Retailing case studies

Retailing industry is the "cash counter" for all the companies. More so for FMCG (Fast Moving Consumer Goods)
companies. How in the world some one can explain Wal-Mart continuing to be one of the top-five Fortune 500
companies in the world? What does Wal-Mart manufacture? It manufactures world-class service utility. A typical
google search for retailing would yield millions of results underscoring the importance of retailing. The other global
retailers such as TESCO, Aldi, Target, Metro, GAP, etc have created new business platforms with their unique and
sustaining business models.
Retailing in India, mostly unorganized got a boost in the mid-90s with many Indian companies taking the organized
route. Leading the pack is Future Group's (headed by Kishore Biyani) Big Bazaar, Pantaloons, etc. Following the
success of these multi-location stores, other Indian conglomerates have started operating several Pan-India retail
outlets. While Reliance Industries (led by Mukesh Ambani) has panned out Reliance Fresh outlets, Birla Group
(headed by Kumar Mangalam Birla) had been operating 'MORE' retail outlets throughout the country. Other
prominent Indian retail outlets are Subhiksha, Food World, etc.
IBSCDC's collection of Retailing case studies relate both to the Global Retail companies as well as Indian Retail
companies. Some of these case studies are best selling case studies with their focus and clearly defined business
dilemmas.

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Reliance Fresh is the convenience store format which forms part of the retail business of Reliance
Industries of India which is headed by Mukesh Ambani[citation needed]. Reliance plans to invest in excess
of 250 billion in the next 4 years in their retail division. [citation needed] The company already has 1691
Reliance Fresh outlets across the country.[1] These stores sell fresh fruits and vegetables, staples,
groceries, fresh juice, bars and dairy products.
A typical Reliance Fresh store is approximately 30004000 square feet and caters to a catchment
area of 23 km.[citation needed]
Contents
[hide]

1 History

2 Controversy

3 See also

4 References

5 External links

History[edit]
After launch, in a dramatic shift in its positioning and mainly due to the circumstances prevailing in
UP, West Bengal and Orissa, it was mentioned recently[when?] in news dailies that Reliance Retail is
moving out of stocking fruits and vegetables[citation needed]. Reliance Retail has decided to minimise its
exposure in the fruit and vegetable business.
The company may not stock fruit and vegetables in some states. 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 last October [citation needed], not only did the
company say 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[citation needed]. The idea the company
spoke about was to source from farmers and sell directly to the consumer, removing middlemen out
of the way.
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.[citation needed]
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. [citation needed]

Controversy[edit]
In 2007 Reliance stores in Jharkhand faced the ire of mobs of local vegetable vendors. They
vandalised and attacked the stores claiming that they were stealing their livelihoods. [2]
In August 2007, Uttar Pradesh Chief Minister Mayawati ordered to close 10 new stores keeping view
of Law & order situation. In November 2007, Reliance Fresh stores were attacked by Bharatiya
Janshakti Party supporters headed by Uma Bharti.[citation needed]

See also[edit]

List of Indian companies

Namdhari's Fresh

Reliance Footprint

Reliance Jewel

References[edit]
1.

Jump up^ "How Reliance Got Top Position As India's Retailer". Authint Mail. 2014-04-21.
Retrieved 2014-05-05.

2.

Jump up^ "National : Traders attack Reliance Fresh retail outlets". The Hindu. 2007-05-13.
Retrieved 2010-12-31.

http://www.independent.co.uk/news/world/asia/economic-growth-in-asia-indias-store-wars423133.html

External links[edit]

Reliance Official Site

Reliance Retail

Podbharti's podcast reporting on the stone pelting incident at Reliance Fresh store at Ranchi.
[hide]

Reliance Industries Limited

Companies

Reliance Industries
Reliance Industrial Infrastructure
Reliance Logistics
Reliance Solar
Relicord

Reliance Petroleum
Reliance Fresh
Reliance Retail
Reliance Digital
Jamnagar Refinery
Mumbai Indians
Network 18
Reliance Institute of Life Sciences
Institute

Dhirubhai Ambani International School

Hurkisondas Hospital
Dhirubhai Ambani

Notable People

Mukesh Ambani
Nita Ambani
Anand Jain

Charitable trust

Reliance Foundation

Categories:
Retail companies of India

Reliance Industries

Companies based in Mumbai

Companies established in 2006

Supermarkets of India

A fresh approach to food retailing

Tamil Nadu-based Pazhamudir has a successful business model in a challenging
space thats been scaled up through product sourcing and pricing, says the retail
innovation study
Arundhati Ramanathan

Tweet
First Published: Fri, Apr 12 2013. 01 19 AM IST

Kovai Pazhamudir Nilayam MD Senthil Natarajan. Photo: SaiSen/Mint

Chennai: Senthil Natarajan, 30, trained as a software engineera skill hes using to

give his business an edge over competitors.

