US-based Wal-MartGermany's Metro Cash & Carry UK's Tesco France's Carrefour SA: Cash and Carry stores
Earlier aadhar was owned by goorej30000 population like Tinsukia and BoondiSangli, a town of about 400,000 people in Maharashtra known as the "turmeric city
Reliance one – insurance benefits, discounts; First Google search on Reliance-One gives a HR recruiting firm – Reliance-One.comReliance fresh – 981 complaints – mostly bout customer service and rude staffBig Bazaar – 922 complaints – mostly about bill related problems and specific product related problemsSpencer – 500 (included Marks & Spencer also).Spencer retail - 10More for you – 16 complaints since the Retail store influences the perception of the consumer. Thus everything about the store (easy access, bundling of products, service personnel) should together communicate value for money.
By2025, India will be 5th largest consumer market (60 mn people in Indian middle class)
More working women; More plastic money</li></ul>Entry of global giants in India through multiple tie-ups! Aggressive growth plans of domestic players!<br />
Retail in Rural India<br />Future of Kirana Stores?<br /><ul><li> “Kirana store is for emergency shopping, supermarket is for necessities and the hypermarket is for family outing. There will still be a role for the itinerant street hawker on the 21st century Indian shopping landscape, but it will be diminished one”. – Sanjay Bhade, senior VP at Aditya Birla Retail
Future of kirana stores also depends on inclination of next generation in running family businesses. There are better employment opportunities available in small towns now.</li></ul>Numbers Speak<br />Reality Speaks<br />Rural Indian spends 52% of his income; Urban Indian 50%<br />Expanding rural consumption at 12 % for last 6 quarters; Urban demand trails at 7%<br />2012: 52% of retail spending from rural India<br />Better roads - better distribution network. <br /><ul><li>Only 1200 retail outlets in these areas!
Consumers prefer kirana stores (buy on credit, home delivery, proximity to home)</li></ul>But Big Bazaar rises in hinterlands! <br /><ul><li>95 stores in tier-3 towns (pop.-1 lakh); Acquired Aadhar - gone into towns with 30,000 population
In a Big Bazaar outlet in Sangli - a family ran up a bill of Rs 1.25 lakh!
In Alwar, Big Bazaar store had annual sales of over Rs 18 crore. Sale of small stores has dropped 8%.
“Treat catchment area like constituencies - just the way political parties don’t ignore ethnic communities."
Concepts built specially for rural India - stocking aluminium vessels in Muslim dominated communities, tapping local trader & women SHG for food items to address local preferences.
All this added with competitive prices, good ambience & aspirational needs of middle class!</li></li></ul><li>Reliance Fresh – 7P framework <br />
<ul><li>Inseparability & Perceived Risk – Medium
Product Variety – customers want a one-stop shop. So fruits & vegetables + staples, grocery & household products.
Product Quality – Though low price, but customers want best quality.
Policy & Regulatory Framework<br />Troublesome<br />If relaxed norms on FDI in multi-brand retail:<br />Not much opposition from other retailers<br />Increased competition; More pressure on prices and margins<br />TRAI rule – National Do Not Call Registry – further hindrance to promotional activity by Reliance Fresh<br />Possibility of Government intervention to protect interests of street vendors<br />Other challenges: Rise in real-estate, electricity & transportation costs<br />GST - Something to be happy about <br /><ul><li>Abolition of Central Sales Tax is likely to warrant a re-evaluation of procurement and distribution arrangements.
Removal of excise duty on products - cash flow improvements, since GST will be paid on sale/supply rather than on the product.
Elimination of tax cascading is expected to lower business input costs and improve profitability. </li></li></ul><li>The Future<br />Demand is not a problem. <br /><ul><li>Cost structure and Supply chain –2 variables will make or break you!
Train your staff – customer service becomes imperative especially with the threat of international retailers coming in</li></ul>Eventually who will survive? <br />Retailers with deep pocket<br />Integrated and efficient back end supply chain<br />National presence including in rural areas<br />
Conclusion<br />Why will Reliance Fresh Survive<br />To-Do<br /><ul><li> Work on customer satisfaction & in-store experience
Effective communication to consumer needed (hafte ka sabse achcha din)!
Go lean (Aldi)</li></ul>Seamless supply chain infrastructure <br />JV with Wincanton (specialist in logistical & dist. services), to effectively manage back-end operations <br />Cutting costs<br />Merged operational management and sourcing for Reliance Fresh, Reliance Hyper & Reliance Super stores. <br />Consolidated back-office operations, pruning superfluous facilities<br />Farm-to-fork model: If done efficiently, price to consumer will be only 10% above farm-gate prices!<br />Not-To-Do<br />Don’t lose focus from “neighborhood store” . Don’t dilute it by adding apparel in stand alone Reliance Fresh stores<br />Private Labels<br />“Profits earned from them are almost double than those from third-party brands” – COO, Shoppers’ Stop<br />Reliance Fresh: 30% revenue from private labels. In future, also plans to sell its private label products (“dairy pure”, “reliance select”, “reliance value”) to small independent local stores<br />
Learnings from Aldi - World Leaders<br />Unique cart system to save labor time<br />Carries only 1400 fast moving grocery items instead of 30,000!<br />Less inventory, rent and electricity costs<br />All products are placed in shipping boxes directly on the shelves to save labor time.<br />Get your own bags – saves cost<br />95% private labels<br />Website<br />Promotions<br />
Even Wal-Mart advertises!<br />http://www.youtube.com/watch?v=QJHWJHYH_bk&feature=related<br />
What competitors are doing?<br />Positioning<br />More. – Hamesha extra - international experience at Indian prices<br />Big Bazaar – Issesastakuchnahi- all products at one place at cheaper prices – Modern Mandi<br />Private Labels<br />More. – <br />Is pushing hard its private labels. <br />Stocked 18% of a store in Vishakhapatnam with FMCG private products (general standard is 5%). <br />Only private labels are being pushed by audio-video advertising.<br />Currently 19% of revenue comes from private labels and this number is slated to increase to 30% by 2015<br />Big Bazaar – full assortment concept formats – private labels is just another choice for customers <br />
The Detail in Retail<br />Hype & Interest of Retail in India<br />Is Big Retail making money?<br />Casualties: Shubhiksha, Vishal Retail, Indiabulls!<br />Spencers’ loss: Rs 300 crore in 2008-09. Is still losing Rs 12-13 crore a month. Downsizing (<1 million square feet now)<br />Shoppers Stop’s loss: Rs 64 crore in 2008-09<br />ABG’s More Chain (2007) hopes to become positive in 2012-13<br />Pantaloon highly leveraged (Rs 4,000 crore of debt)<br />Reliance Retail: loss of Rs 700 crore in 2008-09 & Rs 450 crore in 2009-10. <br />
Value percentage of total retail space ( including unorganized)<br />
Comparative Financial Measures<br />Spencer’s<br />Aditya Birla Retail<br />Reliance Fresh<br />All figures in Rupee Crore<br />