This document provides an overview of the retail industry in India. It discusses the evolution of retailing from early systems like barter to modern retail formats. The key concepts of retailing including buying, moving, and selling products are explained. The document also summarizes the growth of organized retailing in India since the 1990s due to changing consumer preferences and the entry of multinational brands. It defines retailing and outlines the role of retailers in linking manufacturers to consumers.

1. A
Project Report
On
“TO STUDY THE EFFECTIVENESS OF CONSUMER LOYALTY
PROGRAMME ON SALES PERFORMANCE IN RELIANCE FRESH
STORES IN JAIPUR’’
(RELIANCE)
Submitted in partial fulfilment for the
Award of degree of
Master of Business Administration
2011-2012
Submitted to: Submitted by:
MS. Jaya Pareek Gaurav Sharma
Ms. Nidhi Tak MBA IV Semester
Poornima Group of Institution, Jaipur
(An Autonomous Institute of Govt. of Rajasthan)
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2. CERTIFICATE
This is to certify that GAURAV SHARMA of MBA IV Semester of “POORNIMA
SCHOOL OF MANAGEMENT”, Jaipur has completed his project report on “TO
STUDY THE EFFECTIVENESS OF CONSUMER LOYALTY PROGRAMME ON
SALES PERFORMANCE IN RELIANCE FRESH STORES IN JAIPUR’’ Under
the supervision of MS. JAYA PAREEK, MS. NIDHI TAK & MS. SAVITA
PANWAR, DMS,PGC.
To the best of my knowledge, the report is original and has not been copied or
submitted anywhere else. It is an independent work done by him.
DR. VANDANA SHARMA
DIRECTOR
POORNIMA SCHOOL OF MANAGEMENT
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3. DECLARATION
I hereby declare that the project report entitled “To Study the Effectiveness of
Consumer Loyalty Programme on Sales Performance in Reliance Fresh
Stores in Jaipur’’ submitted for the degree of MBA is my original work and the
project report has not formed the basis for the award of any diploma, degree,
associate ship or similar titles. It has not been submitted to any other university or
institution for the award of any degree or diploma.
GAURAV SHARMA
MBA IV Semester
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4. Preface
This project is related with the retail industry. Retail according to concise oxford
English dictionary, is “the sale of goods to the public for use and consumption
rather than resale.”The founder chairman of reliance group was Dhirubhai H.
Ambani. The managing director is Mr. Mukesh Ambani.
Reliance retail limited is concern with “growth through value creation” the reliance
industry firstly opened their retail as named “reliance fresh” in Hyderabad.
The aim of this project is to analyse the percentage of loyalty programme of
reliance fresh among the customers. The loyalty is one of the important factors
which give birth to retention of customers in stores, the frequency in the purchase
and faith in the customer. The project study is not only restricted in store but also
it is opened its wings for outside world. For starting the project the questionnaire
is to be prepared and then this will be filled by respondents. The sample size will
be taken as 150 respondent as convenience.
The data will be analysed based on suitable tables by using mathematical
technique. The project is mainly analysed by using bar charts.
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5. Acknowledgement
I express my sincere thanks to my project guide by, MS. JAYA PAREEK, MS.
NIDHI TAK & MS. SAVITA PANWAR, DMS,PGC for guiding me right from the
inception till the successful completion of the project. I sincerely acknowledge him
for extending their valuable guidance, support for literature, critical reviews of
project and the report and above all the moral support he had provided to me with
all stages of this project.
I would also like to thank the supporting staff of “POORNIMA SCHOOL OF
MANAGEMENT” for their help and cooperation throughout our project.
GAURAV SHARMA
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6. TABLE OF CONTENTS
S. No. Particulars Pages
1. Introduction to the industry 7-30
2. Introduction to the organization 31-47
3. Introduction to the topic 48-73
4. Research methodology 73-81
4.1 Title of the project 74
4.2 Duration of the project 74
4.3 Objective of study 74
4.4 Type of research 75
4.5 Sample size and method of selecting sample 75
5. Facts & Findings 81
6. Analysis and interpretation 87-96
7. Conclusion 97
8. Recommendation and suggestions 98
9. Appendix 99-101
10. Bibliography 102
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7. INTRODUCTION OF THE INDUSTRY
INTRODUCTION OF THE INDUSTRY
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8. Evolution of Retail
Retail, according to
Concise Oxford
English Dictionary,
is “the sale of goods to the public for use or consumption rather than for resale”.
The barter system was first known retail form; then the currency changed hands;
we had the handcart vendor selling goods in the streets; of late we have a pop &
mom stores which compliment the neighbourhoods stores. The first retailer in
India includes Bata, Pantaloon, Bombay Dyeing, Spencer’s, and Nilgiris &
Higginbotham. The current retail scenario is controlled by the likes of Shoppers’
Stop, Brand Outlets, Big Bazaars etc. The top 4 world players include Wal-Mart,
Carrefour, Tosco and Metro. The opportunities as mentioned are aplenty with
close to
15000000 sq.feet of retail space is under construction for various malls &
shopping centres across the country.
Retailing consists of the sale of goods or merchandise, from a fixed location such
as a department store or kiosk, in small or individual lots for direct consumption by
the purchaser. Retailing may include subordinated services, such as delivery.
Purchasers may be individuals or businesses.
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9. In commerce, a retailer buys goods or products in large quantities from
manufacturers or importers, either directly or through a wholesaler, and then sells
smaller quantities to the end-user. Retail establishments are often called shops or
stores. Retailers are at the end of the supply chain. Manufacturing marketers see
the process of retailing as a necessary part of their overall distribution strategy.
What is retailing
 The sale of goods or commodities in small quantities directly to consumers.
 Buy, Sell & Move
Buy, Move & Sell
Having gone through some of the terminologies in retail and having seen a broad
outline of retail now let’s look into the 3 basic things, which govern the retail
market.
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10. 1. Buy
Buying would involve the following activities, which would mean setting the
guiding principles for all the merchandise decisions that a retailer makes. It should
reflect target market desires, retailer’s institutional type, market place positioning,
defined value chain, supplier capabilities, costs, competitors & product trends.
2. Move
It can be easily said but the processes that are involved in the “move” part are
complex but simple. From the product stage through the processing stage to the
packed ones the move stage would continue.
Various levels that involves in “move” part are: The buyer shortlists the product,
places the order. The vendors receives the order, process the same, packs and
send it to the distribution centre from where it reaches the store for the customer
to buy.
One of the fast picking up aspects of the logistic in India is the COLD CHAIN.
More and more organizations are looking for various aspects of cold chain to
ensure that the products where temperature plays a vital role is maintained and
sustained till such time the sale happens.
The Merchandising and Category management is another important function of
the retail industry. In this we have to opt for right product, place, quantity, quality,
mix, price and time. Each of the stores would operate on certain basic business
projection and all others will follow a typical pattern. For this pattern to be arrived,
the merchandise management plays a big role. The merchandise can make or
break an organization of its profitability.
When we say category management, it would amply the assortments of products
the customer sees as reasonable substitutes for each other with similar
characteristics. It also covers the process of managing merchandise in a retail
business with the objective of maximizing sales and profits of a category. The
category manager is also responsible for developing assortment plans for the
entire category, buying pricing and coordinating promotion.
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11. 3. Sell
Finally of the Buy, Move & Sell comes the selling part of it which involves a
running of a retail stores. Operations as it is known are the crucial functions,
which derive its strength from various other faculties.
The beginning of the day is done with the store being opened by the competent
person. The first activity to happen will be the housekeeping activities followed by
the staff scheduling. The morning’s meetings happen chaired by the head of the
store. The stock outs are established and the replenishments happen as the day
progresses, though it is suggested that replenishments of the stock should always
happen when the customer is not there. The head of the store usually inspects
any one or all the departments of the store, which is otherwise called the “FLOOR
WALK”.
The cashier would ensure that all the cashiers have enough and correct float
cash, whether the POS role, card swap machine and pen is in place or not. In
starting of the day head cashier gives all cashiers a sum of Rs.1500 as loan.
Having set everything in place, the store would then be opened for the customers.
The department’s heads in turn would brief their team on the achievements of the
previous day and set target of the day. During this brief any incidents worth
mention would also be discussed and the promotion offers, which are current, will
also be taken up. Orders will be placed for all the stock out SKU follows up will
also be done for those articles, which are delivered during the day. Cleaning of
the self and also ensuring that the stocks are kept as per the planogram are
checked. It’s just not the duties mentioned above but selling also happen
simultaneously.
At the end of day the process of concluding the activities is called the “END OF
THE DAY” activities. As the person who is in charge of closing the store goes
around checking whether the locks are in place or not; the high value
merchandise counters are properly secured; check for any person hidden in the
change rooms or cloaks rooms; the cashier would ensure that all the money that
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12. has been given as float tallies apart from the money that need to be submitted by
the respective cashiers.
There will be a checklist that needs to sign off together by the security as well as
the in charge for having checked for conformity at the end of the day
EVOLUTION OF RETAILING IN INDIA
In the early eighties “retailing’’ in India was synonymous with peddlers, vegetable
vendors, neighbourhood kirana stores (small grocery stores) or sole clothing and
consumer durable stores in a nearby town. These retailers operated in a highly
unstructured and fragmented market.
Very few retailers operated in more than one city. Before
1990, organized retailing in India was led by few
manufacturer owned retail outlets, mainly from the textile
industry, for example, Bombay Dyeing, Raymond’s,
S Kumar’s and Grasim. But, the Indian retail scenario
started changing in the nineties.
This was further augmented by the changing profile of the Indian consumers, who
were being greatly influenced by western lifestyles. Increasing wages of the
employees working in Greenfield sectors gave rise to a completely new group of
buyers with higher purchasing power.
Moreover, the entry of multinational brands also generated considerable
enthusiasm and interest among domestic retailers. This encouraged setting up of
retail chains by domestic retailers like Cotton World (Mumbai), Nirula’s (Delhi) and
the Viveks and Nilgiris in the south.
THE CONCEPT OF RETAILING
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13. Retailing is the interface between the producer and the individual consumer,
buying for personal consumption. This excludes direct interface between the
manufacturer and institutional buyers such as the government and other bulk
customers. The distribution of consumer products begins with the producer and
ends at the ultimate consumer. Between the producer and the consumer there is
a middleman---the retailer, who links the producers and the ultimate consumers.
A retailer is one who stocks the producer’s goods and is involved in the act of
selling it to the individual consumer, at a margin of profit. As such, retailing is the
last link that connects the individual consumer with the manufacturing and
distribution chain.
Retailing is defined as a conclusive set of activities or steps used to sell a product
or a service to consumers for their personal or family use. It is responsible for
matching the demands of individual consumers with supplies of all the
