THE RELIANCE RETAIL LIMITED

A report on the organization study submitted in partial fulfillment of

the requirements for the MBA (Full time) Degree of the

Mahatma Gandhi University

Submitted by

MARIA JOSE MReg. No.224342010-12 Batch

Focus on Excellence

FISAT BUSINESS SCHOOL

Hormis Nagar, Angamaly, Cochin –683 577.

June 2011

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ACKNOWLEDGEMENT

I use this opportunity to extend my sincere thanks to Dr. P A

Mathew, Dean and Director of FISAT Business School for providing the opportunity

to undertake this study. I am extremely grateful to Mr. Thejo Jose Lecturer, FISAT

Business School, for his active guidance and support.

I am also thankful to Mr. Nagendra Kumar, Deputy HR Manager,

Reliance Fresh Limited, Bangalore for permitting me to do the study. I wish to

acknowledge, the valuable guidance and supervision offered by Mr. Hemanth

Nagaraj, Manager in F & V section, Reliance Fresh Limited, Bangalore. I am also

thankful to all other Department Heads for their Kind co-operation and assistance.

I express my deep sense of gratitude to my beloved family members

and friends.

Above all, I thank the almighty for his blessings for the completion

of my study.

Maria Jose M

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DECLARATION

I hereby declare that the Organizational Study Report entitled RELIANCE RETAIL

LIMITED is a record of bona-fide work done by me in Reliance Retail Limited during

may- June 2011 under the supervision of Mr Nagendra Kumar, Deputy Manager in

HR, Reliance Retail ,Bangalore and Mr Thejo Jose, Faculty Guide, Fisat Business

School, and that no part of this report has formed the basis for award of any degree,

diploma, associate ship, fellowship or any other similar title or recognition in any

other institution.

Hormis Nagar Maria Jose M

Date:

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CONTENTS

Industry Profile

Introduction on Retail Industry 6

Indian Retail Industry 10

Challenges facing Indian Retail Industry 15

Company Profile

Reliance Group 16

Reliance Retail 21

Reliance Fresh 39

Work Flow Model of Reliance 34

Organizational Structure 35

Functional Departments

Marketing Department 37

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Human Resource Department 39

F&V Department 44

Finance Department 47

Operations Department 54

Information technology Department 58

SWOT Analysis 59

Conclusion 62

Bibliography 63

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Chapter 1

INTRODUCTION ON RETAIL INDUSTRY

Retail the term which is the buzzword in today’s day to day life is not at all a

new concept and was there since the barter trade days. But the fact is that it has

been modified, changed and has been given a new look and thus it has come

under the flood lights i.e., as per the old proverb ‘old wine, new bottle’. India

retailing boom is the result of rapid globalization and the recognition of being a

very potential market by big giants and foreign companies making the market

more competitive. This has cause existing retailers to re-tailor their strategies to

suit the new landscape.

Today Indian market is a ‘hot cake’ in the field of retail and is enticing

enough for every retailer to eye for a bigger piece of it. When we talk about

organized retailing, with economy booming, competition in the market place is

fierce. India is all set to experience the phenomenon of a global village. India

Tops A T Kearney’s list of emerging markets for global retailers for the 3rd

consecutive years. It is the 2nd fastest growing economy in the world. India is

the 3rd largest economy in terms of GDP in the next 5 years. India is rated

among top 10 FDI destinations. India is the fastest growing market in Asia-

Pacific for international tourist spending, according to the latest Visa Asia

Pacific release.

Economy is growing by over 8 per cent a year and India’s growth rate can

actually exceed that of China by 2015. Indian economy is expected to grow

larger than Britain’s by 2022 and Japan’s by 2032 to become the third-largest

economy in the world after China and US and finally become the second largest

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economy after China by 2050. A report by investment banker Goldman Sachs,

credits India with the potential to deliver the fastest growth over the next 50

years. According to Standard & Poor’s, FDI to India is likely to grow the

fastest in next few years. The targeted FDI has already hit $ 13 billion in 12

months ending March-2010, more than double India’s previous best of $5.5

billion hit in the previous year.

India is investing over US $130 billion in infrastructure by the end of this

decade. The retail industry itself has attracted investment of over INR 200 billion

(over $4 billion) in creating infrastructure, systems & shop-fit. The additional retail

space is expected to add INR 300 billion ($ 6.67 billion) of business to organized

retail. India is having the largest young population in the world – over 890 million

people below 45 years of age. It has more English speaking people than in the

whole of Europe taken together. Its 300 million odd middle class, the “Real”

consumers, is catching the attention of the world. It is estimated that 70 million

Indians earn a salary of over INR 800,000 ($18,000) a year, which will rise to 140

million by 2012.

Over 10,000 small and big existing outlets to undergo complete facelift

Retailing is one of the largest industries in India and one of the biggest sources of

employment in the country. It is the largest employer after agriculture and an

account for about 6 - 7% of population i.e., employs more than 4 crore people. The

organized retail sector is divided into two types – In-store retailing and Non-store

retailing. The features of in-store retailing are fixed point-of-sale locations, which

are designed to attract a high volume of walk-in customers. Non-store retailers

serve the customers at their doorstep. The in-store retail is more prevalent in India.

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As per management philosopher Professor Dr. Phillip Kotler “retailing includes all

the activities involved in selling of goods or services directly to the final consumers

for personal, non business uses. A retailer or retail store is any business enterprise

whose sales volume comes primarily from retailing” So in the other words,

Retailing is the set of business activities that adds value to the products and services

sold to consumers for their personal or family use.

Retailers satisfy consumer needs by offering the right product at the right

place and at the right price.

Retailers are the final business in a distribution channel that links

manufacturers with consumers. A distribution channel is a set of firms that

facilitate the movement of products from the point of production to the point

of sale to the ultimate consumer.

Manufacturers make products and sell them to retailers or wholesalers.

Wholesalers buy products from manufacturers and resell these products to

retailers, while retailers resell products to consumers. Wholesalers satisfy

retailers' needs, while retailers direct their efforts to satisfying needs of

ultimate consumers.

