1. A project report
oN
MArket coMMuNicAtioN iN A New digitAl world
iN
Submitted in partial fulfillment of the requirements for 3 rd year BBA course for the
degree of Bachelor in Business Administration
BY
Soumya Ranjan Sahoo
Of
ASIAN SCHOOL OF BUSSINESS MANAGEMENT
BHABANESWAR
UNDER GUIDANCE
OF
Mr. Bipin Satapathy Prof. B. Bramha
Store Manager Faculty Guide
Reliance Fresh ASBM,
Bhubaneswar
2. IDENTIFICATION
Name of the student : Soumya Ranjan Sahoo
Enroll No. : 56317UT02105
Registration no : 36088/07
Project Topic : Market Communication in a New Digital
world of Reliance Fresh
Session : 2007-2010
Course name : BBA
Institute : Asian School of Business Management.
University : Utkal University
Project Guide : Mr. Bipin Satapathy
Faculty Guide : Mr. Prof B Bramha
Date of Issue: 18.05.2009
Date of Submission: 20.06.2009
Soumya Ranjan Sahoo
3rd year BBA
[2]
3. DECLARATION
I, Soumya Ranjan Sahoo, here by declare that this project report titled “Market
communication in a new digital world” is original and the result of my own work.
This project report has not been submitted to any other university or institute for
the award of any degree or diploma.
SOUMYA RANJAN SAHOO
[3]
4. CONTENT
• Acknowledgement
• Executive summery
• Certificate of corporate guide
• Certificate of faculty guide
• Introduction
• Retail overview
Overview on Global Retail
Overview on Indian Retail industry
• Reliance
Company profile
Founder profile
Board of Directors of Reliance Industries Limited
Board Committees
RIL commitment
Major Subsidiaries & Associates
Major associates
• Brief on Reliance retail
• Brief on Reliance fresh
History
Present status
Future plans
Farm to Fork
Supply chain model of reliance fresh
SWOT analysis on the Reliance Fresh
• Brief on Reliance fresh in Orissa
• Market communication in New digital world
[4]
5. Introduction
Background
Communication Technologies
o Pull vs. Push
• Direct Marketing
o The Internet
o Streaming Audio and Video
YouTube
Joost
MySpace
o RSS
o Webcasting
o Podcasting
o Blogs
o Peer-to-Peer (P2P) Computing
o E-Procurement
o Mobile Internet
M-Commerce
Wireless Advertising
• Market communication
Definition
Communication process at Reliance fresh
Brand identify at Reliance Fresh
Integrated Marketing Communication (IMC)
Environmental Analysis for Reliance Fresh
Communication gap
Conclusion
Bibliography
Questionnaire
[5]
6. ACKNOWLEDGEMENT
I wish to express my appreciation and thank to all those with whom I have had the
opportunity to work and whose thoughts & insights have helped me in furthering my knowledge
and understanding of the subjects.
Every page of this report reminds me about the moral support and guidance that was
bestowed on me by the respected guide, professor, friends, and family members through out the
duration of the project.
First of all I owe my special thanks to the management of Reliance fresh, for so kindly
providing me data and useful information for the purpose of the study.
My sincere gratitude goes to my project guide Mr. Bipin Satapathy, Store Manager
without whose valued guidance, encouragement and inspiration the project could ever have
been possible.
I convey my regards to Mr. Biswajit Pattanayak, ASBM, Bhubaneswar for providing
ample opportunity and me to prepare this academic task.
I am also grateful to my parents for their encouragement.
I am unable to mention many other name who have helped me greatly but it gives
immense pleasure to appreciate and thanks all those without whose encouragement and help this
project would never have been completed.
[6]
7. SOUMYA RANJAN SAHOO
EXECUTIVE SUMMERY
These days’ organizations are looking forward to obtain competitive edge over their competitors
through highly developed employee skills, excellent market communication skills, distinctive
organizational cultures, management processes and systems which are in contrast to traditional
emphasis on transferable resources such as equipment that can be purchased any time by
competitors’.
Reliance Fresh is the retail chain division of Reliance Industries of India which is headed by
Mukesh Ambani. In reliance also much work is done to develop the marketing competencies so
as to have better results. Reliance has entered into this segment by opening new retail stores at
Hyderabad on 3 November 2006. Reliance plans to invest 25000 crores in the next 4 years in
their retail division and plans to begin retail stores in 784 cities across India.
In my study I have tried to study the market communication processes in digital world for
Reliance Fresh. For that I had gone to different reliance fresh retail stores and find out the
communication ways they use.
I also did environmental analysis for my study. Types of Communication techniques used here.
Big retailers like Reliance have huge resources and network which directly impacted many of
the retailers some of whom are planning to quit. In our sample size of 75 retailers more than 30
agreed to have lost as much as 50% of their sales. This case also discusses pros and cons of
contract farming which on one part assures farmers of price for their crop and knowledge about
fertilizers and seed but on other side has some obvious drawbacks like monopoly of big
retailers. As a big market in which organized sector is poised to grow with 25% - 30% annually
our government must come with appropriate regulations to save small retailers and our
agricultural sector.
[7]
8. Certificate from the Corporate Guide
This is to certify that work entitled Project title “Marketing Communication in New Digital
World” is done by Soumya Ranjan Sahoo under my guidance and supervision for the partial
fulfillment of degree of BBA, Asian School of Business Management, Bhubaneswar.
To the best of my knowledge and belief of the thesis:
• Embodies the work of the candidate himself.
• Has duly been completed.
• Fulfills the requirements of the rules and regulations relating to the summer internship of
the store.
Date Signature of the Corporate Guide
[8]
9. Certificate from the Faculty Guide
This is to certify that work entitled Project “Marketing Communication in New Digital
World” is done by the student name Soumya Ranjan Sahoo under my guidance and
supervision for the partial fulfillment of degree of BBA, Asian School of Business
Management, Bhubaneswar.
To the best of my knowledge and belief the thesis:
• Embodies the work of the candidate himself.
• Has duly been completed.
• Fulfills the requirements of the rules and regulations relating to the summer internship of
the institute.
• Is up-to the standard both in respect to contents and language for being referred to the
examiner.
Date Signature of the Faculty
Guide
[9]
10. INTRODUCTION
With a vision to generate inclusive growth and prosperity for farmers, vendor partners, small
shopkeepers and consumers, Reliance Retail Limited (RRL), a subsidiary of RIL, was set
up to lead Reliance Group’s foray into organized retail.
With a 27% share of world GDP, retail is a significant contributor to overall economic activity
across the world. Of this, organized retailing contributes between 20% to 55% in various
developing markets. The Indian retail industry is pegged at $ 300 billion and growing at
over 13% per year. Of this, presently, organized retailing is about 5%. This is expected to
grow to 10% by 2011. RRL has embarked upon an implementation plan to build state-of-
the-art retail infrastructure in India, which includes a multi-format store strategy of opening
neighborhood convenience stores, hypermarkets, specialty and wholesale stores across
India.
RRL launched its first store in November 2006 through its convenience store format ‘Reliance
Fresh’. Since then RRL has rapidly grown to operate 590 stores across 13 states at the end
of FY 2007-08. RRL launched its first ‘Reliance Digital’ store in April 2007 and its first and
India’s largest hypermarket ‘Reliance Mart’ in Ahmadabad in August 2007. This year, RRL
has also launched its first few specialty stores for apparel (Reliance Trends), footwear
(Reliance Footprints), jewellery (Reliance Jewels), books, music and other lifestyle
products (Reliance Timeout), auto accessories and service format (Reliance AutoZone) and
also an initiative in the health and wellness business through ‘Reliance Wellness’. In each
of these store formats, RRL is offering a unique set of products and services at a value price
point that has not been available so far to the Indian consumer. Overall, RRL is well
positioned to rapidly expand its existing network of 590 stores which operate in 57 cities.
[10]
11. During the year, RRL also focused on building strong relationships in the agri-business value
chain and has commenced marketing fruits, vegetables and staples that the company
sources directly to wholesalers and institutional customers. RRL provides its customers
with high quality produce that has better shelf life and more consistent quality than was
available earlier. RRL has made significant progress in establishing state-of-the-art staples
processing centers and expects to make them operational by May 2008.
Through the year, RRL also expanded its supply chain infrastructure. The Company is fully
geared to meet the requirements of its rapidly growing store network in an efficient manner.
Recognizing that strategic alliances are going to be a key driver to its retail business, in FY
2007-08, RRL established key joint ventures with international partners in apparel, optical
and office products businesses. Further, RRL will continue to seek synergistic opportunities
with other international players as well. This year, RRL will continue its focus on rapid
expansion of the existing and other new formats across India.
.
