Friday, March 09, 2007

Reliance Fresh & Subhiksha - Supermarkets in India

Reliance Fresh and Subhiksha - Retail Stores or Supermarkets in India -A Review

Reliance Fresh and Subhiksha have opened up retail supermarkets selling fruits and vegetables in major cities of India. Recently, Bharti has tied up with Wallmart to open up supermarkets in India. This post is about supermarkets in India and their long term effects.

reliance fresh retail store supermarket supermarkets product review subhiksha delhi india vegetable sellers
A few days ago, I visited the local Reliance Fresh supermarket that had just opened in my Delhi neighbourhood and this is what I observed -

1. Range of Products - Regular vegetables, fruits, Reliances' own brands of packed pulses, Maggi products and Pepsi.

2. Prices - The price was marked in paisas just like at American stores. For example - Potatoes were priced at 5.90 per kg while onions were 15.90 per kg. Yeah right, what difference does 10p make?

3. Comparable Cost - The rate of vegetables like onions and potatoes were 10p less than that of local vegetable sellers. The rate of other products were however much higher than they should have been. Seems like Reliance Fresh applied the same strategy that McDonalds uses to attract customers - ice cream for Rs. 7 and Cola for Rs. 20.

4. Customer Service - The staff in red shirts were mainly checking to see if people were shoplifting and did'nt seem to know much about the products or company. The guards kept yelling at everyone to have their bags checked before leaving.

5. Checking Out - There was a long queue that moved very slowly. VAT or value added tax was added to the bill which increased the cost of the vegetables just bought.

6. Parking - Absolutely zero parking. The guard was yelling at local rickshaw pullers to move away from the entrance.

7. Customers - were middle class folk from my apartment block. They kept touching and turning around each vegetable before selecting them just like they do at the regular vegetable sellers. This looked really out of place and added to a huge crowd.

What is the future for retail supermarkets in India ?

Well, Superbazaar was a government supermarket in the 1980's that closed down because of financial irregularities by employees and a lack of customers. Here's why I think Reliance Fresh and Subhiksha will go the same way -

1. Operating costs are too high - Rent for shops at prime areas, salaries of atleast 15 people at each store, refrigeration, transport, electricity, advertising and losses through shoplifting have to be accounted for. The profits earned through sales will be barely enough to recover costs.

2. Indians are too cheap and thrifty - Most customers won't take the bait of cheap potatoes. They would rather buy one kg of potatoes from Reliance and other products from whichever vegetable seller or retail store is cheaper.

3. Indians like to bargain and bully - Bargaining and getting freebies like chilli or coriander is not allowed at supermarkets like Reliance Fresh or Subhiksha.

4. Type of Products - The potatoes and onions on sale were of a small size. Some vegetables looked like they had been sprayed with something to make them shiny and attractive. People usually don't buy processed foods like jam, sauces, cheese, noodles etc. because ' yeh cheez pet main jum jaata hain'. (harmful as it is not easily digestible)

5. Vegetables are not changed everday and are refrigerated at night. People are aware that the food is not as 'fresh' as that of the local vegetable seller.

6. Most Indians like to shop in privacy, so that 'nazar' or evil eye does not fall on the goods they buy. This, I think is the main reason why a majority of the crowd at Reliance Fresh is just looking around and not buying much. (like me)

reliance fresh retail store supermarket supermarkets product review subhiksha delhi india vegetable sellers
Effects of Retail Supermarkets Like Reliance Fresh

- It may put small vegetable sellers and retail stores out of business. I bet even Reliance does not want this because sales of more costly Reliance products like cellphones, Vimal clothes etc. will suffer.

- Farmers are supposed to earn more as Reliance will buy directly from them instead of the mandi or wholesaler. Knowing the kind of cheats the Ambanis and Reliance are, I seriously doubt they will give the farmer a good price for their produce. Probably, just a rupee or so more so that the wholesalers lose the good vegetables.

- The government will benefit because vegetables will now be taxed.

The initial days saw a huge rush as people came to see what Reliance Fresh was all about after recieving pretty invitations and shopping card offers from the company. A few weeks later the crowd has thinned out. The companies are declaring 'huge profits' but I doubt if they can maintain the momentum in the long run.

Have you shopped at Reliance Fresh or Subhiksha ? Do you prefer the local vegetable seller ?

