IndiaRetailBiz

Strident, and many a times violent, opposition to the entry of big corporate houses in retail, particularly of Reliance group, has finally taken its toll, as it has decided to shut down 20 of its ‘Fresh’ shops that were operating for many months in Noida and Gaziabad towns which fall within Uttar Pradesh part of NCR and lay off 850 of its front-end employees in the state. Reliance has a personnel strength of 2,800 employees in the state. This decision will also adversely affect the investment of Rs. 9,000 crore that the group had earmarked for its retail business in the state.

Although, there is no blanket ban on Reliance’s stores in Uttar Pradesh, frequent disruptions and sudden reversal of agriculture policy are said to be reasons that have forced the group to take such a harsh decision.

This decision of the group could slow down progress of its Rs. 25,000 crore retail roll out in the country. According to ‘NDTV Profit’ report, Reliance may pare its target of setting up 2,000 stores in the next one year to 1,000 stores.

Reliance Retail, the retail arm of the group, has so far set up over 320 ‘Fresh’ stores across the country, thirty of which are located in Uttar Pradesh. Apart from ‘Fresh,’ which is convenience format, Reliance has also set up a speciality store in the state called Reliance ‘Digital’ at Gaziabad. While ‘Fresh’ stores sell food and grocery items of daily needs, ‘Digital’ store sells consumer durables. Reliance has also set up a hypermarket called Reliance ‘Mart’ in Ahmedabad.

“The UP government should withdraw its earlier order of closing down Reliance-owned retail stores, otherwise the decision will be seen and interpreted as a clear case of selective victimisation and will also have impact on future investment inflows,” said Assocham in a statement while urging the UP government to re-open the outlets in the state.

Assocham has also requested Reliance Industries Chairman Mukesh Ambani not to act in haste to exit from UP as it will have wider repercussions, adversely hitting interests of consumers and farmers.

As reported earlier, the state government in Uttar Pradesh, in the wake of protest from traders and street vendors in Lucknow, had ordered closure of all standalone food and grocery retail stores owned by big corporates on 23rd August, 2007. It had also set up a high powered committee of Secretaries to go into all aspects of retail trade and submit its recommendations on the same within a month. No report has been submitted so far by the committe, although more than a month has passed since closure of the shops.