A comprehensive analysis of Reliance Home Delivery & Milk Product

Executive Summary Retailing is the final step in the distribution of merchandise - the last link in the Supply Chain - connecting the bulk producers of commodities to the final consumers. Retailing covers diverse products such as foot apparels, consumer goods, financial services and leisure. Hence, the value proposition a retailer offers to a consumer is easy availabilities of the desired product in the desired sizes at the desired times. The retail market size in India is estimated to be around $180 billion. Retailing provides jobs to almost 15 percent of employable Indian adults and it is perhaps the largest contributor to India's GDP. But the flip side of the coin is that the average size of each of the retail outlets in India is only 50 square feet and though a large employer, the industry is very unorganized, fragmented and with a rural bias.

Collection Center

City processing center

Mandi

Distribution center

DSD

Stores

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Plano gram A Plano gram is the visual representation of how and where the products should be placed on the retail shelves and displays, which ensures ease of shopping for customers. A Plano gram defines which product is placed in which area of a shelving unit and with which quantity. The rules and theories for the creation of a Plano gram are set under the term of merchandising. Plano gram is needed before the products actually arrive to the store. A Plano gram is a retailer's drawing (blueprint), which visually communicates how merchandise and props physically fit onto a store fixture or window to allow for proper visibility and price point options. The retailer can plan to mix the new products with current items or initiate entirely new displays. If you have more than one store this is an excellent way to communicate to your staff how you would like displays executed. Primary targets which should be achieved with Plano gram: •

Achieve merchandising style

•

Merchandise shelf in line with consumer buying behavior.

•

Conforming to adjacencies – what goes next to what.

•

Visual Appeal

•

Tool to ensure merchandising strategies are implemented in the stores

Plano gram management: Plano gram would be based on the Processing food Plano gram Principles: Produce would be kept in shelves in groups – all Category Produce would be kept together (all Fruits would be together, all vegetables would be together, all Cut Produce would be together). This would be the first criterion. 2

Within category, produce would be kept together in Sub Category Level Grouping (All Imported Apple would be kept together; all basic vegetables would be kept together etc). This would be the second criterion. •

All F & V would be kept based on the preference for Fixtures.

•

Ethylene Sensitivity would be the next criteria. All Ethylene releasing

produce would be kept away from ethylene sensitive produce. •

Quantity Sold per Day/ Movement of Produce would be the next

important Criteria. 

The Fastest moving produce would be kept in the Middle Shelf in case of wall racks, front layer incase of Loungers



Next fast moving produce would be kept in the top Shelf of the wall racks and back layer in case of Loungers



Medium moving Produce would be kept in Bottom Shelf front layer of wall racks



Least moving SKUs would be kept in the Bottom shelf, back layer of wall racks/ or in back layer in case of loungers.

•

Bulkiness of the Produce would be the next criteria – All Bulky Fruit/

vegetable would be kept in the Bottom shelf only.

Quality Benchmarking It is simply the systematic process of searching for best practices, innovative ideas and highly effective operating procedures that lead to superior performance. No single department or company can corner the market on all good ideas.

3

Benchmarking is a process used in management, in which organizations evaluate various aspects of their processes in relation to best practice, usually within their own sector. This then allows organizations to develop plans on how to adopt such best practice, usually with the aim of increasing some aspect of performance. Type of bench marking process undertaken here is performance benchmarking. Performance benchmarking enables us to assess their competitive positions through product and service comparisons, usually focuses on elements of price, technical quality, ancillary product or service features, speed, reliability, etc. .

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RELIANCE: AN OVERVIEW "Growth has no limit at Reliance. I keep revising my vision. Only when you can dream it, you can do it."

Dhirubhai H. Ambani Founder Chairman Reliance Group December 28, 1932 - July 6, 2002

Dhirubhai Ambani founded Reliance as a textile company and led its evolution as a global leader in the materials and energy value chain businesses. He is credited to have brought about the equity cult in India in the late seventies and is regarded as an icon for enterprise in India. He epitomized the spirit 'dare to dream and learn to excel'. The Reliance Group is a living testimony to his indomitable will, single-minded dedication and an unrelenting commitment to his goals. Milestones 5

Starting as a small textile company, Reliance has in its journey crossed several milestones to become a Fortune 500 company in less than 3 decades. Reliance continues to cross newer & bigger milestones in its quest for what is known as "Growth is Life".

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$ 30 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, fibre 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, fibre intermediates, plastics and chemicals), textiles, retail and special economic zones. Reliance enjoys global leadership in its businesses, being the largest polyester yarn and fibre producer in the world and among the top five to ten producers in the world in major petrochemical products.

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Major Group Companies are Reliance Industries Limited (including main subsidiaries Reliance Petroleum Limited and Reliance Retail limited) and Reliance Industrial Infrastructure Limited. Innovations at RIL For those who study innovative organizations Reliance Industries will be a shining example of how innovation is practised in almost everything that they do. Here are few things that set them apart: •

"Impossible is an inspiring word" - Nothing turns on the leadership at Reliance Industries than this magical word. Again to quote the Jamnagar example, it was considered impossible to turn a barren land into a greenbelt. Today mangoes grown in Jamnagar are sold in Harrods London.

•

"Hands on thinking, hands off execution." - It is characteristic of Reliance leadership. They think everything through and meticulous planning is their hall mark. When it comes to execution empowerment delegation down to the last employee in the chain is clearly demonstrated.

•

"First time it is learning. Second time it is a mistake." - Mistakes are never frowned upon; instead they are treated as a learning opportunity. It is one such mistake converted to learning that created the world's largest 'Craft Centre' located at Jamnagar. Cumulatively it has trained 1, 50,000 workmen - electricians, welders, carpenters.

•

"Sense of urgency" - Reliance speed is legendary now. Reliance has mastered project management skills and has made it virtually into a fine art. It is this sense of speed that restored operations in record time in Jamnagar, Patalganga and Hazira after being affected by cyclones and floods. 7

•

"Think. Anticipate. Be prepared." Part of meticulous thinking is the ability to anticipate problems. "Every transformation initiative will face resistance. It is our job to anticipate the resistance, take the responsibility to earn the respect of all stakeholders to create a win-win business model."

•

"Dreams and Vision are the most potent fuels in the world." - This is an unmistakable Reliance hallmark espoused both by the founder Chairman Sh. Dhirubhai Ambani and the current Chairman Sh. Mukesh Ambani. To a question on what would be his next big ambition Sh. Mukesh Ambani answered "Rural transformation. Creating direct employment for half a million people in rural India. Creating a supply chain that the world will envy."

•

"Measuring success differently" - Developing a metric to measure how much money was spent, is just one example of inspiring people to think and act differently and effectively.

•

"Asking the right questions." - Reliance Leadership excels in asking the right questions. The company folklore is replete with examples of deceptively simple questions, leading on to incredible outcomes. Commonsense is the bedrock of such thinking.

"Hard work, timely decisions, speed and ingenuity" says one of the senior managers of Reliance Industries to sum up what Reliance is all about. It is evident that Reliance Industries is where it is today because of Innovation in thinking and execution. Given its ambition for India and its own organization Reliance leadership has now taken on a major initiative in the innovation domain. The leadership of RIL recognizes that its biggest competitive advantage and differentiator in the future would be innovation. Innovation has to become the language, the behaviour definer, the culture and the soul of Reliance, even more explicitly than ever before. 8

Growth through Governance Reliance is in the forefront of implementation of Corporate Governance best practices Corporate Governance at Reliance is based on the following main principles: •

Constitution of a Board of Directors of appropriate composition, size, varied expertise and commitment to discharge its responsibilities and duties.