manufacturers. A retailer is a person, agent, agency, company, or organization
which is instrumental in reaching the goods, merchandise, or services to the
ultimate consumer. Retailers perform specific activities such as anticipating
customer’s wants, developing assortments of products, acquiring market
information, and financing.
A common assumption is that retailing involves only the sale of products available
in stores. But, it also includes the sale of services like those offered at a
restaurant, parlour, or by car rental agencies. The selling need not necessarily
take pl ace through a store. Retailing encompasses selling through mail, the
Internet, door-to- door visits; any channel that could be used to approach the
consumer.
Retailing has become such an intrinsic part of our everyday lives that it is often
taken for granted. The nations that have enjoyed the greatest economic and
social progress have been those with a strong retail sector.
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14. Why has retailing become such a popular method of conducting business? The
answer lies in the benefits a vibrant retailing sector has to offer – an easier access
to a variety of products, freedom of choice and higher levels of customer service.
To enter retailing is easy and to fail is even easier. Therefore, in order to
survive in retailing, a firm must do a satisfactory job in its primary role i.e., catering
to customers. Retailers’ cost and profit vary depending on their type of operation
and major product line. Their profit is usually a small fraction of sales and is
generally about 9-10%. Retail stores of different sizes face distinct challenges and
their sales volume influences business opportunities, merchandise purchase
policies, nature or promotion and expense control measures.
In today’s competitive environment retailers have redefined their role in general,
and in the value chain in particular. Retailers act as gatekeepers who decide on
which new products should find their way to the shelves of their stores. As a
result, they have a strong say in the success of the product or service launched
by a business firm. A product manager of household appliances claimed,
‘Marketers have to sell a new product several times, first within the company, then
to the retailer and finally to the user of the product.’
It is a well-established fact that manufacturers need to sell their products through
retail formats that are compatible with their business strategy, brand image, and
market profile in order to ensure a competitive edge. The role of retailers in the
present competitive environment has gained attention from manufacturers
because external parties such as market intermediaries and supplying partners
are becoming increasingly powerful. It is necessary for marketers of consumer
products to identify the need and motivations of their partners in the marketing
channel. This is especially true in the case of new products. The increasing
numbers of product categories followed by multiple brands in each category
complicate decision-making for both manufacturers and market intermediaries.
Retailers want to optimize sales within the limited shelf space, governed by their
individual sales philosophy.
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15. They undertake risk in selecting a portfolio of products or brands to offer to their
customers. Retailers have to make optimum selection of goods to be sold given
the following major concerns:
• Selling space available is relatively fixed and must return maximum profits.
If such space is occupied by merchandise that is not moving, it will not
result in profit. The retailer may have to resort to substantial price
reductions in order to get rid of the unsold stock.
• There is always the risk of non-performance in terms of quality, supplies
etc., which in turn harms the image of the retail outlet.
Retailing is a dynamic industry---constantly changing due to shifts in the needs of
the consumers and the growth of technology. Retail formats and companies that
were unknown three decades ago are now major forces in the economy.
Therefore, the challenges for retail managers the world over are increasing---they
must take decisions ranging from setting the price of a bag of rice to setting up
multimillion dollar stores in malls. Selecting target markets, determining what
merchandise and services to offer, negotiating with suppliers, training
salespeople---these are just a few of the many functions that a retail manager has
to perform on a perpetual basis. The world over retail business is dominated by
smaller family run chain stores and regionally targeted stores but gradually more
and more markets in the western world are being taken over by billion dollar
multinational conglomerates, such as Wal-Mart, Sears, McDonald’s, Marks and
Spencer. The larger retailers have managed to set up huge supply/distribution
chains, inventory management systems, financing pacts and wide-scale
marketing plans.
In the backdrop of globalization, liberalization and highly aware customers, a
retailer is required to make a conscious effort to position himself distinctively to
face the competition. This is determined to a great extent by the retail mix strategy
followed by a company to sell its products.
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16. CHARACTERISTICS OF RETAILING
Retailing can be distinguished in various ways from other businesses such as
manufacturing.
Retailing differs from manufacturing in the following ways:
• There is direct end-user interaction in retailing.
• It is the only point in the value chain to provide a platform for promotions.
• Sales at the retail level are generally in smaller unit sizes.
• Location is a critical factor in retail business.
• In most retail businesses services are as important as core products.
• There are a larger number of retail units compared to other members of
• the value chain. This occurs primarily to meet the requirements of
geographical coverage and population density.
Direct Interaction with Customers
Retail businesses have a direct interaction with end-users of goods or services in
the value chain. They act as intermediaries between end-users and suppliers
such as wholesalers or manufacturers. Therefore, they are in a position to
effectively communicate the response and changing preferences of the
consumers to the suppliers or sales persons of the company. This helps the
manufacturers and markets to redefine their product and change the components
of its marketing strategy accordingly. Manufacturers require a strong retail
network both for reach of the product and to obtain a powerful platform for
promotions and point-of-purchase advertising. Realizing the importance of
retailing in the entire value chain, many manufacturers have entered into retail
business by setting up exclusive stores for their brands. This has not only
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17. provided direct contact with customers, but has also acted as advertisement for
the companies and has provided the manufacturers with bargaining power with
respect to other retailers who stock their product. Retailing provides extensive
sales people support for products which are information intensive, such as in the
case of consumer durables.
Lower Average Amount of Sales Transaction
The average amount of sales transaction at retail point is much less in
comparison to the other partners in the value chain. Many consumers buy
products in small quantities for household consumption. Due to lower disposable
incomes, some consumer segments in India even buy grocery items on a daily
basis rather than a weekly or a monthly basis. Inventory management becomes a
challenge for retailers as a result of the many minor transactions with a large
number of customers. Hence, retailers must take care of determining average
levels of stock, order levels and keep a tight control on costs associated with each
transaction in the selling process. Credit verification, employment of personnel,
value-added activities like bagging, gift-wrapping and promotional incentives all
add up to the costs. One way to resolve this is for the retail outlets to be able to
attract the maximum possible number of shoppers.
Point-of-purchase Display and Promotions
A significant relevant chunk of retail sales comes from unplanned or impulse
purchases. Studies have shown that shoppers often do not carry a fixed shopping
list and pick up merchandise based on impulsive or situational appeal. Many do
not look at ads before shopping. Since a lot of retail products are low involvement
in nature, impulse purchases of the shopper is a vital area that every retailer must
tap into. Therefore, display, point-of-purchase merchandise, store layout and
Catalogues become important. Impulse goods like chocolates, snack foods and
magazines can sell much more quickly if they are placed in a high visibility and
high traffic location.
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18. FUNCTIONS IN RETAILING PROCESS
Retailers play a significant role as a conduit between manufacturers, wholesalers,
suppliers and consumers. In this context, they perform various functions like
sorting, breaking bulk, holding stock, as a channel of communication, storage,
advertising and certain additional services.
SORTING
Manufacturers usually make one or a variety of products and would like to sell
their entire inventory to a few buyers to reduce costs. Final consumers, in
contrast, prefer a large variety of goods and services to choose from and usually
buy them in small quantities. Retailers are able to balance the demands of both
sides, by collecting an assortment of goods from different sources, buying them in
sufficiently large quantities and selling them to consumers in small units.
The above process is referred to as the sorting process. Through this process,
retailers undertake activities and perform functions that add to the value of the
products and services sold to the consumer. Supermarkets in the US offer, on
and average, 15,000 different items from 500 companies. Customers are able to
choose from a wide range of designs, sizes and brands at just one location. If
each manufacturer had a separate store for its own products, customers would
have to visit several stores to complete their shopping. While all retailers offer an
assortment, they specialize in types of assortment offered and the market to
which the offering is made. Westside provides clothing and accessories, while a
chain like Nilgiris specializes in food and bakery items. Shoppers’ Stop targets the
elite urban class, while Pantaloons is targeted at the middle class.
BREAKING BULK
Breaking bulk is another function performed as part of retailing. The word retailing
is derived from the French word retailler, meaning ‘to cut a piece off’. To reduce
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19. transportation costs, manufacturers and wholesalers typically ship large cartons of
the product, which are then tailored by the retailers into smaller quantities to meet
individual consumption needs
HOLDING STOCK
Retailers also offer the service of holding stock for the manufacturers. They
maintain an inventory that allows for instant availability of the product to the
consumers. It helps to keep prices stable and enables the manufacturer to
regulate production. Consumers can keep a small stock of products at home as
they know that this can be replenished by the retailer and can save on inventory
carrying costs.
ADDITIONAL SERVICES
Retailers ease the process of change in ownership of merchandise by providing
services that make it convenient to buy and use products. Providing product
guarantees, after-sales service and dealing with consumer complaints are some
of the services that add value to the actual product at the retailers’ end. Retailers
also offer credit and hire-purchase facilities to the customers to enable them to
buy a product and pay for it later. Retailers fill orders, promptly process, deliver
and install products. Sales people are also employed by retailers to answer
queries and provide additional information about the displayed products.
The display itself allows the consumer to see and test products before actual
purchase. Retail essentially completes transactions with customers.
CHANNEL OF COMMUNICATION
Retailers also act as the channel of communication and information between the
wholesalers or suppliers and the consumers. From advertisements, salespeople
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20. and display, shoppers learn about the characteristics and features of a product or
services offered. Manufacturers, in turn, learn of sales forecasts, delivery delays,
and customer complaints. The manufacturer can then modify defective or
unsatisfactory merchandise and services.
TRANSPORT AND ADVERTISING FUNCTIONS
Small manufacturers can use retailers to provide assistance with transport,
storage, advertising and pre-payment of merchandise. This also works the other
way round in case the number of retailers is small
CLASSIFICATIONS OF RETAIL FORMATS
20

