A CASE OF SUPPLY CHAIN
IMPACT ON OTHER rETAILERS
Reliance Fresh: A Case Study
Prepared for: Mr. Shashank Mehra
Center of retail, FDDI,
Ministry of commerce. )
Prepared by :
03 Ankit Jain
06 Apoorv Mittal
07 Ashish Singh
16 Harsh Vardhan Singh
28 Mukesh Kumar
54 Vaibhav Biyani
Submission Date: May 5, 2008
Giant corporations like Wal-Mart and Reliance have started to try and take over the Indian retail sector. The entry of the giant corporate retail in India’s food market will have direct impact on India’s 650 million farmers and 40 million people employed in tiny retail. More than 6600 mega stores are planned with Rs. 40,000 crore by 2011. Our case is intended to cover two primary objectives which are:
First, when experts and giants like future group WalMart and Reliance they are ready to start operations in retail what kind of strategies and structure they would be having to get the competitive edge over each other and established small and unorganized retailers. Second, what kind of impact has been on other retailers including unorganized ones with the opening of Reliance Fresh stores.
In the following case findings about Reliance Fresh were quite awakening and exemplary. Even after recent shutdown of Reliance fresh stores from UP and unwelcoming vibes from states like Kerala, West Bengal, Orissa and Jharkhand for its retail format (which was allegedly capturing the unorganized sector and leaving thousands of self employed people jobless) Reliance was not in any mood to hamper its 25000 crore plan. Reliance responded with superb strategy in which it shifted its focus from retailer to being a supplier i.e. targeting hawkers, vendors, Push cart wheelers instead of customers.
Big retailers like Reliance have huge resources and network which directly impacted many of the retailers some of whom are planning to quit. In our sample size of 75 retailers more than 30 agreed to have lost as much as 50% of their sales. This case also discusses pros and cons of contract farming which on one part assures farmers of price for their crop and knowledge about fertilizers and seed but on other side has some obvious drawbacks like monopoly of big retailers.
As a big market in which organized sector is poised to grow with 25% - 30% annually our government must come with appropriate regulations to save small retailers and our agricultural sector.
BACKGROUND OF RETAIL
India is a land of retail democracy- hundreds of thousands of weekly haats and bazaars are located across the length and breadth of our country by people’s own self-organizational capacities. Our streets are bazaars – lively, vibrant, safe and the source of livelihood for millions. India has the highest shop density in the world, with 11 outlets per 1000 people. This does not include the village haats. Our retail democracy is characterized by
1. High levels of livelihoods in retail with nearly 40 million employed which accounts for 8% of the employment and 4% of the entire population.
2. High levels of self - organization.
3. Low capital input
4. High levels of decentralization
Retail in India has started with the concept of weekly markets, where all the traders gather at one big place to sell their products every week. The people come to these weekly markets to buy the household items for the next one week. Village fairs and melas were also common as it had more of an entertainment value. Once the people started getting busy with their lives and when they turned entrepreneurial, there emerged the mom and pop shops...