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Last Updated: Friday, 3 November 2006, 08:47 GMT
Reliance launches retail venture
By Omer Farooq
BBC News, Hyderabad

Reliance chairman Mukesh Ambani at a new food store
Reliance stores are different to traditional food retail in India
Indian industrial group Reliance has made its foray into retailing, formally opening 11 stores in Hyderabad.

Branded "Reliance Fresh", they are part of a $5bn project planned for more than 780 cities and 6,000 rural towns in India over the next five years.

The company aims to open stores in the top 70 cities within the next two years and have sales of $25bn by 2011.

About 95% of India's retail sector is made up of small, family-run stores and has not been tapped by big business.

There have been worries that Reliance's move will adversely affect the 12 million traditional Indian traders and shop keepers.

'Affordable'

The first Reliance shops, selling fresh vegetables, fruit, flowers and other groceries were formally launched in the up-market Banjara Hills area of Hyderabad in Southern India.

"This marks our first step in a long journey in to the organized retail business", said Raghu Pillai, president of operations and strategy at Reliance Retail.

Reliance, whose interests range from petrochemicals to power, has an ambitious supply chain plan, integrating farmers with the shops.

I am impressed by the hygienic conditions and the way the things are packaged
Afsana Ahmad, customer

"Our intention is to bring high quality fresh food to the customers at an affordable price," said Gunender Kapur, head of Reliance's food business.

This makes sense in a country where about 40% of the vegetable and fruits produced perishes before reaching the markets.

Reliance chairman Mukesh Ambani, who visited all 11 shops on the eve of opening, said his firm offered "unmatched affordability, quality and choice of products and services to the customers".

'Hygienic'

Customer Rajni Srinivasan told the BBC she was impressed with the shops.

"The prices of some of the vegetables is around 40% less than the other shops. I hope it is just not a promotion and that they will continue with this".
A small local grocery store in India
There are about 12 million small grocery shops in India

Another customer, Afsana Ahmad, said the "ambience" of the shop was different to other stores.

"I am impressed by the hygienic conditions and the way the things are packaged. It is good and affordable".

Other business houses such as RPG, Tata and Bharati have their own plans for the retail business

Reliance's move has generated a lot of excitement and interest across India as it has come at a time when the country's economy is booming and India's 300 million strong middle class has caught the attention of the world.

Its retail business plans stretch beyond groceries and other day-to-day requirements to financial services, insurance and entertainment through the other formats like hyper markets and specialty stores.

International retail chains including Wal-Mart, Carrefour and Tesco have yet to grab a slice of the Indian retail business.

'Winning combination'

Mr Pillai said that there was room in the retail sector for traditional sellers and bigger firms.

"Retail market size in the country today is $300bn and it is growing at 8%.

"We want to do $25bn of business in five years - and this will not be capturing the full growth."

The firm expects to employ 500,000 staff as well as creating at least one million jobs indirectly.

The head of agricultural business at Reliance retail, Sanjeev Asthana, said that farmers would benefit from the company's move into retail.

"Our partnership with farmers is aimed at creating a winning combination," he said.

"We want to create a system in which the farmers get not only timely payment but also get good extension service quality input and cutting edge technology.

"The overall income of the farmers should go up".




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