[11]
12. RETAIL OVERVIEW
Etymology:
Retail comes from the French word retaillier which refers to “cutting off, clip and divide” in
terms of tailoring (1365). It first was recorded as noun with the meaning of a “sale in small
quantities” in 1433(French). Its literal meaning of retail was to “cut off, shred, paring” like the
French, the word both in Dutch and German (Detailhandel and Einzelhandel respectively) also
refer to sale small quantities of items.
Simply retailing means, directly selling many goods or commodities and services to the
consumer. Retail business involves selling commodities form a retail store, online order,
through vendors and so many other policies.
Retail types:
There are three major types of retailing. The first is the market, a physical location where buyers
and sellers converge. Usually it’s done in 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 services, where goods are out
of reach of buyers, and must be obtain from the sellers. This type of retail is common for small
expensive items (e.g. jewelry) and controlled items like medicine and liquor. Self-service,
where goods may be handled and examined prior to purchase, has become common since the
20th century.
The third form of retail is virtual retail, where products are ordered via mail, telephone or online
without having been examined physically but instead of catalog, on television or website.
Retailing consists of the sale of goods merchandise for a fixed location, such as a departmental
store or kiosk, or by post, in small or individual lots of direct consumption by the purchaser.
Retailing may include retailing service, such as delivery. In commerce, a retailer buys goods or
products in large quantities from manufacturers or business. In commerce, a retailer buys goods
or products in large quantities from manufacturer or importers, either directly or through a
wholesaler, and then sells smaller quantities to the end user. Retailers are the end user of the
supply chain. Manufacturing marketers see the process of retailing as a necessary part of their
overall distribution strategy.
[12]
13. Retail industry:
Retail industry has brought in phenomenal changes in the whole process of production,
distribution and consumption of consumer goods all over the world in the present world most of
the developed economics are using the retail industry as there vital growth instrument.
At present, all the industries of U.S.A the retail industry holds the second place in terms
employment generation. In fact, the strength of retail industry lies in its ability to generate large
volume of employment. Not only in U.S.A but also the other developed countries like the UK,
Canada, France, Germany and Australia are experiencing tremendous growth in there retail
sector.
Observing the global upward trend of retail industry, now the developing countries like India
are also planning to tap the enormous potential of retail sector. Wal-Mart the world largest
retailer, is interested in opening shops in India. Other popular brands like Pantaloons, Big
Bazaar (India) and Archies (U.S.) are rapidly increasing their market share in the retail sector.
Emergence of a strong retail sector can contribute immensely at the economic development of
any country with a dominant retail sector, the farmers and other suppliers can sell their products
directly to the major retail companies and can ensure stable profit. On the other hand, to ensure
steady supply of goods, the retail companies can inject cash into the production system. This
whole process can result into a more efficient production and distribution system for the
economy as a whole.
Retail business:
It is not a secret that retail business is one of the most actively developing sectors of national
economy. Besides territorial extension retail chain now tends to create new format in retail
outlets in order to gain more customers. With the increasing power of the people the retail
business is sure to flourish.
Retail business is all about the study of the relationship of customer satisfaction, consumer
loyalty and profitability. By retail business we mean a lot of things right from bank to shop at
the door step, no matter how or small the business is, it all runs in the basic principles of
customer satisfaction, customer loyalty and profitability.
Today, with the customers being provided a array of choices, is the king. He can choose what to
buy what not to buy and from where, so a good retailer strive to achieve the maximum customer
satisfaction. After the satisfaction comes the loyalty to the customer, which plays a major role in
[13]
14. bonding and cementing the relationship of the retailer and customer. Last but not the least is the
profit part, which without saying the most aspect of any business.
Retailers satisfy consumer needs by offering right products at the right place and at the right
price. Retailers are the final business in the distribution channel that link manufacturers with
consumers. A distribution channel is a set of firms that facilitate the movement of products from
the point of production to the point of sale to the ultimate consumer.
GLOBAL RETAIL OVERVIEW
Retail has played a major role world over in increasing productivity across a wide range of
consumer goods and services. The impact can be best seen in countries like U.S.A, UK, Mexico,
Thailand and more recently China. Economics of countries like Singapore, Malaysia, Hong
Kong, Sri Lanka and Dubai are also heavily assisted by the retail sector. Retail is the second
largest industry in the United States both in number of establishments and number of
employees. It is also one of the largest worldwide. The retail industry employees more than 22
million Americans and generates more than $3 trillion in retail sale annually.
The world’s largest retailer is also the world’s largest corporation in terms of annual sales. Wal-
Mart’s net sales of $401.24 billion — up 7.2 per cent– for the fiscal year (2008-09) ending 31st
January, 2009. Wal-Mart has become the most successful retail brand in the world due its ability
to leverage size, market clout, and efficiency to create market dominance. Wal-Mart heads
fortune magazine list of top 500 companies in the world. Wal-Mart, which employs over 1.4
million associates in the US and over 0.68 million associates outside the US, created around
63,000 jobs worldwide this year, including over 33,000 in the United States. Wal-Mart Stores
was placed in 16th position in 2008 Forbes Global 2000 list. It is a major public corporation in
United States of America. It operates a group of big departmental stores and discount stores.
In Forbes annual list, large numbers of billionaires are from retail business.
INDIAN RETAIL INDUSTRY
India retail industry is the largest industry in India, with an employment of around 8% and
contributing to over 10% of the country's GDP. Retail industry in India is expected to rise 25%
yearly being driven by strong income growth, changing lifestyles, and favorable demographic
patterns.
It is expected that by 2016 modern retail industry in India will be worth US$ 175- 200 billion.
India retail industry is one of the fastest growing industries with revenue expected in 2007 to
amount US$ 320 billion and is increasing at a rate of 5% yearly. A further increase of 7-8% is
[14]
15. expected in the industry of retail in India by growth in consumerism in urban areas, rising
incomes, and a steep rise in rural consumption. It has further been predicted that the retailing
industry in India will amount to US$ 21.5 billion by 2010 from the current size of US$ 7.5
billion.
Shopping in India has witnessed a revolution with the change in the consumer buying behavior
and the whole format of shopping also altering. Industry of retail in India which has become
modern can be seen from the fact that there are multi- stored malls, huge shopping centers, and
sprawling complexes which offer food, shopping, and entertainment all under the same roof.
India retail industry is expanding itself most aggressively; as a result a great demand for real
estate is being created. Indian retailers preferred means of expansion is to expand to other
regions and to increase the number of their outlets in a city. It is expected that by 2010, India
may have 600 new shopping centers.
In the Indian retailing industry, food is the most dominating sector and is growing at a rate of
9% annually. The branded food industry is trying to enter the India retail industry and convert
Indian consumers to branded food. Since at present 60% of the Indian grocery basket consists of
non- branded items.
India retail industry is progressing well and for this to continue retailers as well as the Indian
government will have to make a combined effort.
• India Shopping Malls
• Scope of the Indian Retail Market
• Indian Organized Retail Market
• Growth Factors in Indian Organized Retail sector
• Opportunities in Indian Organized Retail sector
• Challenges facing the Indian Organized Retail sector
• Role of Supply Chain in Indian Organized Retail
• Employment Generation by Indian Organized Retail Sector
• Indian Organized Retail Sector's Impact on Lifestyles
[15]
16. • Emerging Trends in Indian Organized Retail Sector
• Growth of Retail Companies in India
• Evolution of Indian Retail
• FDI in Indian Organized Retail Sector
• Formats in Indian Organized Retail Sector
• Consumer Durables Retail
Growth phase of Indian Retail Industry:
The growth factors in Indian organized sector are various but it is mainly due to the fact that
Indian economy is booming also, the rise in the working population which is young, pay-
packets which are hefty, more nuclear families in urban areas, rise in the number of women
working, more disposal income and customer aspiration, western influence and growth
expenditure in luxury items. All these are the factors for the growth in Indian organized retail
sector.
The phase of high growth of Indian retail sector is expected to Continue due to huge amounts of
investments and breaking up of traditional concepts in this sector. These are leading to various
changes and are providing further boost to the growth of the Indian Retail Sector. The Indian
Retail Sector that includes the traditional retail and the modern retail is estimated to grow at a
very fast pace from US$ 336 billion, in 2006 to US$ 590 billion, by 2011.
The traditional retail sector is expected to increase from US$ 324 billion, in 2006 to US$ 493
billion, by 2011. The share of the modern retail in the Indian Retail Sector is also estimated to
increase from 4% in 2008, to 16% in the next five years. This exceptional growth is expected to
take place in the retail sector due to large amounts of investment which is estimated to be about
US$ 35 billion in the next five years. The "cash- and- carry" activities are expected to receive
the majority of investment.
The maximum amount of growth in the Indian Retail Sector will be registered in the topmost 50
to 60 markets that are located in the urban areas. These markets would be mostly supermarkets
and hypermarkets. However, these supermarkets and hypermarkets will also witness fast
erosions in their margins. Further, it is estimated that in the longer run, the convenient stores
that are located in the local neighborhood will continue to survive.
