Reliance Expands It retail Dream

Not one to give up easily, Mukesh Ambani and Reliance Retail have planned to expand

their operations to Uttar Pradesh and Eastern India where their initial attempts failed due to agitation from political parties. Reliance has plans to introduce specific formats in prior established markets like Lucknow, Kanpur, Ghaziabad and Noida and will then expand further depending on government policies. Reliance retail president, Bijou Kurien, said in a recent interview that East India and Lucknow are two markets where Reliance has had the least penetration yet and hence they will try and target the markets in hope of expansion. With the improvement in the political scenario, this dream is a lot more likely to come true. The biggest road block is the UP government which has put a ban of vegetable retailing and Reliance will have to break through with products like jewellery, apparel and other retail items.

The UP government had previously forcefully closed Reliance Retail in 2007 in Jharkhand as well as other location like Kolkata due to extreme political agitation. These political groups were against the commercialization of vegetables due to the apparent threat it posed for small kirana stores. However, in the past 2 years reliance has opened up over 17 outlets in Kolkata itself and is testing the waters in other cities. Retail contribution to Reliance has dropped from 65% to 50% due to its expansion in the avenue of specialty formats. Reliance plans to invest a hefty amount in its stores at approximately 1 Crore per sq ft with a slightly higher investment for hypermarkets. Reliance has a current network of 1050 stores and plans to open another 150 stores by March, with the aim of doubling the total number of stores in the next 5 years.

The value retailing wing of Reliance focuses primarily on food and grocery which accounts for a large segment of the Indian Retail sector.

by: Chintan Shah

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