still aim at ‘Fresh’ strategies.
The most realistic scenario for Reliance Fresh
now is to perhaps co-opt the middlemen in their retail journey. Those in the know say that there are at least, four to seven levels of intermediaries between the farmer and the consumer. Reliance was planning to eliminate all of them. If instead, Ambani works out a strategy to make at least a few of the intermediaries a part of their supply chain, by upgrading their storage facilities & skill sets. If nothing else, the number of those protesting will subside substantially.
Another strategic move would be to engage local grocery stores as Reliance Fresh franchises. “At least, that way the grocery guys will begin feeling that it is not a zero-sum game,” opines an industry insider. In turn, Reliance will also benefit from their unparalleled proximity to consumers, convenience and services offered.
There are still others, like Prof. Mohanbir Sawhney, Director of the Center for Research in Technology & Innovation at Kellogg School of Management, who believe that the capital-intensive business model of Reliance Retail makes their ventures very risky. But industry insiders say that that’s another chicken and egg story. “In the absence of effective back-end operations viz. transportation and storage, it is tough for companies like Reliance to effectively stock their front end and wait endlessly for someone else to bring the back-end up in order,” avers Asitava Sen of KSA Technopak. And once Reliance sets up the back-end infrastructure, they may later lease it to others to operate and focus on their core business. Another option for Mukesh Ambani is to set his eyes on the cash & carry business, like German major Metro and South Africa’s Shoprite are doing. Since FDI is allowed in the cash & carry segment, the B2B business model propounded by these stores is emerging as a potent tool for global retailers to tap into India’s high-potential semi-urban and rural markets. This way, instead of supplying to consumers directly, Reliance Fresh will instead be supplying to a battery of small retailers, who would prefer Reliance Fresh produce because of its lower prices. “Instead of reaching out to 6,25,000 villages, you just cater to 60,000 retailers. This way, Reliance Fresh will ensure that ‘unorganised’ wholesale market is turned into ‘organised’ wholesale market,” offers Sen. He adds that while Reliance Fresh’s entry into wholesale instead of retail may still spark off another series of protests, at least the numbers will stay limited.
But knowing the fearless entrepreneur that Mukesh Ambani is and his legendary Midas touch, chances of him bowing coyly out of modern retail is almost the imagination of an overstretched mind. And even as Ambani mulls his future course of action, the violent furor caused by his entry in the segment continues unabated. The latest to join the bandwagon is Reliance Retail’s home state, Maharashtra, with a consortium, consisting of FDI Watch, All India Kisan Sabha, Bhartiya Mazdoor Union and the Confederation of Indian Traders (CIT), organising a mass rally on October 10 in Mumbai. “Reliance Retail’s foray into food and grocery retail is dangerous for the economy and livelihood of over 12 million local vendors and traders across the country,” says Dharmendra Kumar, whose FDI Watch has been agitating vociferously against FDI in retail in the country, specifically Wal-Mart’s proposed India foray. “It’s not just Reliance Retail, we’ll block any big corporate getting into the retail sector till there is a proper national retail policy in place to protect the interests of local grocery stores, vendors and farmers,” he adds emphatically.
The most realistic scenario for Reliance Fresh
now is to perhaps co-opt the middlemen in their retail journey. Those in the know say that there are at least, four to seven levels of intermediaries between the farmer and the consumer. Reliance was planning to eliminate all of them. If instead, Ambani works out a strategy to make at least a few of the intermediaries a part of their supply chain, by upgrading their storage facilities & skill sets. If nothing else, the number of those protesting will subside substantially.Another strategic move would be to engage local grocery stores as Reliance Fresh franchises. “At least, that way the grocery guys will begin feeling that it is not a zero-sum game,” opines an industry insider. In turn, Reliance will also benefit from their unparalleled proximity to consumers, convenience and services offered.
There are still others, like Prof. Mohanbir Sawhney, Director of the Center for Research in Technology & Innovation at Kellogg School of Management, who believe that the capital-intensive business model of Reliance Retail makes their ventures very risky. But industry insiders say that that’s another chicken and egg story. “In the absence of effective back-end operations viz. transportation and storage, it is tough for companies like Reliance to effectively stock their front end and wait endlessly for someone else to bring the back-end up in order,” avers Asitava Sen of KSA Technopak. And once Reliance sets up the back-end infrastructure, they may later lease it to others to operate and focus on their core business. Another option for Mukesh Ambani is to set his eyes on the cash & carry business, like German major Metro and South Africa’s Shoprite are doing. Since FDI is allowed in the cash & carry segment, the B2B business model propounded by these stores is emerging as a potent tool for global retailers to tap into India’s high-potential semi-urban and rural markets. This way, instead of supplying to consumers directly, Reliance Fresh will instead be supplying to a battery of small retailers, who would prefer Reliance Fresh produce because of its lower prices. “Instead of reaching out to 6,25,000 villages, you just cater to 60,000 retailers. This way, Reliance Fresh will ensure that ‘unorganised’ wholesale market is turned into ‘organised’ wholesale market,” offers Sen. He adds that while Reliance Fresh’s entry into wholesale instead of retail may still spark off another series of protests, at least the numbers will stay limited.
But knowing the fearless entrepreneur that Mukesh Ambani is and his legendary Midas touch, chances of him bowing coyly out of modern retail is almost the imagination of an overstretched mind. And even as Ambani mulls his future course of action, the violent furor caused by his entry in the segment continues unabated. The latest to join the bandwagon is Reliance Retail’s home state, Maharashtra, with a consortium, consisting of FDI Watch, All India Kisan Sabha, Bhartiya Mazdoor Union and the Confederation of Indian Traders (CIT), organising a mass rally on October 10 in Mumbai. “Reliance Retail’s foray into food and grocery retail is dangerous for the economy and livelihood of over 12 million local vendors and traders across the country,” says Dharmendra Kumar, whose FDI Watch has been agitating vociferously against FDI in retail in the country, specifically Wal-Mart’s proposed India foray. “It’s not just Reliance Retail, we’ll block any big corporate getting into the retail sector till there is a proper national retail policy in place to protect the interests of local grocery stores, vendors and farmers,” he adds emphatically.
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