Reliance opens new supermarkets across the country

Reliance’s bid to retail farm products in West Bengal has been put on hold thanks to Forward Bloc's resistance and Jyoti Basu’s apprehensions but analysts say that Reliance Fresh will find the going tough also in other provinces of eastern India.

Earlier this month, vegetable sellers armed with brooms, rods and bamboo sticks smashed and vandalised three new supermarkets at Ranchi in Jharkhand giving vent to their frustration at being unable to compete with the chain’s low prices.

Analysts believe the attack is a sign of things to come as Reliance opens new supermarkets across the country. Between last November and May, it launched 155 outlets.

According to reports, customers like the chain because the produce is generally fresh, the shops are air-conditioned and the prices are much lower than those of open-air markets or mobile vendors.

These are sellers who trundle around neighbourhoods with carts laden with vegetables and fruit. Residents enjoy the convenience of buying vegetables right outside their door. But the vendors and small shopkeepers fear they will not survive the Reliance onslaught.

Because it buys in bulk directly from farmers, Reliance Fresh enjoys economies of scales, which it passes on to customers in the form of low prices and discounts. Vendors have to battle many odds. The supply chain is so inefficient that the produce they bring to the towns is not very fresh by the time it arrives.

In fact, according to experts, about half the country’s food and vegetables rot before they reach the shelves or market stalls. India lacks cold storage and refrigerated transport — all things Reliance has built for its new chain.

Reliance Fresh, a subsidiary of Reliance Industries, is investing $5.6 billion in hundreds of stores. The company, already India’s top private oil refiner and petrochemical maker, is at the lead of the large chain stores that are storming into Indian organised retail, which now makes up only about 5 percent of the retail market.

The retail revolution in India is touching almost everyone. Indians are switching from small shops and open-air markets to shopping malls and supermarkets.

Reliance is on the vanguard of this transformation. But Wal-Mart is coming soon, and two other supermarket chains — Britain’s Tesco, and Carrefour of France — are itching to enter the Indian market.

The losers are likely to be the estimated 12 million Indians whose livelihoods depend on their small shops. The number of mobile vegetable vendors is not known.

Experts are divided on the impact of every street in every town succumbing to the retail revolution. Some predict doom for small shopkeepers. Others believe that while many will indeed disappear, quite a lot will survive.