News: RIL to sell fruits in retail debut

(DNA 18/08/2006) New Delhi - It’s official. Mukesh Ambani’s retail venture is set to take off from Hyderabad next month.

And first off the shelf would be fresh fruits and vegetables (besides some grocery items and milk products) being retailed across a 3,000-5,000 feet single store in the Andhra capital.

In fact, the fruit and vegetable story would unfold with about 1,000 such stores across various parts of the country over the next four months.

But why the clamour to get into retailing fresh veggies? Reliance Retail president and chief executive (operations and strategy) Raghu Pillai told DNA Money, “The demand for fresh fruit and vegetables is a whopping 100 million tonnes per year.

Obviously, this offers an immense opportunity and we intend to establish ourselves as a nationwide retail chain.” Beginning with Hyderabad, the veggies will reach Mumbai and Delhi before Diwali this year.

Pillai says Reliance Industries Ltd (RIL) will try its hands at all forms of retailing - supermarkets, hypermarkets, speciality stores and seamless malls. “Our aim is to become the king of distribution in this country and we will try all permutations and combinations to achieve this goal”.

Reliance has been working hard at establishing mammoth supply chain and sourcing infrastructure; it has already signed agreements with the state governments of Punjab and Haryana for putting in place Rural Retail Hubs (RRHs), which will act as nodal centres for procuring farm fresh produce.

The company has also developed a unique supply chain by deciding to buy as many as 40 aeroplanes, which will transport produce from RRHs to retail outlets.

But Reliance is not alone in harbouring ambitions in the fresh veggie business. It has impending competition from Sunil Mittal, who is believed to have signed up British major Tesco Plc for doing more or less the same kind of business.

Mittal says that he is working on a “very large initiative” in retail. “Decisions on format, size, product category and partner will be taken by the end of September. By then, we will know whether it’s a hypermarket or a convenience chain model or a combination of these”.

While fruit and vegetable retailing appears to be foremost on RIL’s list of things to do just now, it seems that other retail formats could take some time. When asked whether consumer durable and lifestyle product retail formats were ready, Pillai said the consumer electronics business may begin only next fiscal.

“We are working on how to do this in the best possible way. We intend to create a lifestyle-based format which will include a whole host of digital products, displayed across large speciality stores”.

On lifestyle products, he said that, as of now, RIL has not signed on any global luxury brand but is in talks with many. There have been reports of RIL signing on Louis Vitton and Versace. Pillai also indicated the company’s interest in areas such as retailing of auto parts but did not provide further details.