Reliance Retail : A Fresh Approach Towards Retailing in India

Indian retail scene

India ranks first in A.T. kearneys study for top international destinations for retail investment. The attractiveness of India is augmented by its US$350 billion retail market in which 96% market share is held by 12 million family-run shops, making it a virgin territory for organised-retail investment. Unorganised retailers are typified as being small in scale, individual units who typically buy off invoice and evade formal taxes. The organised sector, which currently accounts for between 2 to 6 % of the total retail market is slated to increase by 15 to 18 % by the year 2011.

 Household groceries and apparel are tipped to be the key drivers in Indias organised retail industry. Among the various retail formats that are currently used in India, the prominent ones include unorganised retail formats that are unique to India such as street carts, corner shops, kirana stores, open air markets, etc. The organised retail sector on the other hand, is dominated by modern formats such as hyper markets, super markets, speciality chain stores, factory outlets, discounters and retail entertainment centres such as mall multiplexes.

 Among the organised retail formats, hypermarkets and departmental stores have experienced tremendous growth in India. Big bazaar, which belongs to pantaloons Retail India Ltd. And Giant of the RPG group are the market leaders in the hypermarket category, where the success of these retailers has been credited to their ability in offering Indian consumers everything from food to non-food items under a single roof at low prices. Departmental stores such as Shopperss Stop of the K. Raheja group, Westside(Tata group) and pantaloons have become highly popular with the growing segment of affluent urbanites.

 With growing middle class and rising urban incomes; Indias population is showing an insatiable appetite for consumerism. It is not surprising to find several national and international retailers clamouring to help themselves to a generous piece of the Indian market

Reliance industries Ltd : History

Indias largest company with a market value of US$36 billion and turnover of US$58 billion. The company was started by Dhirubhai Ambani, who started a textile company with his personal savings of US$1000. the company grew rapidly and went went public to raise funds for a polyester plant. Over the years reliance has become the worlds lagest producer of polyester. From there on, RIL has grown exponentially to diversify into successful businesses in plastics, petrochemicals and oil refining.

 From the theoretical point of view, Reliance Retails diversification strategy can be explained by the strategic contingency theory, which dictates that diversification involves finding the right fit between external factors such as govt. policies, laws, etc. and internal factors such as firm risk reduction and uncertainity of future cash flows.

The Reliance Retail strategy

Strategic partnerships : Sahakari bhandar Reliance has acquired information impactedness, which according to TCA refers to the knowledge acquired through firm specific, task specifid=c and transaction specific experience . This information impactedness provides reliance with learning-by-doing, tacit knowledge of the retail industry that will equip the company with knowledge of running retail operations and provide possible solutions to future retailing problem.

Rapid expansion Supply chain : from farm to fork New ventures

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