Types of Retail:

Food products

Soft goods- clothing ,apparel ,and other fabrics

Hard goods (“hardliner retailers” ) – appliances, electronics, furniture,

sporting goods etc

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There are the following types of retailers by marketing strategy:

Supermarkets- sell mostly food products

Department stores- very large stores offering a huge assortment of “soft” and

“hard goods”

Discount stores- tend to offer a wide array of products and services, but they

compete mainly on price

General merchandise store- a hybrid between a department store and discount

store

Warehouse store – low cost, often high quantity goods piled on pallets or

steel shelves; warehouse clubs charge a membership fee

Variety store or “ dollar store” – extremely low- cost goods, with limited

selection

Demographic- retailers that aim at one particular segment (eg: high-end

retailers focusing on wealthy individuals)

Some stores take a non frill approach, while others are “mid-range” or “high end”,

depending on what income level they target.

General store- a store which sells most goods needed, typically in a

rural area

Convenience store- a small store often with extended hours, stocking

everyday or roadside items

Big-box stores- encompass larger department ,discount, general

merchandise, and warehouse stores

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Retail Pricing

The pricing technique used by most retailers is cost- plus pricing. This involves

adding a markup amount (or percentage) to the retailer’s cost. Another common

technique is suggested by the manufacturer and usually printed on the product by

the manufacturer.

Indian Retail Industry

India is the country having the most unorganized retail market. Traditionally it

is a family’s livelihood, with their shop in the front and house at the back, while

they run the retail business. More than 99% retailer’s function in less than 500

square feet of shopping space. The Indian retail sector is estimated at around Rs

900,000 crore, of which the organized sector accounts for a mere 2 per cent

indicating a huge potential market opportunity that is lying in the waiting for the

consumer-savvy organized retailer.

Purchasing power of Indian urban consumer is growing and branded

merchandise in categories like Apparels, Cosmetics, Shoes, Watches, Beverages,

Food and even Jewelers, are slowly becoming lifestyle products that are widely

accepted by the urban Indian consumer. Indian retailers need to advantage of this

growth and aiming to grow, diversify and introduce new formats have to pay more

attention to the brand building process. The emphasis here is on retail as a brand

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rather than retailers selling brands. The focus should be on branding the retail

business itself. In their preparation to face fierce competitive pressure, Indian

retailers must come to recognize the value of building their own stores as brands to

reinforce their marketing positioning, to communicate quality as well as value for

money. Sustainable competitive advantage will be dependent on translating core

values combining products, image and reputation into a coherent retail brand

strategy.

There is no doubt that the Indian retail scene is booming. A number of large

corporate houses — Reliance, Tata’s, Reheat’s, Piramals’s, Goenka’s — have

already made their foray into this arena, with beauty and health stores,

supermarkets, self-service music stores, new age book stores, every-day-low-price

stores, computers and peripherals stores, office equipment stores and home/building

construction stores. Today the organized players have attacked every retail

category. The Indian retail scene has witnessed too many players in too short a

time, crowding several categories without looking at their core competencies, or

having a well thought out branding strategy.

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GROWTH OF RETAIL SECTOR IN INDIA

The trends that are driving the growth of the retail sector in India are

Low share of organized retailing

Falling real estate prices

Increase in disposable income and customer aspiration

Increase in expenditure for luxury items (CHART)

(DIAGRAM-1)

Another credible factor in the prospects of the retail sector in India is the increase

in the young working population. In India, hefty pay packets, nuclear families in

urban areas, along with increasing working-women population and emerging

opportunities in the services sector. These key factors have been the growth

drivers of the organized retail sector in India which now boast of retailing almost

all the preferences of life - Apparel & Accessories, Appliances, Electronics,

Cosmetics and Toiletries, Home & Office Products, Travel and Leisure and

many more. With this the retail sector in India is witnessing rejuvenation as

traditional markets make way for new formats such as departmental

stores, hypermarkets ,supermarkets and specialty stores.

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Organized retailers are the contemporary formats by which shoppers have the

edge of a world class shopping experience. Fine examples of these formats are

Pantaloon, Shoppers Stop and Trent.

Organized retail may broadly be classified into the following formats-

• Malls. The largest form of organized retailing today. Malls are located mainly

in metro cities, in proximity to urban outskirts; this format ranges from

approximately 60,000 sq ft to 7, 00,000 sq ft and above. They lend an ideal

shopping experience with an amalgamation of product, service and

entertainment, all under common roof.

• Hypermarkets. They are typically large, starting from 40,000sq. ft plus are

usually located outside the city limits. This format comprises of a multiple

division layout, and usually has an” industrial- look” interior. Hypermarkets

generally provide daily necessities and grocery like items. Pricing is competitive

and they also offer volume discounts.

• MBO’s. Multi Brand outlets, also known as Category Killers, offer several

brands across a single product category. These usually do well in busy market

places and Metros.

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• Super Markets. Large self service outlets, catering to varied shopper needs are

termed as Super markets. These are located in or near residential high streets.

These stores today contribute to 30% of all food & grocery organized retail sales.

Super Markets can further be classified in to mini supermarkets typically 1,000

sq ft to 2,000 sq ft and large supermarkets ranging from a size of 3,500 sq ft to

5,000 sq ft. having a strong focus on food & grocery and personal sales.

• Discount Stores. As the name suggests, discount stores or factory outlets, offer

discounts on the MRP through selling in bulk reaching economies of scale or

excess stock left over at the season. The product category can range from a

variety of perishable/ non perishable goods.

• Convenience Stores. These are relatively small stores 400-2,000 sq. feet

located near residential areas. They stock a limited range of high-turnover

convenience products and are usually open for extended periods during the day,

seven days a week. Prices are slightly higher due to the convenience premium.

• Departmental Store. Large stores ranging from 20000-50000 sq. ft, catering to

a variety of consumer needs. Further classified into localized departments such

as clothing, toys, home, groceries, etc.

