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Reliance Retail to be Wal-Mart of India ?

August 22, 2006


Rising fuel prices and real estate costs in India has not dithered the ambitions of Reliance group chairman Mukesh Ambani. Unable to withstand local competition, Wal-Mart recently pulled out of Germany. Wal-Mart is still studying the viablity of retailing in India.

Reliance started its Retail venture by opting to manage a chain of retail stores in Mumbai – Sahakari Bhandar and turning it around by pumping cash and optimizing the back end operations. It has big ambitions for a 300 city nation-wide roll out of Reliance Retail for which the company is already leasing or buying space in all the major cities.

ET reports that it is trying to emulate Wal-Mart in hiring its workforce. It will require around 500,000 people to manage it. The maintenance of each store including employee management will be the responsibility of franchisee, who will operate on an incentive and commission basis. Other retailers liek Food World and Pantaloon(Biz bazaar) have their employees on their Payroll. It looks like Reliance is afraid of unionzation of labours.

RIL which had no prior experience in retailing has already unsuccessfully tested grounds marketing Mobiles under Reliance Infocom.(when it was part of RIL) Lately its Petroleum retailing has also been a failure mostly due to government regulations. But do you remember how the Petroleum retailers got together to oppose actions of Mukesh Ambani at maker Tower when he stepped out and assured to bail everybody out. You can’t rule out unionization when you are trying to squeeze blood out of someone 😉

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