A major focus area in the Indian retail sector is the supply chain management. In the western
countries, the retail sector has a highly developed system of supply chain. However
developments in supply chain in Indian retail sector has been quite slow.
[16]
17. Other areas that need attention for the growth of the Indian retail sector to continue includes
duty and tax structures, infrastructure, rising land prices and effective trend forecasting. Trend
forecasting needs to be done in the country especially in the segments of cosmetics, apparel and
footwear for this will help the retail companies to curtail their expenses substantially. Also
another area that requires attention is manpower for it is estimated that the Sector of Indian
Retail will suffer from shortage of manpower by about a million people, by 2012.
The chains in the Indian retail sector need to frequently change their stocks and also adopt
concepts like home delivery. If all these areas are given immediate attention then the growth
phase of Indian retail sector would continue at a very fast pace. The Indian retail sector would
then witness the setting up of retail parks that are flourishing in Europe. Further, the growth of
the Indian retail sector would help in making the country ready for big retailers by 2015- 2016.
Global retail giants are also entering the retail industry in India and this is also one of the factors
in the growth of the organized retail sector in India. The global retail giants who are entering the
organized retail sector in India are:
• Wal-Mart
• Tesco
• Metro AG
The factors for growth in Indian organized retail sector are many and that’s the reason behind its
massive growth. But for this no continue both the Indian retailers and the government will have
to work together.
India a perfect destination for business expansion:
A stable government with 2nd stage reforms in place. Well established corporate ethics. Major
tax reforms including implementation of VAT.
A resplendent market of India:
Largest young population in the world - over 890 million people below 45 years of age.
More English speaking people in India than in the world of Europe taken together.
600 million+ effective buyers by 2010.
550 million+ under the age of 20 by 2015.
[17]
18. 70 million+ earns Rs. 8, 00,000+ ($18,000) a year-number to rise to 140 million by 2011.
Opportunities in Indian organized retail sector:
The opportunities in Indian organized retail sector are many for this sector is witnessing a
boom. The Indian retail industry in amounted to US$200 billion in 2006, and out of this amount
the amount the Indian organized retail sector amounted to US$6.4 billion. The opportunity in
India organized retail sector can be judge from the fact that by 2010 it is expected to rise to
US$23 billion.
The Indian governments in 2005 allowed foreign direct investment (FDI) in single brand retail
to 51%.These have opened up a lot of opportunities in India organized retail sector. In fact 325
departmental stores, 300 new malls and 1500 super markets are being built which shows the
tremendous opportunities in the organized retail sector in India. Many Indian companies seeing
the various opportunities in organized retail sector in India have entered in. reliance industries
limited is targeting for annual sale of US$25 billion by 2011. It is planning to invest US$6
billion in order to open 1,500 supermarkets and 1000 hyper markets. Bharti telecoms is palling a
joint venture with Telco a global retail giant worth 750 million.
[18]
19. Company profile:
Reliance Industries Limited (NSE: RELIANCE) is India's largest private sector conglomerate
(and second largest overall) with an annual turnover of US$ 35.9 billion and profit of US$ 4.85
billion for the fiscal year ending in March 2008 making it one of India's private sector Fortune
Global 500 companies, being ranked at 206th position (2008).
Backward vertical integration has been the cornerstone of the evolution and the growth of
reliance. Starting with textiles in the late seventies, reliance pursued a strategic of backward
vertical integration- in polyester, fiber intermediates, plastics, petrochemical, petroleum refining
and oil and gas exploration and production- to be fully integrated along the energy and value
chain.
Reliance enjoys global leadership in the business, being the largest polyester yarn and fiber
producer in the world and among the top five to ten producers in the major petrochemical
products.
The group export products in excess of US$ 20 billion to 108 countries in the world. Major
group companies are Reliance Industries Limited (including main subsidiaries Reliance
Petroleum Limited and Reliance Retail Limited) and Reliance Industrial Infrastructure Limited.
Founder profile:
“Growth has no limit at Reliance, I keep revising my
vision. Only when you can dream it,
you can do it”
Dhirubhai H. Ambani
Founder Chairman Reliance Group
[19]
20. December 28, 1932-July 6, 2002
Board of Directors of Reliance Industries Limited
Shri Mukesh D. Ambani
Chairman & Managing Director
Shri Nikhil R. Meswani Shri Hital R. Meswani Shri H.S.Kohli
Executive Director Executive Director Executive Director
Shri PMS Prasad Shri R. Ravimohan
Shri Ramniklal H. Ambani
Executive Director Executive Director
[20]
21. Shri Mansingh L. Bhakta Shri Yogendra P. Trivedi Dr. D. V. Kapur
Board Committees:
The Board has established the following Committees to assist the Board in discharging its
responsibilities:
• Audit Committee
• Remuneration Committee
• Shareholders'/Investors' Grievance Committee
• Finance Committee
• Health, Safety and Environment Committee
• Corporate Governance and Stakeholders' Interface Committee
• Employees Stock Compensation Committee
The Board has adopted charters setting forth the roles and responsibilities of each of the above
Committees as well as qualifications for Committee membership, procedures for Committee
members' appointment and removal, Committee structure and operations and reporting to the
Board. The Board may constitute new Committees or dissolve any existing Committee, as it
deems necessary for the discharge of its responsibilities.
[21]
22. RIL commitment:
Growth through commitment:
We care about
Quality
Research and development
Health, safety & environment
Human resource development
Energy conversion
Corporate citizenship
Reliance believe that any business conduct can be ethical only when it rests on the nine core
values of honesty, integrity, respect, fairness, purposefulness, trust, responsibility, citizenship
and caring.
The essence of these commitments is that each employee conducts the company’s business with
integrity, in compliance with applicable laws, and in a manner that excludes considerations of
personal advantages.
We do not lose sight of these values under any circumstances, regardless, of the goals we have
to achieve. To us, the means are as important as the needs.
For Reliance...
Growth is care for good health:
Reliance occupational health centers carry out pre-employment and periodic medical checkups
as well as other routine preventive services. Specialized tests like biological monitoring, health
risk assessment studies and audits to various materials are also performed. Health education and
awareness form an integral part of the health care program at reliance
[22]
23. Growth is care for safety:
We believe that the safety of each employee is the responsibility of the individual as well as the
whole community of employees.
Growth is care for the environment:
Reliance believes that a clean environment and around the work place fosters health and
prosperity for the individual, the group and the larger community to which they belong.
Environmental protection is an integral part of the planning, design, construction, operation and
maintenance of all our projects.
Growth is conservation:
At reliance, energy conservation efforts seek to reduce the unit cost of fuels and to improve
efficiencies in energy in intensive processes.
Growth is better in our people:
Reliance builds with care a work place that pro actively fosters professional as well as personal
growth. There is freedom to explore and learn and there are opportunities the inspire initiative
and intrinsic motivation. We believe the people must dream to achieve these dreams will drive
the company’s excellences in all its businesses. Reliance thinks behaves lives and thrives with a
global mind set, encouraging every employee to reach his/her full potential by availing
opportunities that arise across the groups.
Growth is thinking beyond business:
As corporate citizens, we invest in social infrastructure, believing strongly that our business
strength fuels our social contributions. To these end reliance encourages funds and develops
numerous education, health, and human capital and infrastructure initiatives. These initiatives
are under taken through partnership with non-governmental organization, corporate and trusts.
Major Subsidiaries & Associates:
• Reliance Petroleum Limited
• Reliance Netherlands by (including Trevira)
• Reliance Retail Limited
• Reliance Jamnagar Infrastructure Limited
• Reliance Haryana SEZ Limited
[23]
26. Reliance retail limited:
With a vision to generate inclusive growth and prosperity for farmers, vendor partners, small
shopkeepers and consumers, Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to
lead Reliance Group’s foray into organized retail.
Reliance is gearing up to revolutionize the retailing industry in India. Towards this end,
Reliance is 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 integral feature of this project. By
creating value at all levels, we will actively endeavor 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.
Reliance Fresh recently (24th Jan, 2007) opened 12 “Fresh” outlets in Chennai increasing its
total store count to 40. Reliance is still testing its retail concepts by controlled entry beginning
in the southern states.
The entry of the giant corporate retail in India’s food market will have direct impact on India’s
650 million farmers and 40 million people employed in tiny retail. More than 6600 mega stores
are planned with Rs. 40,000 crore by 2011.
With a 27% share of world GDP, retail is a significant contributor to overall economic activity
across the world. Of this, organized retailing contributes between 20% to 55% in various
developing markets. The Indian retail industry is pegged at $ 300 billion and growing at over
13% per year. Of this, presently, organized retailing is about 5%. This is expected to grow to
[26]
27. 10% by 2011. RRL has embarked upon an implementation plan to build state-of-the-art retail
infrastructure in India, which includes a multi-format store strategy of opening neighborhood
convenience stores, hypermarkets, and specialty and wholesale stores across India.