21. A.
B.
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22. TRENDS IN RETAIL FORMATS
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23. On account of liberalization, globalization and consumer preferences the retail
industry is continuously going through changes. While multinational retail chains
are looking for new markets, manufacturers are identifying, redefining, or evolving
new retail formats. The existing retail houses are also gearing up to face the
emerging competition from the organized sector and the changing outlook of the
consumers. For example, consumer spending is shifting from goods to services.
Accordingly the retailers too are fast adjusting to the changing consumer
preferences.
Consumers are not only looking for the core products or functional benefits from
the retailers but also the non-functional benefits, which need to be compatible with
their lifestyles. For example, most of the traditional eating joints in India such as
Haldiram, Bikaner and Sagar Ratna have revised their product offerings and
atmospherics on the lines of the multinational chains to compete with them and to
serve better, the changed expectations of the consumers.
Retailers can be classified according to their selling processes as store based
retailers or non-store retailers.
1. Store Based Retailers :
Store based retailers operate at fixed point-of-sale locations. Their stores are
located and designed to attract a high volume of walk-in customers. In general,
store based retailers offer a wide variety of merchandise and use mass-media
advertising to attract customers. They typically sell merchandise for personal or
household consumption, but sometimes they also serve business and institutional
clients.
Store based retailers can be further classified on the basis of various parameters
like:
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24. (A) Ownership
(B) Strategy mix
(C) Service vs. Goods retail mix
RETAIL IN DETAIL
The Indian Retail market is worth a whooping 930000 crores. If one has to divide
between the organized and unorganized sectors the major contribution comes
from the unorganized sector, which contributes close to 98% of the total retail
market. The balance of 2% amounts anywhere between 18-2000 cores.
The difference between organized and unorganized sectors in the US & some of
the Far East Asian countries are pretty low unlike in India. With the advent of
seasoned players in the field of retail in India, the gap is likely to be abridged in
the coming years.
The difference between them is 85:15 in favour of organized sector in the US and
81:19 in the favour of the organized sector in Taiwan.
The employment opportunities in retail are pretty high. But again the ratio of
organized and unorganized is skewed towards the unorganized sector. While the
organized retail sectors deploys 500000 people & the unorganized sector deploys
close to 80 times the workforce.
Factors that influence the growth in retail:
The DINK/HINK families, working women, working parents and the rising
disposable income has contributed to the growth of Retail across. The middle-
income group is the fastest growing segment in the country today. Further the
electronic media is also aiding the growth of the Retail industry.
To summarize the top 6 factors that drive the growth of the retail industry in India
would be as follows:
 The Demographics
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25.  Lifestyles
 Needs and Desires
 Shopping Attitudes and Behaviour
 Retailers action
 Environmental Factor
These six factors clubbed with a co-coordinated logistics make the sale happen.
As in any industry there is a social commitment also to be fulfilled. These can be
recapitulated as under:
 Quality products
 Competitive prices
 Wide range to choose from
 Employment opportunities that are created
 The economy would experience sea of change and
 Would mean a WIN - WIN situation to everyone.
Support Functions:
The entire operation is possible with the help of a support team. This support
team consists of the following:
Human Relation-Involves itself in recruitment, training and welfare apart from
their
regular activities
Good Receiving-This department is responsible not just for the receipt of goods
but also checking for their conformity and returns goods to the suppliers as need
arises.
Maintenance-The entire stores furniture and fixtures are taken care of by the
maintenance team
Accounts- the department, which receives all the cash, charge slips and other
types of tenders; keeps a tag on the local store expenditure and also monitors any
deviation in the transactions.
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26. Housekeeping- Mostly it’s an outsourced agency, which does the work. They
keep the premises clean and tidy at all levels.
Security-They are responsible for safeguarding men and material of the
organization.
VM-This department maintains the displays and the signage across the stores.
CSD-Otherwise known as the customer service desk takes care of the customer
complaints and issuance of merchandise credit and taking care of the loyalty.
RETAIL TERMINOLOGIES-
Alike any other industry the retail industry also has a wide range of terminologies,
which are in use on a day-to-day basis. Few samples of them would include the
following:
Till - The cash point
Tender - The type of payment the customer is making
SKU - Stock keeping unit
Merchandise Credit - Credit note
Assortment - Range of products and so forth
Maximum Bay Quantity - It is the maximum quantity of each product, which can
be placed on each shelf.
Maximum Display Quantity – It is the number of SKUs, which can be directly
seen by the customer in the front side.
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27. Retail types-
There are three major types of retailing. The first is the market, a physical location
where buyers and sellers converge. Usually this is done on town squares,
sidewalks or designated streets and may involve the construction of temporary
structures (market stalls). The second form is shop or store trading. Some shops
use counter-service, where goods are out of reach of buyers, and must be
obtained from the seller. This type of retail is common for small expensive itms
(e.g. jewelry) and controlled items like medicine and liquor. Self-service, where
goods may be handled and examined prior to purchase, has become more
common since the Twentieth Century. A third form of retail is virtual retail, where
products are ordered via mail, telephone or online without having been examined
physically but instead in a catalog, on television or on a website. Sometimes this
kind of retailing replicates existing retail types such as online shops or virtual
marketplaces such as eBay or Amazon.
Retail pricing
The pricing technique used by most retailers is cost-plus pricing. This involves
adding a markup amount (or percentage) to the retailers cost. Another common
technique is suggested retail pricing. This simply involves charging the amount
suggested by the manufacturer and usually printed on the product by the
manufacturer.
In Western countries, retail prices are often so-called psychological prices or odd
prices: a little less than a round number, e.g. $6.95. In Chinese societies, prices
are generally either a round number or sometimes a lucky number. This creates
price points.
Often prices are fixed and displayed on signs or labels. Alternatively, there can be
price discrimination for a variety of reasons. The retailer charges higher prices to
some customers and lower prices to others. For example, a customer may have
to pay more if the seller determines that he or she is willing to. The retailer may
conclude this due to the customer's wealth, carelessness, lack of knowledge, or
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28. eagerness to buy. Price discrimination can lead to a bargaining situation often
called haggling — a negotiation about the price. Economists see this as
determining how the transaction's total surplus will be divided into consumer and
producer surplus. Neither party has a clear advantage, because the threat of no
sale exists, whence the surplus vanishes for both.
Retailers who are overstocked, or need to raise cash to renew stocks may resort
to "Sales", where prices are "marked down", often by advertised percentages -
"50% off" for example.” Sales" are often held at fixed times of the year, for
example January sales, or end-of-season sales, or Blue Cross Sale.
Top Retailer Worldwide
Rank Retailer Home Country
1 Wal-Mart Stores, Inc. U.S.A.
2 Carrefour Group France
3 The Kroger Co. U.S.A.
4 The Home Depot, Inc. U.S.A.
5 Metro Germany
RETAIL SECTOR IN INDIA
As the corporate – the Piramals, the Tata, the Rehears, ITC Ltd, S.Kumar’s, RPG
Enterprises, Shopper’s Stop, Pantaloons, Reliance Retail, Vishal Mega Mart,
Aditya Birla Group, Landmark Group, True Mart race to revolutionize the retailing
sector, retail as an industry in India is coming alive.
Across the country, retail sales in real terms are predicted to rise more rapidly
than consumer expenditure during 2003-08. The forecast growth in real retail
sales during 2003- 2008 is 8.3% per year, compared with 7.1% for consumer
expenditure. Modernization of the Indian retail sector will be reflected in rapid
growth in sales of supermarkets, departmental stores and hyper marts. Sales
from these large-format stores are to expand at growth rates ranging from 24% to
28

