Reliance Retail looks at India’s small towns

After targetting India’s mega cities first, Reliance Retail unfolded plans to roll out a retail infrastructure that caters to towns with a population of less than 50,000 people. The ambitious retailer intends to build 200 stores and 665 rural business hubs in 850 towns in the country. Reliance Retail unfolded its plans against a background of media reports that it was laying off hundreds of workers in regions where opposition against the retailer is strong.

Reliance Retail’s plans sound as if they support the agricultural and socio-economic development of India. The Indian newspaper Business Standard described the new stores as having some 20 per cent of their selling space allocated to local vendors of fresh foods and artifacts. The rural hubs will be used for the procurement of fresh foods, providing farmers with a channel of distribution.

Still, there is much opposition against Reliance Retail by small traders – often backed by politicians – who fear to be out of business due to competition from modern retail structures. The AFP newswire quoted a company official who confirmed that Reliance Retail sacked 150 grocery workers in communist-ruled West Bengal state. "There were around 150 contract staff who were let go," the official said, calling media reports that 400 were dismissed in the eastern state too high. Initially Reliance Retail wanted to launch around 145 grocery stores and other retail operations in West Bengal.

Last week Reliance Retail dismissed 1,000 of its 2,000 employees and froze operations in India's most populous state Uttar Pradesh after violent protests by small traders there. The protests led the Uttar Pradesh government to order Reliance stores to close, citing law and order worries. "We have decided to go slow in both West Bengal and Uttar Pradesh," said the Reliance official to AFP.