Logistics

FARMHOUSE ON CONTRACTFARMHOUSE ON CONTRACT

WHOLESALE MANDI’S

WHOLESALE MANDI’SWHOLESALE MANDI’S

Cold Trucks, TATA 407, 408, LP

MODEL 2

WHOLESALE TRADING

Reliance formalized its second supply chain model to shift itself from grocery retailer to grocery supplier by focusing and establishing itself in Mandi’s.In processing centers workers wearing balaclavas, woolen trousers and bulky jackets work inside a room kept at a constant 3oC, peeling and chopping vegetables, spinning them dry and then heaping them in small plastic packets before placing them in plastic transport crates. The model2 depects the Relience fresh.

CHANNEL DESIGN

The vegetables are collected in villages from farmers directly.

They are submitted to Collection Centers (CC) like Bhuma Nagar, Shaid

Nagar, Baramunda, Khordha Buddha Nagar,etc.

Payment and quality checks are done in collection centers.

From CC they are transferred to Distribution Centers (DC) via Reliance own

logistical units.

MEMBERS AND THEIR ROLES

FARMERS: The farmers harvest the crop and bring it to the collection centre.

They save on the transportation cost they would incur in taking the vegetables to

the mandi.

COLLECTION CENTRE: One Reliance authorized person is in charge of

collection centre. He inspects the quality and takes in the vegetables. He is also

responsible for payment of the farmers. He ensures the loading of all vegetables in

the trucks which are sent to the DC.

NATIONAL SOURCING: In order to provide a constant supply of all perishable

vegetables warehouses have been bought where goods are kept in cold storage.

Whenever there is a shortage in supply from any region then, these warehouses

MANDI: A team of two people is situated at the mandi. These teams are

responsible for constantly monitoring the rates and communicating the same to the

head office. If there is an urgent need which cannot be fulfilled by the collection

centre then reliance purchases the supply directly from mandi but at a rate which is

3%-4% less than the actual mandi rate.

DISTRIBUTION CENTRE: The distribution centre receives the vegetables and

does a thorough quality check. They prepare the vegetables for the retail stores and

also ship the vegetables depending on the requirement for each store.

RETAIL STORES: They are just responsible for receiving and checking the

quantity of vegetables arriving each night. Then they put up all good vegetables on

display for customers.

FARM TO FORK MODEL

The farm to fork model consists of seven steps which are shown in the figure given below:

DAILY ACTIVITIES OF RELIANCE FRESH

Reliance Fresh was blessing in disguise of a store when it opened. The quality of fruits and vegetables was amazing. So fresh, so photo-like! We were happily surprised. It made shopping for groceries and fruits and vegetables not only convenient but also a fun activity. This is because Relience fresh perform certain daily activity which are as follows:

Milk IndentingMilk ReceivableMorning BrietiveJob AllocationStore Performance(Morning)Bread IndentingUpdate ReportsSt.Performence(Afternoon)DumpMark downGRN DepositFootfall Report

Besides this Relience fresh also perform other activities like:

Home retailingCatalogue retailingDirect respond retailingAutomatic VendingElectronic retailing

FUTURE PLAN OF RELIANCE FRESH

Plans to invest Rs 25000 Crore in next 4 year in their retail division

Every Indian Consumer

Train students and housewives – Customer care & Quality service – Part time job

New format of food and café – Reliance food

Private label sale – Kirana store

Pharmacy retail store

6000 outlets – 784 cities

Launch soaps, detergents, cosmetics and non FMCG products – Private label

RECOMENDATIONS

COMMUNICATION:

Based on our observation we found that reliance fresh is not able to make an advertisement properly as compare to big bazaar or other retail store which is its competitor. So company should make a proper team to let the people aware about their schemes and offers being given by reliance fresh.Company should increase the number of counter so that it may minimize the queue of the customers.Company should acquire more and more skilled people so that it may satisfy their customer in all areas.

PROMTNESS IN SERVICES:

Relience fresh should pay kind attention towards the existing customer and try to provide them quick response in the sphere of services so that they become loyal.

BEHAVIOR AND COMMITMENT:

Behavior and commitments of sales man towards the dry outlets should be

improved.

Expand service

Give training to staff

Improve inventory control

CONCLUSION

It was a pleasant experience to have a survey in a Relience fresh It has given me an opportunity to know all dimensions of the market and how to tackle problems of it I have learned various functions carried out at all the level of organization especially of middle level and lower level. After a rigorous period of our survey we come to know that how practical knowledge is different from the theoretical concepts.

From the survey we conclude that:

Still reliance fresh gets the support of most favorable brand for the every consumer. Bigbazar food items also favorable but not that much.Favorable customer told bigbazar service is not so good. The trend of the people is changing very fast in accepting the new brands if it fulfills the requirements of the customer.People shifting to reliance fresh very rapidly.If bigbazar unable to adopt themselves through necessary changes then reliance fresh becomes the market leader in the near future.

BIBLOGRAPHY

www.google.com

www.wikipadia.com

www.reliencefresh.info

Marketing Management by C.B.Gupta