29. 49% per year during 2003-2008, according to a latest report by Euro monitor
International, a leading provider of global consumer-market intelligence.
A. T. Kearney Inc. places India 6th on a global retail development index. The
country has the highest per capita outlets in the world - 5.5 outlets per 1000
population. Around 7% of the population in India is engaged in retailing, as
compared to 20% in the USA.
The factors responsible for the development of the retail sector in India can
be broadly summarized as follows:
 Rising incomes and improvements in infrastructure are enlarging consumer
markets and accelerating the convergence of consumer tastes.
 Looking at income classification, the National Council of Applied Economic
Research (NCAER) classified approximately 50% of the Indian population
as low income in 1994-95; this has declined to 17.8% in 2006-07.
 Liberalization of the Indian economy which has led to the opening up of the
market for consumer goods has helped the MNC brands like Kellogg,
Unilever, Nestle, etc. to make significant inroads into the vast consumer
market by offering a wide range of choices to the Indian consumers.
 Shift in consumer demand to foreign brands like McDonalds, Sony,
Panasonic, etc.
The internet revolution is making the Indian consumer more accessible to the
growing influences of domestic and foreign retail chains. Reach of satellite T.V.
channels is helping in creating awareness about global products for local markets.
About 47% of India’s population is under the age of 25; and this will increase to
55% by 2015.
This young population, which is technology-savvy, watch more than 50 TV
satellite channels, and display the highest propensity to spend, will immensely
contribute to the growth of the retail sector in the country. As India continues to
29

30. get strongly integrated with the world economy riding the waves of globalization,
the retail sector is bound to take big leaps in the years to come.
The Indian retail sector is estimated to have a market size of about $ 180 billion;
but the organized sector represents only 3% share of this market. Most of the
organized retailing in the country has just started recently, and has been
concentrated mainly in the metro cities.
India is the last large Asian economy to liberalize its retail sector. In Thailand,
more than 40% of all consumer goods are sold through the super markets and
departmental stores. A similar phenomenon has swept through all other Asian
countries. Organized retailing in India has a huge scope because of the vast
market and the growing consciousness of the consumer about product quality and
services.
A study conducted by Fitch, expects the organized retail industry to continue to
grow rapidly, especially through increased levels of penetration in larger towns
and metros and also as it begins to spread to smaller cities and B class towns.
Fuelling this growth is the growth in development of the retail-specific properties
and malls. According to the estimates available with Fitch, close to 25mn sq. ft. of
retail space is being developed and will be available for occupation over the next
36-48 months. Fitch expects organized retail to capture 15%-20% market share
by 2010.
RETAILING FORMATS IN INDIA
Malls: The largest form of organized retailing today. Located mainly in metro
cities, in proximity to urban outskirts. Ranges from 60,000 sq ft to 7, 00,000 sq ft
30

31. and above. They lend an ideal shopping experience with an amalgamation of
product, service and entertainment, all under a common roof. Examples include
Shoppers Stop, Pyramid, and Pantaloon.
Specialty Stores: Chains such as the Bangalore based Kids Kemp, the Mumbai
books retailer Crossword, RPG's Music World and the Times Group's music chain
Planet M, are focusing on specific market segments and have established
themselves strongly in their sectors.
Discount Stores: As the name suggests, discount stores or factory outlets, offer
discounts on the MRP through selling in bulk reaching economies of scale or
excess stock left over at the season. The product category can range from a
variety of perishable/ non perishable goods.
Department Stores: Large stores ranging from 20000-50000 sq. ft, catering to a
variety of consumer needs. Further classified into localized departments such as
clothing, toys, home, groceries, etc.
Department Stores: Departmental Stores are expected to take over the apparel
business from exclusive brand showrooms. Among these, the biggest success is
K Raheja's Shoppers Stop, which started in Mumbai and now has more than
seven large stores (over 30,000 sq. ft) across India and even has its own in store
brand for clothes called Stop!.
Hyper marts/Supermarkets: Large self service outlets, catering to varied
shopper needs are termed as Supermarkets. These are located in or near
residential high streets. These stores today contribute to 30% of all food & grocery
organized retail sales. Super Markets can further be classified in to mini
supermarkets typically 1,000
31

32. INTRODUCTION TO THE ORGANIZATION
INTRODUCTION TO THE ORGNIZATION
Reliance group-
Founder Chairman of Reliance Group
"Growth has no limit at Reliance. I keep revising my vision. Only when you can
dream it, you can do it."
32

33. Dhirubhai H. Ambani
Founder Chairman Reliance Group
December 28, 1932 - July 6, 2002
Shri Dhirubhai Ambani was an exceptional human being and an outstanding
leader. He dared to dream on a scale unimaginable before in Indian industry. His
life and achievements prove that backed by confidence, courage and conviction,
man can achieve the impossible. From a humble beginning, he went on to create
an enviable business empire within a span of just 25 years. The US$ 54 billion
Reliance Group is a living testimony to his indomitable will, single-minded
dedication and an unrelenting commitment to his goals.
The Group's track record of consistent growth is unparalleled in Indian industry
and perhaps internationally too. Today, the Group's turnover represents nearly 3
percent of India's GDP.
The corporate philosophy he followed was short, simple and succinct - "Think big.
Think differently. Think fast. Think ahead. Aim for the best". He inspired the
Reliance team to do better than the best - not only in India but in the world. He
was probably the first Indian businessman to recognize the strategic significance
of investors and discover the vast untapped potential of the capital markets and
canalise it for the growth and development of industry. He was supremely
confident that finance
33

34. would never be a constraint in executing his projects because, as he said proudly,
Indian investors would provide him with the necessary resources. For him, his
people were his most important asset.
He scouted around for the best and most talented professionals, nurtured them
and continuously propelled them to aim for still higher goals. These highly
motivated people comprise the core of what he named: "The Reliance Family".
Shri Dhirubhai Ambani visualized the growth of Reliance as an integral part of his
grand vision for India. He was convinced that India could become an economic
superpower within a short period of time and wanted Reliance to play an
important role in realizing this goal.
The Bhagavad-Gita states, "The actions of a great man are an inspiration for
others. Whatever he does becomes a standard for others to follow." This certainly
applies to Shri Dhirubhai Ambani.
The Reliance Group 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 22 billion. The flagship company,
Reliance Industries Limited, is a Fortune Global 500 company and is the largest
private sector company in India.
Backward vertical integration has been the cornerstone of the evolution and
growth of Reliance. Starting with textiles in the late seventies, Reliance pursued a
strategy of backward vertical integration - in polyester, fibber intermediates,
plastics,
petrochemicals, petroleum refining and oil and gas exploration and production - to
be fully integrated along the materials and energy value chain.
The Group's activities span exploration and production of oil and gas, petroleum
refining and marketing, petrochemicals (polyester, fibber intermediates, plastics
and chemicals), textiles and retail.
34

35. Reliance enjoys global leadership in its businesses, being the largest polyester
yarn and fibber producer in the world and among the top five to ten producers in
the world in major petrochemical products.
The Group exports products in excess of USD 7 billion to more than 100 countries
in the world. There are more than 25,000 employees on the rolls of Group
Companies. Major Group Companies are Reliance Industries Limited (including
main subsidiaries Reliance Petroleum Limited and Reliance Retail limited), Indian
Petrochemicals Corporation Limited and Reliance Industrial Infrastructure Limited.
Mr. Mukesh Ambani
Chairman & Managing Director
Mr. Mukesh D. Ambani, age 49, is a Chemical Engineer from the University of
Bombay and pursued MBA from Stanford University, USA. He is the son of Late
Mr. Dhirubhai H. Ambani, Founder Chairman of the Company.
35

36. Mukesh Ambani is the chairman, managing director and the largest shareholder
of Reliance Industries, India's largest private sector company and a Fortune 500
Company. His personal stake in Reliance Industries is 48%. His wealth is US$
20.1 billion as of March 2007, making him the world's 14th richest person and the
second richest person in India. Mukesh and younger brother Anil are sons of the
late founder of Reliance Industries.
Mukesh Ambani joined Reliance in 1981 and initiated Reliance's backward
integration from textiles into polyester fibers and further into petrochemicals. In
this process, he directed the creation of 60 new, world-class manufacturing
facilities involving diverse technologies that have raised Reliance's manufacturing
capacities from less than a million tones to twelve million tones per year.
Mukesh Ambani is also steering Reliance's initiatives in a world scale, offshore,
deep water oil and gas exploration and production program, a pan-India
petroleum retail network involving 5,800 outlets and a research-led life sciences
initiative covering medical, plant and industrial biotechnology.
Mr. Mukesh D. Ambani joined Reliance in 1981, initiated Reliance’s backward
integration from textiles into polyester fibbers, and further into petrochemicals. In
this process, he directed the creation of several new and large world-class
manufacturing facilities involving diverse technologies that have raised Reliance's
petrochemicals manufacturing capacities from less than a million tones to over
thirteen million tones per year. He directed and led the creation of the world's
largest grassroots petroleum refinery at Jamnagar, India, with a present capacity
of 660,000 barrels per day
(33 million tones per year) integrated with petrochemicals, power generation and
port and related infrastructure. He had set up the Reliance's communications
technology initiative that is the largest and most complex information and
communications technology initiative in the world.
Mr. Ambani is steering Reliance's initiatives in a world scale, offshore and
onshore oil and gas exploration and production program, creation of a pan-India
petroleum retail network and setting up of a new export oriented refinery through
36