41 comments:

  1. interesting cyberkitty.I last visited India in 1995, hope to be there this summer if my back holds up. I think a few of the things you mentioned makes sense.I think Indians do like to bargain and would like to purchase vegetable every day. I remember my mother going to the local market every single day.I also think people who do not have good transportation will find it hard to buy in bulk and take it home. I do hope there is some positive incentive for having these supermarkets. It would be good if the farmers are getting a good price for their goods.

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  2. If I was in India, I would love the comfort of buying veggies and friuts in my unddies. I mean when I am home and the sabzi wala yell's outside announcing his arrival, it would be so convinent to rush out by just putting my robe on the PJs, to get what I need for the day. Out here in the west we do not have that luxury (of vendors coming door to door to sell veggies).

    If you go to a super store to buy, you will have to buy for the whole week (thats how we do here in the west) but who will want to buy for a week in India if you have the vendor coming to your door almost everyday providing you with daily fresh produce, at least not me.

    And yes, carrots are orange in color here. I have seen some orange carrots in (South) Delhi also, but only in off season. Normaly in winters (in india) Red Carrots are plenty.

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  3. awww these are funny lol
    >Indians are too cheap and thrifty
    >Indians like to bargain and bully
    it shows how smart indians are!
    we are not used to talk with the sellers. so supermarkets are more convenient.
    the prob is, wat u pointed out, the fake colours and shining spray.. ughhh!
    thanks sooo much for an interesting news!!

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  4. I've never liked to stand in ques to get food out of everything. And then these guys at the counters in places like Subhiksha/StarBazaar/SabkaBazaar/BigBazaar are slow as hell too. Their comps work slow,they don't ever seem to have change,they are 'out of stock' on most items on YOUR list,they never seem to have variety(like ven u dont want Moltova,bt want Bournvita),they take like an eternity to pack...the list basicaly goes on.
    I think your local grocery shops that 'deliver' at our doorstep are better any day. You don't end up buying anything apart from what you need+if they don't have something when you call,they get it for you(if u'v got a gud enuf rappo)
    Subhiksha I've been using because they deliver vegetable&fruits too. As long as they are in business,i dont hv to step out,go to th mandi/veg-stalls,n carry some 20kgs of green groceries on my back(stairs).I'm happy.
    S m i l e

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  5. nice article... i also have almost the same ideas.. except you failed to mention that 1/4 of the indian perishable produce gets wasted and through refrigerated trucks reliance can actually increase the availability of vegetables... hence control inflation.

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  6. rel has the deep pockets to play for the long run... over a period of time, as affluence increases, people would go for the convenience factor of getting it all at the same place...

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  7. Starry Nights, Sifar, Niki, Sakhi, Pegasus and Manuscrypts - thanks for your comments. Three points I'd like to make -

    - About Reliance controlling inflation through its refrigerated trucks. It's more likely Reliance will use refrigeration to hoard vegetables, increase scarcity and then sell vegetables at a hugh cost. This will increase inflation.

    - I've seen people go to Reliance Fresh and buy one item just to get the branded plastic bag. They then roam about with this bag at the local market to prove they have visited the 'posh' Reliance store!

    - Affluence has not resulted in change of certain habits for Indians. Millionaires still spit on the road or eat dal, roti and subzi for lunch!

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  8. cyberkitty, u really have gone deep in ur studies about indian market and their mentality. i agree on that. reliance has to divert all its funds (kala paisa) somewhere and what other good way than openeing a supershoppee for the people with the government nodding to whatever they say. what is reliance really want to show?? a big question. if it really wanted to do some samaj-seva, why do all the halla-gulla and go on romping that they hold the future of how the indian market will behave. they forgot india is a democratic country and its people, even when rules are made for their safety do not follow them, then how would they expect them to come attracted to superstores. i think all the guys living in developed countries and now somewhat used to do bulk shopping for the week, would be the idle candidates for these kind of shops (bakra).

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  9. Thanks for this news piece. My opinion is: I would love to shop at supermarkets even if they are xpensive. I want things to be fresh, all at one place and evrytime. NO more haggling for prices and going to different vendors. I dont mind paying a conveince premium for this. I have a long to-do list and shorter I can make the better lifestyle I can lead.

    Maybe it because i have lived int he west for 4 years or maybe it jsut is a better way of doing things.