RRL launched its first store in November 2006 through its convenience store format ‘Reliance
Fresh’. Since then RRL has rapidly grown to operate 590 stores across 13 states at the end of
FY 2007-08. RRL launched its first ‘Reliance Digital’ store in April 2007 and its first and
India’s largest hypermarket ‘Reliance Mart’ in Ahmadabad in August 2007. This year, RRL has
also launched its first few specialty stores for apparel (Reliance Trends), footwear (Reliance
Footprints), jewellery (Reliance Jewels), books, music and other lifestyle products (Reliance
Timeout), auto accessories and service format (Reliance AutoZone) and also an initiative in the
health and wellness business through ‘Reliance Wellness’. In each of these store formats, RRL
is offering a unique set of products and services at a value price point that has not been available
so far to the Indian consumer. Overall, RRL is well positioned to rapidly expand its existing
network of 590 stores which operate in 57 cities.
During the year, RRL also focused on building strong relationships in the agri-business value
chain and has commenced marketing fruits, vegetables and staples that the company sources
directly to wholesalers and institutional customers. RRL provides its customers with high
quality produce that has better shelf life and more consistent quality than was available earlier.
RRL has made significant progress in establishing state-of-the-art staples processing centers and
expects to make them operational by May 2008.
Through the year, RRL also expanded its supply chain infrastructure. The Company is fully
geared to meet the requirements of its rapidly growing store network in an efficient manner.
Recognizing that strategic alliances are going to be a key driver to its retail business, in FY
2007-08, RRL established key joint ventures with international partners in apparel, optical and
office products businesses. Further, RRL will continue to seek synergistic opportunities with
other international players as well. This year, RRL will continue its focus on rapid expansion of
the existing and other new formats across India.
A target 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 retail venture seems all set to achieve the status of being the flag-bearer of
India Retail Inc, and that too in record time!
Earlier, about a year ago, it only whispered in close industry circles. Slowly the whispers
become louder, and the word gained ground that India’s largest private sector company, reliance
industry limited (RIL), is entering the Indian retail sector in a real big way.
But with virtually nothing coming from anyone known inside RIL about their retail plans, this
has to be one of the most closely guarded secrets of Indian corporate story. Amidst all sorts of
speculations in the media circles about RIL intended retail foray, the word finally came out on
January 23, 2006, when the Mukesh Ambani – controlled Reliance Industries Limited presented
[27]
28. mega retail initiative retail plans to the board of director who subsequently gave their consent to
pursue the retail business through a wholly-owned subsidy 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, 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).
Just how big and grand this investment in Indian retail sector can be gauged by the simple fact
that the Indian retail sector is estimated to be at Rs.10,50,000 crore (US$ 233 billion) - growing
5% annually- and the estimated share of the organized retail only Rs.36,000 crore (US$ 8
billion), at present , albeit growing at over 30% every year. That makes reliance retail proposed
investments equivalent to about 10% of India organized 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 organized retail
market of Rs. 1,00,000 crore (US$ 22billion) by 2010 now appears conservative, likely to be
achieved much earlier than 2010.
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.
Reliance Retail is likely to launch 252 new Fresh stores across the country by March next year.
It also plans to start “Rose”, a jewellery store modeled on Tanishq.
Sources also said the company may unveil 200 Fresh stores in Mumbai alone; but they didn’t
specify any deadline. The sizes of Fresh stores may differ from place to place, they added.
Currently Reliance Retail operates 372 Fresh outlets across the country.
As per the Macquarie research equities report, the retail major plans to have a total of 100m sq
ft of retail space in 800 cities by calendar year 2010 and revenues of $22 billion by the end of
financial year 2011. Currently, the Fresh store sizes are anywhere between 1100 sq ft and 7500
sq ft depending on the location.
An analyst added the company will have to restrict its store sizes to 1,000 sq ft in Mumbai
considering the real-estate crunch and crowded landscape of neighborhood stores in the city.
A few days ago DNA Money had reported about Reliance talking to mom-and-pop stores to
take the franchisee route for small stores. The analyst added that Reliance Fresh stores could
also be run on a franchise model in Mumbai considering the strong associations of small
retailers in the city. And it’s not just the Reliance Fresh- a convenience store format where the
most valued business house is pumping money. The Reliance Hyper mart (above 50,000 sq ft)
also plans to spread its presence from 1 (in Ahmadabad) to 10 by the end of this financial year.
[28]
29. Similarly, there will be 26 minimarts (10,000-50,000 sq ft) dotting the Indian retails cape by
March 2008. Sources added that these mini-marts and hyper marts will also include specialty
stores. Reliance has already bought 1 lakh sq ft in the crown interior mall in Haryana’s
Faridabad to launch its home décor specialty store.
Cost-cutting plans Things aren’t all that hunky-dory at Reliance Retail. Stores haven’t been able
to meet the profitability targets, a Reliance source said. Spinning off the retail venture into
different verticals, the source added, is to treat them as independent cost-profit centers and bring
more accountability in the areas of costing, manpower, stocks, procurement, and advertising and
promotions.
“Earlier there were different reporting centers for different business functions. Now one store
manager will be responsible for all the functions of a particular store,” the source said. The
company is planning to hire a lot of apprentices and trainees to do front-line jobs and thereby
slash manpower costs. Also, the spin-off is expected to help the company offset losses incurred
in other sections such as jewellery, footwear, apparel due to lock-outs or strikes by protestors.
Fresh vegetables and fruits section has especially been targeted by the small retailers. Currently,
out of 372 Reliance fresh stores, 26 are closed due to protests (19 of them in Uttar Pradesh and
Ghaziabad, five in Noida).
Jai Bendre, head, marketing, food business, Reliance Retail, recently said: “The wastage in food
and vegetables products in India is believed to be more than the total production of UK.”
Unmesh Sharma, analyst, Macquarie research equities, in a report to investors said: “The lack of
cold/supply chain infrastructure has resulted in a food & vegetable produce wastage of 25-40%.
The company will aim to improve margins by investing in IT and infrastructure to improve the
supply chain efficiencies. However managing space acquisition, IT and manpower challenges
might delay the ramp-up by 36 months.”
Food:
Food retail in India is food dominant shopping basket in India. The US$ 6.1 billion Indian foods
industry, which forms 44%of the entire FMCG sales, is growing at 9%and has set the growth
agenda for modern trade formats. Food accounts for the largest share of consumer spending.
Food and food products account for about 53%of the value of final private consumption.
Reliance retail looks forward to be the driver of growth in the industry with a committed team
under the leadership of Mr. Gunender Kapur, Chief Executive and President of Foods Business.
Targets:
• Reliance retail turn over by 2010 Rs.1, 00, 000 crore (Out of which 40% is
estimated Reliance Retail Turnover by 2010 to be form Foods Business)
• Capture dominant market share of Indian retail industry
[29]
30. • A pan India footprint is more than 800 cities and towns
• Cater to both urban and rural populations
Reliance food team strives to continuously delight the customers. This is the first small step in
their attempt to build and forge strong and enduring bond with millions of farmers and
transform their relationship with customers to a new level. The Organization believes in giving
customers quality food items, fruits and vegetables at affordable price at Reliance Fresh store.
Footwear:
The Footwear Vertical headed by Mr Gopalakrishnan Sankar is out to create a niche within the
Retail Revolution in Reliance Retail. Envisioned by a clear goal of becoming destination store
of footwear. Reliance industry plans to stamp its presence across 42 cities by opening over 80
independent stores by 2010, which will insuring them capturing maximum market share in the
18, 000cr footwear industry armed with a mission of creating destination Shoe Shop. These
stores will stocked with National, International and Private Label products that will provide
cutting edge retail and shopping experience to the individual and family. Product source from
Brazil, China, Indonesia, Malaysia, Vietnam and Thailand to name a few countries will be
display and sold across all stores.
These products are value led, meant to create novelty and developed category killers in
footwear, accessories and luggage in all segments for all occasions. Creating these will be
Portland Design- specialist in design and providing solution for meaningful customer
experience. All this will be provided through a State of the Art Design Studio which is being to
created to have an in-built Design/CAD Room, Product Development Area, Mock Display
Room, Testing Laboratory, Range Presentation Area, Reprographic, and Sample Storage Area.
Apparel:
As the glaring gaps in the market today remain unattended, it gives Reliance the ideal
opportunity to step in and revolutionize the shopping environment in the country. The challenge
is to transform the Indian customer’s lifestyle and the way our people shop. By offering exiting,
fashionable and extreme value products of international caliber they want to capture a
significant share of customer spending more on clothing and luggage. The plan of offer
‘Extreme Value’ to the customer by weaving together competitive price with an irresistible line,
where the customer would have the luxury of shopping from a diverse product range in an up
market ambience. They will be focusing at offering ‘affordable fashion’ with superior quality
fabrics. They are also looking for house brands to build a strong business in their departmental
and fast fashion apparel specialty and luggage store. To be a part of India’s globalization, they
plan to tie up with big international brands.