•

Ensuring timely flow of information to the Board and its Committees to enable them to discharge their functions effectively.

•

Independent verification and safeguarding integrity of the Company’s financial reporting.

•

A sound system of risk management and internal control.

•

Timely and balanced disclosure of all material information concerning the Company to all stakeholders.

•

Transparency and accountability.

•

Compliance with all the applicable rules and regulations.

•

Fair and equitable treatment of all its stakeholders including employees, customers, shareholders and investors

Growth through Recognition Reliance has merited a series of awards and recognitions for excellence for businesses and operations. 9

2007-2008 •

Shri Mukesh Ambani was awarded the Defence India Excellence Award 2007. The Award is a salute to those who have made the country proud.

•

Shri Mukesh Ambani was conferred the Indian of the Year Award by NDTV. This is India’s most prestigious award for outstanding contribution towards the betterment of the nation. Shri Mukesh Ambani received the coveted award in the Business Category.

•

Shri Mukesh Ambani was conferred the Outstanding Business Leader of the Year Award by CNBC TV18.

•

Shri Mukesh Ambani was awarded the Business Leadership Award 2007 by NDTV Profit.

•

Shri Mukesh Ambani was conferred the Leadership Award for Global Vision by the United States India Business Council.

•

Shri Mukesh Ambani was elected to be a member of the Honorary Fellows of The Institution of Chemical Engineers, UK. 10

•

On invitation to Shri Mukesh Ambani, Reliance Industries Limited became a Council Member of World Business Council for Sustainable Development (WBCSD) in July 2007. Presently, Shri Mukesh Ambani is the only Indian CEO who is Council Member of WBCSD.

Corporate Ranking and Ratings: Reliance featured in the Fortune Global 500 list of ‘World’s Largest Corporations’ for the fourth consecutive year. •

Ranked 269th in 2007 having moved up 73 places from the previous year.

•

Featured as one of the world’s Top 200 companies in terms of Profits.

•

Among the top 25 climbers for two years in a row.

•

Featured among top 50 companies with the biggest increase in Revenues.

•

Ranked 26th within the refining industry.

Reliance is ranked 182nd in the FT Global 500 (up from previous year’s 284th rank). •

Petro Fed, an apex hydrocarbon industry association, conferred the Petro Fed 2007

awards in the categories of “Refinery of the Year” and “Exploration & Production - Company of the Year”. •

Brand Reliance was conferred the “Bronze Award” at The Buzziest Brands Awards

2008, organized by agencyfaqs! •

Institute of Economic Studies conferred the “Udyog Ratna” award in October 2007 for

contributions to the industry. •

Chemtech Foundation conferred the “Hall of Fame” in February 2008 for sterling 11

contributions to the industry. •

Chemtech Foundation conferred the “Outstanding Achievement - Oil Refining” for

work at the Jamnagar Manufacturing Division. •

Petroleum Federation of India conferred the “Refinery of the Year Award - 2007” to

Jamnagar Manufacturing Division Exports •

“The Plastics Export Promotion Council - PLEXCOUNCIL Export Award” in the

category of Plastic Polymers for the year 2006-2007 was awarded to Reliance being the largest exporter in this category. Health, Safety and Environment •

Jamnagar Manufacturing Division was conferred the “Golden Peacock Award for

Occupational Health & Safety - 2007” by Institute of Directors. •

Jamnagar Manufacturing Division was conferred the “ICC Award for Water Resource

Management in Chemical Industry”. •

Jamnagar Manufacturing Division was conferred the “Good House Keeping Award”

from Baroda Productivity Council. •

Jamnagar Manufacturing Division was conferred the “BEL-IND” Award for the best

scientific paper at the 58th National Conference of Occupational Health. •

Naroda Manufacturing Division was conferred the “Safety Award and Certificate of

Appreciation” presented by Gujarat Safety Council & Directorate of Industrial Safety & Health, Gujarat State for the recognition of safety performance at the 29th State Level Annual Safety Conference. •

Dahej Manufacturing Division received “BSC 5-Star” rating from British Safety

12

Council, UK. •

Dhenkanal Manufacturing Division received the “2nd Prize for Longest Accident Free

Period” from the Hon’ble Minister of Labour, State of Orissa. •

Hoshiarpur Manufacturing Division bagged the First Prize in “Safety in Punjab”,

organized by Punjab Safety Council. •

Patalganga Manufacturing Division won the “Gold Medal at CASHe (Change Agents

for Safety, Health and Environment) Conference”. It also won the III Prize in Process Management category for Presentation on Safety through Design in chemical process industry in Petro safe 2007 Conference. •

Kurkumbh Manufacturing Division won the “Greentech Safety Award silver trophy”

for outstanding achievement in safety management in chemical sector. •

Hazira Manufacturing Division received the “TERI Corporate Environmental Award

(Certificate of Appreciation)” for PET recycling project.

•

Nagothane Manufacturing Division received the “Shrishti G-Cube Award for Good

Green Governance” from Minister for Commerce and Industry, on World Earth Day. Training and Development •

Jamnagar Refinery was adjudged the winner of the “Golden Peacock National

Training Award -2007”. •

Patalganga Manufacturing Division won the “ASTD (American Society for Training

& Development) Excellence in Practice Award” for innovative practice titled Learning Function’s role as Business partner: Empowering people with Knowledge to achieve Business Goals. 13

•

Reliance won the CNBC TV-18 instituted Jobstreet.com Jobseekers’ Employer of

Choice Award. Energy Excellence •

Exploration & Production (E&P) Division won “The Infraline Energy Excellence

Awards 2007: Hydrocarbon Columbus Award for Excellence in Petroleum Exploration”. •

Patalganga Manufacturing Division won the First Prize in “Energy Conservation in

State of Maharashtra” organized by Maharashtra Energy Development Agency (MEDA). •

Jamnagar Manufacturing Division won the “Oil & Gas Conservation Award -2007”

from the Centre for High Technology, Ministry of Power & Natural Gas for the excellent performance in reduction/elimination of steam leaks in the plant. •

Jamnagar Manufacturing Division was the recipient of the “Infraline Energy Award-

2007” by Ministry of Power. •

Hazira Manufacturing Division won the Government of India Energy Conservation

Award (2007) conferred by the Bureau of energy efficiency and Ministry of Power. •

Hazira Manufacturing Division was adjudged “Excellent Energy Efficient Unit” at

Energy Summit - 2007 by CII. •

Vadodara Manufacturing Division received the CII award for “Excellence in Energy

Management - 2007” as energy efficient unit. This division also received the 2nd prize in “National Energy Conservation Award - 2007” from Bureau of Energy efficiency, Ministry of Power, Government of India. •

The Company’s manufacturing divisions at Vadodara and Hazira were honoured with

CII-National award for excellence in water management - 2007 as water efficient unit in “Within the fence” category. Additionally, Hazira Manufacturing Division was honoured as 14

water efficient unit “Beyond the Fence” category. Quality •

For the first time ever, globally, a petrochemical company bagged the “Deming Prize

for Management Quality”. “The Quality Control Award for Operations Business Unit 2007” was awarded to the Hazira Manufacturing Division for Outstanding Performance by Practicing Total Quality Management. •

“QUALTECH PRIZE 2007”, which recognizes extraordinary results in improvement

and innovation, was won by Hazira Manufacturing Division for its Small Group Activity Project. •

