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A report on the organization study submitted in partial fulfillment of the requirements for the MBA (Full time) Degree of the Mahatma Gandhi University
Focus on Excellence
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
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.
Maria Jose M
CONTENTS
Industry Profile
Introduction on Retail Industry Indian Retail Industry Challenges facing Indian Retail Industry 6 10 15
Company Profile
Reliance Group Reliance Retail Reliance Fresh Work Flow Model of Reliance 16 21 39 34 35
Marketing Department Human Resource Department F&V Department Finance Department Operations Department Information technology Department SWOT Analysis
37 39 44 47 54 58 59 62 63
Conclusion Bibliography
Retail the term which is the buzzword in todays 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 Kearneys 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 AsiaPacific for international tourist spending, according to the latest Visa Asia Pacific release. Economy is growing by over 8 per cent a year and Indias growth rate can actually exceed that of China by 2015. Indian economy is expected to grow larger than Britains by 2022 and Japans by 2032 to become the third-largest
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economy in the world after China and US and finally become the second largest 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 & Poors, 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 Indias 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
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serve the customers at their doorstep. The in-store retail is more prevalent in India. 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
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
Retail Pricing
The pricing technique used by most retailers is cost- plus pricing. This involves adding a markup amount (or percentage) to the retailers cost. Another common technique is suggested by the manufacturer and usually printed on the product by the manufacturer.
India is the country having the most unorganized retail market. Traditionally it is a familys livelihood, with their shop in the front and house at the back, while they run the retail business. More than 99% retailers 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, Tatas, Reheats, Piramalss, Goenkas 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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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 stores, hypermarkets for new formats such as departmental and specialty stores.
,supermarkets
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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.
MBOs. 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.
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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Dr. D. V. Kapur
Shri M. P. Modi
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 consumers 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 inhouse brands to build a strong business in their departmental and fast fashion apparel specialty and luggage stores. To be a part of Indias globalization, they plan to tie up with big International Brands.
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.
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. Its 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 RILs 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 stores 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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Reliance Fresh TYPE Convenient Stores 30Th October,2006 Mumbai, India Mukesh Ambani, CEO Retail www.ril.com
Founded
Headquarters
Key people
Industry Website
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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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Verification
Packaging
Transportation to stores
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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 organizations 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 organizations 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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CEO
EXECUTIVE Secretary
Admini stration
Comme rcial
Operat ions
HR
SLP
Market ing
D& L
Other income
EPC
Manag er
Manag er
HR Man ger
Ma nag er
Manager
Execu tive
Asst. Manager
Executi ve
Officer
Execu tive
Guard Executive Store Manager Executive HR Inbound Manager Outbound manager MIS Manager
ASM C&A
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Inbound Executives
Outbound Executive s
MIS Executive
FUNCTIONAL DEPARTMENTS
Marketing Department
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
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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 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.
customers in order to get new customers, retain the existing ones. It is one of
State Head
Executives
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Education: based upon qualification a candidate is offered for a post for example
PUC + experience as CSA B. com Graduate + experience as supervisor in retail C&A (Commercial Associate) Store Manager
Post Graduate
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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 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 walkins. 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
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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.
Interview candidate
Salary Negotiation
Joining Formalities
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HR Head (Zonal)
Training
Recruitment
HR Operations
Zonal Training
Recruiters
State Training
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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. Main process in F&V Purchase Sales
F&V
Purchase
Category team Placing the inter purchase Team Pricing Promo configuration Planogram
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Collectio n Centre
Communi cates to CC
Sorting Area
Staging Area
Picking Area
Processing Area
Stores
Stores
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National Head
Zonal Head
State Head
Category Manager
State Buyers
CC In chair
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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.
Inventory controller
Check physical inventory & upload PI in system on regular basis Analyze the reasons for stock variation Control dump & shrink at stores
Dividend Policy
Dividend per every year and bonus issue is made periodically
Risk Management
Insurance Risk, Currency Risk, Commodity Risk etc are managed and hedged where necessary with financial & other institutions
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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 its 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.
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Backend
Account payables & Receivables Daily Cash Pick up Declaration of Cash Segregations of mode of Payment (MOP) Vendor payment Coins management 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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Karnataka
Kerala
Tamil Nadu
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Operations Department
This department is wholly concerned with the store operations which involve the following process:-
BUY
MOVE
SELL
BUY-
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
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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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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.
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Store Managers
Store Managers
Store Managers
CSAs
CSAs
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IT Department Structure
Corporate IT Managers
Store IT Managers
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SWOT ANALYSIS
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.
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.
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.
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.
International Retail Giant RRL faces tough competition with not only
domestic company but also international company like Carrefour, Metro AG, Tesco.
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Conclusion
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.
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Bibliography
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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