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SIDDESH JADHAV

SUBMITTED BY : SIDDESH JADHAV

ROLL NO : 1031 (MARKETING) MUMBAI INTSITUTE OF MANAGEMENT AND RESEARCH

INTRODUCTION
RELIANCE FRESH
The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's largest private sector enterprise, with businesses in the energy and materials value chain. Group's annual revenues are in excess of USD 27 billion. The flagship company, Reliance Industries Limited, is a Fortune Global 500 company and is the largest private sector company in India. Reliance Fresh is the convenience store format which forms part of the retail business of Reliance Industries of India which is headed by Mukesh Ambani. Reliance plans to invest in excess of Rs 25000 crores in the next 4 years in their retail division. The company already has in excess of 560 reliance fresh outlets across the country. These stores sell fresh fruits and vegetables, staples, groceries, fresh juice bars and dairy products. About Reliance Fresh a convenient store format, is governed by the Mukesh Ambani and is the most important part of Reliance Industries retail Business. Reliance Ltd. has planned to invest more than Rs. 25000 crores in the retail division. It also comprises more than 560 reliance fresh stores all over the country. The outlet sells fresh fruits, staples, dairy products, fresh juice bars, groceries and vegetables. A distinctive Reliance Fresh outlet is around 3000 to 4000 sq. feet and accommodates catchment area of one to three Kilometers.

History of Reliance Fresh

The Reliance Retail had to face various difficulties before the launch of Reliance fresh, because of the various circumstances prevailing in Orissa, West Bengal and UP, along with the news focusing on the dearth of vegetables and fruits stocks. The retail business of Reliance then minimized its exposure in vegetable and fruit business, as a result established Reliance fresh positioning a pure super market play focusing on various categories like IT, consumer durables, home, FMCG and food.

The retail company of Reliance may not supply the vegetables and fruits in a few states, the Reliance Fresh decided to not to race with local wholesalers partly because of the political reasons as well as its incapability to maintain a healthy supply chain.

The Reliance Retail had to face various difficulties before the launch of Reliance fresh, because of the various circumstances prevailing in Orissa, West Bengal and UP, along with the news focusing on the dearth of vegetables and fruits stocks. The retail business of Reliance then minimized its exposure in vegetable and fruit business, as a result established Reliance fresh positioning a pure super market play focusing on various categories like IT, consumer durables, home, FMCG and food. The retail company of Reliance may not supply the vegetables and fruits in a few states, the Reliance Fresh decided to not to race with local wholesalers partly because of the political reasons as well as its incapability to maintain a healthy supply chain.

Growth of Reliance Fresh

The first ever a Reliance Fresh store was established in Hyderabad, wherein the company, mainly focused on the fresh produced vegetables and fruits at comparatively low price along with an introduction of farm to fork theory.

Growth through Value Creation

With a vision to generate inclusive growth and prosperity for farmers, vendor partners, small shopkeepers and consumers, Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to lead Reliance Groups foray into organized retail. Since its inception in 2006, Reliance Retail Limited (RRL) has grown into an organisation that caters to millions of customers, thousands of farmers and vendors. Based on its core growth strategy of backward integration, RRL has made rapid progress towards building an entire value chain starting from the farmers to the end consumers. Reliance Retail continued to expand presence of its value and specialty formats. During the year, Reliance Retail opened 90 new stores spanning across 'value' and 'specialty' segments. In-store initiatives, wider product choice and value merchandising enabled the business to achieve robust growth during this period. Its presence in the optics business is in partnership with Grand Vision. 51 new stores were added during FY-11 taking the total presence to 100 stores across key markets in the country. The retail chain offers single brand optical products including Vision Express frames, lenses, contact lenses, sunglasses, solutions and accessories. For the very first time, consumers in India got the opportunity to experience Hamleys, which is considered to be the world's most wonderful toy shop. The brand was launched in India with opening up of 2 stores during the year. I-Store by Reliance Digital is a one-stop-shop for all Apple products and services. There are 17 such stores currently operational. Reliance Brands also announced exclusive licensing arrangement with two leading international brands:

Steve Madden, a leading designer, wholesaler and retailer of fashion-forward footwear and accessories for women, men and children.

Quiksilver, a leading outdoor sports lifestyle company to launch their core brands 'Quiksilver' and 'Roxy'.

Across India, Reliance Retail serves over 2.5 million customers every week. Its loyalty programms, "Reliance One", has the patronage of more than 6.75 million customers.