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  10. This arguement conculding supermarket will not be successful in India is
    weak because it relies on a specific area of concerns regarding the behaviour of the customers
    that aren't neccessarily true. There are three points that worth explanation before the author
    recieves any kudos from the audience.


    My first problem with the argument is author's position about Indian shopper's attitude
    towards buying stuff. I agree that Indians by origin all about bargaining, However, that is in
    age group of 35 or above. The younger age group is not the same, his or her earning is more than
    the salary of their parents. The trend is changing. The author should keep in mind that more than 50 percent of the
    indian population is in younger age group.


    This brings me to the second point : people attraction towards supermarket. The author's unwillligness to discuss
    about the locatily of the supermarket needs to be questioned. The reliance markets are opened
    in prosperous areas where upper middle and upper class people are shopping in more numbers.
    Supermarkets will attract buyers due to cleanliness of the shop, ampleness to walk around
    and disparateness of vegetables at one place.Who has time to go to muddy markets,and shops to buy vegetables after
    bargaining in the fast moving lifestyle ? Who has time to go to crowded markets multiple times while both husband and wife
    are working?. If there The senior citizens might want to kill some time going daily to market, even they may want to go to noiseless place.


    Finally, I take the issue of quality of the product. I am not seeing how the author makes a point that a ordinary
    shop wala has better product than a multi crore oraganization's shop has. In fact reliance can purchase
    much superior product with their high potential deal with farmers. The Author's skepticism about refrigirating
    the product is groundless, only for the product that is not available day to day basis the shop needs to stock,
    why would Reliance supermarket owners, educated and brilliant, accumulate stock when they know
    it will be unfresh and reduce the sale.


    There are too many holes in the argument, so it is difficult to take the author seriously. Unless further
    evidence surfaces in areas described above and provide information around reliance management is not knowledgeable
    enough to pull this one as a success, the premises that are presented are insufficient proof that
    the conclusion is not reasonable.

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  11. Hi AlwaysCoolChetan, Anonymous and Arun Gavel, thanks for your comments.

    Points I would like to make -

    1. Some foreign returned Indians have been conditioned to a certain way of life which it it difficult to break out off. Plus they have to keep up thier standard of living to thier neigbours, otherwise what will people say ???

    2. India may have a huge population of youngsters but to assume that a majority of them have high paying jobs is being very optimistic. The unemployment rate in India is the highest today. Most private companies have a hire and fire attitude and keep staff only for a short period of time on a really low salary.

    3. The shopping of working youngsters who live with thier parents are done by thier family while those who live alone are forced to save every paisa to pay monthly bills. Children embibe values from thier parents and thriftiness is one such value.

    4. I have seen Reliance Fresh supermarkets in non upmarket areas such as Jhandewalan and Paharganj in Delhi. Both stores were empty except for the staff. About there being plenty of space - it is not true. Two people cannot push thier shopping carts in the same aisle at the same time without badly bumping around.

    5. A Subsiwala gets fresh stock at the Mandi everyday. Reliance Fresh stores unsold stock in thier large refrigerators in the night. Reliance storeowners think they are educated and brilliant which is why they accumulate unfresh stock and sell them at a lower discounted rate in the middle of the week to attract customers.

    Indians are not fools, most people have the 'baniya' mentality and can guess what they are upto !!

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  12. Vegetables are best eaten fresh, apart from that no one will like to go to supermarket every day to buy vegetables when your friendly vegetable vendor comes right to your doorsteps. Ap-art from that we Indians are very price sensitive. I also dont like the idea of shopping from supermarket as it destroys the local econony and all the profits go to one individual or family. I also dont like the concept of going around a supermarket picking up stuff then standing in the line for payment when your local grocery sho gives you free home delivery for even a bread.

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  13. All of you are so naive....

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  14. This article was quite an interesting read -- and from a refreshingly unique perspective.
    However,your focus on the high costs of operation seem largely unwarranted. A supply chain as efficient as ones created by Reliance or Birla is only going drive down costs as volume is ramped up. Street vendors, largely operate on illegal terms without regulatory approval.
    Increased volume will lead to lower prices, and this lower prices will attract customers, and the money saved will only boost other branches of the economy as people spend the rupees they save on vegetables on (say) art, or anything else .