Vadodara Manufacturing Division’s Polypropylene-IV (PP-IV) plant was conferred

the “Spheripol Process Operability Award-2006” for the highest operability rate with an on stream factor 98.97% by M/s. BASELL, Italy. •

Allahabad Manufacturing Division won the “Excellent Category Award” at National

Convention of Quality Circle (NCQC) - 07. Six-Sigma •

Lean Six sigma project on “Reducing retention time of caustic soda lye tankers at

Jamnagar” won the 1st prize in the national level competition held by Indian Statistical Institute (ISI). •

Patalganga Manufacturing Division’s Six Sigma Project on Improve Transfer

Efficiency for Automatic winders in PFY won the 2nd Prize for “Best design for Six Sigma Project in International Six Sigma Competition” organized by IQPC (International Quality and Productivity centre). •

Barabanki Manufacturing Division won the 3rd prize in “All India Six Sigma case

study contest 2008” for the Case study on “Reduction of waste of Plant 2 from 16% to 8%”. 15

•

Hoshiarpur Manufacturing Division won the 2nd prize in “Six Sigma competition at

National Level” organized by ISI and Quality Council of India (in manufacturing category), while Dhenkanal and Barabanki Manufacturing Divisions won the 3rd prize. •

Vadodara Manufacturing Division’s Six Sigma project won the 1st prize as the “Best

Six Sigma project” at National level by CII. Technology, R&D and Innovation •

Vadodara Manufacturing Division’s R&D bagged an award from Indian Institute of

Chemical Engineers for Excellence in Process / Product Development for the work on “Eco friendly Process for Acetonitrile Recovery”. •

“DSIR National Award for R&D Efforts in Industry (2007)” was conferred on Hazira

Manufacturing Division for the Cycle hexane Recovery Project. •

Patalganga Manufacturing Division’s Project titled Augmentation of ETP and use of

biogas in Fired heaters won the “Best Innovative Project” from CII. •

Reliance bagged the “Innovation Award at Tech Converge 2007” for innovative

developments in short-cut fibres. •

Hazira Manufacturing Division won the “Golden Peacock Innovation Award - 2007”

for its Cyclohexane Recovery Process. Information Technology •

“CIO of the Year Award” for the best IT-enabled organization in India for the Year

2007. •

“Ones to Watch - CIO - USA Award”, for figuring among the top 20 organizations

fostering excellence in IT team. •

“The Skoch Challenger Award” conferred for the best IT Head (managing the most IT

16

enabled organization) of the Year 2007. •

“Best IT Implementation Award”, by PC Quest for Knowledge Management Systems

portal (KMS). •

“CIO Excellence Award” for Chemical Industry Information Technology Forum for

exemplary Information Technology implementation amongst global chemical companies. •

“CTO Forum Hall of Fame Award” for the best CIOs in India for not only providing

service to their organisations, but also serving as idols. Social Initiatives •

Hazira Manufacturing Division won the “Golden Peacock Global Award for Corporat.

17

Growth through Value Creation With a vision to generate inclusive growth and prosperity for farmers, vendor partners, small shopkeepers and consumers, Reliance Retail Limited (RRL), a subsidiary of RIL, was set up to lead Reliance Group’s foray into organized retail. With a 27% share of world GDP, retail is a significant contributor to overall economic activity across the world. Of this, organized retailing contributes between 20% to 55% in various developing markets. The Indian retail industry is pegged at $ 300 billion and growing at over 13% per year. Of this, presently, organized retailing is about 5%. This is expected to grow to 10% by 2011. RRL has embarked upon an implementation plan to build state-of-the-art retail infrastructure in India, which includes a multi-format store

18

strategy of opening neighbourhood convenience stores, hypermarkets, and specialty and wholesale stores across India. RRL launched its first store in November 2006 through its convenience store format ‘Reliance Fresh’. Since then RRL has rapidly grown to operate 590 stores across 13 states at the end of FY 2007-08. RRL launched its first ‘Reliance Digital’ store in April 2007 and its first and India’s largest hypermarket ‘Reliance Mart’ in Ahmedabad in August 2007. This year, RRL has also launched its first few specialty stores for apparel (Reliance Trends), footwear (Reliance Footprints), jewellery (Reliance Jewels), books, music and other lifestyle products (Reliance Timeout), auto accessories and service format (Reliance AutoZone) and also an initiative in the health and wellness business through ‘Reliance Wellness’. In each of these store formats, RRL is offering a unique set of products and services at a value price point that has not been available so far to the Indian consumer. Overall, RRL is well positioned to rapidly expand its existing network of 590 stores which operate in 57 cities. During the year, RRL also focused on building strong relationships in the agri-business value chain and has commenced marketing fruits, vegetables and staples that the company sources directly to wholesalers and institutional customers. RRL provides its customers with high quality produce that has better shelf life and more consistent quality than was available earlier. RRL has made significant progress in establishing state-of-theart staples processing centres and expects to make them operational by May 2008. Through the year, RRL also expanded its supply chain infrastructure. The Company is fully geared to meet the requirements of its rapidly growing store network in an efficient manner. Recognizing that strategic alliances are going to be a key driver to its retail business, in FY 2007-08, RRL established key joint ventures with international partners in apparel, optical and office products businesses. Further, RRL will continue to seek synergistic 19

opportunities with other international players as well. This year, RRL will continue its focus on rapid expansion of the existing and other new formats across India. 12 The Q4 of FY 2001 for RIL has been somewhat disappointing in terms of numbers for investors. However, some of the major developments should not be undermined, which will keep creating value in the coming year. Also, there were extraordinary items, influencing this performance. More importantly, prices of major feed stocks increased sharply. As a result of this, higher crude oil prices remained during the year. The rise in product prices lagged the increase in feed stock costs, leading to overall pressures on profitability. Polyester PSF, PET) Reliance has been ranked as the 2nd largest producer of POY and PSF in the world, and the largest polyester manufacturer in India, with a market share of 51 per cent. Its production volume in the polyester business increased 10 per cent during the year to 724,000 tons. The annual compounded growth rates in polyester consumption in India are in double digits over the past 2 decades. Per capital consumption of polyester in the country also still remains amongst the lowest in the world. This reflects the continued potential for strong demand growth in the future. RIL as a strategy increased its focus on the specialty products, thus, increasing its market share, leading to wider product range, improved margins and superior overall value proposition to customers. During the year, it also took over two more polyester manufacturing facilities, DCL Polyester Ltd and JCT Ltd, with a total capacity of 120,000 tons per annum. Subsequent to the end of last fiscal, the Government has imposed antidumping duties on POY imports from a large number of countries in the Asia Pacific region, to counter unfair competition.