This was the idea, which was anticipated by the company was to take the supply direct from the farmers and then sell straightaway to the consumers removing the middle-men off the beaten track. Reliance introduced several formats in the marketplace to cater to needs of common people, which includes Reliance Fresh, Reliance Super, Reliance Footprint, Reliance Timeout, Reliance Jewels, Reliance wellness, Reliance Mart and Reliance Digital, to name a few. In addition to this, the Reliance Retail also entered into a treaty with Apple, which is a leading Information Technology company, to set up a series of Apple Specialty Outlets branded as I-Store, with its first ever store in Bangalore. With an idea to produce inclusive prosperity and growth for farmers, consumers, small shopkeepers and vendor partners, Reliance Retail was set up in order to lead the foray of Reliance Group into an organized retail.

VISION AND MISSION

To be the most admired and successful organized retail company in India that materially enhances the quality of life of every Indian by - Providing unprecedented affordability, quality and choice - Being the partner of choice in creating prosperity for Indian farmers and other vendor partners - Unleashing the power of the Indian workforce through the generation of new & attractive employment opportunities To generate inclusive growth and prosperity for farmers, vendor partners, and consumers, Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to lead Reliance Groups foray into organized retail.

FORMAT

Convenience Stores:
These are relatively small stores 400-2,000 sq. feet located near residential areas. They stock a limited range of high-turnover convenience products and are usually open for extended periods during the day, seven days a week. Prices are slightly higher due to the convenience premium.

OVERALL STRATERGY

The first of their format is Reliance Fresh, a convenience store. These stores, range from 2,000 to 5,000 sq feet, provide customers with a variety of fresh fruits, vegetables, staple foods and other products in a world-class ambience. They aggressively partnered farmers by following a farm-to-folk strategy to ensure fresh fruits and vegetables at affordable prices. They chose Hyderabad to test waters, as the city offers real estate at a price that does not quite pinch. They selected the cream crowd from pioneers in organized retailers to head the organization. With such a strong foothold, they ventured and their cash counters clicked Rs 3.5 to Rs 6.5 lakh per day and some outlets at prime locations are averaging Rs 5 lakh per day. Reliance Fresh will not compete with local vendors due to political reasons, and their inability to create a robust supply chain. This is different from their original plans. In states like Kerala, West Bengal and Orissa, where they face opposition, they have changed their retail strategy by introducing large supermarkets, where they will not trade in fruits and vegetables. This is a critical factor in assessing the impact of retail giants on the unorganized segment. These Reliance Super stores are large supermarkets with an area of 4,000-10,000 sq ft and will stock grocery, stationary, pharmaceutical products and apparel only. In the foods business, they have consciously segregated its vegetarian and non-vegetarian items by having a separate brand - Delight for the latter, with a separate distribution centre. This may be a smart move as vegetarians are sensitive to these issues. Seeing huge opportunities, they have introduced own brands like Dairy Pure for milk, ghee, (the only

other major player being Amul) and Reliance Select for other categories like staples. This will optimize margins and streamline supply chain because of bulk procurement. Reliance Fresh will also retail FMCG, home, consumer durables, IT, pharmaceuticals, and auto accessories, in different formats like hypermarkets, supermarkets and discount stores; however, food will be a major account. Organized retailing and supply chain integration displace labor in a labor-surplus society. These chains negate a large and growing proportion of added value away from producers to companies. Bulk procurement decreases producers margins. By controlling both ends of the chain, the company can buy cheap and sell dear, thus severely undercutting the small retailers and creating a monopolistic situation. In addition, retail trade also has a sky rocketing effect on the real estate prices. Markets, wholesale sales and retail form one axis of the economy, while productive sectors like agriculture, textile, and industries form the other. Ambitious MNCs are trying to control both the axes of the economy on the pretext of privatization, liberalization, and globalization. Therefore, Reliance Fresh along with other domestic corporations have a moral standing. Along with the support of the government, they must pave a path for an efficient retail market (no monopoly) in India and help maintain a socio-economic equilibrium. This will remain the biggest challenge for Reliance who leads the way as a corporate citizen. The growth must be through value creation. This will help the Indian retail sector to remain fresh in a hygienic and ethical market.

