Mukesh Ambani’s Reliance Industries Ltd has launched Reliance Fresh in different cities in India. According to Retail consultancy Technopak Advisors, the size of India’s retail industry is of $300 billion and it will cross $427 billion by the end of 2010. More than 100 Reliance Fresh stores have been launched across the country and it will reportedly cross the 500-store mark by March, 2008.
The Reliance Retail, a subsidiary of Reliance Industries, has been already spent more than Rs 1,500 crore to get about a dozen and a half commercial properties in the national capital in January this year.
Now the Reliance Retail has decided to developed a unique business model to include the local ‘kirana store owners’ into the reliance network. Reliance Retail wants to use their kirana property on lease only on the agreement of no-competition pact with the kirana owners.
The reliance fresh is selling fruits, vegetables and grocery outlets and aiming to capture big neighbourhood markets too. For that purpose, Reliance retail has decided to acquire space on lease from kirana shop owners. In return the reliance retail would pay them up to four times the rental on the existing market rate.
Once the agreement would be signed between the kirana owner and reliance retail, kirana traders would not be able to do a similar kind of business in the same locality.
As for example, if a kirana shop owner gets a market rent of Rs 15,000-20,000 a month, Reliance Retail would reportedly pay him up to Rs 80,000-Rs 1,00,000 that actually would depend on the location of the shop.