37. RIL's subsidiary Reliance Petroleum Limited (RPL) with a capacity of
approximately 580,000 barrels per stream day integrated with a 0.9 MMTPA
polypropylene plant.
Mr. Ambani's Achievements include:
• Conferred 'ET Business Leader of the Year' Award by The Economic
Times (India) in the year 2006.Had the distinction and honour of being the
co-chair at the World Economic Forum Annual Meeting 2006 in Davos,
Switzerland.
• Ranked 42nd among the 'World's Most Respected Business Leaders' and
second among the four Indian CEOs featured in a survey conducted by
Price water house Coopers and published in Financial Times, London,
November 2004.
• Conferred the World Communication Award for the 'Most Influential Person
in Telecommunications in 2004' by Total Telecom, October 2004.
• Chosen 'Telecom Man of the Year 2004' by Voice and Data magazine,
September 2004.
• Ranked 13th in Asia's Power 25 list of 'The Most Powerful People in
Business' published by Fortune magazine, August 2004. 30 Growth is Life
• Conferred the 'Asia Society Leadership Award' by the Asia Society,
Washington D.C., USA, May 2004.
• Ranked No.1 for the second consecutive year, in The Power List 2004
published by India Today, March 2004.
• Mr. Mukesh D. Ambani is the Chairman of Indian Petrochemicals
Corporation Limited, Reliance Petroleum Limited and Reliance Retail
Limited. He is member of the Shareholders'/ Investors' Grievance
Committee of the Company.
Major Subsidiaries & Associates:-
The Reliance Industries Limited is the flagship company of Reliance Group which
has ownership interest in the following subsidiaries & associates
37

38. Major Subsidiaries-
Reliance Petroleum Limited
Reliance Netherlands BV (including Trevira)
Reliance Retail Limited
Ranger Farms Private Limited
Retail Concepts and Services Private Limited
Reliance Retail Insurance Broking Limited
Reliance Dairy Foods Limited
Reliance Retail Finance Limited
RESQ Limited
Reliance digital Retail Limited
Reliance Service Solutions Limited
Reliance Jamnagar Infrastructure Limited
Reliance Haryana SEZ Limited
Reliance Industrial Investment & Holdings Limited
Reliance Ventures Limited
Reliance Strategic Investments Limited
Reliance Exploration & Production - DMCC
Reliance Industries (Middle East) DMCC
RELIANCE RETAIL LIMITED-
Growth through Value Creation Reliance is gearing up to revolutionize the
retailing industry in India. Towards this end, they are aggressively working on
introducing a pan-India network of retail outlets in multiple formats. A world class
shopping environment, state of art technology, a seamless supply chain
infrastructure, a host of unique value-added services and above all, unmatched
customer experience, is what this initiative is all about.
The retail initiative of Reliance will be without a parallel in size and spread and
make India proud. Ensuring better returns to Indian farmers and manufacturers
and greater value for the Indian consumer, both in quality and quantity, will be an
38

39. integral feature of this project. By creating value at all levels they will actively
endeavour to contribute to India's growth.
The project will boast of a seamless supply chain infrastructure, unprecedented
even by world standards. Through multiple formats and a wide range of
categories, Reliance is aiming to touch almost every Indian customer and
supplier.
The magnitude and strategy of RIL's retail foray is sure to have far reaching social
and economic implications by directly influencing the lifestyles of hundreds of
millions of consumers, besides indirectly impacting the livelihood of tens of
millions. This indirect impact will be on those engaged in a wide range of
economic activities including farming, consumer goods manufacturing, and a host
of myriad other services that bring hundreds of categories of goods and services
from the producers to the final consumers.
Business analysts feel that Mukesh Ambani's advantage is his huge financial
strength coupled with a track record of implementing mega projects in record
time, at globally competitive capital costs. Mukesh Ambani has learned to dream
big from his great visionary father, the late Dhirubhai H Ambani, who is
acknowledged as one of India's tallest, most ambitious and successful business
leaders for his sharp business acumen and skilled people management ability.
The announced retail project is any indication; Mukesh Ambani has indeed
inherited all these skills from his father. Re-writing the rules of business has been
the forte of Dhirubhai and Mukesh is attempting the same in retail.Quite clearly,
RIL is now all set and ready to conquer the organized retail domain. The Indian
retail scene is now going to witness some real fast-paced action, with the
consumer – as always – having the best deal. So, as they say, let the action
begin!
Reliance Digital:
39

40. Mukesh Ambani's Reliance Industries Ltd launched a second group of retail
stores called RELIANCE DIGITAL, which will sell consumer electronics and other
household appliances. Reliance Digital Store has been launched five months after
the company first introduced its fresh food format outlets, Reliance Fresh, that
stock its own label of groceries under the brand, Reliance Staple.
The first of the stores was unveiled at the Shipra Mall at Indirapuram in
Ghaziabad on the outskirts of the national capital New Delhi April 24 Reliance
Retail Ltd, the mega retail venture from the Mukesh Ambani stable, marked its
foray into speciality retail with the launch of its first consumer durable outlet,
Reliance Digital, in the NCR region. Reliance is planning to open a total of 150
Reliance Digital stores across 70 cities with investment of Rs 1,000 corer over the
next three to four years.
One-stop shops: The stores size approx 15,000-30,000 sq. ft, will function as
one-stop shops for all technological solutions in the consume durables and IT
telecommunications segment to cater to the tastes and requirement of customers.
Reliance Digital stores would sell everything from TV sets, home theatres,
refrigerators, cooking ranges, dishwashers to computers and mobile phones from
across brands. Each store would be set up at an investment of Rs4 to Rs7 crore
and also provide after-sales services On private labels, RELIANCE DIGITAL has
on offer of more than 4,000 products from over 150 brands. As part of their overall
business strategy they will have their own consumer durable private labels, but
not immediately. With its own labels in the Consumer durables segment, Reliance
Retail will be fighting for a share of the $5.6-billion domestic market, which is
dominated by South Korean brands LG and Samsung and Japan's Sony.
The domestic consumer electronics market is growing by 10 per cent annually
and is split between imported South Korean brands such LG and Samsung and
Japan’s Sony on the one hand and Indian market leaders like Videocon and BPL.
40

41. The prices being offered at the Reliance Digital stores will be most competitive
and if any consumer finds a cheaper product in the market within 30 days they will
not hesitate to match the offer. Besides, the stores will also provide pre- and post
sales services through its in-house Reliance cares Q vertical. The stores will also
offer finance schemes for consumers for which the retail majors are in talks for tie-
ups with several financial institutions, City Financial being one of them.
Reliance Industries launched its first retail format called Reliance Fresh in
Hyderabad. Spread over 2,000-5,000 sq ft, 11 such Reliance Fresh
neighbourhood convenience stores were come up in the city. These stores sell
fresh fruit and vegetables besides staples (dal, atta, rice) as well the company’s
in-house brand Reliance Select and Reliance Value.
Reliance is gearing up to revolutionize the retailing industry in India. Towards this
end, we are aggressively working on introducing a pan-India network of retail
outlets in multiple formats. A world class shopping environment, state of art
technology, a seamless supply chain infrastructure, a host of unique value-added
41

42. services and above all, unmatched customer experience, is what this initiative is
all about.
The retail initiative of Reliance will be without a parallel in size and spread and
make India proud. Ensuring better returns to Indian farmers and manufacturers
and greater value for the Indian consumer, both in quality and quantity, will be an
integral feature of this project. By creating value at all levels, we will actively
endeavour to contribute to India's growth.
The project will boast of a seamless supply chain infrastructure, unprecedented
even by world standards. Through multiple formats and a wide range of
categories, Reliance is aiming to touch almost every Indian customer and
supplier.
The Fresh stores at Hyderabad are part of a pilot project, which will help company
understand customer needs. The pilot for this format will be taken too many other
cities over the next few months. Next on the company’s list are bigger cities
including Delhi and Mumbai.RIL intends to invest close to Rs 25,000 crore over
the next five years in the retail business. The company plans to establish 4,000
retail outlets across various formats by then, and is eyeing sales of Rs 1, 00,000
crore over the 5-year period from the retail business.
Besides Reliance Fresh, the company also plans to launch larger format stores
called “Feel Fresh Plus” which will be spread over 10,000-15,000 sq ft. The Fresh
Plus stores will stock fruit and vegetables as Well as apparel, consumer
electronics, FMCG items and even medicines. From Hyderabad, these stores will
travel to Mumbai and Delhi where Reliance has identified up to 80 locations each.
But even as the retail debut kicks off with fruit and vegetables, it seems the
company is doing a rethink on whether to get into the larger formats such as
hypermarkets and supermarkets. These two formats require over 1 lakh sq ft of
space and may not come up at prime city locations. Instead, Reliance is
contemplating tapping alterative sites such as the SEZs for opening hypermarket.
42

