India’s retail sector has been growing at an incredible rate for the past two years. Most Indian conglomerates have or at least tried to establish a presence in this sector. As such, the market leader for some time has been Mukesh Ambani’s Reliance Retail which owns a wide variety of stores in the consumer goods, automobile and food sectors. Now, the Reliance Industries Limited (RIL) owned retail chain is planning to take on the mother of all retail chains – Walmart when it established its presence in India.
The valuation of India’s retail sector is a staggering $450 Billion. Reliance Retail has tried to capture a large part of this. The company has always tried to innovate and offer new services that could turn into an asset and the ‘Cash and Carry’ format has been a huge hit so far. The Ambani-owned retail chain is certainly leading the pack as its set to open around 100 cash-and-carry stores in the next two years. During this time it faces stiff competition from a retail chain that practically rules the market in North America.
Walmart is one of the great business stories of our times. The chain has permeated into almost every neighbourhood of North America and is synonymous with ‘retail.’ With FDI in retail being given the thumbs up, the American-chain is seeking to establish its presence in India. Standing in its way is Reliance Retail – an already established name and brand that has garnered many accolades for its service. Reliance is set to open around 100 cash-and-carry stores in the next two years, while Walmart India CEO KrishIyer said it would take the world’s largest retailer another six years to launch 50 Best Price stores.
A person close to Reliance Retail was quoted as saying, “Within two years of opening our first cash-and-carry store, we have become the largest wholesale cash-and-carry chain in the country and we plan to continue our current pace of growth. Our store expansion programme will cover top Indian cities by 2016.”
The sizes of the new Reliance Market stores will range between 10,000 square feet and 45,000 square feet, said a person familiar with the development. To save on real estate costs, the company will adopt improvised methods to store goods vertically rather than horizontally. It will also focus on developing its own brands for all customer segments.
With new stores optimizing space to save real estate, the company will target both, end-consumers and small businesses. This is similar to the business model followed by other international retailers in the country. For instance, Walmart, Metro Cash & Carry and Carrefour operate only cash-and-carry stores that are different from B2C retail chains, such as Big Bazaar and Shoppers Stop. The cash-and-carry business is about bulk-buying and it can only serve registered members including kirana stores, hospitals and hotels. Reliance Market has 1.2 million registered members.