Reliance MartPosted: September 12, 2007
Reliance Mart, a Peek into the Store
Reliance Retail successfully launches its first hyper mart: We were in Ahmedabad for Reliance Retail’s launch of its first and India’s largest hypermarket yesterday. We were impressed by the scale and size of the store, wide product offering, excellent shopping experience and superior product quality.
Targeting wide socio economic class under one roof: Reliance has clearly questioned the popular belief that different socio economic classes in India will not shop under the same roof. Reliance Mart is targeting all income groups under one roof by offering a very diverse product range covering a broad range of price points. The store offers low-priced footwear to premium cosmetics, perfumes and LCD televisions.
Reliance Mart likely to raise consumer expectations: Reliance Mart offers a very good shopping experience for the consumer with broad aisles, open spaces, high ceilings, broad escalators, exclusive basement parking for 400 cars and 200 two-wheelers and good flooring. Inour view, considering the product offering and shopping experience, Reliance Mart comes across as a combination of a hyper mart and a department store.
Apparel likely to be a key differentiator: The company has identified apparel as its key product offering and is likely to use this as its Unique Selling Proposition. Private label contributes around 50% of the apparel offering, which has differentiated quality products at attractive prices.
No predatory pricing strategy: The company’s tagline for Reliance Mart is ‘highest-quality, lowest price’. Although it is too early to be certain, Reliance Mart does not appear to be positioning itself only on the price platform. The assurance of better product quality appears to be a key mantra for the company. However, the company has identified a few categories that will be marketed aggressively and on which it will offer lowest prices vs. the competition
Unique Characteristics of the StoreThe hypermarket is targeting consumers from all income classes under one roof. The product offering is quite diverse across price range. Located in the Upmarket Growing Suburb and Upmarket Mall
Broad range of services:
- It also has tailoring, shoe and watch repair shops, a photo shop and gifting and laundry services, among others.·
- The store also has a book shop, for both child and adultsults, has a sports and fitness section, sections for auto accessories, jewellery, wellness and perfumes, and also an optician, among others.·
- Separate Sections for Books, Music, Greetings Card Collection Along with a Prescription Optician·
- Separate Innovative Counter for Mobile Phones·
- Auto Accessories Include Batteries, Tyres, etc·
- Fine Gold Jewellery – Private Labels·
- Sports and Fitness Section Next to Toys·
- Fresh Bakery Products·
- Small Pharmaceuticals Products Section
Consumer finance schemes: Purchases above Rs10,000 may be financed by the company. Consumers have the option to pay in easy installments.
Health and wellness store: Reliance Mart has a health and wellness store, which includes products such as protein supplements.Wellness Section Offering 5% Discount on ProductsLikely to raise the bar of consumer expectations:RelianceMart offers a very good shopping experience for the consumer, with broad aisles, open spaces, high ceilings, broad escalators, exclusive basement parking for 400 cars and 200 two-wheelers and good flooring.
- Large Space at the Exit to Avoid Overcrowding;
- Escalator-Driven Ramp on Left for Convenient Exit
- Large Ramp for Movement from Ground to First Floor
- Attractive Display of Beauty and Hygiene Products
- Large Space on Mother Aisles
- Even the Section Aisles Are Large
Reliance Mart is the largest hypermarket in India, with a total area of 165,000 sq ft, which includes around 15,000 to 20,000 sq ft of store warehouse. A Large Number of LCDs on Display, A typical of Hypermarkets in IndiaA Wide Range of Top of the Line Consumer Durables
Reliance Mart has allocated space for premium personal products and perfumes and the display is similar to those in department storesBeauty Products Display Similar to a Department Store
A Separate Section Assigned for Perfumes
Key Highlights of the Store
- Three-storey store covering a wide range of 95,000 SKUs, which include pharmaceuticals, footwear, jewellery, auto accessories, toys, greeting cards, eyewear (both prescription and sunglasses), watches, consumer electronics (including laptops and accessories), fresh produce, food & grocery, home care products, apparel, non-food FMCG, lifestyle products, etc.·
- Department Store Style Large Collection of Watches·
- Currently the hyper mart is serviced by one distribution centre in Naroda, Ahmedabad. Reliance is planning to set up a very large distribution centre on the outskirts of Ahmedabad, for which 60 acres of land have been purchased. All products except fresh fruits and vegetables will be replenished from the distribution centres.·
- Fresh fruits and vegetables are sourced from their collection centres. 50% of fresh fruits and vegetables are sourced from farmers directly. The remainder are sourced from local wholesale markets. The company has not got a contract farming arrangement with farmers. It discloses its buying rates at its collection centres. Farmers have the choice of whether or not to sell their products to Reliance collection centres.·
- ‘Reliance Fresh’ Style Display of Fresh Vegetables
Apparel is being positioned as the biggest differentiator. Differentiated high-quality private labels account for 50% of the apparel offering. The key price drivers in the apparel segment were Rs199 shirts, Rs99 T- shirts and Rs199 jeans. The company also has wrinkle-free cotton shirts and trousers for Rs599 and permanently perfumed infant suits for Rs149. We saw the greatest rush for Rs199 jeans and Rs199 shirts.Women’s Ethnic Wear Section,Men’s Formal Wear Section,Childrenswear.
The store has 61 check-out counters to ensure limited waiting periods for consumers.The entire store is managed and run by the company, with no concessionaires or consignment sales. All products are bought out and no space is given on rent to third parties.
- All hypermarkets will be run by the company – no franchisee operations are expected. ·
- Reliance Mart occupies nearly 75% of the Iscon mall. The company has bought the space for an estimated Rs1bn instead of paying rent.·
- Footwear has 90% private label, apparel has 50%, watches have 15%.
In the food category, Reliance Mart has launched sugar, tea, salt and atta private labels. Prescription eyewear and bedsheet private labels have also been launched. There are no private labels in consumer electronics and FMCG yet.·
- Salt Private Label·
- Atta Private Label
- Sugar Private Label
- Footwear Private Label
- Watch Private Label
Reliance Mart has a huge range of furniture products; 70% of furniture is imported. An Extensive Furniture Section.
Update on Other Formats and Plans·
- The company targets 100mn sq ft over the next 3-5 years.It is targeting Rs12,000 per sq ft per year for hypermarkets with an EBITDA margin of 8%. ·
- The company has no immediate plans to get into a JV with any foreign company.·
- Reliance One customers with loyalty cards have already touched 1.5mn.·
- It has already acquired 40 properties for setting up Reliance Mart in Gujarat.·
- The company plans to have 28 Reliance Marts by December 2007, 150-200 by December 2008 and 500 by 2010 on an all-India basis.·
- The flagship textile brand ‘Vimal’ is likely to be relaunched in September 2007.·
- 240 Reliance Fresh stores have opened so far, with 1200 in various stages of completion. The company’s target is to open 1,000 stores by December 2007. It plans to add around 100 stores in the next 15 days •
- The company also plans to launch specialty apparel stores by December 2007.·
- Reliance Fresh in the Neighborhood·
- Orderly Queues for Entry at 10 am·
- First Few Shoppers Exiting at 10.30 am·
- Packed to Capacity at 2 pm·
- Entry Restricted – Huge Crowd Waiting to Enter