RELIANCE FRESH SET TO SHUT SHOP IN UP

The opposition to organised retail has claimed its first victim. Reliance Retail is likely to hand out termination letters to 1,000-odd employees of Reliance Fresh stores in UP in the course of this week as it prepares to formally exit the state.

Bowing to mass opposition from local shopkeepers, the company will also close 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.

When contacted, a Reliance Retail spokesperson said, “We have no comments to offer at this stage.” At present, the company employs 2,800 people in the state, and operates 20 stores in Noida and Ghaziabad. Industry observers also describe Reliance’s step as a tactic move to put pressure on the state government to reverse its approach.

While 1,000 people may lose their jobs, the company is likely to absorb the remaining employees. Reliance Fresh stores were also forced to close in Bhubneshwar by the local police on Tuesday, amidst protests by traders. Last week, traders had protested outside Reliance Fresh outlets in Delhi. The company had to shut down its Shakkarpur store in East Delhi for over an hour though it later re-opened.

Last month, the company started operations in Lucknow and Varanasi with 14 stores, which 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 corporates to close down.

Despite this, the company was able to continue operations in Noida and Ghaziabad, part of the National Capital Region (NCR). However, due to frequent intervention by the local administration, which would ask the stores to suddenly down shutters, Reliance is planning to exit the market.

Being the most populous state of the country, UP is clearly one of the most important consumer markets for any retail chain. Apart from the Noida and Ghaziabad, various studies have shortlisted six UP cities as the fastest growing retail destinations in India. These include Lucknow, Kanpur, Meerut, Agra, Varanasi and Allahabad.

The strategic importance of UP for a large-scale retailer like Reliance is 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.

Persistent lobbying by various pressure groups had convinced the Mayawati-government to make amendments in the state’s APMC Act and allow corporates to procure directly from farmers. However, this amendment was also not implemented following political opposition.

Sources say that Reliance’s food & grocery business has been 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 neighbourhood kirana stores, but also with small fruit and vegetable vendors.

This makes the company vulnerable to political attacks. Clearly, one reason why Reliance is going slow in its retail plans in most parts of the country is that the company does not want to become a part of any political party’s poll-agenda. “It should not become an election issue,” said a source.

SOURCE :ET

RIL, Himachal Futuristic plan tie-up to link retail stores by cable

The company is also said to be in talks with Railtel, PowerGrid and BSNL for leasing additional fibre lines

Mumbai: Mukesh Ambani-controlled Reliance Industries Ltd (RIL), India’s largest listed entity, is planning a tie-up with Himachal Futuristic Communications Ltd (HFCL) to roll out a 7,000km fibre optic cable project at a cost of Rs.1,200 crore. HFCL will lay the cable connecting RIL’s retail outlets.

The company is also said to be in talks with Railtel, PowerGrid and BSNL for leasing additional fibre lines. These lines will be used for the company’s internal data traffic, sources close to the development said.

RIL executives declined comment on the proposed tie-up but said that under the demerger agreement between the two Ambani brothers, Anil and Mukesh, it was free to provide any service to its staff for internal consumption.

Reliance Retail, a unit of RIL, plans to set up around 4,000 theatres as part of its retail roll-out.

I always assumed that if HFCL shoots up, then market is overvalued and is ripe for a crash/correction.

RIL Retail to tap small towns

After speciality formats in mega cities, the Mukesh Ambani-promoted Reliance Retail plans to tap opportunities in towns with a population of less than 50,000. The company will set up 200 town centres and 665 rural business hubs in 850 towns in the country.

The town centres will consist of low-cost malls and stores and have a local touch.

According to a Reliance Retail executive, 20 per cent of the space will be occupied by local vendors selling their agricultural produce, food items and artifacts. Besides, there will be stores for foods and vegetables, entertainment, durables and apparels.

The company has already selected properties in cities such as Shivkasi in Tamil Nadu and is negotiating in other towns, he said. The company was also looking to buy the cinema halls and auditoriums which are shut. The town centres will also have education centres which will double up as theatres at night. The company will set up multiplexes in some of these town centres as well.

The company is also setting up rural business hubs to procure fruits and vegetables. These hubs will act as collection centres for fruits and vegetables after doing the first-level grading.

The company will have a property portfolio of 25 million sq feet by next year. The company currently owns 330 Fresh stores, a digital store and one hypermarket.

The company has launched its B2B initiative, labelled Ranger Farms, to cater to small retailers in Hyderabad. It has also introduced its own label in the staples category under the Reliance Select brand.

The Rs 140,000 crore rural retail market is expected to cross the Rs 180,000 crore mark by 2010, according to a CII-Yes Bank study. This may go up to Rs 240,000 crore by 2015. Village households in India are expected to rise to 15.3 crore in 2009-10 from 13.5 crore in 2001-02, making rural India the largest potential market in the world, the report added.

The rural retailing space is dominated by ITC with its E-Choupal and Choupal Sagars, Indian Oil with Kisan Seva Kendras, Godrej with Adhar stores and DCM with Hariyali Kisaan Bazaar.