Reliance Retail has staked its claim to be at the forefront of the “tremendous growth” in India’s retail sector with plans to invest US$6bn in expansion over the next four years.
A source close to the company told just-food today (17 August) that Reliance wants to expand its store network to around 5,000 outlets across India by 2011.
At the moment, Reliance runs 250 convenience stores, one hypermarket and one “speciality store” in India. However, the company has ambitious plans to expand as the purchasing power of India’s middle classes grow.
On Wednesday, Reliance signalled its intentions with the launch of a superstore in the city of Ahmedabad. “Reliance is going to cross every part of the country,” a source said today.
India’s retail market is estimated at around US$350bn, a figure set to grow and which has caught the attention of multinational retailers like US giant Wal-Mart.
Earlier this month, Wal-Mart announced a deal to set up a network of cash-and-carry stores with local conglomerate Bharti Enterprises. However, direct foreign investment in India’s retail sector has, so far, been prohibited by the Indian government.
Small “mom-and-pop” stores account for the vast majority of the sector and Reliance believes it has a “great opportunity” to expand.
“Consumers are growing more wealthy and there is definitely increasing aspiration here,” the source said. “But, organised retail is non-existent so Reliance see a great opportunity.”
The supply networks throughout India also remain inefficient, the source said. “Again, there is a great opportunity to have efficiencies in the supply chain. But, Reliance is not just looking at the front-end and the supply chain; it is also looking at how to work with farmers to help them produce better quality products.”
Reliance plans to take the number of hypermarkets in its portfolio to some 800. The source said that the company does not see much competition on the horizon, as the potential for the Indian retail sector is so great.
“No-one else has the aspiration of being in every city, in every town, in every small town,” he said. “Also, the fact that there will be tremendous growth in organised retail means there is room for everyone.”