Reliance pushes forward in India

Reliance pushes forward in India

Reliance Industries, the parent of Reliance Fresh, along with other retailers, including Wal-Mart, has teamed up with Bharti Enterprises, to change the way Indians shop. So far 220 Reliance supermarkets have opened in 20 Indian cities since the rollout began last November. Plans call for 2,500 outlets in the next four years, including 500 hypermarkets.

The retailers' plans are generating opposition from wholesalers, other middlemen, and leftist political parties, which estimate that small-scale retailing provides livelihoods to about 20 million urban workers and 12 million rural vendors. To stem such opposition, Reliance has been opening bulk-buy stores called Ranger Farms in the early-morning hours that allow street vendors to buy at wholesale prices from the Reliance supply chain, thereby increasing their margins.

That hasn't stopped the Communist Party of India (Marxist), which initially focused on blocking foreign investment in the retail sector, from calling for restrictions on the number and size of large stores that can be opened in a single locality. They also want protection for farmers who sell to large retail chains and will, they fear, be bullied into accepting low prices.

Reliance and Bharti argue that their supply chains will replace corrupt officials and middlemen who run the current purchasing and distribution system, and reduce waste of up to 40% of produce sent to urban areas.

The rapid growth of the retail sector, together with shoppers' preferences in developed markets around the world for both big and small outlets, should mean that the impact on the mom-and-pops will be far less than feared.
(Source: Fortune International)
Published 02-07-2007 (10:05) by Karen Willoughby

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