• Exclusive Store. Ranging from a size of 500 sq ft to 5,000 sq ft. & above, this

format is owned/ managed by the Company or through its franchise. These can

offer single brand as well as multiple bands.

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• Specialty Store. These formats focus on a specific product category, Medium

sized layout in strategic location. Specialty stores provide a large variety base for

the consumers to choose from. Despite the presence of the basic ingredients

required for growth of the retail industry in India, it still faces substantial hurdles

that will retard and inhibit its growth in the future. One of the key impediments is

the lack of FDI. This has largely resulted in limited capital investments in supply

chain infrastructure, which is a key for development and growth of retailing and

has also constrained access to world-class retail practices. Lack of proper

infrastructure and relatively high cost of real estate are the other impediments to

the growth of retailing. While the industry and the government are trying to

remove many of these hurdles, some of the roadblocks will remain and will

continue to affect the smooth growth of this industry.

Challenges facing Indian retail industry

The tax structure in India favors small retail business

Lack of adequate infrastructure facilities

High cost of real estate

Dissimilarity in consumer groups

Restrictions in Foreign Direct Investment

Shortage of retail study options

Shortage of trained manpower

Low retail management skill

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RELIANCE GROUP

The Reliance Group, founded by Dhirubhai H. Ambani (1932-2002), is India's

largest private sector enterprise, with businesses in the energy and materials value

chain. Group's annual revenues are in excess of US$ 27 billion. The flagship

company, Reliance Industries Limited, is a Fortune Global 500 company and is the

largest private sector company in India. Backward vertical integration has been the

cornerstone of the evolution and growth of Reliance. Starting with textiles in the

late seventies, Reliance pursued a strategy of backward vertical integration - in

polyester, fiber intermediates, plastics, petrochemicals, petroleum refining and oil

and gas exploration and production - to be fully integrated along the materials and

energy value chain.

The Group's activities span exploration and production of oil and gas, petroleum

refining and marketing, petrochemicals (polyester, fiber intermediates, plastics and

chemicals), textiles and retail. Reliance enjoys global leadership in its businesses,

being the largest polyester yarn and fiber producer in the world and among the top

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five to ten producers in the world in major petrochemical products. The Group

exports products in excess of US$ 15 billion to more than 100 countries in the

world. Major Group Companies are Reliance Industries Limited (including main

subsidiaries Reliance Petroleum Limited and Reliance Retail limited) and Reliance

Industrial Infrastructure Limited.

Founder Chairman

"Between my past, the present and the future, there is one common factor:

Relationship and Trust. This is the foundation of our growth."

Shri Dhirubhai H. Ambani

Founder Chairman Reliance Group

December 28, 1932 - July 6, 2002

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Board of Directors of Reliance Industries Limited

   

Shri Mukesh D. Ambani

Chairman & Managing Director

 

Shri Nikhil R. Meswani

Executive Director

Shri Hital R. Meswani

Executive Director

Shri PMS Prasad

Executive Director

Shri P.K.Kapil

Executive DirectorShri Ramniklal H. Ambani Shri Mansingh L. Bhakta

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Shri Yogendra P. Trivedi Dr. D. V. Kapur Shri M. P. Modi

Prof. Ashok Misra Prof. Dipak C Jain Dr. RaghunathAnant Mashelkar

PRODUCTS AND BRANDS

The Company expanded into textiles in 1975. Since its initial public offering in

1977, the Company has expanded rapidly and integrated backwards into other

industry sectors, most notably the production of petrochemicals and the refining of

crude oil. The Company now has operations that span from the exploration and

production of oil and gas to the manufacture of petroleum products, polyester

products, polyester intermediates, plastics, polymer intermediates, chemicals and

synthetic textiles and fabrics.

The Company from time to time seeks to further diversify into other industries.

In January 2006, the Company approved a plan to establish a retail business

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through a subsidiary Reliance Retail Limited that will operate, among other things,

supermarkets, convenience stores and specialty stores across India. The Company

approved initial expenditure of US$ 750 million to fund the initial stages of this

plan. The Company's subsidiary Reliance Jamnagar Infrastructure Limited is

currently establishing infrastructure facilities such as roads and buildings for the

proposed Special Economic Zone (SEZ) at Jamnagar, Gujarat. The Company's

major products and brands, from oil and gas to textiles are tightly integrated and

benefit from synergies across the Company.

Central to the Company's operations is its vertical backward integration

strategy; raw materials such as PTA, MEG, ethylene, propylene and normal

paraffin that were previously imported at a higher cost and subject to import duties

are now sourced from within the Company. This has had a positive effect on the

Company's operating margins and interest costs and decreased the Company's

exposure to the cyclicality of markets and raw material prices. The Company

believes that this strategy is also important in maintaining a domestic market

leadership position in its major product lines and in providing a competitive

advantage.

The Company's operations can be classified into four segments namely:

Petroleum Refining and Marketing business

Petrochemicals business

Oil and Gas Exploration & Production business

Others

The Company's refinery at Jamnagar is the third largest refinery at a single

location in the world. The Company is:

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The world's largest producer of Polyester Fiber and Yarn

4th largest producer of Paraxylene (PX) and Purified Terepthalic Acid (PTA)

6th largest producer of Mono Ethylene Glycol (MEG)

7th largest producer of Polypropylene (PP)

FOOD

Food retail in India Food dominates the shopping basket in India. The US$ 6.1

billion Indian foods industry, which forms 44 per cent of the entire FMCG sales, is

growing at 9 per cent and has set the growth agenda for modern trade formats. Food

accounts for the largest share of consumer spending. Food and food products

account for about 53 per cent of the value of final private consumption. Reliance

Retail looks forward to be the driver of growth in this industry with a committed

team.

Targets:

Capture dominant market share of Indian Foods retail industry

A Pan-India footprint in more than 800 cities and towns

Cater to both urban and rural populations

Reliance Foods team strives to continuously delight the customers. This is the

first small step in their attempt to build and forge strong and enduring bonds with

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millions of farmers and transform their relationship with customers to a new

level. The organization believes in giving customers quality food items, fruits

and vegetables at affordable price at Reliance Fresh stores.