[30]
31. Membership finance and travel:
Membership program:
They plan to have 100 million customers out of which it is expected that 50 million will be
membership customer – who will have the success to the benefits of the loyalty program under
“Reliance One”
Payment:
To improve the customer experience and to enable cashless payments by customers it is
proposed to introduce several payment options that can be used in all the store formats. The
service offered are, Close Loop Store Cards (Prepaid, Gift & Credit) Credit card, Debit card,
ATM availability, Mobile and internet payment options etc.
Lending:
As an Indian customer becomes aware and demanding, they will need access to demand easy
credit to meet their requirements. It is expected that a significant percentage of reliance retail
customers will use leading products both in the urban and rural areas. The services offered are
Customer Finance, SME Finance and Rural Hub Finance.
Insurance and investment:
Reliance retail will plays a role of a broker o services the needs of the customers distributing a
whole range of insurance and investment products. The intention is to give them choice and
impartial advice. The services offered are life insurance, general insurance and various
investment products.
Travel service:
Reliance Retail proposed to offer Travel Services to its customers covering of range of offering
at unbeatable value owing to the scale of distribution envisaged. Services offered are travel
packages for individuals, Corporate Clients and Family Holidays, FOREX, Other Foreign
Travel linked products, Travel Insurance, Ticketing and Hotel Booking (both Domestic &
International)
Automotive:
[31]
32. The automotive team, currently comprising of 20 members from reputed auto companies is
headed by Mr. Arun Dey, CE –Automotive Retail. The team aims to participate in the vehicle
ownership experience of Reliance Retail customers and constantly keep on creating value and
retaining value. To deliver this the organization will be retailing automotive products and
accessories and setting up worlds class services facilities catering to two wheelers & passengers
cars. India today boasts of a population of more than10 million cars and 43 million two
wheelers. Despite the burgeoning vehicle population, services & maintenance of these vehicles
still remains a problem. It is with these underserved market that Reliance Retail decided to set
its foot towards creation of a world class auto care chain, in sync with the Reliance Retail. The
facility would also be retailing auto products namely- Tyres, Tubes, Lube, Car Accessories, e-
bikes etc. all these facilities are coming up shortly.
Lifestyle:
At reliance retail lifestyle they promise to offer a world of products and experiences never seen
before. A world of style and class for fun and excitement with indulgence and pampering of
knowledge and entertainment. They recognize their role in bringing their style, excitement and
entertainment to customers’ lives. so they are offering categories like jewellery, books, music,
cosmetics, fragrances, watches, sunglasses, toys, sporting goods, stationary, gifts, flowers, print
services.
CDIT:
It will be a one stop for all technology solutions in the field of consumer electronics, home
appliances, information technology and telecommunication.
Experience zone:
A showcase for technology, every experience zone will have fully functional products, for the
customer to have a true ‘touch & feel’ experience. Experts will guide customers on how to get
the beast quality experience in their own setups at home. Zones will be for the followings, and
will be present in stores as per the respective business plans:
Home theaters - different zones ranging from entry –level to a very premium experience.
Photography - with a digital mini lab
Designer kitchen - completely operational kitchen with appliances
Gaming area - vibrant and happening
A collapsible classroom space for training and contests
[32]
33. Reliance Fresh Supermarkets
Type : Supermarket
Founded : 3- October 2006
Headquarters : Mumbai, India
Key people : Mukesh Ambani, CEO
Reliance Fresh is the convenience store format which forms part of the retail business of
Reliance Industries of India which is headed by Mukesh Ambani. Reliance plans to invest in
excess of Rs 25000 crores in the next 4 years in their retail division. The company already has
in excess of 560 reliance fresh outlets across the country. These stores sell fresh fruits and
vegetables, staples, groceries, fresh juice bars and dairy products.
A typical Reliance Fresh store is approximately 3000-4000 square feet and caters to a catchment
area of 1-2 km.
History:
Post Lunch, in a dramatic shift in its positioning and mainly due to the circumstances prevailing
in UP, West Bengal and Orissa, it was mentioned recently in news Dailies that, Reliance Retail
is moving out of stocking fruits and vegetables. Reliance Retail has decided to minimize its
exposure in the fruit and vegetable business and position Reliance Fresh as a pure play super
market focusing on categories like food, FMCG, home, consumer durables, IT and wellness,
[33]
34. with food accounting for the bulk of the
business.
The company may not stock fruit and
vegetables in some states. Though Reliance
Fresh is not exiting the fruit and vegetable
business altogether, it has decided not to
compete with local vendors partly due to
political reasons, and partly due to its inability
to create a robust supply chain. This is quite
different from what the firm had originally planned.
When the first Reliance Fresh store opened in Hyderabad last October, not only did the
company said the store’s main focus would be fresh produce like fruits and vegetables at a
much lower price, but also spoke at length about its “farm-to-fork’’ theory. The idea the
company spoke about was to source from farmers and sell directly to the consumer removing
middlemen out of the way.
Reliance Fresh, Reliance Mart, Reliance Digital, Reliance Trendz, Reliance Footprint, Reliance
Wellness, Reliance Jewels, Reliance Timeout and Reliance Super are various formats that
Reliance has rolled out.
Current status:
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.
Future plan:
The Reliance Fresh supermarket chain is RILs Rs 25,000 crore ventures and it plans to add
more stores across different geographies, and eventually have a pan-India footprint by year
2011.
The opening of Reliance’s retail chains closely follows the moves of global players like Wal-
Mart Stores Inc and Metro AG seeking to open shop here in the country. With Reliance
[34]
35. announcing plans to expand, and that too rapidly, the retail scenario in the country is all set to
take off in a big way.
Besides, the stores would provide direct employment to 5 lakh young Indians and indirect job
opportunities to a million people, according to the company. The company also has plans to
train students and housewives in customer care and quality services for part-time jobs.
“Reliance Retail plans to introduce private label sale to kirana stores”
Mukesh Ambani’s Reliance retail is understood to be exploring ways to supply its private labels
in food and groceries to Kirana Stores and small retails in the country. A separate entity, most
likely to be named Reliance foods, will carry out the private label business. With out having to
spend much on advertising & marketing expenses apart from generating business volumes.
Sources said that after lunching private labels in food & groceries, Reliance Retail is also
expected to lunch soaps, detergents, cosmetics & non-FMCG products under its private labels
segment with a new brand name. The company flagship chain Reliance Fresh sells staples and
food items under Reliance select and reliance value brands, diary product under “Diary Pure”
brand. Preposition, said Purnendu Kumar.
FARM TO FORK
The Reliance retail company sources say it is setting aside Rs 50,000 crore to build its farm-to-
fork linkage. Reliance has drawn up plans for a presence in 784 towns and 6,000 mandi
(wholesale market) towns with 1,600 rural business hubs to service these. It has already rolled
out 177 Reliance Fresh stores across major towns in 11 states. According to a company report,
RIL is targeting a turnover of Rs 40,000 crore in the next few years.
[35]
36. After Future Group, Reliance Retail plans to introduce private label sale to kirana stores
Reliance Retail is understood to be exploring ways to supply its private labels in food and
groceries to kirana stores and small retailers in the country. A separate entity, most likely to be
named Reliance Foods, will carry out the private label business. Reliance Fresh head Gunender
Kapur was made head of private labels business in the company. Once, they entirely cater to the
demands of their stores, and then they can certainly look at supplying them to other retailers
since they have required infrastructure, process and systems in place.
It is said that after launching private labels in food and groceries, Reliance Retail is also
expected to launch soaps, detergents, cosmetics and non-FMCG products under its private
labels segment with a new brand name. The company’s flagship chain Reliance Fresh sells
staples and food items under Reliance Select and Reliance Value brands, dairy products under
“Dairy Pure” brand.
Kishore Biyani Future Group, too, also have plans to sell its private labels to stores outside the
group and it has already carried out pilot studies for this venture and is expected to start the
business soon. Future Logistics, the logistics arm of the group, also has plans to foray into
wholesale distribution of products such as food, apparel, grocery to organized retail chains in
the country, which is expected to start from this month.
[36]
37. Nearly 2 years ago, Reliance Industries announced an ambitious plan to invest Rs 25,000 crore
to expand its stores in the country to take the advantage of organized retail in the country.
Initially, the company was planning to open 2,000 stores by 2008, and 5,000 stores by 2010, but
due to a delay in delivery of properties, economic downturn and demand slump the company
had to scale back its expansion plans.
Reliance Retail runs over 850 stores, which include stores for food and grocery, consumer
durables, beauty and wellness, jewellery, footwear, among others. Its formats such as apparel
chain Reliance Trends, beauty and wellness format Reliance Wellness, consumer durable chain
Reliance Digital have private labels or are in the process of launching private labels.
