Other retailers stay firm as RIL wobbles in UP

A few days back, Reliance Retail decided to blank out Uttar Pradesh from its ambitious growth plans after small grocers ransacked its stores in the state. The proposed 120 Reliance Fresh outlets in the state were scrapped and 870 employees were handed pink slips.

The company now fears Orissa would suffer a similar fate. Its first store at Bhubaneswar was attacked recently soon after the opening.

"We have still not heard from the Orissa government, but we will not open shops right now. We have no intentions of opening shops that will be targeted by mobs," said a Reliance Retail source.

With its stores under attack in more and more states, Reliance Retail will have to seriously revisit its rollout plans. There have been protests against it in Madhya Pradesh, Uttar Pradesh and now Orissa. Left-ruled Kerala has already said that it views large retail chains with a great deal of scepticism.

At the moment, Reliance Retail Chief Executive (operations and strategy) Raghu Pillai says that the rollback is limited to Uttar Pradesh.

"At the end of the day, there has been no forward movement by the Uttar Pradesh government. The situation is too unpredictable and therefore we decided on this course of action," he said.

However, sources close to Reliance Retail said the tactical withdrawal from the state may be aimed at forcing the state government into taking a quick decision on the fate of organised retail in the country's most populous state. It is worth noting that the company has still not terminated the lease for any of its shops in Uttar Pradesh.

Meanwhile, civil society activists have decided to throw in their lot with traders and grocers on the issue, which could only make things worse for Reliance Retail.

Interestingly, some people who have been associated with the shutting down of the stores said that they would target Reliance Retail alone amongst the large grocery chains because it was a part of the country's largest business house.

Little wonder, all other retailers Business Standard spoke to said they would all go ahead with their expansion plans.

Subhiksha, the Chennai-headquartered chain of supermarkets and pharmacy chains, is going ahead with its plans in UP. "We will carry on with our plans of 120 stores in the state. We have already crossed the 50 per cent mark by opening 60 outlets," said R Subramanian, managing director, Subhiksha.

Big Bazaar, the hypermarket promoted by Kishore Biyani, also remains gung-ho about its roll out plans. There are six such stores and another four will be opened in the next few months.

Though Big Bazaar CEO Rajan Malhotra terms the protests as "not good for the sector", he adds: ''UP is a growing market and we do not want to scale back our operations. We will go ahead with our expansion plans in the state."