Reliance Retail is likely to launch 252 new Fresh stores across the country by March next year. It also plans to start “Rose”, a jewellery store modelled on Tanishq.
Company to launch ‘Rose’ jewellery stores, on the lines of Tanishq
MUMBAI: Reliance Retail is likely to launch 252 new Fresh stores across the country by March next year. It also plans to start “Rose”, a jewellery store modelled on Tanishq.
Sources also said the company may unveil 200 Fresh stores in Mumbai alone; but they didn’t specify any deadline.
The sizes of Fresh stores may differ from place to place, they added. Currently Reliance Retail operates 372 Fresh outlets across the country.
As per the Macquarie research equities report, the retail major plans to have a total of 100m sq ft of retail space in 800 cities by calendar year 2010 and revenues of $22 billion by the end of financial year 2011.
Currently, the Fresh store sizes are anywhere between 1100 sq ft and 7500 sq ft depending on the location.
An analyst added the company will have to restrict its store sizes to 1,000 sq ft in Mumbai considering the real-estate crunch and crowded landscape of neighbourhood stores in the city.
A few days ago DNA Money had reported about Reliance talking to mom-and-pop stores to take the franchisee route for small stores.
The analyst added that Reliance Fresh stores could also be run on a franchise model in Mumbai considering the strong associations of small retailers in the city.
And it’s not just the Reliance Fresh- a convenience store format- where the most valued business house is pumping money.
The Reliance Hyper mart (above 50,000 sq ft) also plans to spread its presence from 1 (in Ahmedabad) to 10 by the end of this financial year.
Similarly, there will be 26 mini-marts (10,000-50,000 sq ft) dotting the Indian retailscape by March 2008.
Sources added that these mini-marts and hyper marts will also include speciality stores. Reliance has already bought 1 lakh sq ft in the crown interior mall in Haryana’s Faridabad to launch its home décor speciality store.
Cost-cutting plans
Things aren’t all that hunky-dory at Reliance Retail. Stores haven’t been able to meet the profitability targets, a Reliance source said.
Spinning off the retail venture into different verticals, the source added, is to treat them as independent cost-profit centres and bring more accountability in the areas of costing, manpower, stocks, procurement, and advertising and promotions.
“Earlier there were different reporting centres for different business functions. Now one store manager will be responsible for all the functions of a particular store,” the source said.
The company is planning to hire a lot of apprentices and trainees to do front-line jobs and thereby slash manpower costs.
Also, the spin-off is expected to help the company offset losses incurred in other sections such as jewellery, footwear, apparel due to lock-outs or strikes by protestors.
Fresh vegetables and fruits section has especially been targeted by the small retailers.
Currently, out of 372 Reliance fresh stores, 26 are closed due to protests (19 of them in Uttar Pradesh and Ghaziabad, five in Noida).
Jai Bendre, head, marketing, food business, Reliance Retail, recently said: “The wastage in food and vegetables products in India is believed to be more than the total production of UK.”
Unmesh Sharma, analyst, Macquarie research equities, in a report to investors said: “The lack of cold/supply chain infrastructure has resulted in a food & vegetable produce wastage of 25-40%.
The company will aim to improve margins by investing in IT and infrastructure to improve the supply chain efficiencies.
However managing space acquisition, IT and manpower challenges might delay the ramp-up by 36 months.”
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