FOOTWEAR

Envisioned by a clear goal of becoming a destination store for footwear

Reliance industries plans to Stamp its Presence across 42 cities already opened over

80 independent stores, which will ensure them capturing maximum market share in

the 18,000cr footwear industry. Armed with a mission of creating a destination

Shoe Stop these stores will be stocked with National / International and Private

Label products that will provide Cutting Edge Retail and Shopping experience to

the Individual and Family.  Products sourced from Brazil, China, Indonesia,

Malaysia, Vietnam, Thailand to name a few countries will be on display and sold

across all stores. 

These products are Value led, meant to create novelty and developed to be

category killers in footwear, accessories and luggage in all segments and for all

occasions.  Creating this will be Portland Design – Specialists in Design and

Providing Solutions for a meaningful Customer Experience.  All this will be

provided though a State of the Art Design Studio which is being created to have an

in-built Design / CAD Room, Product Development Area, Mock Display Room,

Testing Laboratory, Range Presentation Area, Reprographics and Sample Storage

Area.

APPAREL

As the glaring gaps in the market today remain unattended, it gives Reliance the

ideal opportunity to step in and revolutionize the shopping environment in the

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country. The challenge is to transform the Indian consumer’s lifestyle and the way

our people shop. By offering exciting, fashionable and extreme value products of

international caliber they want to capture a significant share of consumer spending

more on clothing and luggage. They plan to offer ‘extreme value’ to the customer

by weaving together competitive prices with an irresistible line, Where the

customer would have the luxury of shopping from a diverse product range in an up

market ambience. They will be focusing at offering ‘affordable fashion’ with

superior quality fabrics, as demographic figures of a youthful nation (62% are under

30) present an indisputable opportunity. They will also be looking at premium in-

house brands to build a strong business in their departmental and fast fashion

apparel specialty and luggage stores. To be a part of India’s globalization, they plan

to tie up with big International Brands.

MEMBERSHIP FINANCE AND TRAVEL

Membership program:

They plan to have 100 million customers out of which it is expected that 50

million will be membership customers - who will have access to the benefits of the

loyalty program under “Reliance One”.

Payments:

To improve the customer experience and to enable cashless payments by

customers it is proposed to introduce several payment options that can be used in all

the store formats. The services offered are, Closed Loop Store Cards (Prepaid, Gift

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& Credit), Credit Cards, Debit Cards, ATM Availability, Mobile and Internet

Payment Options etc.

Lending:

As the Indian consumer becomes increasingly aware and demanding, they will

need access to easy credit to meet their requirements. It is expected that a

significant percentage of Reliance Retail customers will use lending products both

in the Urban and Rural areas. The services offered are Consumer Finance, SME

Finance, and Rural Hub Finance.

Insurance and Investment:

Reliance Retail will play the role of a broker to service the needs of its

customers by distributing a whole range of Insurance and Investment products. The

intention is to give them choice and impartial advice. The services offered are Life

Insurance, General Insurance and various Investment Products.

Travel Services:

Reliance Retail proposes to offer Travel Services to its customers covering a

range of offerings at unbeatable value owning to the scale of distribution envisaged.

Services offered are Travel packages for individuals, corporate clients and family

holidays, FOREX, Other Foreign Travel linked products, Travel Insurance,

Ticketing and Hotel Bookings (both Domestic & International.

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AUTOMOTIVE

The team aims to participate in the vehicle ownership experience of Reliance

Retail customers & constantly keep on creating value & retaining value. To deliver

this, the organization will be retailing automotive products & accessories and

setting up world class service facilities catering to two wheelers & passenger cars.

India today boasts of a population of 9 million cars & 42 million two wheelers.

Despite the burgeoning vehicle population, service & maintenance for these

vehicles still remains a problem. It is with this underserved market that Reliance

Retail decided to set its foot towards creation of a world class auto care chain, in

sync with the Reliance Retail. The facility would also be retailing auto products

namely- Tyres, tubes, lube, car accessories, e-bikes etc. All these facilities are

coming up in Mumbai and Jamnagar shortly.

LIFESTYLE

At Reliance Retail Lifestyle they promise to offer a world of products and

experiences never seen before. A world of style and class for fun and excitement

with indulgence and pampering of knowledge and entertainment. They recognize

their roles in bringing style, excitement and entertainment to customers’ lives. So

they are offering categories like jewellery, Books, Music, Cosmetics, Fragrances,

Watches, Sunglasses, Toys, Sporting Goods, Stationery, Gifts, Flowers, Print

Services.

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CDIT

IT will be a one-stop solution for all technology solutions in the field of

consumer electronics, home appliances, information technology and

telecommunication.

Experience Zones

A showcase for technology, every experience zone will have fully functional

products, for the customer to have a true ‘touch & feel’ experience. Experts will

guide customers on how to get the best quality experience in their own setups at

home. Zones will be for the following, and will be present in stores as per the

respective business plans:

Home Theatres – different zones ranging from entry-level to a very premium

experience.

Car AV installation bays

Photography – with a Digital Mini-lab

Designer Kitchen – completely operational kitchen with appliances

Gaming area – vibrant and ‘happening’

A ‘collapsible Classroom space’ for training & contests

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Innovation Pillars

It is a ‘technology-snapshot high point’ in the store. Customers are drawn to

these high points and invited to “Discover more". Innovation Pillars will be for

the following, and will be present in stores as per the respective business plans-

Audio

Video 

Imaging 

Laptop

Gaming

Mobile, and 

Home

The various formats run by Reliance Retail are as follows:-

1. Reliance Mart.

2. Reliance Trends.

3. Reliance Footprints.

4. Reliance Wellness.

5. Reliance Jewellery.

6. Reliance Time-Out.

7. Reliance Super.

8. Reliance AutoZone.

9. Reliance Fresh.

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So by this we can see how Reliance Retail is creating a strong base or

foundation in the Indian Retail field. It’s trying to make itself available to every

needs and wants of present customers. Reliance retail with its huge and mammoth

brand name has made its presence felt in the retail field already providing tough

competition to the existing big sized retailers. With its Reliance Mart it has come

up with so huge hyper market format to cater the needs of the customers making the

entire product needed available under one roof to the customer

.

