IndiaRetailBiz

Reliance Retail, the retail arm of Mukesh Ambani owned Reliance group, which began rolling out its US$ 6 billion (Rs. 25,000 crore) “farm to fork” retail strategy 18 months ago, in November, 2006, from Hyderabad, is unhappy with the tardy progress made so far, as it appears to be faltering on growth targets.

Contrary to periodic announcements made by its top honchos, and despite legendary project execution skills of the group, Reliance Retail has not achieved even 60% of the target set for the rolling out its flagship food and grocery retail chain called “Reliance Fresh.” It has so far launched only 585 stores of this chain against the original target of launching 1,000 stores 2007 end.

The progress in case of other general and speciality formats is even worse, where in some cases achievements are less than even 10% of the targets. While, it could open only four stores of Reliance Mart (Hypermarket) and three stores of Reliance Super (Mini-hypermarket) in ‘general’ category, it has not gone beyond double digits in ’speciality’ categories like durables, apparell, books, music, and jewellery. Most of these formats, in fact, have less than five stores each.

While political hostility, as far as the ‘fresh’ chain is concerned, has been a very big impediment in the progress, Reliance’s progress in other areas to say the least has also been quite tardy, where it did not have to face any such hurdles.

Perhaps, this can be attributed to the nature of retail business itself, which unlike its other businesses is not so technology intensive and is also not location specific. Retail business is not only highly dispersed but subject to plethora of widely differing statutory provisions that change from state to state and in some cases even district to district. Moreover, retail business also calls for heavy interface with people than most other businesses. Reliance, in short, has not fully succeeded in getting handle on this business.

Reliance has also not succeeded in implementing its “farm to fork” strategy. Not only farm land is highly fragmented in size as well as ownership, existing agri-laws on cultivation and marketing in most parts of the country are also not conducive to undertake organised business. Reliance, contrary to expectations, has also been not able to eliminate intermediaries’ role in agri business which is critical for economic viability of organised retail business. Add to this the woes of sky rocketing real estate prices, shortage of skilled manpower, poor state of logistic and support services, and the picture becomes clear.

Taking stock of the grim situation, Reliance Group Boss Mukesh Ambani, who according to an exclusive news report broadcast by CNBC18, recently met top retail honchos has asked them to go slow on roll out plans, particularly in non-urban areas and in the states like Uttar Pradesh, Jharkhand, Bihar, Orissa, M.P., Kerala, and West Bengal, where the ruling parties are outright hostile to growth of organised retail, or where small traders and activists are strident in opposition to the entry of big corporates in retail.

The meeting of the top retail executives called last week to discuss and review progress of the retail business among others was attended by Raghu Pillai, Chief Executive, Reliance Retail.

When contacted, Reliance refused to comment on the report, says the channel.