43. The strategy is to open one Reliance Fresh store in a radius of three to four km to
serve 1,000-2,000 families. This means about 30-40 stores in the major metros.
Reliance Fresh is selling vegetables and fruits sourced from farmers through the
company’s agri hubs.
Reliance Fresh would carry fresh fruits and vegetables, staples, top-up grocery,
non-food items and dairy products and a whole lot of other categories at very
competitive prices. All the stores opened have an average area of about 1,800 sq
ft and an average of about 20 sales associates attending to customers in each
store open from 8 a.m. to 10 p.m. on all seven days of the week.
A targeted sales turnover of Rs 90,000 crore (US$ 20 billion) by 2010 with a
planned investment of Rs 30,000 crore over the next five years – that's the retail
vision of Mukesh Ambani and his RIL retail team. RIL's retail venture seems all
set to achieve the status of being the flag-bearer of India Retail Inc, and that too in
record time!
Culling information from all possible sources, Images F&R Research attempts to
put the Reliance Retail jigsaw in order and see how the concept and strategy
differentiates from the existing competition, how it impacts the intermediaries and
consumers, and more interestingly, how will it stand up to the real competition
from global retail powerhouses like Wal-Mart, Carrefour, Target, Metro, Sears and
Tesco that are eager to enter the Indian retail arena once the FDI barrier is lifted.
Read on for the full story…It's been in the news for quite some time now. Earlier,
about a year ago, it was only whispered in close industry circles. Slowly the
whispers become louder, and the word gained ground that India's largest private
sector company, Reliance Industries Limited (RIL), is entering the Indian retail
sector in a real big way. But with virtually nothing coming from anyone in the know
inside RIL about their retail plans, this has to be one of the most closely guarded
secrets of India's corporate story.
43

44. Amidst all sorts of speculations in the media circles about RIL's intended retail
foray, the word finally came out on January 23, 2006, when the Mukesh Ambani-
controlled Reliance Industries Limited presented the mega retail initiative plans to
its board of directors who subsequently gave their consent to pursue the retail
business through a wholly-owned subsidiary of the company – likely to be
christened Reliance Retail Limited. The Reliance Retail blueprint envisages
nation-wide chains of hypermarkets, supermarkets, discount stores, department
stores, convenience stores and specialty stores, in about 800-odd cities and
towns across the length and breadth of India. The RIL board of directors approved
the initial phase of the retail foray at an estimated cost of Rs 3,350 crore (US$
750 million).
That was big news for both the national and international media, which went all
agog again with intense speculation. Giving full respect to the importance of this
announcement, more than one leading international daily – chiefly, The Financial
Times – gave this news a front-page treatment, speculating (like many others)
that this investment could just be an initial trance of a much larger commitment
from Reliance Industries towards the retail project.
Just how big and grand this investment is for the Indian retail sector can be
gauged by the simple fact that the entire Indian retail sector is estimated to be at
Rs 1050,000 crore (US$ 233 billion) – growing at five per cent annually – and the
estimated share of organised retail is only Rs 36,000 crore (US$ 8 billion), at
present, albeit growing at over 30 per cent every year.
That makes Reliance Retail's proposed investments equivalent to about 10 per
cent of India's organised retail market – such a level of investment in the Indian
retail arena has been unprecedented in the country's most promising sunrise
industry – retail So much so, projections by the Images-KSA India Retail Report
2005 of an organised retail market of Rs 100,000 crore (US$ 22 billion) by 2010
now appears conservative, likely to be achieved much earlier than 2010.
44

45. If Indian retail was lacking a whole-hearted and full-blooded thrust from a big and
large corporate house (apart from the lukewarm investments made by the Tatas
and ITC), it is now all set to change. Mukesh Ambani, who has been nourishing
retail ambitions for quite some time now, has clearly positioned himself in to the
role of redefining the entire landscape of Indian retail.RIL Set To Become World's
Largest Real Estate Property Owner. What is even more interesting is that
Reliance Industries Limited will far out-surpass the Catholic Church in becoming
the world's largest owner of real-estate property by virtue of its mega Retail and
Satellite Township plans, in the next two to three years!
Now what exactly does this mega retail plan portend for the Indian retail sector?
In fact, what exactly are RIL's plans, in terms of retail strategy? How will RIL
differentiate its stores and concept from existing players who have already moved
into the retail space earlier, and have already established a good foothold? How
will this impact the existing retail majors – the likes of Pantaloon Retail, Trent
India, Shoppers' Stop, RPG, etc? How will the consumer benefit from RIL's
venture and how will intermediaries like traders, suppliers and farmers all along
the supply chain network benefit? What will be the USP of Reliance Retail?
And, more significantly, how will this impact the major international retailers who
plan to enter the Indian retail market? Reliance Retail is in fact giving India for the
first time a real feel of the scale at which these global retail powerhouses actually
operate, it is preparing India to stand up to the ensuing competition and in the
process, allow consumers the full benefits of modern retail.
Retail Will Become Core Business of RIL-
Reliance Industries Limited is the largest and one of the fastest growing private
sector companies in India, with business activities encompassing almost all major
45

46. growth sectors of the Indian economy. The company manufactures and markets a
wide range of products with market Leadership in almost all its businesses.
All of Reliance Group production and services ventures have one common feature
– global scale operations employing state-of-the-art technology in all fields. The
company is truly emerging as a well diversified conglomerate with global
competence in technology, management and financial capabilities to meet the
needs of a rapidly growing Indian market. With domestic market shares ranging
from 40-80 per cent, RIL is also ranked among the top 10 producers globally, for
all its major product segments. It is one of India's largest business Conglomerates
with total revenues of Rs 1, 00,650 crore (US$ 22.6 billion).
It is being speculated within the industry that the ROIs made by RIL in the retail
space will far out-shadow its existing core flagship businesses – and very soon
retail will become the core business for the Mukesh Ambani-controlled Reliance
Empire.
Future Planning:-
Company plans to have a pan-India presence by opening stores in 784 cities and
600 small towns and achieve a target of Rs.10 billion revenue by 2010 by which
time it hopes to complete Phase 1. In the first phase company plans to employ
500,000 people. It is following an all-inclusive model giving the right affordability
across all income groups. Company is aggressively partnering farmers by
following a farm-to-fork strategy in its supply chain management model and
ensures that it delivers fresh fruits and vegetables at affordable prices to
consumers. Currently, Reliance Fresh has over 100 stores across the country.
Reliance Fresh also offers a membership and loyalty programme - Reliance One -
to deliver customized benefits to frequent shoppers. Currently, it has 200,000
loyalty customers across Hyderabad, Jaipur and Chennai.
Reliance Retail, the 100% subsidiary of Reliance Industries, on October 28
unveiled Reliance Fresh, the first of its multi-format retail foray involving an
46

47. investment of Rs 25,000 crore.Reliance Fresh is the company’s brand for
neighbourhood fresh-food outlets. It will also sell kitchen equipment and other
edibles.Besides, it has planned hypermarkets, supermarkets, discount stores,
department stores, convenience stores and specialty stores, to be unveiled
shortly.
The Reliance Fresh supermarket chain is RIL’s Rs 25,000 crore venture and it
plans to add more stores across different geographies, and eventually have a
pan-India footprint by year 2011.
The super marts will sell fresh fruits and vegetables, staples, groceries, fresh juice
bars and dairy products and also will sport a separate enclosure and supply-chain
for non-vegetarian products.
Currently, selling through company-owned stores currently totals just $8 billion in
India. Industry estimates say that the country’s retail industry is worth $300 billion,
that is about Rs 13, 50,000 crore. This stands a chance to blossom to $427 billion
in the next four years. Organized retail accounts for just over Rs 35,000 crore.
Reliance Fresh bids to tap the potential for organized retail in the country.
Point of Sale Software System-
Retail Shoreline is an open-standards, fully integrated and cross-functional Point
of Sale (POS) and store management software system. Its uniqueness is in the
functionality, world-wide install base, and hardware independence.
Multi-Concept Functionality that delivers a fully integrated POS solution to meet
all of your business needs
Open by Design supports industry standards and is hardware independent plus
integration with other third-party retail applications is straightforward, affordable
and low risk
Advanced Promotion Features enable a single point of update for pricing and
promotions across all retail formats
Graphical, Easy to Use flexible intuitive user interface, touch-screen capabilities
and even graphical customer screens, means that cashier training is minimal and
customer interaction is effortless
47

48. Quick Service Deli, provides a powerful method of managing fresh-made
sandwiches and deli items. Fuel provides full support for operating an onsite fuel
station, supporting a full range of fuel station and supermarket services
Retalix BackOffice is tightly integrated with Retalix Store Line, and offers POS
item management and reporting, DSD receiving, label and sign printing, handheld
RF communications, host communications and in-store ordering
Retalix Pocket Office is a mobile platform that enables users to manage store
operations anywhere in the store, taking the application to the business decision
point, while on the sales floor or receiving dock.
Retalix Store Line is installed in more than 250,000 POS terminals worldwide,
and is the selected POS solution of top-tier retailers such as Tesco, Publix,
Sainsbury's, Woolworths Australia, Delhaize Group, Hy-Vee, and the A.S. Watson
Group.
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.
48

