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Thu, Aug 16, 2007 - Page 10 News List

Reliance plans retail revolution with opening of India's largest hypermart

AFP , NEW DELHI

Indian retail giant Reliance Industries opens the nation's biggest superstore in Ahmedabad yesterday.

PHOTO: AFP

Indian giant Reliance Industries opened the nation's biggest superstore yesterday and announced plans for hundreds more in what it called another step in its drive to unleash a "retail revolution."

The hypermarket in the western city of Ahmedabad -- India's biggest outlet under a single roof -- is the latest format to be rolled out by Reliance, which launched its US$6 billion retail foray last November.

The opening on the 60th anniversary of the country's independence "marks the achievement of another milestone in our effort to unleash a retail revolution in India," Reliance chairman Mukesh Ambani said.

But the opening of the store, which will carry more than 95,000 products and is one of more than 500 Reliance says it plans by 2010, comes amid mounting unease about the impact of big retail outlets on India's largely unorganized mom-and-pop shopping landscape.

On Tuesday, the Confederation of All India Traders demanded a parliamentary committee "look into all issues arising out of the entry of corporate retailers into retail trade and serious objections raised by traders."

"From what we've seen in other countries, these big retailers have totally destabilized local retailers," said Praveen Khandelwal, general secretary of the organization made up of 5,000 retail trade bodies.

"They're adopting predatory pricing with the sole aim of hijacking the vast potential retail trade" estimated at around US$300 billion, he said.

Reliance's smaller format grocery stores called Reliance Fresh have already sparked violent protests by small vendors. They say that Reliance's retail venture, which promises "unmatched affordability," threatens their livelihoods.

Reliance's new three-story hypermarket covers 50,000m2, which store officials said was about a third larger than any rival outlet. It will sell groceries, garments and consumer durables.

Reliance, which is targeting annual sales of US$25 billion by 2011, says it aims to give an "international shopping experience" to consumers more used to shopping at shabby corner stores or at open air markets.

The RelianceMart hypermarket chain will be open from 10am to 10pm seven days a week, and its prices will undercut those of rivals by as much as 60 percent, a senior Reliance official said.

"They will have to add a lot of value on price and quality to compete," said the official, who asked to remain unnamed.

Reliance, which also earlier launched a consumer electronics chain Reliance Digital, is a corporate behemoth which has straddled India's economy for decades with activities in petrochemicals, oil and gas and refining.

The government still bans foreign firms seeking to tap India's increasingly affluent middle class of some 300 million from selling directly to consumers.

But the firms are using a back door to enter the market by starting wholesale and sourcing firms that supply a local retail partner.

Last week Indian telecom firm Bharti Enterprises and US-based retail giant Wal-Mart announced a 50-50 joint venture for a new chain of wholesale stores in India to serve small retail shops.

The government is considering relaxing foreign retail entry rules, but this is being stiffly opposed by leftist parties.

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