The managing director of Kovai Pazhamudir Nilayam is taking the food and
vegetable retail chain based in Tamil Nadu and founded by his father into the
modern age. The younger Natarajan scouts the best sources overseas for exotic
fruits and is also upgrading the system by using technology.
By contrast, his father N. Natarajan, the founder of the Rs.160 crore chain, once
used to collect market intelligence by roaming the streets of Coimbatore with a fruit
basket.
The older Natarajan, the second of four brothers, dropped out of school as a nine
year old to sell fruits along with his elder brother to make ends meet. He worked in
a small fruit shop till the age of 14 and used his savings from this to open his first
store by investing Rs.300 in 1965. My father was of the view that when things we

wear on our feet are sold in shops, things we eat should be dealt better, said his
son, who espouses this as his philosophy for the business.
The key to Pazhamudirs success is old-fashioned common sensegive customers
fresh produce at an affordable price. What has helped is that the Natarajans
introduced several firsts that are now emulated by at least 80 other retailers in the
region. These measures were aimed at making the business customer-friendly and
less prone to price gouging. Pazhamudir was the first to introduce fixed prices for
fruit, allowing customers to choose those they wanted to buy. The company also
introduced the system of selling fruit by weight instead of by the dozen.
Growth was slow in the first two decades, as Natarajan only had four stores by
1985. But there was a reason for that.
We were focused on ensuring each store was profitable on its own. This is
something we ensure even today, said Senthil. By the time the enterprise spread
to Chennai in 2001, Natarajan was also selling vegetables.
Vegetables are less profitable, with a mark-up of up to 20%, compared with 30% for
fruit. However, vegetables doubled footfalls to an average of 2,500 in a day. Growth
was still slowone outlet was added every year as the company lacked a
distributing centre with cold storage facilities and there was no central purchasing
plan. The real growth came after 2005 when the younger Natarajan joined the
business, having worked withMicrosoft Corp. for a year in Hyderabad.
His introduction of technology and warehousing increased the cost of operations by
2-5% because of the extra logistics, rentals and labour. But this also allowed the
business to stock more exotic fruits and vegetables, thanks to cold storage facilities.
Also, wastage came down to 4-5% from 8%.
Expansion was accelerated. We began opening an outlet once in every three
months from the earlier pace of one outlet a year, Senthil Natarajan said.

The firm now has 33 outlets in nine cities in Tamil Nadu, of which 19 are in Chennai
its biggest marketand nine in Coimbatore. It plans to add another 30 in Chennai
by 2015. The average investment per store is Rs.50 lakh and break-even takes
about three to four years, said Natarajan, who has grown his business without
seeking recourse to debt.
Retail chains such as Reliance Fresh, the food and groceries supermarket chain
of Reliance Industries Ltd, have a larger footprint with more than 30 stores in
Chennai and four in Coimbatore.
Natarajan said, however, Pazhamudirs average sales per store is the highest
among organized chains, making it the largest regional retailer by revenue.
Pazhamudir has been growing at a compounded annual growth rate of 10-15% for
the last three years and expects to have closed fiscal 2013 with Rs.160 crore
revenue. To its credit, the retailer also has a higher net gross margin of close to
20%, compared with 11-15% for its peers, said a Booz & Co. and Retailers
Association of India report on successful innovations in Indian retail presented at the
Retail Leadership Summit in February. The business shows how efforts focused on
the supply side can also deliver consumer and business impact, the study said.
However, scaling up will come with its own set of challenges, said analysts.
Food and grocery retailing is a Rs.18 trillion industry but the organized segment is
justRs.450 billion, said Binaifer Jehani, director, Crisil Research. Among all other
retailing, gross margins in food and vegetable are among the lowest at 10-15%. And
it takes seven to eight years to break even, Jehani said.
It is a complex business. National retail chains such as Reliance Fresh have a
single-source model where they source from the local APMC (agricultural produce
market committee), but that does not distinguish you from the hawker. While they
have deep pockets, they are still sorting out various issues like customer connect,
merchandising, said Arvind Singhal, chairman, Technopak, a retail advisory. He

said the unique selling point of stores such as Pazhamudir is the freshness of the
produce.
The moment volumes become large and demand exceeds the supply from your
existing suppliers, you will have to bring in more suppliers into your fold, and that
makes it more complicated to manage as you need to have multiple distribution
centres, then capex climbs, and it leads to multiple inventory management, he
said.
Singhal believes while Pazhamudir has a good model, the nature of the business is
such that it is best to remain local and exhaust the potential in one city before
exploring others.
Senthil Natarajan agreed. What customers buy varies every 50 km. We would
rather be a south Indian player who understands what the customer wants before
entering new markets.

A fresh approach to food retailing

Tamil Nadu-based Pazhamudir has a successful business model in a challenging
space thats been scaled up through product sourcing and pricing, says the retail
innovation study
Arundhati Ramanathan

Tweet
First Published: Fri, Apr 12 2013. 01 19 AM IST

Kovai Pazhamudir Nilayam MD Senthil Natarajan. Photo: SaiSen/Mint

Chennai: Senthil Natarajan, 30, trained as a software engineera skill hes using to

give his business an edge over competitors.