The whole idea of private labels is based on pricing and retailers get enough volumes on their
shelf at marginal costing. Retailers have an opportunity to sell their private labels to kirana
stores. But it depends on their strategy on pricing and marketing right products is said by
Naimish Dave, director with OC & C Strategy Consultants.
.Business consultancy Techno Park Purnendu Kumar says retailers can sell their products to
mom-and-pop stores only through their cash and carry ventures as reaching out to individual
stores would be tough preposition. Supplying to kiranawalas is a tedious job as you need to have
different points of sale, enough manpower and transport and delivery systems. But selling
products through cash and carry stores is a viable
SUPPLY CHAIN MODEL OF RELIANCE FRESH
Reliance started its retail operations of reliance fresh stores with following supply chain model.
Procuring directly from the farmers and operating with moderate margin but mass selling was
key to reliance fresh operations for first few months.
The following figure depicts the reliance fresh model
MODEL 1 :-
[37]
38. MODEL 2 :-
Model 2: Whole Sale Trading (WST) Reliance formalized its second supply chain model to
shift itself from grocery retailer to grocery supplier by focusing and establishing itself in
Mandi’s.
Steps in WST model:
1. Reliance has owned farms on contract basis for production of specific crop which is decided
after extensive research depending on
•SOIL CONDITIONS.
•CLIMATE CONDITIONS.
•RETURN OVER COSTS INCURRED.
[38]
39. 2. Different vegetables and fruits from such farms are collected through reliance own logistics
and brought to collection Processing centers where quality check and other required
processing is done. In processing centers workers wearing balaclavas, woolen trousers and
bulky jackets work inside a room kept at a constant 3 0 celcious, peeling and chopping
vegetables, spinning them dry and then heaping them in small plastic packets before placing
them in plastic transport crates. At the other end of the 5,000-sq-m warehouse, men unload
crates of fruits from a truck pulled up to a spotless loading dock. A quality-control expert
samples every tenth crate; if the fruits are good a team will ready them for delivery within
hours to Reliance fresh stores around different places like U.P and as far away as Hyderabad
and even Mumbai (formerly Bombay). If they are not, workers will inspect the entire
shipment and discard anything below standard.
[39]
40. 3. Merchandise from these collection processing centers are collected and loaded for
Wholesale mandi’s. As this merchandise is to be made available by 4 A.M in morning thus
deliveries in trucks are sent at time depending upon:
TRANSIT TIME. – Time required reaching destination i.e mandi’s.
MARGIN TIME. – Time period between a truck reaching mandi and then Unloads. Can
be 2 to 3 hours.
4. From mandi’s where the trucks have been unloaded, roadside vendors and pull carters buy
fruits and vegetables to supply in households.
5. In case still some vegetables and fruits are not sold reliance logistics own transportation
send them to reliance fresh stores
SWOT ANALYSIS ON THE RELIANCE FRESH
Strengths:
Reliance is the first into enter into this unorganized sector of vegetables and fruits. According to
them its intentions to have100% farm fresh foods in their new retail stores. It is also adding
shortly a juice bar, and even a large counter for puja flowers. In fact, over 60 per cent of the
floor space has been dedicated to fresh fruits and vegetables, the rest to other food products like
staples, spices, bakery, etc. But reliance has decided not to add any bar soap or toothpaste and
detergent in its shelves. So by using this strategy they are positioning themselves different from
other players of the industries like Food world, Big Bazaar and Nilgiris. But overcome the short
comings of these specialized stores they are also introducing new Reliance full-fledged
supermarket called Shakhari Bhandar which offers each and everything from the staple to soap.
Most of the staples are under its own private label brand — ‘Reliance Select’. There is a 500g
channa dal pack priced at Rs 28, a 500g urad dal pack for Rs 39, all under Reliance’s own
brand. Excepting a few packets of Nestle’s Maggi, or MTR’s masalas or Pepsi’s Lays chips,
there is very little shelf space given to the big brand owners in the country. Reason: private
labels offer far better profit margin to the retailer than branded products of FMCG companies.
Most of these outlets will need only 2,000-5,000 sq. ft. A supermarket may need as much as
8,000-10,000sq.ft.
Weakness:
This is definitely an interesting business venture but it may miss out on the opportunity to
capture a greater share of the customer’s wallet. For customers, too, this could be irksome, as
[40]
41. they would have to visit another store to pick up essentials. Reliance could easily fix this
problem by adding a few small counters for some basic non-food products. According to their
official this format is not final one they are accepting the new changes which are required to
attract the large number of customers.
Opportunities:
Reliance wants to build a high-profitability business and food is, perhaps, the best venture to
start. That is because the Indian food supply chain is grossly inefficient. There are several
intermediaries, each of whom adds his own profit margin to the cost. Besides, there is huge
wastage in transit. This offers potential for savings and profits. To reduce the cost and increase
the profit it has been sourcing out its requirements from the farmers. For example, the leafy
vegetables, brinjals, tomatoes and green chilies in the Banjara Hills outlet were sourced directly
from farmers in Vantimamdi, Chevella and nearby mandals in Ranga Reddy district of Andhra
Pradesh. The supply chain already has been backed by few hundred farmers the number is
estimated to touch million in next five years. The main aim of the reliance is to eliminate the
intermediaries in the sector and reduce the cost. Smaller stores have two advantages. They bring
down the cost of real estate (and increase profits). It is easier to find space for small
convenience stores in a quiet neighborhood than for supermarkets in high streets.
Threats:
This model is engineered to clock a faster turnover of inventory — Reliance expects consumers
to visit the store at least twice a week for their top-up groceries. Each store will have an
investment of Rs 50 lakh to Rs 60 lakh. Unlike global retailers who operate on thin margins,
Reliance Retail is looking at a fairly high-margin business model. Deliberately stopped short of
being a full-fledged supermarket rather, it has limited itself to a food and grocery convenience
store. They also have a threat from the existing supermarkets which provides all the services to
its customers. For Example Food world and Nilgiris also provides food and beverages with
other personal care products. These convince are not existed in the present Reliance retail
stores.
RELIANCE FRESH IN ORISSA
Reliance fresh stores in Orissa opened on 25th October, 2007. The store was first opened in
Kalpana square, Bhubaneswar. Core business of Reliance Fresh is selling Fruits and Vegetables
to the ultimate customer. When it opened, traders and rode side vendors opposed. Reliance
Fresh is hampering local vegetables vendors business. After that blow Reliance Fresh decided
not to sell fruits and vegetables in Orissa. There are 14 reliance fresh stores in Orissa.
[41]
42. Stores in ORISSA:
Stores in Store location Date of Total area of
Orissa inauguration square ft.
Bhubaneswar Kalpana Square 25/09/2007 2925
Gopobandhu Square 09/10/2007 3259
Lewis Road 30/10/2007 2200
Bomikhal 07/11/2007 6368
Nayapalli,IRC 17/11/2007 4935
Baramunda 24/11/2007 4176
Unit-4 23/02/2008 3428
Saheed Nagar 00/00/2008 5245
Cuttack CDA-Sector-6 22/12/2007 4749
Mahanadi Vihar 22/12/2007
2999
(Sanjivani Chowk)
Dolamundai 08/03/2008 5349
Jhola Sahi 12/03/2008 4921
Kanika Chowk 01/04/2008 0000
31/05/2008
Cantonement
In 2008, without selling fruits and vegetables, Reliance Fresh stores of Orissa are performing
well in nationwide. The average Sq. feet sale of Reliance Fresh in India is Rs. 22 and in Orissa
Sq. Feet sale is Rs. 17 without selling fruits and vegetables. The Head Office of Reliance Fresh
of Orissa is in Fortune tower, Bhubaneswar. Reliance fresh is targeting the Upper class and
Middle class customers. But according to location of these stores Upper class, Middle class, and
Lower class customers are visiting to the store. But, now in the every store in Orissa, are selling
fruits and vegetables.
[42]
43. MARKET COMMUNICATION IN NEW DIGITAL WORLD
Introduction:
“Few industries are under as much pressure as media…thanks to a growing number of
delivery channels and formats, consumers have virtually unlimited options when it
comes to how and when they consume information. While audiences’ appetite for
information and entertainment is truly staggering, providers are finding they must
spread the wealth in a buyer’s market now glutted with delivery points. It’s not
surprising that enterprises — from entertainment, broadcasting and cable companies,
to publishers and digital media innovators — are seeing once-predictable revenue
structures give way as consumers get used to information available virtually on
demand — whenever, however and from wherever they choose to absorb it.”
Long back when marketing was in its baby years and many of its now elementary issues were
assumed to fall within basic concepts of economics (e.g., price setting was viewed as a simple
supply and demand issue) and it had barely differentiated from plain advertising theory.