49. Farmers
Collection centre
Reliance Fresh Distribution centre
49

50. INTRODUCTION TO THE TOPIC
INTRODUCTION TO THE TOPIC
Reliance Fresh Loyalty Programme
Nowadays it is important to earn loyalty of investors, employees and customers.
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51. The essence of customer loyalty, dimensions of customer loyalty, mission, goals,
tasks of customer loyalty as well as disputes a process of developing customer
loyalty programmed: choice of a target group, grounding the structure
implementing customer loyalty programmed, registration of participants and type
of the programmed, collection of information about customers and Storing, ways
to communicate with customers, establishment of privileges to participants of the
loyalty programmed and evaluation of the programmed success.
Introduction
Loyalty demonstrates person’s disposition to brand of goods (service),
supermarket, category of goods, a certain activity. An enterprise seeks loyalty of
investors, employees and customers in order to consolidate its position in the
market.
There is a linkage between these participants of the business. The growth of
revenues and share of the market enables to attract potential customers or
customers of competitors. The growth of the market share stimulates more rapid
expansion of the enterprise and its competitive advantage. It makes attracting of
investors easier.
A prosperous enterprise can offer personnel good pays for their job and create
conditions for their career. It helps to keep the best employees who affect the
results of reducing costs, improving quality, and increasing productivity. The
higher productivity is one of the conditions to pay larger salaries to the
employees, to bankroll trainings or other programmers stimulating loyalty of
employees. Enterprises create loyalty programmers in order to develop loyalty
and to reward.
It is effective marketing instrument helping to create such a situation where all
interested sides win. Customer loyalty programmers are more frequent. Loyalty
programmes allow enterprises to understand Their customers better as well as to
satisfy their needs and expectations.
Customer loyalty programmes relate enterprise and customers, initiate permanent
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52. dialogue between them, and increase satisfaction of customers also they are a
source of different information about customers, they mitigate potential shift of the
best customers to competitors, and help to cooperate with partners and to keep
terms with competitors .
The studies of loyalty programmes got activated in Western countries in the last
decade of the XX century. Effect of loyalty programmes and factors of success
were analyzed in fields of automobile, packer goods, finance, airlines, retail, and
telecommunication services.
In Lithuania there are not many scientific publications related with methodology of
developing loyalty programmes, their application advantages, and arising
problems yet. We can pontifically assume that practice of developing loyalty
programmes is more advanced than theory. Therefore, it is necessary to find an
answer to the question how Customer loyalty programme should be developing
that it will be useful for both enterprise and customer.
Dimensions of customer loyalty-
Customer loyalty means the trust that enterprise gains making and developing
mutual useful relationships with customer. Referring to Lovelock and Wright
(1999), loyalty is customer’s voluntary decision to maintain long-term relations
with the enterprise. Successful long-term relations that lead to loyalty help to
reduce a risk and uncertainty arising from the consumption that nowadays gets
more and more complex. Customer will be loyal if he or she gains more benefit
than other enterprise can offer. If enterprise, its goods or services disappoint
customer or suggestion of other enterprise is more valuable to customer, the
probability that customer will give
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53. Preference to competitor of the enterprise will increase. Discussions on different
customer loyalty dimensions bringing influence on its management take place in
the scientific literature. The source of loyalty studies was a form of customer
behaviour Hard-core loyalty is distinguished for devotion to the enterprise,
repeated purchase probability, staying with the current provider and
recommendations for the enterprise to friends, colleagues, family members, etc.
By now some scientists accept such approach to loyalty. But scientists more often
accent attitudinal loyalty as other dimension of the loyalty now. Customer’s loyal
attitude shows a conscious effort to evaluate competing brands, customer’s
preferences and willingness to purchase goods or services. Lee, distinguish
customer’s responsibility and preferences to brand as the features of loyal
attitude. Loyal behaviour and loyal attitude influence the enterprise in different
ways.
Loyalty based on customer attitude could be more vulnerable when loyalty is
based on behaviour. According to them, it is necessary to estimate that behaviour
and attitude are changing over time, so loyalty is changing, too. Without above-
mentioned dimensions of the behaviour and the attitude, accent cognitive loyalty
emphasizing complexity of the loyalty.
Calls cognition-based or cognitive loyalty as rational because customer makes
decisions recognizing the processes in the enterprise, thinking, handling
information, estimating the technology, etc.
The scientist points other important dimension of loyalty – emotional loyalty. It is a
result of customer feelings, expectations, and interpersonal relationships with
employees. Distinguish the importance of expectations and experience, but
distinguish the importance of customer interpersonal relationships with
employees. Interpersonal relationship and mutual trust determine social comfort,
greater attention, and sometimes growth into friendship. It becomes switching
barriers to other provider of goods or services. What determines customer
loyalty? Scientists often point customer satisfaction assume that different level of
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54. satisfaction matches up to different level of loyalty.
The scientists classify customers into four groups considering satisfaction and
loyalty relation: loyalist/apostle (high satisfaction -high loyalty), defector/terrorist
(low satisfaction - low loyalty), mercenary (high satisfaction - low loyalty), and
hostage (low satisfaction - high loyalty). Do not deny dependence between
customer satisfaction and loyalty. But they notice that low customer satisfaction
(sometimes even dissatisfaction) not always become the reason of making a
break of relations with enterprise. It happens when enterprise has a dominant
position in the market; its brand of goods (services) is well-known, offering goods
(services) is a bit different, it is high switching costs to other provider, etc.
Mission, goals and tasks of loyalty programme-
Loyalty programmes are especially popular in the end customer market.
Nowadays it is difficult to imagine the activity of supermarkets, gas stations,
airlines, insurance companies and other companies without them. For example, in
USA 70% of households, in Holland 80% of households have at least one loyalty
card. The goals of loyalty programmes can be different. Distinguishes mission,
goals, main and secondary tasks. Everyyalty programme is created in order to
strengthen the positions of the enterprise in the market – increase of market
share, income and profitability of activity. In order to implement the goal of the
loyalty programme, the enterprise should deal with five key tasks as following:
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55. 1) To develop and strengthen loyalty of present customers. The enterprise seeks
this by undertaking to meet customers needs better than other participants of the
market during all period of relationship with customers;
2) To attract new customers. The enterprise can seek it in two different costly
ways, namely:
1) Suggesting attractive privileges stimulating to become a participant of
the loyalty programme, and
2) Attracting these who have heard good responses of participating in the
loyalty programme. In our opinion, in the first case the enterprise needs
more effort and resources. When participants of loyalty programme
advertise the programme, it depends on how the enterprise reminds
them about the loyalty programme and its objectives, benefit for
participants, how they value receivable benefit, etc.;
3) To create a database of customers. Without the database customer
relationship management is Impossible. In the database not only demographical
data of customers should be, but also information about their behaviour should be
stored, for example, preferences of consumption, acceptance of brands,
periodicity and quantity of purchase, the change of the brand, etc.
4) To provide maintenance to departments of the enterprise implementing
functions of development and Research of goods (services). The data about
customers help to communicate with them directly and to find out difficulties of
consumption, what attributes of goods (services) should be improved, to get ideas
for creating new goods (services). The obtained information of qualitative
research does not reflect the opinion of all consumers. But referring to
consumer’s live word is essential in preparing to comprehensive quantitative
research of the market;
5) To provide possibilities to communicate between participants of the
programme. It will help Service provider or agent, who initiates or controls the
process of communication, to communicate with Customers regularly and directly.
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56. 56