For the first time in organized retail, Reliance Trends is introducing a Made to

Measure tailoring service, offering customized fits to all the customers buying

fabrics from the store at prices comparable to their neighborhood tailors.

As we know Reliance Mart is a hyper market format in order to cater the needs.

It is well on track to democratize fashion and make it attainable to the masses as we

know the present trend of consumers are getting used to mall shopping. So this

hyper market is ready to provide them with what they want.

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Reliance Fresh is the retail chain division of Reliance Industries of India which

is headed by Mukesh Ambani. Reliance has entered into this segment by opening

new retail stores into almost every metropolitan and regional area of India. Reliance

plans to invest Rs 25000 crores in the next 4 years in their retail division and plans

to begin retail stores in 784 cities across the country. The Reliance Fresh

supermarket chain is RIL’s Rs 25,000 crore venture and it plans to add more stores

across different cities and eventually have a pan-India footprint in this year. The

super marts will sell fresh fruits and vegetables, staples, groceries, fresh juice bars

and dairy products and also will sport a separate enclosure and supply-chain for

non-vegetarian products. Besides, the stores would provide direct employment to 5

lakh young Indians and indirect job opportunities to a million people, according to

the company. The company also has plans to train students and housewives in

customer care and quality services for part-time jobs.

According to Deccan Herald, the company is planning on opening new stores

with store-size varying from 1,500 sq ft to 3,000 sq ft, which will stock fresh fruits

and vegetables, staples, FMCG products and dairy products. Each store is said to be

within a radius of 1-2 km of each other, in relation to the concept of a neighbor

store. However, this is only the entry roll-out that the company has planned.

Bangalore is said to have 40 stores in all by the end of the year. In a dramatic

change due circumstances prevailing in UP, West Bengal and Orissa, It was

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mentioned recently in News Dailies that, Reliance Retail is moving out stocking.

Reliance Retail has decided to minimize its exposure in the fruit and vegetable

business and position Reliance Fresh as a pure play super market focusing on

categories like food, FMCG, home, consumer durables, IT, wellness and auto

accessories, with food accounting for the bulk of the business. The company may

not stock fruit and vegetables in some states, Orissa being one of them.

Though Reliance Fresh is not exiting the fruit and vegetable business altogether,

it has decided not to compete with local vendors partly due to political reasons, and

partly due to its inability to create a robust supply chain. This is quite different from

what the firm had originally planned. When the first Reliance Fresh store opened in

Hyderabad some years back, not only did the company said the store’s main focus

would be fresh produce like fruits and vegetables at a much lower price, but also

spoke at length about its “farm-to-fork’’ theory. The idea the company spoke about

was to source from farmers and sell directly to the consumer removing middlemen

out of the way. Reliance may exit some businesses if the business does not increase

by March 2008. Reliance Fresh, Reliance Mart, Reliance Digital, Reliance Trends,

Reliance Footprint, Reliance Wellness, Reliance Jewels, Reliance Timeout and

Reliance Super are various formats that Reliance has rolled out. In addition,

Reliance Retail has entered into an alliance with Apple for setting up a chain of

Apple Specialty Stores branded as iStore, starting with Bangalore.

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ABOUT RELIANCE FRESH

Reliance Fresh

TYPEConvenient Stores

Founded30Th

October,2006

Headquarters

Mumbai, India

Key peopleMukesh Ambani, CEO

Industry Retail

Website www.ril.com

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Vision Of The Company

To be the most admired and successful organized Retail Company in India that

materially enhances the quality of life of every Indian.

We will achieve this by:

Providing unprecedented affordability, quality and choice in global products

and services

Being the partner of choice in creating prosperity for Indian farmers and other

producers of goods and services

Unleashing the power of the Indian workforce through the generation of new &

attractive employment opportunities, & creating an empowered & rewarding

workplace

Mission Of The Company

Leap frog the way an Indian Consumer shops

Be a trusted partner who provide the best products & services the world has to

offer, at the best prices, in the most convenient setting.

Create an efficient and transparent global supply chain by the creation and

optimal utilization of world-class infrastructure and international partnerships,

thus creating more value for our customers, suppliers, partners and stake

holders.

Bring prosperity to millions of Indian producers, especially our farmers, by

providing the most attractive returns for their efforts. Be a capable and

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dependable partner to them right through their creation process and help them

become more successful.

Unleash the initiative, creativity & energy of Indian workforce through creation

of new jobs, & provide our employees a supportive, rewarding environment to

work and grow.

Financially reward our shareholders on a sustained basis

Core Values

Respecting and valuing employees

Creating a positive work culture and a mutual trust and creating a feeling of

family

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Work Flow Model of Reliance

The following model explains how RRL procure good from farmer and delivered

to ultimate customer

34

Verification

Packaging

Transportation to stores

Labeling price

Display at fresh stores

Labeling price

Procurement of Fruits and vegetables

Organizational structure

Organizations are economic and social entities in which number of persons

performs multifarious tasks in order to attain common goals. Once a group of people

has established an organization to accomplish shared goals, organizational structure

evolves to increase the effectiveness of the organization’s control of the activities

necessary to achieve its goals. Organizational structure is the formal system of task &

authority relationships that control how people co-ordinate their actions & use

resources to achieve organization’s goals. The principle purpose of organizational

structure is one of control: to control the means used to motive people to achieve these

goals.

For any organization, an appropriate structure facilitates effective responses to

problem of co-ordination & motivation --- problems that can arise for any number of

environmental, technological or human resources. As organizations grow &

differentiate, the structure likewise evolves. Organizational structure can be managed

& changed through the process of organization design

Organization structures can be designed on the basis of departmentalization &

relationships.

Departmentalization is the process of dividing work of an organization into various

units or departments.

Relationships are the process by which organization brings relationships among

employees at different levels, materials, money & machines.