    While I felicitate your insight into the psychology of his country mates, I fail to reason how any such prejudices could not fall prey to an increasingly affluent urban denizens.
    For instance, most middle class Indian families I've met expressed their desires to purchase a car -- regardless of it's utility in increasingly crowded Indian streets. It's this aspiration that powered (and lead to an eventual crash, but let's leave that for now:) )the economy of the US and the increased spending can only spruce up the Indian economy.
    That said, this venture appears to be lacking in some ways, but future developments in this sector could potentially revolutionize Indian Retail. Short term effects will certainly involve job losses, but in the long run this could only helb build a stronger economy.
    Remember , 99% of Indian retail is currently in the unorganized sector , leading to waste, inefficiency, and loss of government revenue.

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  15. Fawaz said "99% of Indian retail is currently in the unorganized sector , leading to waste, inefficiency, and loss of government revenue."

    It may be unorganized to your viewpoint. Do you really believe that any business can survive without organization? simply because they do not have a written rule book for you to view does not mean that those vendors are unorganized. They have survived and not begging on the streets. 'nuf said.

    Secondly, you talk about waste. There is a delicate balance between efficiencies achieved by a centralized supplychain and a decentralized supplychain. Even Reliance will have waste proportionate with its inventory rollover metrics. The subzi-wallah has by now known his/her market well enough to know his MOQ to minimize waste and boost revenue. Reliance is still on the learning curve. It will be a while before each buyer/purchaser/retail-manager in the Reliance "Fresh" group understands their own MOQ.

    Let us not belittle the SMEs who understand their subject matter all too well, just in a different supply chain model.

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  16. Hi All,

    Here I am going to share one my bitter experience with reliance fresh 

    On 5th May I purchased vegetables of Rs.206.00 from Reliance Fresh, Lloyds Road, Royapettah, Chennai - 14, I offered my debit card and entered my pin, they again asked me to enter the pin and said that at first time there was no transaction and I entered. When I checked my account I found there was two times payment of the same bill to the reliance. I took the print out of bank statement and showed the manager of reliance fresh, he accepted that there are two transactions and committed to debit the money soon within one week to my account. After three weeks they called to my mobile and said that there was only one transaction from my card to them.

    Now my question is:
    - Is the Bank statement showing the two transactions to the reliance fresh is false?
    - If suppose it is false then why they committed to pay me in my first visit?
    - If suppose there was only one transaction they should show me their bank statement or any system generated proof of only one transaction.

    I am not alone victim of this case, whether I enquired, most of the customers have suffered the same there.

    My request to you all is to help me to recover my money and maintain transparency between client & management relationship.

    With regards

    An unfortunate victim
    FAISAL IMAM

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  17. How can I get franchise of reliance fresh
    Dear sir,
    I am thinking to take franchisee of reliance fresh .I have my own furnished area. So please tell me the procedure, terms and conditions. Myself Anil Jain and my E-mail ID is vishurock@gmail.com
    Thanks,
    Anil jain
    Cont.No.:-9412233608

    ReplyDelete
  18. How can I get franchise of reliance fresh
    Dear sir,
    I am thinking to take franchisee of reliance fresh .I have my own furnished area. So please tell me the procedure, terms and conditions. Myself Sachin Satija and my E-mail ID is satija1984@gmail.com
    Thanks,
    Sachin Satija
    91-9971713322.

    ReplyDelete
  19. I have visited local shubhiksha supermarket here in Vadodara gujarat, few times and I have to say that the veggies are not fresh. who wants to buy few days old vegitables, wjen you have some one delivered fresh one to your home?
    well this Sunday on July 22nd, I visted supermarket located at Harinagar Char Rasta to pickup katchup. I also needed to buy some veggitables too, they had fresh one in a box outside of store and old ones in the store. Two vegitables cost amounted to Rs 20/- and I almost paid for it. then I realished I had to buy some Dhania (Coriander) too. so I asked picked up about 100 gmand asked the sales person to weigh it, only two string of it was 100gm so I asked her to zero the scale (the container she used on the weighing machine was 90gm and was not zeroed for the first two items too. my total amount was Rs 17/- Dhania was Rs 4/- so actual cost of other two vegitable for which i was about to pay Rs 20/- was of Rs 13/- value. I am concerns hwo many other customers have been overcharged before me?