INTEGRATED MARKETING COMMUNICATION (IMC)

Integrated marketing communications (IMC) is a process for managing customer relationships that drive brand value primarily through communication efforts. Such efforts often include cross-functional processes that create and nourish profitable relationships with customers and other stakeholders by strategically controlling or influencing all messages sent to these groups and encouraging data-driven, purposeful dialog with them. IMC includes the coordination and integration of all marketing communication tools, avenues, and sources within a company into a seamless program in order to maximize the impact on end users at a minimal cost. This integration affects all firm's business-tobusiness, marketing channel, customer-focused, and internally directed communication

DIWALI SPECIAL

COLGATE EVENT

LAYOUT OF THE STORE

Reliance fresh have Grid type layout

Counters and Fixtures are placed in long rows or runs usually at right angles, throughout the store

This layout is used in grocery, discount store and drugs stores, like- Reliance fresh Advantages-: Easy to locate merchandise, cost efficient, easy accessible for customers Disadvantages-: limited browsing and limited creativity in dcor

Reliance Fresh like other organized retailers in food & grocery has a Grid Layout format. This could be because of the following reasons: a) They get more shelves to stock products b) Lesser space is wasted in Aisles c) Customer Familiarity d) Higher Space productivity

VISUAL MERCHANDISING
Visual Merchandising - The Concept Visual merchandising, in simple terms, is the art of displaying merchandise in a store. It is the sales promoting activity by the way of effective presentation in a retail store. The environment of the retail store is made conducive to

enhance sales. It is aimed at creating an ambience that will prompt the customers to purchase the product. Visual merchandising is aimed at making the shopping experience a happier and a comfortable one. Visual merchandising makes the store look attractive and appealing to customers. It also helps in routing the store traffic. The sole objective of visual merchandising is to make the shopping experience a pleasure by inculcating the feeling of self-accomplishment in the buyers. The buyer himself chooses the product and this selfdecision making formulates the base for the feeling of content in his mind. Visual merchandising also eases the marketing pressure of the seller by making the communication with customers more effective. Moreover, it relieves the pressures on inventories, as most of the items are stacked on the racks or in showcases being displayed. Purpose of Visual Merchandising is pursued by retail stores with certain objectives. The first and foremost purpose of visual merchandising is sales promotion and like all other sales promotional strategies, it is aimed at increasing the overall sales of the store. Since visual merchandising is the display of all products available in the store, it becomes convenient for the buyer to pick up goods of his choice. Convenient buying also makes the shopping experience enjoyable to the customers. As customers are not required to remember the list of purchase they are more relieved while shopping. Visual merchandising also fulfils the purpose of effective display

Vertical glow sign outside the store as typically seen in petrol pumps. Not

seen till now in grocery stores. Increases visibility of stores in by-lanes -where visibility is limited to just 2-3 stores from the main road. Products available listed on the glow sign.

Store Faade Bright, Striking, Primary Colours

Highly visible store promotions, re-iterating value for money proposition

Vegetables in Basket

LOCATION JUSTIFICATION

Reliance retail stores are largely like a Super market set up or like a convenience store format with their stores ranging from 1100 to 7500 sq. ft. Also, Food and perishables form a large share of their product offerings. These stores are usually spotted in a Neighborhood location as stand-alone stores. The reason for such a strategy could be to provide customers with proximity and also have high visibility to cut out competition from stores like Spencers, Big Bazaar, Subhiksha etc.

ORGANISATION STRUCTURE

STORE MANAGER ASISTANCE STORE MANAGER FINANCE AND ACCOUNTS MANAGER

Supervisors

ACCOUNTANT

Customer Service Associates

There is a Customer Desk in each Reliance Fresh store which is operated by Customer Service Associates. But our secondary research and understanding through personal experiences suggest that Customer Service Staff needs training as they lack focus on solving customer problems and are also a little apprehensive about receiving customer complaints

PRICING STRATERGY

Reliance Fresh claims to offer Affordable Pricing but we find their pricing strategy to be: a) Discount pricing: As they offer spot discounts on membership cards. Also, they offer discounts on volume purchases for example Rs 10 off on a 5kg pack etc.

b) Competitive Pricing: Their product price range is wide and they offer competitive price i.e. a little lower (marginally lower) than the identified competition. c) Also, they mark price in Paisa to make it appear as low priced.

SUPPLY CHAIN MANAGEMENT

A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers. Supply chains exist in both service and manufacturing organizations, although the complexity of the chain may vary greatly from industry to industry and firm to firm.

Farmers Collection center

Reliance Fresh

Distribution center

From the above pictorial representation of supply chain management of reliance fresh it is clear that raw material is procured from vendors, transformed into finished goods in a single step, and then transported to distribution centers, and ultimately, customers. Realistic supply chains have multiple end products with shared components, facilities and capacities. The flow of materials is not always along an arborescent network, various modes of transportation may be considered, and the bill of materials for the end items may be both deep and large.

SWOT ANALYSIS

STRENGTHS:

Brand Reliance:

Due to the attachment of Brand Reliance, which is symbol of quality, trust & transparency gives an edge to the Reliance Fresh as people know that this brand will never deceive them at any point of time. This name itself earns lots of customers for the retail venture of Reliance.