In the increasing competition of the midst 20th century companies slowly began to realize that
the old ways of selling were losing their ways. As competition grew stiffer across most
industries, organizations started to peek on the consumer side of the transaction as well.
What evolved from there was a new philosophy which suggested that in order to increase sales,
companies needed also to understand the needs and behaviors of their consumers. Not until then
was marketing in its truest sense born. Marketing was now first and foremost about knowing the
consumer and it is very likely that it is from this time that the term “The Customer is King” was
born.
However, up until now marketing have continuously separated between sender and receiver,
companies have send their marketing messages, the consumer have received them and acted
upon the multitude of messages from different companies. The significance of the consumer
being the sender of the marketing message was minimal. Sure, there has always been the impact
of word-of-mouth, but its influence was still not powerful enough to generate a great concern
for management.
Fast forward to 2007, and we can now surely talk about the consumer as being the king. The
Internet connects billions of people across continents and people are actively grouping,
discussing, reading, inventing, sharing and trading online. In an environment like this, where
people are unlimitedly connected with each other, word-of-mouth, or “word-of mouse” rather,
has a completely new meaning. Blogs have on occasions destroyed company images,
plummeted sales, and ruined entire organizations. Companies now have all the reasons in the
world to worry about what people think about them, and they do!
[43]
44. Background:
In the modern society, consumers– just as well as companies, are senders of marketing
messages. Today, people influence other people’s buyer behavior perhaps even to a greater
extent than companies do.
On the other hand, this also means increased opportunities for companies as they too have
access to the World Wide Web and all its functions just like anyone. They can send you
personalized information in an instant and customize marketing messages based on consumer’s
Internet behavior. Companies, too, can utilize the power of blogs, websites, and communities.
The Internet opens up a whole new world of marketing opportunities in this new age of
interconnectedness.
Still, market changes that are occurring today are not only limited to the proliferation of the
web, but all kinds of new technologies of the 21st century are collectively challenging the
traditional market structures and they are continuously forming new conditions to act upon.
Here is an instant time machine in bullet points that will give you a glimpse of what is
happening:
• The difference between broadcast, cable and satellite will become irrelevant
because all screens will be connected to a single pipe that is now known as the
Internet.
• DVRs (digital video recorders) as we know they will die out since all screens will
be powered by computers (read: have memory and web access) and all content will be
available on demand. Cell phones will become DVRs-on-the-go, their storage
capacity accommodating for thousands of programming hours.
• We will be moving from the rule of mass content to the rule of content
communities as TV content recommendation technologies proliferate.
• The mobile phone is not only a media consumption device; it’s also a content
creation device.
• Consumers have moved from owning the means of content consumption to owning
the means of production and ultimately — the means of distribution.
• Nobody knows how a particular device can evolve, least of all its engineers. An
evolution of any medium is shaped by its users.
• If, in the early days of television, a celebrity was somebody who had done
something notable, “A modern celebrity is someone who is recognized by more
people than he himself can recognize.”
It is clear that we are moving towards a situation where the individual has an increasingly
powerful influence on the market and in which customization and personalization to the needs
of the consumer is key.“Strategic Responses to Media Market Changes”
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45. “The pace of market changes is extraordinary, forcing managers, shareholders, and employees
to scramble to comprehend the changes, to develop strategic responses, and to reorganize their
activities. The process is complex and there is difficulty determining where to focus attention
because no single force is behind the changes. Instead pressures are coming from technological
forces, production forces, market forces, social forces, and managerial forces simultaneously.”
Market communication techniques:
Market communication are means by which firms attempt to inform, persuade, and remind
consumers -directly or indirectly- about the products and brands that they sell.
There are various technologies through which companies can interact to consumer and provide
information about a product or services. They are:
Pull vs. Push:
There are basically two ways to receive information, either you actively seek it or it is given to
you.
Pull strategy, when the manufacturer uses advertising & promotion to persuade consumers
to ask intermediaries for the product, thus inducing the intermediaries to order it.
Push strategy, when a manufacturer uses its sales force & trade promotion money to induce
intermediaries to carry, promote, and sell the product to end users.
Example: If you are browsing the Web pages on the Internet, this is considered to be a “pull”
technology because you are the one who actively seek information. Receiving e-mails is, on the
other hand, a ”push” technology since you are given information by another part without
necessarily asking for it.
Direct marketing:
Use of mail, telephone, fax, e-mail or internet to communicate directly with or solicit response
or dialogue from specific customers & prospects.
Customized: The message can be prepared to appeal to the addressed individual.
Up-to-date: A message can be prepared very quickly.
Interactive: The message can be changed depending on the person’s response.
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46. The Internet:
The internet is a global system of interconnected computer networks that use the standardized
Internet Protocol Suite (TCP/IP).it is a network of networks that consists of millions of private
and public, academic, business, and government networks of local to global scope that are
linked by copper wire, fiber-optics cables, wireless connections and other technologies.
The internet carries a vast array of information resources and services, most notably, the inter
linked hypertext documents of the World Wide Web(WWW) and the infrastructure to support
electronic mail, in addition to popular services such as online chat, file transfer and file sharing,
online gaming and voice over internet protocol(VoIP) person-to-person communication via
voice and video.
Since the Internet has a central role in the changes that are studied in this thesis, let us take a
look on how fast and how widespread its usage actually is. Larry Landweber of the Computer
Science Department at the University of Wisconsin, Madison, USA, has created some maps that
suitably illustrate this matter.
[46]
47. This first map shows the differential levels of network connectivity in September 1991:
Map of International Connectivity, 1991. the next map is from June 1997 and the
vast proliferation after only six years is very evident.
[47]
48. Map of International Connectivity, 1997.
Even though the last map shows how nearly the entire world is connected, it is still from 1997
and thus quite old. Nowadays the whole world is more or less considered to have Internet access
and it is instead the number of Internet users within each country that is studied. Antonio
Scarponi (2005) has created an animated map of the world showing the growth of Internet users
from 1993 and predicted to 2015, the following map depicts the predicted Internet usage 2015
and uses a cartogram representation where the size of the country is based on the number of
Internet users rather than the geographical area.
Internet Users World Map, 2015.
It is evident that the Internet is extremely widespread, and that its formation was quite rapid,
particularly in comparison with that of television which was discussed earlier. The point here is
that changes and evolvements in technology and society take place with varying paces and with
varying effects. In the same reasoning, the authors believe that the changes that are explored in
this thesis will have a dramatic impact on how companies communicate in their markets, how
consumers retrieve information, communicate, buy commodities and receive services in their
daily lives. It can be discussed how long it will take until there is a dramatic result on society as
a result of the current changes; will it take more than thirty years as in the case of television, or
will it be faster as in the case of radio and the Internet? However, it is much more important to
realize that the changes are actually occurring, and that they are gradually imposing companies
to respond as it was made clear in the introduction of the thesis, and it is thus even more
[48]
49. important to try to grasp the changes and try to realize what they imply – which is exactly why
the authors have dedicated themselves to this thesis.
Streaming Audio and Video:
Traditional techniques for receiving multimedia over the Internet required that you first
download the content, and not until the completion of the download could you watch or listen to
it. Nowadays, however, you can watch or listen to content on the Internet at the same time as
you are receiving it, this is what is called “streaming”. It implies major benefits in regards to not
having to wait and it generally enriches the experience of the Internet, making it more vibrant
and dynamic.
YouTube:
YouTube is a video streaming site owned by GOOGLE, it grows by an addition of 65,000 new
videos every day and over 100 million video clips are watched each day by people allover the
world. The videos can easily be forwarded to friends over the Internet but recently, however, the
videos are being increasingly forwarded to cell phones as well.
YouTube is extremely huge communities where members upload, view, forward, saves and
comment on video clips in virtually all possible topics. This enormous reach has, of course,
attracted businesses to join the network and even the United States Army has recently started to
use YouTube for uploading videos from the war in Iraq.
[49]
50. Joost:
Joost is a new computer based, ad financed television service that differs from YouTube in the
sense that all material is straightly from the content producers which resolves any copyright
issues. On YouTube, on the other hand, many members upload recorded content from other
sources, such as movies or TV shows, which can cause copyright issues with the original
content producer and/or provider.
Regarding the interface, Joost operates on full screen and the user can switch between channels
just as with regular television. Rather than running directly on the Web browser, like YouTube,
Joost is instead installable software available for both Mac OS and Windows. The software is
not completely finished but a beta version is available through invitation and one of the authors
has managed to receive one.
MySpace:
MySpace.com, which was launched less than two years ago, is the fifth ranked web domain in
terms of page views. It integrates web profiles, blogs, instant messaging, e-mail, music
downloads, photo galleries, classified listings, events, groups, chat rooms, and user forums, and
MySpace.com has thus created a connected community where users put their lives online.
