RIL beats local stores in initial retail run

Kirana shops and greengrocers have found a new challenge to grapple with.

This is a business strategy definitely not taught at Harvard, but Reliance retail could just find itself being subjected to the innate shrewdness of the mom -and-pop store owners.

Among the 3,000-odd customers who have been shopping at the Reliance Fresh store at Noida , since its inauguration on January 29 are some neighbourhood Kirana shop owners. They buy flour, edible oil rice and other groceries to replenish their inventories, to be resold later.

"When I found Reliance Fresh was offering one pack free with every two packs of edible oil, I wanted to buy the entire stock. Since I was allowed to buy only one, I sent my staff to buy more packs," Vinay Kumar, who owns a Kirana store close to Reliance Fresh, says nonchalantly.

But initial indications suggest that the smaller stores are in for a tough time, the tactics not withstanding.

Ever since Reliance Retail set up its grocery and vegetable store in New Delhi's buzzing suburb, Kirana shops as well as greengrocers have found a new challenge to grapple with. Reliance Fresh is offering vegetable at prices that are up to 50 per cent below the mandi rates. Deals offered on groceries too are unmatched. Several shops close to the store have put up banners announcing discount sales in the last few days.

Within less than ten days of its inauguration, the store has over 3,000 customers every day and a day's sales amount to over Rs 4 lakh.

Reliance scores heavily over local fruits and vegetable vendors on account of its strong backward integration.

"Collection centres for various commodities (potato in Uttar Pradesh and West Bengal, onion in Nasik and so on) are being set up across the country, where we procure directly from the farmers. Cold storage facilities are in place for grading and sorting. Thus, the farmer's produce, which is local, reaches to national consumers. While ensuring better price to farmers, this also offers value to consumers in terms of quality and price," said a Reliance Retail executive.

The sourcing of the Fast Moving Consumer Goods (FMCG) is being done in bulk by Reliance and thus here too it is able to sell it at a price marginally lower than the Kirana stores.