 Maximum number of Retail Stores: Due to the 4 stores in the Ajmer city, reach of the Reliance Fresh is maximum as compared with other retail stores. These 4 stores of the city are situated at different location covering all major residential areas of the city. This reach makes the Reliance retail a local store with international quality and standards. This reach & quality takes the business ahead of the competitors. Centralized Management and Inventory System: Technology provides interconnectivity among the different stores & thus makes the management among the stores more efficient and helps in the flow of information regarding various aspects of the management of the stores, especially inventory of goods & services. This centralized system helps in balancing the deficiency and surplus of different goods & services at different stores. If any product is deficient at any store and is required urgently, then the required product is arranged from the store having the surpluses.

Rate of Fruits & Vegetables are Nominal:

The rates of fruits & vegetables are nominal compared other retail stores in the city and this low price gives the best utility to the consumers.

 Home Delivery Facility Home Delivery Facility was started to tap those customers who have time paucity to come to the store for shopping & this ultimately increases the customer base of the Reliance Fresh.

Multi Commodity Shopping: This store provides opportunity to the customer to shop many different commodities at one place and this saves their time & money and thus enhances their utility. Good Ambience: Hygiene, cleanliness, housekeeping & friendly behavior of the staff makes the store ambiance perfect for shopping. Cordial Staff: Cordial & Cooperative staff makes the shopping experience of the customers excellent and makes customer a delighted customer as he or she returns home with a smiling face. Promotional Schemes: Excellent promotional schemes attract the customers towards the retail outlets. When the promotional schemes are attached with the different activities then it becomes the best tool to showcase that the company is customer oriented. Customer Engagement Activities:

After completing the competitive analysis it is analyzed that the major strength of Reliance Fresh are Customer Engagement Activities. It is specially designed to attract more customers and to retain them for longer period of time or to convert them into loyal customers as well as in retaining the old & loyal ones and these activities adds value to the customers spent money. Customer Engagement Activities are done with the objective of: To attract more customers. Activities were planned to attract females & children to Fresh outlets as they play a major role in the buying decisions of the family. To create a long-term relationship with the customers. To create Bench Mark.

It provides different types of offers to customers on different occasions, which makes customer feel more special and associated with the store.

Inclination Towards Corporate Social Responsibility: The basic structure of Reliances retail format is to provide goods & services in correlation with corporate social responsibility. It starts with procurement of raw materials i.e. directly purchasing from the farmers and giving them the best return for their produce and it ends with customer engagement activities where children are taught how to be healthy throughout their life. Other Value Added Services: Membership Cards Mobile Recharge Health Insurance Prepaid Voucher

Two & Four Wheeler Insurance

 Strong Financial Backup

Good Employee Base

The Location of the Stores is Excellent

First Mover Advantage

Strong Customer Base\Network

Providing brand to customer at an affordable rate

WEAKNESSES:

 Products are sold only at MRP: All the products are sold at their MRP only and this may hamper sales as, many customers wants the products at discounted rate and thus this may drive the customers towards other retail formats & competitors. So this weakness has to be tackled with utmost importance, as the customer always wants maximum utility at the lowest prices. Slow Billing System: During the peak hours or rush hours, only two or three counters remain operational out of five. Most of the time staff is not available at the counters. Billing takes too tong sometimes as the system shows different prices of the same products. This will deter the customer and others in his contact to visit the stores during the rush hours & thus Reliance may lose its customer base. Shortage of Man Power: Staff is less in Reliance Fresh in comparison to its competitors like Spencers & Big Bazaar. Shortage of manpower is mainly felt during peak hours and thus quality of services deteriorates considerably & this impacts the consumers satisfaction level. Un-Trained Staff: This is the major drawback in the service industry, as ill equipped staff cannot render the required quality of services. It was observed that many a times they do not have complete knowledge about the rates & promotional schemes at different sections of the stores for different products. They are sometimes not aware of what product is kept where. Stock Outs & Bad Quality:

It was observed that many a times the quality of products was not up to the mark especially in F & V sections. It has also been observed that the old and bad stocks lay on the shelf for the sale with new stock due to which new stock also gets perish in very short time.