20

Fibre Intermediates (Px, PTA and MEG) Reliance is the world’s 3rd largest producer of Paraxylene, and the world’s 4th largest producer of PTA. Production volumes in this business were up by 29 per cent last year. This was mainly on account of the commissioning of 1.4 million ton per annum PX facility at the integrated Jamnagar Petrochemicals Complex. Polymers (PP, PE and PVC) Reliance is the largest producer of these products in the country, with a market share of 52 per cent. During the year, this business grew by 18 per cent. Again this growth is attributable to the commissioning of the new complex at Jamnagar. The future demand prospects for polymers remains extremely strong, with India poised to emerge as the third largest plastics market in the world. Oil and Gas This is the biggest business developing for RIL. We believe, going forward over the next five to ten years, this will become RIL’s largest business area. Even worldwide, for large Oil companies this is the most profitable area. Currently, it accounts for only 3 per cent of RIL’s total revenues. RIL holds a 30 per cent interest in the unincorporated JV with Enron and ONGC to develop the proven Panna, Mukta and Tapti (PMT) oil and gas fields. The oil production from these areas recorded a growth of 22 per cent this year. During the year, RIL has, in a 90:10 consortium with Niko Resources of Canada, been awarded 12 new exploration blocks by the Govt., through a process of competitive

21

international bidding. This has made RIL the country’s largest E&P (Exploration and Production) player in the private sector, with exploration acreage of 105, 765 sq. kms. In order to grow further aggressively in this activity, RIL has bid for 15 new exploration blocks in the second round under the Govt.'s new exploration licensing policy (NELP) along with Hardy Oil of UK. Financials (Rs In Crores) Particulars

FY 2000-01

FY 19992000

Sales

It must be noted here that, during the year the company has changed the basis of providing depreciation from

28008

20301

Other Income

383

687

certain assets. Other than this policy,

Total Income

28391

20988

the profit would have been higher by

PBIDT

5562

4746

Interest

1216

1008

has gone up, in turn reducing the net

PBDT

4346

3738

profits.

Depreciation

1565

1278

Valuations

Profit Before Tax

2781

2460

135

57

the FY 2001. However, to measure

Profit After Tax

2646

2403

its true performance, one must look

Equity

1054

1054

Reserves

10941

9865

Book Value (Rs.)

113.8

103.5

Taxation

SLM to WDV method in respect of

Rs. 163 crs. Also, the other income for the year has been lower and tax

PE: RIL quotes at a PE of 13.4 for

at in a consolidated sense. For it's consolidated earnings in FY 2001, RIL quotes at a PE of 10.1. This is a 22

gross under valuation, given its excellent growth prospects in future and the potential of value unlocking from its investments. Also, it must be noted that the last year’s performance is against most of the product prices at a trough level. There is a chance of these prices improving by June’01. In this case, RIL profits can improve. Also, this year would be marked by several potential value unlocking stories in RIL. For eg. The phased stake divestment in RPL would give it about Rs. 3500 crs. The other big investments like Reliance Telecom and Reliance Infocom are already in a very good shape and are being valued highly. The Reliance Telecom project has become cash positive and Reliance Infocom valuations are reportedly being put up at Rs. 30,000 cr plus. Thus, each year now there is a possibility of massive value unlocking from the RIL investments. This could be a bonanza for RIL investors. Disclaimer: For further clarifications/ suggestions please

This publication has been prepared solely for

contact-

information purpose and does not constitute a solicitation to any person to buy or sell a

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Industry Introduction Retail Retailing is the last link in the chain of production, which begins at the extractive stages, moves through manufacturing, and ends in the distribution of goods and services to the final consumer.Retailing is the business, which considers every individual as a customer, and accounts for less than 10% of the worldwide labor force but is still the single largest industry in most nations. Retailing consists of the sale of goods or merchandise from a fixed location, such as a department store or kiosk, or by post, in small or individual lots for direct consumption by the purchaser. The distribution of the consumer products begins with the producer and ends at the ultimate consumer. Between the producer and the consumer there is a middleman the retailer, who links the producers and the ultimate consumers. Retailing is defined as a conclusive set of activities or steps used to sell a product or a service to consumers for their personal or family use. It is responsible for matching individual demand of the consumer, which supplies of all the manufactures. The word retail is derived from the French world “retailer”, meaning to cut a piece off or to break bulk. A retailer is a person agent, agency, company or organization, which is instrumental in merchandise or services to the ultimate consumer. 24

Retailing scenario is changing day-by-day; everyday brings new opportunities along with threats and learning because still retailing is in infantile stage so there are lots of things to learn. In retailing the best way for learning is benchmarking which gives an idea about our position along with competitors. In India, the retail sector is the second largest employer after agriculture. The retail sector in India is highly fragmented and includes predominantly small independent and ownermanaged shops. Food sales constitute a high proportion of the total retail sales. The share was 62.7% in 2001, worth approximately Rs 7039.2 billion, while non-food sales were worth Rs 4189.5 billion. The retail business in India is expected to reach Rs.19069.3 billion by the end of 2007. Frequently Thought Questions Many times I used to think that what is milk? How is it useful for us? What are its Constituents and many more? During my association with Dairy Pure I found answers to all my questions and queries. Question 1: What is milk? Answer: Milk is a lacteal secretion from the mammary glands of a healthy milky animal free from colostrums. Milk has got mainly three constituents – fat (3 to 6%), snf comprising of proteins, lactose, minerals etc (8 – 9%) and water (85%). Question 2: Is Dairy Pure milk prepared from powder? Due to the calving cycle, cow / buffalo remain in milk for 8-9 months in a year. The high yielding and low yielding period is different in case of cow or buffalo, but generally winters are called flush season due to high production of milk whereas summers are called lean season when production is less. On the other hand, the demand is almost 25

constant throughout the year. Hence during flush season, fat part of milk is preserved in form of white butter and snf in form of powder after evaporating water. These two constituents are mixed and processed during lean season to meet the demand. So powder is nothing but preserved snf / fat of milk 39 Question 3: How is milk useful for us? Milk is nature’s perfect food for all ages. It has almost all the vital nutrients needed for growth and well being of human body. Milk is the richest natural source of calcium and essential amino acids. It is good for bone formation. It is particularly beneficial for people recovering from sickness, for sportsmen, for old people, for pregnant women and for growing children. The doctor recommends a minimum daily intake of 250 ml. Or one and a half glass of milk for every person. Normal cow milk has 4%fat and buffalo milk 6% fat. There is another important constituent of milk- solids not fats these solids – not – fat. (Or SNF, as it is commonly called) comprise of proteins, minerals, carbohydrates and vitamins. For milk to be nutritionally balanced, it has to contain both fat and solids- notfat in right proportion. Question 4: Why pasteurized milk is better than vendor’s milk? Dairy Pure milk strictly conforms to PFA standards to comply with the legal requirement and to provide wholesome nutritive food to the consumers. This means when we are buying Dairy Pure milk, we are sure we are getting value for our money. We are sure of getting the “nature’s perfect food” full 500 ml, 100ml, in every pack. We are sure of getting milk which has longer life because of its superior bacteriological quality. The loose milk available from local vendors in Jaipur city often does not conform to PFA standards. It has fat and less solid-not fat than required. If our milk contains 0.5% less fat or SNF, we are paying up to 60 paisa per pouch extra. Besides, it is not uncommon to find artificial preservatives, not permitted by law being added to lose milk. This has been 26

authenticated in a recent campaign run by this sangh, in which it was found that more than 60% to 70% of milk sold by private traders and loose milk contain artificial preservatives, not permitted by law. By compromising on the quality of milk we may be depriving our children of essential life building proteins and nutrients that only pure, high quality milk offers.

International Retail: At A Glance 

One of the world’s largest industries exceeding Rs.405 thousand lakh crore.



47 Global Fortune 500 companies & 25 Asia's Top 200 companies are retailers.



Dominated by developed countries.



US, EU & Japan constitutes 80% of world retail sales.

Retail industry can be divided into two types: 1. Organized Retail: Major players included in this segment are Reliance Reatil, pantaloons, Spencer, Aditya Birla group, Piramal group, Raheja group, etc.

