Now, 14 months after it launched grocery stores under the Reliance Fresh brand name, Reliance Retail Ltd (RRL) has embarked upon mass operational restructuring of its various retail formats. If sources are to be believed, each vertical will soon become separate companies headed by independent CEOs.
Speaking to Indiaretailing, sources close to RRL informed: “Reliance Retail will soon become a typical ‘pipal’ tree with a number of retail branches spanning across various formats. If the projected investments for food and grocery stores (Reliance Fresh) don’t happen, the company will float various other formats, which are money drivers and at the same time suitable for the Indian atmosphere.”
At present, the company’s retail verticals like Reliance Fresh, Ranger Farms (the agri and farm produce vertical), Reliance Dairy Foods Limited, Reliance Digital for consumer durables and information technology, Reliance Mart (hypermarket), Reliance Trendz (apparel store), Reliance Wellness offering wellness products, Reliance Footprint (footwear store), Reliance Jewels (jewellery store), and Reliance Timeout (books, music, stationery, toys and gifts store that opened today in Bengaluru) are into direct retail business.
When quizzed about the various formats that are likely to come up in the near future, the sources divulged: “Reliance is test-watering various retail grounds. Each format will be floated under existing arms, and later it will be made into a separate profit centre or company according to the results that it makes in the short run. However, Reliance Retail Ltd will be the holding company for each of these new verticals. For example, the recently floated Reliance Footwear and Reliance Jewels, placed under the lifestyle format, are expected to get their own retail identities.”
According to reports, the restructuring will enable each vertical to set up its own sourcing, supply chain and distribution channels, and, hence, not depend on a common pool for such activities. Also, creation of separate profit centres will make it easier for RIL to close down any particular vertical that does not perform as per expectations.
Ranger Farms will be headed by Gunender Kapur, who will handle different functions such as sourcing, collection and distribution of farm produce. Till now, Ranger Farm outlets have been used as B2B centres from where push-cart vendors and other retailers can buy fresh fruit and vegetables for selling on their own.
Lifestyle will also be structured in a similar fashion. The company’s lifestyle vertical includes Reliance Jewels, Reliance Footwear, Reliance Trendz, and Reliance Timeout. Similarly, it is learnt that the company is working on floating a new home fashion vertical.
Meanwhile, the Rural Business Hub (RBH) concept will soon be on track. To be headed by Sanjeev Asthana, the RBH vertical is expected to develop mega rural centres besides taking care of land acquisitions for the purpose and offering value-added services to farmers such as high-quality seeds, hospitals and road infrastructure.
“RBH can act as a medium to drive out the worries of farmers against organised retailing. Reliance, being barred by governments, political outfits and local merchant bodies in states like Uttar Pradesh, West Bengal, Kerala, Orissa, and Uttarakhand, should work on a strategy whereby they can convince those sloganeering against them,” said an industry watchdog. He added that the protests plague is likely to spread to other states like Tamil Nadu, Karnataka and Maharashtra, where small vendors have started to unite against organised retailing.
Currently, the company operates more than 430 Reliance Fresh stores in various cities and its earlier target was to reach 2,000 stores by 2011. During the initial months after its announcement to enter the retail business, Reliance had said that it planned to open more than 6,000 stores – a mix of hypermarkets, speciality stores and fresh-produce stores – at an investment of Rs 25,000 crore over five years.
In September, Reliance silently floated a new group arm Reliance Brands Pvt. Ltd for acquisitions, joint ventures and strategic alliances with international brands straddling the premium-to-luxury end of the market. According to reports, Reliance Brands, spearheaded by VF Arvind Brand’s ex-chief Darshan Mehta, is inking a joint venture with Italian fashion powerhouse Sixty Group to bring in brands like Miss Sixty, Energie, Killah and Murphy&Nye.
– Vishnu Rageev R, Bengaluru Bureau