Reliance Retail Limited is having Hierarchical organizational structure

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Organizational Structure of Reliance Retail Limited

FUNCTIONAL DEPARTMENTS

Marketing Department

36

ASM Inbound Executives

Outbound Executives

MIS Executive

Inbound Manager

Outbound manager

MIS Manager

EXECUTIVE Secretary

Administration

Commercial

Operations

HR

SLP

Marketing

D& L Other income

EPC

Manager

Manager

Operation Head

HR Manger

Manager

Manager

Executive

Asst. Manager

Executive

Clustermanager

Store Manager

C & ASr. CSA

CSA

Asst. manager

Executive HR

Officer

Guard

Executive

Manager

Manager

Executive

CEO

Basic marketing function: In reliance marketing department play a crucial

role. There are three main function of marketing department in reliance, there

are:

1. Communication of promotion : Marketing department is held responsible for

communicating all upcoming promotions like any offer or discount to

customers. This is done through visual merchandising which means displaying

about current offers and communicating it. This is done through various mean

like leaflets, dangles, etc.

2. Customers behavior and their buying pattern : Marketing department is also

responsible for knowing about its customer and thereby their buying pattern

because on the basis of this only further decision regarding promotion is taken

3. Competitive analysis : Beside above two stated the main function of marketing

department is to do competitive analysis i.e. knowing about their competitor

and their strategy and thus taking a prominent step.

Products and services offered: Marketing department people has

responsibility to take care of kind of product and services to be offered. It

generally includes all FMCG good, any electronic goods, staples. When it

comes to serve reliance people are take proper care of customer care and take

guarantee of their product which they offer.

Distribution channel: Marketing people take care of supply of goods to

final destination. Rather than purchasing from any wholesaler reliance purchase

all its vegetables from farmer (where production is more) for all other FMCG it

buys directly from producer.

Advertisement: Since communicating all latest offers to customer is primary

duty/ responsibility of marketing department therefore this work is done very

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crucially by them, for promoting its products reliance uses various media like

posters, banners, leaflets, danglers, etc.

Sales promotion: Sales promotion is any initiative undertaken by an

organization to promote an increase in sales, usage or trail of a product or

services (i.e. initiatives that are not covered by the other elements of the

marketing communications or promotions mix). For promoting its sales

marketing department offers various offers like buy one get one free, or buy 2ltr

Pepsi at just rupee 15.

Customer loyalty card: Reliance offers membership cards to their

customers in order to get new customers, retain the existing ones. It is one of

their marketing strategies.

Marketing department structure

Human Resource Department

Personal selection and department: HR is considered as core of all

organization thus selection of any personal is the key aspect. Recruitment plays

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Marketing Head (Zonal)

State Head

Executives

an important role in HR. Recruitment means selecting the Right candidate, at

the right time, at the right cost.

Education: based upon qualification a candidate is offered for a post for example

Educational qualification Designation offered

10 th pass Customer Service Associate

PUC + experience as CSA

Supervisor

B. com C&A (Commercial Associate)

Graduate + experience as supervisor in

retail

Store Manager

Post Graduate Administrative job related according to

his qualification

Employee remuneration: HR department is held responsible for deciding

on the pay scale of the employee. This decision is taken after considering things

Minimum Wages Act 1947

Qualification

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Experience

Previous earnings

Findings

The recruitment procedure controlling the attrition rate are the most

challenging act at Reliance Fresh

The recruitment procedure is same for every walk- in

The number of walk- ins in a day is around 20.

The number of walk-ins are more for CSA ( Customer Sales Associates)

when compared to the positions like SM ( Store Manager), ASM ( Assistant

Store Manager) , C&A (Commercial & Associate), and MSR ( Membership

Sales Representative) & SUP (Supervisor)

The minimum qualification is SSLC as an eligibility criteria for a CSA

The main reason for walk- ins is the advertisement given by the HR team,

this is by banners, pamphlets & references given by the employee

It was noticed that maximum number of walk-ins happened to be in the age

group 18-22 followed by the age group 22-25 and 25-28 subsequently walk-

ins. The age limit for the employment is between 18-30.

The selected candidates are allotted the stores near to their residence.

There will be separate training for Store managers, Department managers,

Corporate etc

As a motivational aspect, depending on his/ her performance, a CSA or a

Supervisor from each store is rewarded the “ Star of the Month” every

month to boost healthy competition between the stores.

Recruitment Process

40 Job Description

41

Finding for approval to NHQ

Salary Negotiation

Interview candidate

Sourcing externally through job frontals, employee referrals etc.

Candidate selected internally

No Suitable candidate available internally

Check with Internal Applicants

Releasing IJP (Internal Job

Human Resource Management Department Structure

42

Sending for requisition & position code creation to NHQ

E- Recruitment & Offer letter generation

Joining Formalities

HR Head (Zonal)

Training

F&V Department

Reliance Foods team strives to continuously delight the customers. This is the first

small step in their attempt to build and forge strong and enduring bonds with millions

of farmers and transform their relationship with customers to a new level. The

organization believes in giving customers quality food items, fruits and vegetables at

affordable price at Reliance Fresh stores. It Capture dominant market share of Indian

Foods retail industries. Around 40% is estimated Reliance Retail Turnover by 2011 to

be from Foods Business.

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Payroll and compliances

State Training

Recruitment

Recruiters

HR Operations

Main process in F&V

Purchase Sales

Functions of F&V Section

F&V

Purchase Category team

Placing the inter purchase

Team

Pricing

Promo configuration

Planogram

Business Process Flow For Fresh

44

Sorting Area Association Area

Area for emptyStaging Area

Collection Centre

Communicates to CC

Collective PO made by category in SAP, communicated to CPC

Individual stores place STO in SAP

Sales Floor

F&V Job Chart

45

Sorting Area Association Area

Area for emptyStaging Area

National Head

Zonal Head

State Head

Finance Department

Source and Application: There are various sources of fund, some of them

are: Initial Public Offering (this method was first introduced by reliance itself),

Equity share Capital, debenture, bank loans, creditors, etc. As far as application

is concern then the main area of application is purchasing all goods from main

suppliers like farmers for all different kinds of fruits and vegetables and from

main producers like Nestle, Maggie, etc.