27

2. Unorganized Retail: This category includes Pushcart vendors, Regular Shop/Wet shop, Local retailers, etc.

Share of Organized Retail

Retail Landscape in India Retail Industry in India is the second largest employer after Agriculture. It contributes to 10 % of GDP and 6-7 % of the Employment

•

Indian Retail - dominated by unorganized sector.

•

Approximately 12 million Mom and Pop Shops.

•

Share of organized retail sector is only 3%.

•

FDI in the retail sector not allowed so as protecting local retailers. 28

•

Indian retail sector is one of the least concentrated in the world.

•

India is third largest market in Asia, next to Japan & China.

29

Future of Retail in India •

Organized Retail Industry is expected to grow at 25 to 30%.

•

Share of Organized retail is set to increase from 3% to about 10% by 2010.

•

The top 5 companies in India have a market share of less than 2% and hence more corporate players are entering in retail.

•

Existing players increasing their number of stores and size.

•

More and more Malls, Shopping Complexes, Multiplexes and entertainment complexes are being opened.

•

FDI in retail sector has not been permitted in order to protect local retailers, hence restricted entry into single branded stores.

`

30

31

32

Company Profile Introduction Reliance Industries Ltd. (RIL) has entered the list of World’s Most Respected Companies Reliance is one of the only two companies from India that have featured in the World’s 90th Most Respected Companies list published by Financial Times based on global survey and research done by Pricewaterhouse Coopers. Mr. Mukesh Ambani, Chairman and Managing Director, Reliance Retail Ltd. is among the top 50 most respected business leaders of the world. Reliance also features among the global companies that create most value for their shareholders. Reliance is the only company from India to feature in the list of 60 global companies that will make the most impact on economic / social issues in emerging markets over next 5-10 years. In this list Reliance ranks 53rd . Microsoft and McDonald’s are at the top of this list. Reliance tops the list of most respected companies in India. The survey in its list for Indian ranks 12 companies as most respected companies. Reliance is at the top, and is followed by Infosys at second place, and Hindustan Lever at third place. This fifth annual global survey was based on interviews with 1,000 senior executives and opinion formers in 20 countries weighted against the GDP of the respondents base of operations. The core of the survey remains consistent over time, identifying those companies and business leaders globally that are most respected by their peers and the reasons for those choices.

33

Ranked amongst the world Top 200 companies in terms of profit in fortune 500 list.

Ranked amongst world’s 10 Most respected chemicals Companies.

Emerged as ‘India’s biggest wealth creator in the private sector over a 5-year period. Ranked amongst the world Top 50 companies to create The most value for their Shareholder.

RELIANCE : as an achiever 34

Reliance Industries limited is the largest and one of the fastest growing private sector companies in India, with business activities encompassing all major growth sectors of the Indian economy such as – oil & gas exploration and production, petroleum refining & marketing, petrochemicals including intermediates, and textiles. The company manufatures and markets a wide range of products with market leadership in almost all its business. All its production facilities have a common feature – global scale operations employing state-of-the-art technology in the respective fields. The Reliance group has also ventured into power, telecom and infocomm areas, thus truly emerging as a well – diversified conglomerate with global competence in technology, management and financial capabilities to meet the needs of the rapidly growing Indian market. With domestic market shares ranging from 40 to 80 % reliance is also ranked among the top 10 producers globally, for all its major product. Reliance group’s business activities encompass all major growth sectors of the Indian economy:Oil and gas exploration, Refining and marketing, Petrochemicals including imtermediates, Textiles, Power, Telecom, Infocomm, Insurance, Retail, etc. • Reliance was ranked 417 in 2004,342 in 2005 and 269 in 2006. • Among the top 25 climbers for the second year in succession. • India’s only private sector company to feature in forbes in the fortune 500.

Core values of company 35

Reliance Retail 36

Growth through Value Creation Reliance retail 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. Reliance is gearing up to revolutionize the retailing industry in India. Towards this end, Reliance is aggressively working on introducing a pan-India network of retail outlets in multiple formats. A world class shopping environment, state of art technology, a seamless supply chain infrastructure, a host of unique value-added services and above all, unmatched customer experience, is what this initiative is all about. The retail initiative of Reliance will be without a parallel in size and spread and make India proud. Ensuring better returns to Indian farmers and manufacturers and greater value for the Indian consumer, both in quality and quantity, will be an integral feature of this project. By creating value at all levels, we will actively endeavor to contribute to India's growth. Reliance is gearing up to revolutionize the retailing industry in India. Towards this end, we are aggressively working on introducing a pan-India network of retail outlets in multiple formats. A world class shopping environment, state of art technology, a seamless supply chain infrastructure, a host of unique value-added services and above all, unmatched

customer

experience,

is

what

this

initiative

is

all

about.

The retail initiative of Reliance will be without a parallel in size and spread and make India proud. Ensuring better returns to Indian farmers and manufacturers and greater value for the Indian consumer, both in quality and quantity, will be an integral feature of this project. By creating value at all levels, we will actively endeavor to contribute to India's growth. 37

The project will boast of a seamless supply chain infrastructure, unprecedented even by world standards. Through multiple formats and a wide range of categories, Reliance is aiming to touch almost every Indian customer and supplier. Reliance Fresh, Reliance Mart, Reliance Digital, Reliance Trendz, 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.

RELIANCE FRESH (AN OVERVIEW) 38

The Reliance Fresh supermarket chain is RIL’s Rs 25,000 crore venture and it plans to add more stores across different regions, and eventually have a pan-India footprint by year 2011. 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. In a dramatic change due circumstances prevailing in UP, West Bengal and Orissa, It was 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 last October, 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. .

The Reliance Retail had to face various difficulties before the launch of Reliance fresh, because of the various circumstances prevailing in Orissa, West Bengal and UP, along with the news focusing on the dearth of vegetables and fruits stocks. The retail business 39

of Reliance then minimized its exposure in vegetable and fruit business, as a result established Reliance fresh positioning a pure super market play focusing on various categories like IT, consumer durables, home, FMCG and food. The retail company of Reliance may not supply the vegetables and fruits in a few states, the Reliance Fresh decided to not to race with local wholesalers partly because of the political reasons as well as its incapability to maintain a healthy supply chain. Growth of Reliance Fresh The first ever a Reliance Fresh store was established in Hyderabad, wherein the company, mainly focused on the fresh produced vegetables and fruits at comparatively low price along with an introduction of farm to fork theory. This was the idea, which was anticipated by the company was to take the supply direct from the farmers and then sell straightaway to the consumers removing the middle-men off the beaten track. Reliance introduced several formats in the marketplace to cater to needs of common people, which includes Reliance Fresh, Reliance Super, Reliance Footprint, Reliance Timeout, Reliance Jewels, Reliance wellness, Reliance Mart and Reliance Digital, to name a few. In addition to this, the Reliance Retail also entered into a treaty with Apple, which is a leading Information Technology company, to set up a series of Apple Specialty Outlets branded as IStore, with its first ever store in Bangalore. With an idea to produce inclusive prosperity and growth for farmers, consumers, small shopkeepers and vendor partners, Reliance Retail was set up in order to lead the foray of Reliance Group into an organized retail