OPPORTUNITIES:

Provides Online Shopping: Most of the customers buy their products by home delivery service because going & buying the products from the store is very time consuming, therefore Reliance has the opportunity to provide online shopping to such customers. Through a centralized online system, Reliance can render services to any customer living anywhere in the town, state or in the country, provided that Reliance Fresh has a store in that particular area. Through the centralized system, orders can be taken at a particular place and through an automatic system; the order is passed to the nearest Reliance store. Loyal Customer Base of Competitors: More customer base can be achieved by studying the competitors consumer behavior, likes, dislikes & facilities being provided by the competitors. Changing life style:

Changing life style always provides best opportunity as it creates demand for new things & thus provides opportunity to the business community to tap the changing environment opportunities. Venturing into other commodities in demand More varieties of products & services can be added to the portfolio by analyzing the demand for the new products and services. By venturing into new product market new customer can be gained and thus helps in increasing the customer base. Innovative promotional schemes to attract masses: Innovative promotional schemes which make the products and services more attractive and appeals the consumers to visit the stores to avail the scheme. For example If Reliance gives discount to the customers for off time shopping then not only the consumers will visit the stores during lean time but will also stores to manage the peak hours. Boom in the Retail Sector: Booming retail sector is providing new opportunities to the retail business houses as more & more customers are becoming aware of this new way of shopping experience and are relishing this new experience.

Change in the mindsets of the customers towards retail industry: With growing awareness among the customers about hygiene & health they have started buying the products from the retail stores to have quality products having highest standards.

 New formats are coming like hypermarkets, supermarkets This gives opportunity to tap the upper segment of the society & thus adds to the bottom line of the company. Should keep providing gift vouchers Reliance Fresh should keep providing gift vouchers to the customers with the option of shopping anything with limit of the gift voucher. This would help to create new customers. Can take advantage of its 28 locations Reliance Fresh is the only retail outlet which has 28 stores all over in Ajmer, so it can take the advantage of serving more & more customers.

Emerging Segment with huge potential and opportunities

Increase in Purchasing Power of Consumers provides a huge potential in this sector.

Opportunity to capture other potential untapped markets in Ajmer.

Can add more brands to its existing portfolio of brands

Huge scope in selling consumer products under its own brand name.

THREATS :
Competition from the local vendors: Local vendors posses a major threat to the booming retail industry as they provide the cheapest goods & services, the only difference is the hygiene & quality of the goods and services being provided. Local vendors often had strong political support and thus may influence the decision makers. Competition from other retail players: Other retail competitors like Spencers, More, Express City, etc. also pose threat as they poach on the customer base of the company. Any innovative product & service can easily attract the customers towards them, thus reduces the customer base & hence profitability. Bad quality products One of the major threats for Reliance Fresh is that customers are switching over the other retail outlets because fruits & vegetables are of bad quality and even the rates are high according to the quality and thus make them dissatisfied with the services of the store. So the customers are now searching a place from where they can buy good quality products at reasonable prices. Disappointing Staff Services

Retail being a service industry heavily depends on the quality of services to retain its customer base and thus any mismatch in expected & delivered services can be fatal for the business. Most of the customers leave the store without buying anything from the store just because the staff is not available to guide them, most of the staff is not aware of the offers & schemes and all the counters are not operational even during the rush hours. Economic Factors Economic factors like inflation, recession, etc., heavily hampers the normal functioning of the business and leads to heavy losses to the industry as well as to the companies operating in that economy. Change in governments policy Any change in the government policy can heavily can severely influence the running business as is in the case of West Bengal where many retail businesses were not allowed to open the retail stores especially Reliance Fresh and the change in the policy has allowed it to open the store in West Bengal.

Local Political Environment Peace, stability & security are very important factors for the growth of any business and any disturbance can have a dead blow on the retail business. Recent blasts (13/05/08) in Ajmer have hampered the business as people have started to be away from the crowded areas and therefore have hampered the sales of many retail stores.

FINANCIAL ANALYSIS

As per their Annual report for the fiscal 2009-2010 we arrive at the following conclusion: 1. Their Labour Productivity comes out to be Rs 52.70 lakhs i.e. each employee on an average makes Rs 52.70 lakhs of sales per year. 2. Also, Sales per sq. ft. comes out to be 0.2342 lakh/sq. ft. 3. Reliance Fresh derives most profit from Sales of Fresh fruits and Vegetables and least from the sales of Staples and Non veg items. This might indicate that Staples might be the traffic builder for Reliance fresh as the margins on the same are lower where as Fresh vegetables, Home Care, Personal Care and Processed food can be the destination goods as these stores are usually located in a neighbourhood set up. Also, the margins on Fresh fruits and vegetables could be a result of their association with farm folks and the fact that they have long term contracts with the farmers for direct supply thereby increasing the efficiency of their supply chain. Please see the following graph to understand the performance of each category of reliance fresh.