Profit: The estimated turnover of Reliance Retail in the last financial year was

around Rs. 4500 crores and the estimated loss was very marginal (less than 10%

of sales). Actual data has not been provided by the company.

Sales expenditure trend: The sales expenditure trend of the company can

explained as follows first purchase department places an order for purchase to

operation department which is further placed to vendor. Once conformation

letter is received from vendor side then goods are received from them and then

quality checking process takes place. For all goods received ‘goods receipt note

is generated’ which is sent to commercial department for payment. This is how

sales trend expenditure takes place in reliance retail.

Cost control: Controlling cost is the prime function of finance department. In

order to control price reliance follows HUB AND SPOKE MODEL which

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means that it sources its F&V from farmer due to which cost of intermediaries

comes down. Apart from this it buys all of its FMCG from producer only.

Pricing technique: Charging correct price is very important thus before

charging any price finance people do a competitive analysis i.e. they charge

price after seeing their competitor all their profit margin.

Key Result Areas

Cash and Bank Controller

Manage account payable process effectively (payment to vendors)

Manage store commercial operation including cash and card sales monitoring

Manage F&V process for procurement and payment for farmers

Arrange cash for petty payment at various location

Manage farmer & Mandi tax payments

Arrange timely funds for all commercial activities

Inventory controller

Check physical inventory & upload PI in system on regular basis

Analyze the reasons for stock variation

Control dump & shrink at stores

Activities specific for this department

Cash and bank

Inventory control

Tax matters

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Income accounting

Support Head Office

Dividend Policy

Dividend per every year and bonus issue is made periodically

Inventory Management Policy

The main purpose of inventory management policy is to continue, control on

stocks to minimize holding cost and dump and shrink accounting

Receivable Management Policy

Bulk of the sales are in cash at stores

Sales through Credit Card - cash received within week’s time

Sales through coupons (Sodexho) – cash received within a fortnight

Payments are realized after a fixed cyclic time

Risk Management

Insurance Risk, Currency Risk, Commodity Risk etc are managed and hedged

where necessary with financial & other institutions

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Cost Innovations and Cost Reductions

Use of Petro card for diesel purchase

E- payment to farmers

Best practices specific to the department

Accounts payable done strictly as per credit limits negotiated with vendor

Enhance capability of commercial staff at stores

Mode of payments

There are various modes of payments in the stores like:

Cash

Credit Card/ Debit Card

Sodexho

Accor

R one vouchers/ Gift vouchers

Among these only cash is collected by CMS security service in banks on a daily

basis, whereas the coupons (Sodexho, Accor) are collected once in a week on Friday.

During the time of cash collection, four copies of each reliance fresh & delight

transactions (with detailed information such as notes particular with denominations)

are prepared. Three copies are taken by CMS representative & one copy of it is kept in

the store, all copies duly signed by the CMS authority & store C&A.

Then it’s recorded in the system with the representative scroll number, which is

thereby sent to the state corporate office.

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There is a minimum balance of cash to be maintained in every store which is fixed

by the Commercial Managers.

The total store backend financial operation is co-ordinate by the SAP software,

which enables uninterrupted recording of data. Moreover as different aspects such as

Void transactions, Refund transactions, Electronic journal (a complete detail of the

bill), sales report, hence cross checking in case of any deputes is possible & chances

of fraud is less.

The inventory system in the stores is also well managed. Stock of Goods is

received everyday from the Distribution Centers (DC) , Fasts Moving Consumer

Goods (FMCG) is received directly from the company. The perishable items like

F&V, FMCGs are recorded as & when they are dumped or wasted in the system.

Payment to vendors is also efficiently managed. The average weekly payments is

paid either through Cheque (HDFC Bank), Demand Draft or Net Transfer (Account to

Account Transfer). The goods purchased from the vendors are on certain credit

policies managed by the Mumbai headquarter. Hence the company has a very efficient

Working Capital Management.

Functions of the Finance Department

The financial department as called Commercial Department in Reliance is

responsible for all cash related transactions in the stores. The Commercial Department

has the following functions:-

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Functions of Commercial Department

Front End Backend

(Store level)

Account payables &

Receivables

Daily Cash Declaration Segregations Vendor payment

Pick up of Cash of mode of Coins management

Payment (MOP) MIS & budgeting,

Analysis of stock &

Store

Physical inventory

Analysis (Dump,

Shrink) Cash & Bank

Stocks Physical Inventory (PI) Stock Controller

(Store P&L,

Liquidation, GRN, PI

GRN- Goods receipts note Non F&V)

Tikki Paav

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Finance Department Structure

52

Zonal Financial Head

Kerala Karnataka Tamil Nadu

Asst. Managers (2)

Asst. Managers (2)

Asst.

Managers (2)

Operations Department

This department is wholly concerned with the store operations which involve the

following process:-

BUY MOVE SELL

BUY- The company purchases the goods from the Vendors ( Farmers,

Distributers & Wholesalers) which involves the Category, Marketing &

commercial managers

MOVE- This phase is concerned with the Designation & Logistics (D&L) &

Supply Chain Management (SCM). The goods either move from the vendors

directly to the stores or through the Distribution Centre (DC). The distribution

centers are located at Nelmangla & Belgum in Karnataka. This is dealt in by the

Replenishment officials in which the purchased goods move in the following

process—

VENDOR DC STORE

Or

(DSD) VENDOR STORE

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In case of return of goods the opposite process follows i.e.---

STORE DC VENDOR

During the movement of goods from the vendors, several checking are undertaken

like the Quality check, Quantity check, Stock check, Cost & Price check. The

Warehousing activities can be classified as the Inward & Outward activities, which

are as follows:--

Inward Activities

Storage locations

Storage bins

First in First out (FIFO)

Stock up

Outward Activities

Picking

Sorting & Grading

Check for damages & dump

Docking, load

Dispatching

Flow through

Transport

o Route plans

o Trucks

o Timeless

SELL – The operations related to selling are listed as follows:

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Planogram – A Planogram is the systematic arrangement of different products of

different categories in different sections of the store so that it will be convenient for

the customers to get the products as well as will be beneficial for the store. Planogram

for different stores is different because the store size and shape varies constantly from

place to place. In the planogram there are different arrangements for different

categories of products. So the planogram for non-food items is different from that of

Beverages.