40

Reliance Fresh in Rajasthan: 41

Reliance fresh is operating in 4 cities of Rajasthan (Jaipur, Ajmer, Jodhpur and Udaipur) with all of its listed SKU’s.There are 27 Reliance fresh outlets in Jaipur, 3 at Ajmer, 3 at Udaipur and 5 outlets at Jodhpur. Reliance fresh supply chain for fruits and vegetable at Jaipur comprises of three sources of supply. First one is the national sourcing located at Delhi; it supplies exotic and temprate fruits and vegetables. Apart from this potato is mainly supplied from national sourcing team. Fruits and vegetables found in abundance in Rajasthan are also made available to other locations all over India by bulk sourcing. Second source of supply is from collection centers (CC) which are located in the out side near by areas of Jaipur city. For Jaipur identified collection centers are Piliya, Chomu, Bagru, Hathnoda, Kanota and Moriza. Fruits and Vegetables are supplied to these collection centers from near by village farmers then these are sent to distribution Center located at VKIA, Jaipur. Then after proper sorting and grading these are dispatched to respective

42

stores according to their indented quantity.j Third source of supply is direct store delivery (DSD). Indirectly store delivery fruits and vegetables are sent directly to stores according to indented quantity. Fruits and Vegetables are purchased at local Retail mandi of Jaipur in morning auction by operation team and supply is made. Source of particular fruit and vegetable is decided according to the availability of then and can vary time to time. Some of the listed SKU’s are according to the local buying behavior of customers they are generally consumed in Rajasthan only but have to be listed in national SKU listing. Vendors are also identified by operation team for bulk

43

supply of fruits and vegetables.

44

Collection Centre

Business Process Flow for Fresh Collective PO Made by Category in SAP, communicated to CPC

Communica tes to CC

1 1 Filled F & V crates .. move from CC to CPC staging area

.

Staging area

CPC

DC

Association area

Individual Stores Place STO in SAP

STORES

Sorting Area Area for empty Tagged crates 5 5 Weigh and place .. the goods in crates, apply labels/Bar Code

2 2 Crates are weighed .. and moved inside the CPC

1 1 Trucks with 3. 3. crates move Picking Picking Area to store 10 10 order .. according to store request Sales Floor 12 12 Crates moved to the .. Staging Area for dispatch to Stores

Processing Area

8 8 Deliver goods to DC .. against the PO 9 9 GR at DC .. and weigh 11 11 Transfer to store –specific .. storage area Staging S S S S area t t t t o o o o r r r r e e e e 3 2 4 1

Stores Make GRN against Goods received

Stores Make GRDC against Crates Returned

45

COMPANY’S VISION 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

46

workplace.

COMPANY’S MISSION •

Be a trusted partner who provides the best products & services the world has to offer, at the best prices, in the most convenient setting. 47

•

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 stakeholders.

•

Bring prosperity to millions of Indian producers, especially our farmers, by providing the most attractive returns for their efforts. Be a capable and 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.

TARGET PRODUCTS CATEGORIES Reliance fresh cover following categories that account for major consumption: 48

•

Food

•

Non-Food

•

Service Products

Food •

Fresh & Frozen

•

Dairy

•

Staples

•

Processed Foods

•

F&B

Non-Food •

FMCG & Pharmacy

•

Apparel and Footwear

•

Consumer Durable & IT

•

Lifestyle

•

Home Products

•

Books, Music, Toys & Gifts

Service Products •

Entertainment

•

Healthcare & Wellness

•

Financial Service

•

Travel Service

•

Printing & Imaging 49

•

Fuel and Automotive

•

Others Services

Objective of Study 50

The objective of the project was to study the Home Delivery and Milk Production at Reliance Fresh stores in Rajasthan. This important study has been undertaken because for surviving in today’s competition it is a must to increase the selling of milk along with improvement in quality of home delivery services.

Purpose of the Objective 1. To identify various factors contributing home delivery of goods and milk products. 2. To identify those stores where sales of milk product is very less. 3. To identify major commodities contributing to Milk Products and home delivery services.

Research Methodology 51

The project required a direct contact with the milk champions on the floor and looking at the procurement and logistics of Milk Products. Area of Survey: Jaipur city (27 stores). Data Sources: Both primary and secondary data were collected for the study. Primary Data: Primary data were collected through pre - structured schedule by personal interview with store personnel, customers (96, 12 customers at 8 stores) and through self-exploratory study. Secondary Data: Secondary data were collected from company’s literature, SAP and Internet. Stores Studied: Reliance Fresh, Saras Milk, Amul Dairy, and Lotus Milk. Duration of Survey: Six Weeks Duration of Analysis: Two Weeks Customers were also interviewed to make an attempt to find out what is their expectation w.r.t quality of Home Delivery and Milk Products, taking prices also in consideration. Besides this, customers were also interviewed to know their views regarding services availed from competitors i.e., local retailers and other organized retail players. Floor champions were also interviewed to know the service they are providing to customers on the floor. A questionnaire was prepared to gather information about the customer expectations and his buying behavior. Customers were personally observed, on the spot personal interaction was done and asked to fill questionnaire. The questions on the basis of questionnaire were asked to them and the answers were then screened and the desired information then squeezed.

52

For Quality benchmarking visits to other organized and unorganized retailers were done to compare quality they are providing and prices were also considered at the same time. For finding quality problems faced by all the stores of Jaipur daily follow-up was done with each store for a week to know what was the indent of the day (morning and evening), how much was the supply against indent, what were the missing SKU’s, what were the SKU’s supplied less then indent and what was the push indent for the day and what were the quality issues of the day. Quality is all about perception.

Findings of the Study

53

Results of consumer buying behavior survey 96 customers were interviewed for find out the customer’s perception through questionnaire and they were asked to give there views on the scale of five from 1= very good, 2=good, 3=neutral, 4=poor, 5=very poor on the ten parameters. These ten parameters were price, quality, freshness, convenience, variety, hygiene/cleanliness, packaging, personal attention, shopping experience and home delivery. And the over all result came out is shown in table below. Table1: Consumer’s perception about various formats / sources of buying fresh fruits and vegetables.

Attributes

Pushcart

Daily

Reliance

Vendor

Market/Local

Fresh

Other retailers

Retailer Price

4

3

2

3

Quality

2

2

4

3

Freshness

2

2

4

4

Convenience

2

4

2

3

Variety

4

2

1

3

3

3

2

2

Packaging

2

2

3

2

Personal

1

3

3

3

Hygiene/ cleanliness

54

9Attention Home Delivery Shopping Experience

1

3

3

3

3

3

2

2

This project has given interesting findings, which can generate fruitful analysis for reliance fresh business. In finding shows that what is the consumer perception about retail industry? What are there trends of purchase in one year? How they responding for bad quality items? Also there interest in purchase of exotic food. Also found that how interestingly reliance fresh compete with other organized and unorganized players. Still the war of price is remaining constant. But in this war still customer is not in win win situation. Customers not get expected quality food from reliance fresh. Quality is the one of factor which affecting on purchasing of consumer. In factor analysis it was seen that quality is main factor at time of purchase.

7%

19%

Price

17%

Quality

28%

29%

Freshness Convenience Others

55

Fig 17: Factor Influence at the Time of Purchase.

13%

17%

Push cart Daily mandi

25% 28% 17%

Reliance Fresh Local Retailer Other retailer

Fig 18: Quality Perception about Reliance Fresh & other Competitor. Consumer pre-structured questionnaire observed that Reliance fresh quality does not fulfill the quality criteria of consumer. For the evaluation of reliance fresh milk products business

compared the supply chain with the other retailer still reliance is in win situation for margin evaluation. But B2B option is going to be next buzzword for the survival of reliance fresh. In the marketing channel reliance is in forward than organized players but at the customer touch point lacking for personal attention compare to the unorganized players. In talking with in sense of promotion reliance not in much forward nothing differentiation as compare to other organized players. Lot of things may come in notice as time unfolds in the near future. Not only reliance but also other players increasing their number of outlets regularly but at the same time they are loosing their control over quality aspect by increasing their business operations.