The managing director of Kovai Pazhamudir Nilayam is taking the food and
vegetable retail chain based in Tamil Nadu and founded by his father into the
modern age. The younger Natarajan scouts the best sources overseas for exotic
fruits and is also upgrading the system by using technology.
By contrast, his father N. Natarajan, the founder of the Rs.160 crore chain, once
used to collect market intelligence by roaming the streets of Coimbatore with a fruit
basket.
The older Natarajan, the second of four brothers, dropped out of school as a nine
year old to sell fruits along with his elder brother to make ends meet. He worked in
a small fruit shop till the age of 14 and used his savings from this to open his first
store by investing Rs.300 in 1965. My father was of the view that when things we

wear on our feet are sold in shops, things we eat should be dealt better, said his
son, who espouses this as his philosophy for the business.
The key to Pazhamudirs success is old-fashioned common sensegive customers
fresh produce at an affordable price. What has helped is that the Natarajans
introduced several firsts that are now emulated by at least 80 other retailers in the
region. These measures were aimed at making the business customer-friendly and
less prone to price gouging. Pazhamudir was the first to introduce fixed prices for
fruit, allowing customers to choose those they wanted to buy. The company also
introduced the system of selling fruit by weight instead of by the dozen.
Growth was slow in the first two decades, as Natarajan only had four stores by
1985. But there was a reason for that.
We were focused on ensuring each store was profitable on its own. This is
something we ensure even today, said Senthil. By the time the enterprise spread
to Chennai in 2001, Natarajan was also selling vegetables.
Vegetables are less profitable, with a mark-up of up to 20%, compared with 30% for
fruit. However, vegetables doubled footfalls to an average of 2,500 in a day. Growth
was still slowone outlet was added every year as the company lacked a
distributing centre with cold storage facilities and there was no central purchasing
plan. The real growth came after 2005 when the younger Natarajan joined the
business, having worked withMicrosoft Corp. for a year in Hyderabad.
His introduction of technology and warehousing increased the cost of operations by
2-5% because of the extra logistics, rentals and labour. But this also allowed the
business to stock more exotic fruits and vegetables, thanks to cold storage facilities.
Also, wastage came down to 4-5% from 8%.
Expansion was accelerated. We began opening an outlet once in every three
months from the earlier pace of one outlet a year, Senthil Natarajan said.

The firm now has 33 outlets in nine cities in Tamil Nadu, of which 19 are in Chennai
its biggest marketand nine in Coimbatore. It plans to add another 30 in Chennai
by 2015. The average investment per store is Rs.50 lakh and break-even takes
about three to four years, said Natarajan, who has grown his business without
seeking recourse to debt.
Retail chains such as Reliance Fresh, the food and groceries supermarket chain
of Reliance Industries Ltd, have a larger footprint with more than 30 stores in
Chennai and four in Coimbatore.
Natarajan said, however, Pazhamudirs average sales per store is the highest
among organized chains, making it the largest regional retailer by revenue.
Pazhamudir has been growing at a compounded annual growth rate of 10-15% for
the last three years and expects to have closed fiscal 2013 with Rs.160 crore
revenue. To its credit, the retailer also has a higher net gross margin of close to
20%, compared with 11-15% for its peers, said a Booz & Co. and Retailers
Association of India report on successful innovations in Indian retail presented at the
Retail Leadership Summit in February. The business shows how efforts focused on
the supply side can also deliver consumer and business impact, the study said.
However, scaling up will come with its own set of challenges, said analysts.
Food and grocery retailing is a Rs.18 trillion industry but the organized segment is
justRs.450 billion, said Binaifer Jehani, director, Crisil Research. Among all other
retailing, gross margins in food and vegetable are among the lowest at 10-15%. And
it takes seven to eight years to break even, Jehani said.
It is a complex business. National retail chains such as Reliance Fresh have a
single-source model where they source from the local APMC (agricultural produce
market committee), but that does not distinguish you from the hawker. While they
have deep pockets, they are still sorting out various issues like customer connect,
merchandising, said Arvind Singhal, chairman, Technopak, a retail advisory. He

said the unique selling point of stores such as Pazhamudir is the freshness of the
produce.
The moment volumes become large and demand exceeds the supply from your
existing suppliers, you will have to bring in more suppliers into your fold, and that
makes it more complicated to manage as you need to have multiple distribution
centres, then capex climbs, and it leads to multiple inventory management, he
said.
Singhal believes while Pazhamudir has a good model, the nature of the business is
such that it is best to remain local and exhaust the potential in one city before
exploring others.
Senthil Natarajan agreed. What customers buy varies every 50 km. We would
rather be a south Indian player who understands what the customer wants before
entering new markets.