Stocking or replenishment – Order the goods when the stock is about to be

finished, so that customers get the things whenever they want.

Cleanliness – Maintain good ambience and keep the store clean is another

important process.

Customer Service – Customer is the king, so in order to gain more customers the

customer service is made efficient. This gives the company a competitive edge in the

market.

Billing and Checkout - The CSAs are trained to carry on the billing process faster

& with minimum mistakes, which results in low waiting time for customers & greater

customer satisfaction.

After billing the bills are rechecked at the exit by the security & thereby recorded in

the log book, which results in minimizing frauds & future reference.

Manpower management –managing all level of employees effectively is also a

complementary process

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Operations Department Structure

Information Technology department

56

Asst. Store Managers

Asst. Store Managers

Asst. Store Managers

Zonal Chief Executive

Store Managers

Cluster Managers

State Operations

Karnataka

C&As C&As

Store Managers

Store Supervisors

State Operations Head

Kerala

CSAs

Cluster Managers

CSAs

Store Supervisors

Tamil Nadu

State Operations Head

Cluster Managers

Store Managers

C&As

CSAs

Store Supervisors

SAP (software Application Products) is used as the back end support software

which co-ordinates all the departments together.

ILO (Integrated Light Out) is also used as a supporting software in the

company. This software enables to hold together all the corporate office of

reliance in India with Mumbai.

The usage of MIS (Management Information System) by the managers is also

extensive in various DSS (Decision Support System). There is also a 24 hours

SAP helpdesk which makes the more easy & uninterrupted. This also enhances

the efficiency of the employees.

Each employee is also provided with an individual internet connection

Limited sites to access & an individual telecom service for the purpose of

communication. Hence this facilities the timely completion of works & good

co-ordination among departments.

IT Department Structure

SWOT ANALYSIS

57

Information Technology Head

Corporate IT Managers Store IT Managers

Strength

Private label sale- RRL sells product multiproduct at low cost . However it

offers various products at private labels like pulses, sugars. This forms a part

of strength for RRL.

Contract Farming- RRL has direct contact with farmers because of which

they directly purchase various fruits and vegetables from them. This helps

them in forming folk and farmer model.

Network-1600 channels in villages- RRL enjoys strength of having huge

networks in village. This helps company to know about new information

pertaining to business.

Good co-ordination among employees- This is a very essential element,as

it provides a good work culture in the store as well as in the office.

24 hours SAP helpdesk- This provides of immediate help incase of system

software problems & to maintain a continuous work flow.

Good ambiance- The stores provide good ambiance which is comfortable

for both customers & employees.

Many services under one roof- All the reliance stores provide insurance

facilities to its customers as an additional benefit which include vehicle

insurance, personal & health insurance. This adds to its competitive

advantage. Free home delivery is also available.

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Weakness

Poor inventory control- RRL purchase goods directly in bilk from farmer,

thus proper care towards these goods is required by maintaining proper

inventory. RRL fails to achieve this goal and this cause huge amount of

dump.

Lack of knowledge about products- Employees working at stores doesn’t

have proper knowledge about many products.

Poor security measures- The closed circuit cameras are only provided at

the billing or till areas. Which cannot detect customer movement all over the

store.

Improper store arrangements- Sections are not made distinct by names

like personal care. Health care, baby care etc.

Offers not clearly visible- There is no usage of attractive colures or fonts to

grab the attention of the customers.

Less promotion for the own products- Reliance own products are not

promoted extensively as comparison to More or Food world where

television is used to promote their own products continuously.

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Opportunities.

Farm to fork model – RRL follows farm to fork model and thus eliminates

involvement of middle men and save its cost. This company fain more to

profit.

1 million farmers next five years – RRL is planning to increase its contacts

with more numbers of farmers in next five years. This will help company to

expand its business to its best.

Booming industry – RRL has scope to expand in this industry as retail is

booming industry and contributing at high rate to national economy

Threats

International Retail Giant – RRL faces tough competition with not only

domestic company but also international company like Carrefour, Metro

AG, Tesco.

Limited products offered – RRL offers limited products to its customers,

for example Food world and Nilgiris also provides varity of food and

beverages, pet food along with other products. These do not exist in the

present Reliance retail stores.

Less offers- The discount & offers are less in comparison to its competitors.

Moreover there is less discounts for reliance loyalty card holde

Conclusion

60

As per the observations & data collected now in India the Retail industry is in a

booming stage where the companies are pertaining in semi urban and rural markets.

The change in mind set of the public towards retail has been changed. The companies

in this sector are focusing more on customer perception.

The company is totally concentrating on customer equity by creating hypermarket

and providing satisfactory shopping experience. This report has given me the

exposure to the practical side of retailing like how to interact with customers at the

time of selling, how to arrange products effectively. The most important thing that I

learned was on tactics of gaining new customers & retaining them.

The conclusion from this research is that Reliance Stores lead the retail market in

all the aspects of shopping by providing good quality products and services to

consumers and the consumer perception is good towards Reliance.

Retail as an industry is still in its infancy in India but is fast catching up the

pace. There is still an enormous opportunities in this arena, and companies like

Reliance Retail have fared well in this race. Though there would be tough

competition for Reliance group from the existing big players such as Future Group,

but I believe it would come up with flying colors since it has already drilled into the

right kind of Indian tastes which will make it a superb player in this sector in the

days to come.

Bibliography

61

Primary Source

Interview

Data from Organization

Observation

Secondary Source

Kotler and Keller, Marketing Management, 12th edition

Aswathappa. K.2009. Organizational Behavior

www.ril.com

www.retailindustry.com

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