57. The process of loyalty programme development-
The developing of loyalty programme requires the following sequence:
1) To identify a target group of the loyalty programme,
2) To decide what kind of structure will implement the programme,
3) To decide how customers will be registered and what kind of the programme it will
be,
4) To decide how data about customers will be got and stored,
5) To chose in what way it will be communicated with participants of the programme,
6) To decide what privileges will be as a reward for customer loyalty,
7) To evaluate a success of the programme.
Target group of loyalty programme. Before developing loyalty programme the
enterprise should find out What customer is good? The value of different segments of
customers is not the same to enterprise. So it is required to define what kind of
customers the enterprise wants to attract and what their behaviour is desired. The
enterprise needs to divide customers into categories and determine what basis of
loyalty is: rationality or emotions.
The most attracting group is customers who often purchase goods and/or services or
continually retain relations with enterprise. The customers who seldom purchase
goods and/or services are less attractive but they consider the enterprise as their
own. An active part of the customers can join the loyalty programme. Besides, they
are willing to recommend the enterprise to members of referent groups they are
belonging to. Casual customers rarely purchase goods and/or service of the
enterprise; their decision is affected by offered benefit. Analysis of disposable
information helps to distinguish features of good customers. They can be emotionally
devoted, important to the enterprise very much; they can value brand of goods
(services), etc.
According to the scientists, it is important to determine the customers who will be
valuable in the future and seek for their loyalty. Structure implementing loyalty
programme. From the point of organizational view the difficult structure, consisting of
employees, participants and external partners, implements loyalty programme.
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58. Plenty and variety of tasks of loyalty programmes obligate enterprise to decide how
the programme will be organized and implemented – by its own resources or by help
of specialized service provider. the key tasks should be implemented by enterprise
itself but secondary tasks should be given to specialized service providers.
Mission of loyalty programme:
1. To establish a stable turnover basis; it means that customer loyalty is like
assumption of future profit. So it is counted in the value that will be gained in the
future;
2. To calculate lifetime-value indicators;
3. To increase the customer’s value, notably through additional sales;
4. To write off costs of investing in the customer’s acquisition;
5. To cut transactional operational costs, for example, loyal customers more than
others understand their Responsibilities and functions are more tolerant to failures,
etc.
6. To attract new customers through positive responds of loyal customers.
We have considered two points of view to mission and tasks of loyalty programme.
We can claim that the goal of the loyalty programme is the same but tasks realizing
the mission are different and changing. They depend on activity, size, popularity,
strategy of the enterprise and other factors. Despite diversity of loyalty programmes,
they deal with tasks of getting and storing information, marketing efficiency, brand
acceptance, service development and tasks helping to improve internal processes.
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59. The enterprise can use different means to implement the tasks of loyalty programme.
In our opinion, they can be divided into groups of organizational (e.g., providing toll-
free telephone access and automated attendant telephone answering non-business
hours, publishing home telephone number on business cards, providing an e-mail
address of customers, providing right, clear and easy-to-read bills, providing
additional service and offering a guarantee, etc.), communicational (e.g., preparing
answers to FAQs, communication with customers continually, promising only what
can be really implement, listening customers, individualizing communication with
customers, etc.) and composite (e.g., awarding for customer loyalty in many ways,
responding quickly to needs, requests and complaints of customers, distinguishing
from other enterprises offering similar goods (services), introducing customers to
something new, making suggestions how to save money, etc.) means. Some of the
means is labelled as strategic means (e.g., identifying long-term customers,
distinguishing from other enterprises offering similar goods (services), offering a
guarantee, etc.)
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60. Why Is Loyalty Important For retail sector?
• Hyper competitive environment.
• Low differentiation due to standard sku
• Leading to low customer stickiness
• Increasing awareness about the brand
Some Public Facts about Loyalty Programs
• 76% of US retailers and 75% of US shoppers are engaged in
loyalty programs
• Shopper ’s Stop claims more than 60% of
• sales from loyalty members
• Subhiksha claims 80% of sales comes from loyalty members
How Can a Loyalty Program Benefit retail?
• Build a long lasting relationship with the customer
• Go beyond product satisfaction to overall brand experience
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61. 1. What is Loyalty Membership?
Loyalty Membership is a program devised by Reliance Industries Limited for
Reliance Fresh to retain the customers visiting their stores. It is a program by which
Reliance Fresh store issues a Loyalty Membership Card to its customers to
encourage them to shop at the store regularly. Each time they buy something they
collect points which will allow them to redeem cash vouchers to shop at store in
future. Followings are the features of the program:--
• An electronic method of identifying customer purchases and translating
that information to reward customers based on their shopping habits.
• There is a reward point system by which customers receive reward points
on every purchase made at the store.
• For every purchase of Hundred Rupees customer will receive one reward
point.
• Customer should accumulate minimum of 25 points to get a reward
voucher by which he can make purchase at the store equivalent to Rupees 25.
• Customers can also retain these points and receive reward voucher
whenever they want.
• Members will also receive accidental insurance of Rupees 50,000 under
this program.
• Customer will be issued a permanent membership card after 180 days of
issuing of temporary card.
2. How Loyalty Membership Program benefit retailers?
• The program data help retailers to adjust their product assortment to
customer demands.
• Retailers remove or cut back slow-moving items and devote more shelf
space to the products that program members buy.
• Identify their most loyal customers.
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62. • Learn more about their best customers buying habits.
• Offer the products and services according to their best customers
demand.
3. How do Loyalty-Membership Program works?
• To enrol, customers typically complete an application form asking for their Name,
address, gender, phone number, e-mail address, income etc.
• Each time cardholders make a purchase; the store scans their membership card, tracks
the sale and converts this data into useful information.
• Loyalty Membership programs give customers points that accrue with their purchases
and can be redeemed for rewards.
4. How can food retailers help consumers and manage operations
with the data they collect?
Analyze shopping habits, refine marketing programs and fine-tune the product mix at
the chain or individual store level.
Stores use data gleaned from loyalty-marketing programs to:
• Identify the promotions that appeal most to various customer groups, e.g., discounts or
rebates for price-conscious shoppers; home delivery services for busy shoppers.
• Reduce the shelf space devoted to slow-moving items in order to stock the products
that customers prefer.
• Reveal when products were sold and whether they were sold on or off promotion, and
the profit margin on each sale.
• Improve speed-to-shelf and decrease out-of-stocks.
• Determine how product deletions affect their best customers, and take steps to keep
those customers from taking their business elsewhere.
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63. 5. What are the advantages of this Loyalty?
Following are the advantages of Loyalty Program:
• Loyalty Program gives customers the sense that the retailer values them personally and
respects them.
• This program has an inbuilt system of giving discount over the competitive prices of the
goods, if compared from general retailers.
• Besides this it also offers an accidental insurance of rupees 50,000.
6. How we can make Loyalty Program more effective?
• We can make it effective by introducing various types of schemes which can attract
customers.
• We can issue prepaid cards in different denominations to our customers and provide
additional discounts and offers in addition to our normal reward point system.
• We can also categories the cards as Platinum, Gold and Silver based on purchasing
capacity/trend of different segments of customers. The advantages can be increased
with the upgraded membership.
• Card can be made attractive by issuing a plastic or a laminated card in place of the
present paper card so that it can be retained for a long time.
• Increase level of personalized service/interactive approach with the customers. Through
interaction and personalize service the front line staff should ensure to make the
customers feel that they are the valued clients.
• Cashier should request and enlighten the customers to use their cards.
• Regular announcement should be made to encourage customers to use their loyalty
cards to redeem reward points.
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64. • There can be additional rewards depending on the frequency of usage of card or can be
based on their visit to the store.
• The Loyalty Program form can be bilingual and should be of one page so that
customers find it easy to fill.
• The form at present is very lengthy and it becomes irritating for the customer when too
much information is being asked. Therefore, it is suggested that the form should be
made simple and some irrelevant questions, if any, may be removed.
• If need be in order to facilitate the customers, a separate person may be assigned the
task for filling up the forms.
• Customers need instant answers to their queries. So store staff can be
trained about this Loyalty Program so that they can also assist customers.
• The FDM should ensure optimum utilization of available manpower.
7. Can Loyalty be bought?
• Yes, it can be bought by winning the faithfulness of the customers by giving them quality
services without interruption. Meeting the changing expectations of the customers
will help strengthen a lasting relationship and ensure that the customers no longer
feel like going elsewhere.
8. What is the percentage of customers using loyalty card?
• On an average every Reliance Fresh is issuing 80-120 loyalty cards per day.
• The ratio of customers using this card floats between 50%-60%.
• Educated people are giving more attention to the loyalty card.
9. How many customers are having more then one card and why?
• Customers are not able to retain existing paper card for a long time so customers can
be issued a new card with the same number if the exiting card cannot be scanned by
machine properly.
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65. • 10% cards cannot be scanned as these are paper cards and get distorted.
10. How we can build our product awareness?
• The advantages of a customer card must be actively conveyed from the management to
the customer via the staff.
• We can utilize the time of customers by making them aware about the reward program
when they are waiting for billing.
• Regular announcements can be made by the MSR’s regarding the benefits of the
Loyalty Card and asking customers to use the benefits of the program.
• Clippings about the product may be flashed through the electronic media.
• Details of the Loyalty Program may also be circulated through pamphlets in
newspapers.
11. What are the problems being faced by customers? How can
work on it?
• Token system should be introduced; as yet customers are facing problems as their
belongings are not safe outside the store.
• Customers have to wait for a long time for billing so we can introduce a system of
separate queues for ladies and senior citizens and can also increase number of
cash counters.
• Customer is coming in Reliance Fresh due to a brand name and thinking its product
would be of good quality, but sometimes there are rotten fruits and vegetables with
the bunch of fresh ones this leads to a wrong impression on customers. So, there
should be proper sorting to maintain the consistency in there quality.
• Proper availability of stock should be maintained to cater to the needs of customers.
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66. • Sometimes store staff are ignorant and don’t pay much attention to customers and this
frustrates the customers. So store staff should be trained to assist the customers in
a proper way.
• Facility of drinking water should be provided at the store which is not available at
present
• Toilets for customers should be made available.
• There should be counting of items purchased by a customer at the billing point to
prevent misplacement.
12. How to increase efficiency of employees?
• Providing refreshments like tea, coffee at least in two intervals so that the employees
feel energetic and work more efficiently.
• Orientation program can be conducted for the employees to make them aware of the
targets to be achieved.
• The employees should be kept in high state of morale. This could be achieved by the
effective leadership.
• Career progression of the employees should be chalked out.
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67. RELIANCEONE MEMBERSHIP CARD
This is a card which was given to the customer at free of cost. This card helps to
increase the loyalty sales percentage of the store. Benefits of this card are:
Customer will get 1% point of his purchasing amount added to hisher membership
card.When these points will become 25, it means that 25 points is equivalent to 25/-.
Heshe will be able to redeem hisher points & get a discount of 25/-With this card
customer will get “Accidental Death Insurance” of 50000/- by default.
If customer will recharge their Hutch, Reliance, Airtel & Idea mobile from CSD then
also 15 point of the amount he recharge will be added to his card.
In starting customer will get temporary card, which is valid for 180 days. Within 180
days customer will get permanent card, which is look like plastic card at postal
address given by the customer in the form for issuing of Reliance One Membership
Card. Conditions for eligibility of permanent card are as follows:
Customers have to do a purchasing of 1500/- with the help of card within 3 months
from the issuing date OR he have to scan his card at least 10 times.
If above criteria is not fulfil then in next 2 months customers have to do a purchasing
of 600/- with the help of card OR he have to scan his card at least 6 times.
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