[50]
51. Here is a quote from a press release by com-Score - a measurer of the digital world, in
September 27, 2006:
“MySpace fares particularly well in U.S. user engagement. The site ranks first among all sites in
individual video streams initiated by U.S. users with nearly 1.5 billion streams, which
represented 20 percent of all videos streamed by U.S. Internet users in July. The typical U.S.
streamer on MySpace initiated an average of 39 streams during the course of the month, or
slightly more than one per day.”
RSS:
RSS (Rich Site Summary or Real Simple Syndication) is a format for delivering regularly
changing web content. Many news-related sites, weblogs and other online publishers syndicate
their content as an RSS Feed to whoever wants it.
RSS solves a problem for regular users of the web. It allows you to easily stay informed by
retrieving the latest content from the sites you are interested in, you thus save time by not
needing to visit each site individually and you ensure your privacy by not needing to join each
site's email newsletter.
Webcasting:
A webcast is a media file distributed over the Internet using streaming media technology. A
webcast may either be distributed live or on demand. Essentially, webcasting is “broadcasting”
over the Internet.
The generally accepted use of the term webcast is the "transmission of linear audio or video
content over the Internet".
A webcast uses streaming media technology to take a single content source and distribute it to
many simultaneous listeners/viewers.
The largest "webcasters" include existing radio and TV stations that "simulcast" their output, as
well as a multitude of Internet only "stations". The term webcasting is usually reserved for
referring to non-interactive linear streams or events.
Rights and licensing bodies offer specific "webcasting licenses" to those wishing to carry out
Internet broadcasting using copyright material.
[51]
52. Webcasting is also used extensively in the commercial sector for investor relations presentations
(such as Annual General Meetings), in E-learning (to transmit seminars), and for related
communications activities. However, webcasting does not bear much, if any, relationship to the
idea of web conferencing which is designed for many-to-many interaction.
The ability to webcast using cheap/accessible technology has allowed independent media to
flourish. There are many notable independent shows that broadcast regularly online. Often
produced by average citizens in their homes they cover many interests and topics. Webcasts
relating to computers, technology, and news are particularly popular and many new shows are
added regularly.
Podcasting:
Podcasting is quickly becoming a buzzword today and it simply implies online audio content
that is delivered through an RSS feed. Many people describe podcasting as radio on demand.
However, podcasting gives significantly more options in terms of content than radio does. In
addition, with Podcasting, listeners can determine the time and the place, meaning they decide
what programming they want to receive and when they want to listen to it.
Blogs:
A blog (a contraction of the term "weblog") is a type of website, usually maintained by an
individual with regular entries of commentary, descriptions of events, or other material such as
graphics or video. Entries are commonly displayed in reverse-chronological order. "Blog" can
also be used as a verb, meaning to maintain or add content to a blog.
Many blogs provide commentary or news on a particular subject; others function as more
personal online diaries. A typical blog combines text, images, and links to other blogs, Web
pages, and other media related to its topic. The ability for readers to leave comments in an
interactive format is an important part of many blogs. Most blogs are primarily textual, although
some focus on art (art log), photographs (photo blog), sketches (sketch blog), videos (vlog), music
(MP3 blog), and audio (podcasting). Micro-blogging is another type of blogging, featuring very
short posts.
As of December 2007, blog search engine Technocratic was tracking more than 112 million
blogs.
[52]
53. Peer-to-Peer (P2P) Computing:
Peer-to-peer (P2P) networking is a method of delivering computer network services in which
the participants share a portion of their own resources, such as processing power, disk storage,
network bandwidth, printing facilities. Such resources are provided directly to other participants
without intermediary network hosts or servers. Peer-to-peer network participants are providers
and consumers of network services simultaneously, which contrasts with other service models,
such as traditional client-server computing.
This was mostly done in order to share files or scarce resources such as printers in company or a
school computer lab, for example. Today, however, we have the same server-client structure
across the entire Web and each separate computer can act as a server as well as being a client,
this consequently implies a significant decentralization of the Internet.
E-Procurement:
Websites are organized around two types of e-hubs: vertical hubs centered on industries
(plastics, steel, chemicals, and paper) and functional hubs (logistics, media buying, advertising,
energy management). In addition to using these web sites, companies can do e-procurement in
other ways:
• Direct extranet links to major suppliers: companies can setup extranet links to its major
suppliers. It can setup a direct e-procurement account at Dell or office depot, and its
employees can make their purchases this way.
• Buying alliances: Several companies buying same goods join together to form
purchasing consortia and gain deeper discounts on volume purchases.
Coca-Cola, Sara Lee, Kraft, PepsiCo, Gillette, P&G and several other companies joined forces
to form a buying alliance called Transora to use their combined leverage to obtain lower prices
for raw materials. Transora members also share data on less expensive ways to ship products
and track inventory.
Mobile Internet:
Audio and video streaming generally enriches the experience of the Internet, making it more
vibrant and dynamic, however, streaming technology not only enriches the Internet but it may
also be the strongest force for significantly extending the Internet to cell phones. Internet traffic
has increased significantly much due to the growing popularity of video streaming sites such as
YouTube, and it speculates that this popularity will spill over to the telecommunications sector.
When you can browse the Web on your cell phone just as you do on your computer, the barriers
are gone, and the article mentions Australia, Japan and South Korea as examples where young
people already are walking the streets watching YouTube clips on their cell phones.
[53]
54. However, Mobile Web access today still suffers from interoperability and usability problems.
This is partly due to the incompatibility of the format of much of the information available on
the Internet with mobile devices and partly due to the small physical size of the screens of
mobile devices and other device limitations. Mobile Internet involves a trade-off between reach
(portability) and richness (small screens and keyboards), where the latter is sacrificed for higher
reach and mobility. In Japan, use of the mobile Internet really has gained foothold.
M-Commerce:
Mobile commerce also known as M-commerce, M-Commerce or U-Commerce, owing to the
ubiquitous nature of its services) is the ability to conduct commerce, using a mobile device e.g.
a mobile phone (cell phone), a PDA, a Smartphone and other emerging mobile equipment such
as dashtop mobile devices. Mobile commerce has been defined as follows:
Mobile commerce is any transaction, involving the transfer of ownership or rights to use goods
and services, which is initiated and/or completed by using mobile access to computer-mediated
networks with the help of an electronic device.
Few typical examples of m-commerce:
• Purchasing airline tickets
• Purchasing movie tickets
• Restaurant booking and reservation
• Hotel booking and reservation
• Mobile banking
• Mobile brokerage
If we really stretch our creativity and try to imagine the possibilities of m-commerce beyond,
for example, downloading ring tones and wallpapers, this leads us to the next notion of wireless
advertising.
Wireless Advertising:
The advertising industry is extremely excited about the idea of reaching high-income earners
anywhere and everywhere for promoting the products and services of its sponsors, and that
wireless internet makes this technically possible.
[54]
55. Possibilities of mobile Internet using the following examples:
“Say you are driving down the freeway. As you approach an exit, your wireless phone is
suddenly deluged by come-ons from fast food restaurants that are located just off the exit ramp.
Or you’re in an unfamiliar city on a business trip, you have time to kill after your meeting, and
you feel like browsing in a bookstore. Your cell phone can provide you with the location of the
closest Barnes & Noble.”
MARKET COMMUNICATION
Definition:
Market communications are means by which firms attempt to inform, persuade, and remind
consumers -directly or indirectly- about the products and brands that they sell. Marketing
communications represent the “voice” of the brand and are a means by which it can establish a
dialogue and build relationships with consumers.
[55]
56. Marketing communication performs many functions for consumers. Consumers can be told or
shown how and why a product is used, by what kind of person, and where and when; consumers
can learn about who makes the product and what the company and brand stand for; and
consumers can be given an incentive or reward for trial or usage. Marketing communications
allow companies to link their brands to other people, place, events, brand, experiences, feeling
& things. Marketing communications can contribute to brand equity by establishing the brand in
memory and crafting a brand image. Advertising so often a central element of a marketing
communications program.
Figure of element of communication process:
Communication process at Reliance Fresh:
First discuss the whole communication process models with reference to reliance fresh. The
communication process (Macro model of communication) involves two elements represents the
major parties in a communication- Sender and Receiver while the other two represents the
communication tools- Message and Media.
Sender: Here sender is Reliance fresh; it encodes the information regarding the promotions and
offers for its potential customers. . The tools of communication are discussed further.
[56]
![IDENTIFICATION
Name of the student : Soumya Ranjan Sahoo
Enroll No. : 56317UT02105
Registration no : 36088/07
Project Topic : Market Communication in a New Digital
world of Reliance Fresh
Session : 2007-2010
Course name : BBA
Institute : Asian School of Business Management.
University : Utkal University
Project Guide : Mr. Bipin Satapathy
Faculty Guide : Mr. Prof B Bramha
Date of Issue: 18.05.2009
Date of Submission: 20.06.2009
Soumya Ranjan Sahoo
3rd year BBA
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