56

Suggestions for Implementation

Now days there is neck-to-neck competition in the world of Retail business and this is increasing day by day as new companies are entering into this business. Every one wants fame and goodwill in the retail world. For this every company has to do so many efforts. In those efforts we can include customer satisfaction and keeping their faith along with maintaining our profits. Only that company can survive who satisfy their customers. They provide so many facilities to the customer such as good quality, more number of SKU’s,

57

quick service, attention to individual customer on the store, response to their problems and solving them as soon as possible, etc. As per my study I found some problems, which are contributing to the increase in, dump and shrink in Reliance fresh stores of Rajasthan along with my suggestions. For quality improvement: •

Dump at arrival is also high so this should be minimized by proper procurement and transportation. It should be recorded at the time of arrival of delivery on the platform it self and it should be kept in mind at the time of indenting also.

•

CSA should be there on the floor every time to reduce losses due to customer mishandling and to check shoplifting.

•

Study also shows number of SKU’s available at stores of Reliance fresh is on lead but on same time loosing quality of product.

For customer satisfaction: •

Proper announcements of promotions and “Today’s offer” should be done from CSD as it is not done on stores.

•

Billing time on cash till should be reduced because customer is not ready to spend much time on till for billing even if he is spending much time on the floor, it can be done by more number of active tills.

•

Mark down zone should be properly highlighted because customers are unaware of these marked down products they treat them as regular and carry perception as if F&V are not of good quality on the store.

•

Customers should be convinced to subscribe for “Membership card”.

•

Customers are not willing to write complains in complain book kept at store so they should be asked personally if they face any problem at store. 58

For store operations: •

Skilled manpower is required who can understand this business like a local mom and pop store’s owner and take quick decision.

•

There is problem of improper forecast and indenting by stores, so stores should give their indent on the basis of their sales and closing stock. Suggestive indents can be provided to stores to sort out this problem.

•

SKU’s should be marked down at proper time before they reach to total dump quality, this will minimize dump.

•

Stores need trained milk champions every time on the floor.

•

Supply timing is also not proper. Many times supply is not on time and stores don’t have much stock of milk on the floor so time of supply should be proper i.e. before 6:00 AM.

•

Billing should be done carefully of Fresh and marked down products.

•

Fresh arrived SKU should not be mixed with earlier supply as it is happening on the stores. Whole lot is mixed and been marked down at the same time. So this practice should be checked.

•

Promotions should be communicated with stores properly on time. Promotion display is also not there on the store floor. Old promotion also should be removed from the floor when they expire.

•

Display of milk should be according to the proposed Plano gram.

For long-term benefits following strategies can be adopted: •

The major issue is the constantly decreasing quality of the SKU’s available at the store. Problem is minimized after DSD is been implemented but there is scope of

59

further improvement in quality of produce available in the store. Procurement team should be more active in finding better vendors and new sources of supply. •

In transit losses should be minimized at each level of movement of SKU’s.

•

All the categories of store should work in collaboration, as internal communication in categories is very week.

•

Cross category promotions should also be promoted.

•

Push indents contribute to increased dump at store. So push indents should be done with proper check.

•

Stock take should be done properly to keep proper record of dump.

•

Dump should be recorded timely and properly to the dump register.

•

Quality and price benchmarking should be done on continuous basis to keep eye on services provided by other retailers.

•

Reliance should keep watch on other potential cities and enter into market before other retailers, to grab advantage of early entrant like its recent opening at Jodhpur.

SWOT ANALYSIS

STRENGTH •

Brand name of the company.

•

New launch of Reliance fresh store in major cities of Rajasthan by the company. 60

•

Range of SKU’s available in Reliance fresh stores is much more than theses listed with other retailers.

•

High quality service.

•

Lowest prices compared to competitors.

•

Number of stores is much more than other organized retailers.

•

Early mover advantage.

•

Its unique mark down policy.

WEAKNESS •

The quality of milk is the major factor, which the company should consider to meet the expectations of the customers.

•

Lack of trained floor champions.

•

Some of the SKU’s on the shelf are non moving but they are still there to meet the policy of company to make available every possible SKU.

OPPORTUNITY •

Potential customers.

•

Many cities of Rajasthan are still not having other organized retail player.

•

Lack of quality service by unorganized retailers.

THREATS •

Big guns of milk like Saras, Amul, Lotus, Local Milk man etc. are also there in Rajasthan giving tough competition to Reliance Fresh. Hence lots of upcoming alternates are there for customers.

61

Annexure

Questionnaire: 1. Name :

62

2. Phone no. : 3. Address : HOME DELIVERY 1.

DO YOU ORDER PRODUCTS ON HOME DELIVEY?

YES

B. NO

2.

IF, YES FROM WHERE DO YOU ORDER FOR YOUR

HOME DELIVERY? A.NEIGHBOUR HOOD KRANA STORE B.MODERN TRADE Formulate: 1. MORE 2. 6/10 3. RELIANCE FRESH 3.

HOW OFTEN YOU ORDER FOR YOUR HOME DELIVERY? A. 1 IN 15 DAYS B. 1 WEEK C. 2 WEEK

4. WHAT ALL PRODUCTS YOU ORDER FOR HOME DELIVERY? 63

A. FRUITS & VEG B. GROCERIES C. MILK & DAIRY ITEMS D. ALL HOUSEHOLD ITEMS 5. WHAT IS THE AVERAGE VALUCE OF YOUR HOME DELIVERY ORDER? A. LESS THAN RS. 100 B. BETWEEN RS 100-299 C. BETWEEN RS. 299-10000 D. ABOVE RS.10000

RELIANCE FRESH 1. DO YOU VISIT FOR RELIANCE FRESH FOR DAILY NEEDS? A. YES

64

B. NO 2. HOW OFTEN YOU VISIT RELIANCE FRESH FOR YOUR SHOPPING? A. ONCE A WEEK B. TWICE A WEEK C. 3-5 TIMES A WEEK 3. ARE YOU AWARE OF FREE HOME DELIVERY SERVICE? A. YES B. NO 4. ARE YOU SATISFIED WITH THE DELIVERY? A.

YES

B.

NO

5. Please explain your views on how to make buying of milk products and home delivery services a perfect shopping experience:

Important factors for the success of milk products and home delivery business in the Organized Retail 65

Particulars

Strongly Agree

Agree

Moderately

Neither

Moderately

Agree

Agree nor

Disagree

Disagree

Strongly Disagree

Disagree Price Quality Promotional Scheme Place and Location No. of SKU’s Availability of Exotic Varieties Ambience of the store Behavior of Front line staff Billing Time

No. Reliance Fresh Stores In Rajasthan 66

District

No. Of Stores

JAIPUR

27

JODHPUR

5

AJMER

4

UDAIPUR

3

BIKANER

3

TOTAL

32

Toll free number for HOME DELIVERY*: 0141-4005555 (* free delivery in 3Km. Area) Rates of milk products of reliance and other competitors Name of milk product

Rate (in Rs.)

Dairy pure double tonned (1 ltr.) 19 Dairy pure full cream (1ltr.)

25

Dairy pure tonned (1ltr.)

21

Dairy pure tonned (500ml.)

10.5

Dairy pure double tonned

9.5

(500ml.) Dairy pure full cream (500ml.)

13

Amul tonned (500ml.)

