Reliance sees new retail business bringing in US$22 billion in 4-5 years

NOIDA, India: Reliance Industries Ltd., one of India's top business conglomerates, hopes its recent entry into the retail business will bring in 1 trillion rupees (US$22 billion, €17 billion) in sales over the next four to five years.

The forecast came Monday as the company opened nine stores in the five satellite towns around India's capital, New Delhi, mostly selling vegetables and groceries.

Around the country, Reliance has opened 49 stores so far. By December, it aims to open 1,000 stores in India, where the booming retail market — estimated at about US$200 billion (€155 billion) per year_ is currently dominated by more than 12 million mom-and-pop shops.

"By 2010-11, our total revenue should be in the region of 1 trillion rupees," said Raghu Pillai, chief executive of the company's retail business.

Large, air-conditioned stores remain a rarity in India, even as rising middle-class incomes and an increase in demand for branded products are driving a retail surge in India. Selling through company-owned stores — also called organized retailing — currently totals just US$8 billion (€6.3 billion).


In recent years though, the share of organized retailing has grown with many Indian companies entering the lucrative trade.

Reliance plans to invest about 250 billion rupees (US$5.5 billion; €4.3 billion) in building a nationwide network of procurement centers, cold storage centers and stores. The first of the company's stores opened in the southern Indian city of Hyderabad in November.

Its plans are by far the most aggressive among the domestic players, but Reliance faces tough competition from U.S. retail giant Wal-Mart Stores Inc., which recently tied up with a local company Bharti Enterprises to enter the Indian retail business. The first store from their joint venture is expected to open by August this year.

"We will be a formidable competitor to Wal-Mart," Pillai said.

Reliance insists its knowledge and understanding of the Indian market gives the company an edge over Wal-Mart. Also, the company is confident keeping prices of products at its stores competitive.

"It will be a combination of price and how well we will execute our model," which includes services such as home delivery, shop-on-phone and engaging small traders in the management of its supply chain, Pillai said.

"Our stores will have a non-intimidating environment with products available at affordable prices."

The company has so far opened 49 stores, mostly selling fruits, vegetables, grocery and diary products.