10.5

Amul double tonned (500ml.)

9.5

Amul gold (500ml.)

13

Amul gold full cream

25

Saras tonned (500ml.)

10.5

Saras double tonned (500ml.)

9.5

Saras gold (500ml.)

13 67

MARKET RESEARCH FOR RELIANCE DAIRY PURE & HOME DELIVERY Vijay Path, Mansarover Reliance Fresh Store Dairy pure Tonned 500ml milk

12 Litre

Saras Tonned 500ml. milk

12 Litre

Saras gold 500ml.

12 Litres

TOTAL

36 Litres

Delivery Van Come at 5:40a.M. Home Delivery 14 liter milk Comments:•

The sell of milk is not good in this store.

•

The home delivery is not good in this area.

•

The staff is not active.

Shiprapath, Mansarover Reliance Fresh Store Saras Tonned milk 500ml

24 liter 68

Total

24 liter

Home Delivery = 8 Litre Delivery Van Come at 7:00 A.M. Ramganj Reliance Fresh Store Saras tonned milk500ml.

12 liter

Amul tonned milk500ml.

12 liter

Saras tonned milk 1 liter

12 liters

Dairy pure full cream milk 500ml.

12 liter

Dairy pure tonned milk 500 ml.

32 Litres

Dairy pure double tonned milk 500 ml. TOTAL

24 Litre

132 Litres

Home Delivery 17 Litre Kalian Malviya Nagar Reliance Fresh Store Dairy pure tonned milk 500ml.

12 liter

Saras tonned

12 liter

Saras double tonned

12 liter

TOTAL 36 Litres Home Delivery = 6 Litre Home Delivery Van Come at 6:00 A.M. Comments:•

The smell of milk is this store is low.

•

The manager is so much tried to increase the sell. He concern with all juice centre & tea stall nearest the store.

•

The delivery boy is the main problem of milk sell.

69

Haldiya Plaza Malviya Nagar Reliance Fresh Store Saras tonned 500 ml.

48 liter

Amul tonned 500 ml.

24 liter

Amul double tonned 500 ml.

12 liter

Saras tonned 1 liter

12 liter

Saras gold 1 liter

24 liter

TOTAL 120 Litres Home Delivery = 48 Litre Delivery Van Come at 6:30 A.M. Comments:•

The sell of milk in this store is good.

•

The home delivery of milk is also very good in this area.

•

A separate delivery boy is for the milk delivery.

Malpura Gate Saras tonned milk 500 ml.

36 liter

Saras tonned milk 1 liter

12 liters

Saras gold 500 ml.

12 liter

Saras double tonned 1 liter

12 liters

TOTAL

72 Litres

Home Delivery 28 Litre Home Delivery Van Come at 6:00 A.M. Comments:•

The sell of milk is increase in this area because there are two or three hostels in this area. 70

•

The manager is not concern with the hostels & nearest tea stall to increase sell.

•

The customer is not so aware of home delivery concept is this area.

Gopalpura Bypass Saras gold 500 ml.

12 liter

Saras double tonned 500 ml.

12 liter

Saras tonned 1 liter

12 liter

Dairy pure tonned milk 500 ml.

12 liters

TOTAL 48 LITRES Home Delivery 10 Litre Delivery Van Come at 6:30 A.M. Comments:So much old stock are there & the detail are Saras milk

20 liter

Amul milk

12 liter

Dairy pure milk

7 liter

TOTAL

39 liter

•

The Staff is not so much concentrate on the milk product. The markdown is not properly.

•

The customer is not so much familiar with home delivery concept.

•

The staff is not making aware customer to this concept.

•

The home delivery is increase in this area because so much people are educated in this area

71

Vidyadyar Nagar Dairy pure tonned 500 ml.

12 liter

Dairy pure double tonned 500 ml.

12 liter

Saras tonned 500 ml.

12 liter

Saras gold 500 ml.

12 liter

Saras double tonned 500 ml.

12 liter

Amul tonned 500 ml.

12 liter

Amul gold 500 ml.

12 liter

TOTAL

84 liter

Home Delivery

15 Litre

Home Delivery Van Come at 7:00 A.M. Comments:•

Some more work to increase the sale of milk.

•

Manager is doing good work to increase sell. Manager is talk with juice centre & tea stale to increase sell.

Barkat Nagar Saras tonned milk 500 ml.

24 liter

Saras gold milk

12 liter

500 ml.

TOTAL

48 liter

Home Delivery 12 Litres Home Delivery Van Come at 6:50 A.M. Comments:•

Delivery boy is not available so the home delivery is not proper.

•

The manager is not so much concentrate on home delivery & milk product.

•

The customer is not aware of home delivery concept.

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Katipura Reliance Store Dairy pure full cream 500 ml.

12 liter

Dairy pure tonned 500 ml.

12 liter

Dairy pure tonned 1 liter

12 liters

Dairy pure double tonned 500 ml.

12 liter

Saras tonned milk 500 ml.

12 liter

Saras tonned milk 1 lit.

12 liter

Saras gold milk 1 liter

12 liter

TOTAL

84 liter

Home Delivery 27 Litres Home Delivery Van Come at 6:45 A.M. Comments:•

The manager is not going to juice centre & tea stall.

•

In this area so much juice centre & tea stall if we make them the customer of our store then the sell in increase.

•

The home delivery is increase in this area because so much people are educated in this area.

Raja park Reliance Store Saras tonned milk 500 ml.

12 liter

Dairy pure tonned milk 500 ml.

24 liters

Dairy pure double tonned 500 ml.

12 liter

Saras tonned milk 1 liter

24 liters

Saras double tonned milk 1 liter

12 liters

Saras gold milk 1 liter

12 liter

TOTAL

96 liter

Home Delivery 28 Litres Home Delivery Van Come at 6:50 A.M. 73

Comments:•

The home delivery of milk is low it should me increase.

•

The home delivery is increase in this area because so much people are educated in this area.

•

The manager is not so much interacting with nearest juice centre & hotel.

Kisanpole Reliance Fresh Store Dairy pure tonned milk 36 liters Saras tonned milk

24 liter

Saras gold milk

24 liter

TOTAL

84 liter

Home Delivery 6 Litre Home Delivery Van Come at 6:25 A.M. Comments:•

The behave of manager is not good. He is not concern to increase the sell of milk product.

•

The staff is so lazy.

•

The manager is not so much concern about the customers.

•

The customers are not so much happy with the staff & manager behavior.

•

The home delivery boy is not in the store.

•

The staff members are doing the home delivery.

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Findings: •

No proper advertising strategy of dairy pure.

•

Unskilled staff because of laziness and no interaction with customers.

•

Lack of knowledge about the home delivery facility and staff is also not telling to customers.

•

Non availability of milk champions (delivery boys).

•

No credit facility to customers as compare to local milkmen.

Suggestions: •

Proper advertising about reliance milk products.

•

Credit facility to major consumers like juice stores, tea hotels, and restaurant.

•

Try to communicate with college canteen.

•

Training to the respective staff and store manager.

References 75

Literature reviewed:

Marketing Management -

Philip Kotler

Business Research Methods -

Donald. R. Cooper

Business Magazines -

Retailer, Retail Buzz, Business World, etc.

Web Portals: http://www.ril.com http://www.thehindubusinessonline.com http://www.indiaoneshop.com/retailing.htm http://www.rpggroup.com/bussectors/spencers/services.htm http://www.indianmba.com/Ocassional_Papers/OP99/op99.html

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