    I asked for manager and was not available. Today I called the store (0265-6458056) and manager was not available. the person who picked up the phone was more intrested in knowing why i needed to talk to him and my story then to give me his contact info.

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  20. hello sir we have special snacks items from south city i could not contact you so i request you to call me on
    9962195331
    vijay
    eba331@gmail.com

    ReplyDelete
  21. HEY,
    I love the argument about economics and Reliance. I also want your opinion regarding the news that Mayawati closed down Reliance Fresh stores after stating that her own policy and words (which support and praise Reliance Fresh type of stores) claiming that "farmers didn't like" the policy/the stores (she didn't specify which).

    And the argument about NRI's dependence on supermarkets...people, could it be that not everyone wants to hackle for every piece of vegitable? It's like a venture that takes up a block of your time and energy. Surely not all resident Indians even enjoy that. But that's preference and since India is democratic, they have a right to like and dislike that process as well. There is no democracy when the masses are pressing their value system and/or way of life on the individual.

    Yet, whatever. If Reliance Fresh represents "posh" and NRI-ish to some, okay. But are we not forgetting, lets say, really rich and super rich people in these big cities? For eg. some Bollywood people must be breathing a relief sign...
    Not to mention the global industries pouring into India and creating a new wave in the employment, more and more Indians are on the economic rise than they were before employee outsourcing happened to India, and the more people become better off, their consuming habits and preferences change.
    Welcome to the impact of globalization. If there is no Reliance Fresh today, there will be one tomorrow. And it could be Walmart. Wait. Walmart is already partnering up with some company and has moved into India. So...hmm.
    And I suspect the sudden shutdown of Reliance Fresh markets may have something to do with this fishy company (Walmart) which has already exhausted Americans and their laws through breaking rules and abusing employees.
    I say, Reliance and its "posh" consumers are the least of your problems when Walmart is coming for you.
    What says you?

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  22. In New Delhi Pandav Nagar-92 store there will be misbehaviour with me when i m billing for my purchasing items. There is no any response for me.my card 2266111163008253 My no is 09953327448

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  23. i want to have a franchise of reliance fresh in Gaya ,Bihar where and to whom i should contact for this.my contact no. is 0631-2420501,0631-2420209,09234750080 Anshuman Nagen

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  24. very impressed to see the reliance fresh malls.
    please let me know about the process and formalities to take the franchise of Reliance fresh retail outlet in Sangly.I have about 2000 Sqft of place in the heart of the town and iam free to start immediately

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  25. whats all this about..?

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  26. thankyu cyuber kitty your research really helped me in an assignment and yea i perfectly agree with your view point.

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  27. This is a great and thanks to the comments of so many people. From my experience as a director for 7to9 Retail Stores, its also a learning into how you are all thinking. Organized retail in India is still new, and the systems and processes are being tuned. But it feels great to hear from you.

    In my experience, there is a lot of variety among Indians, so I disagree with statements of the author that say "Indians will do this..." or "Indians don't want that...".

    For every 10p saving Indian, there is also another Indian who wants to avoid haggling with the vegetable vendor where the starting price is jacked up just because of the hagglers. Many of our customers say they like to buy everything in one shot, knowing that they are getting a good deal overall.

    This is what we tell our customers at 7to9 Retail: "we can't promise to have the lowest price on all items, but we promise to have the lowest price on majority of items, and we promise to treat you better than anyone else in the market". They like it, and it makes our day.

    You are most welcome to visit our site, and share thoughts with us.

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  28. ITS COOL .
    but in the long run they WILL replace the vegetable walas.
    but i prefer to buy them with sand than how it glitters.

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  29. What makes you think that what is bought from the Mandi is fresh and not from a refrigerated hoard (like the onion hoard). Do a google with onions, farmers and middle men and you will see what i am saying

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  30. Sir/madem iam instring reliance fresh in job pls . iam 2year experence is lala khani ram ramcharan lal saraf.as the post counter sales man .
    NAME- SHYAMLAL
    my mob. 9953442936
    my maild- shyamlal_2581@yahoo.com

    ReplyDelete
  31. Agreed. Just think about the young generation where in most 80% ore more are getting gift vouchers worth average 500/- or more per month (Sodexho Passes) atleast these salaried professionals will eventually try to spend at these malls. I even hiked 850/- voucher to 2000/- per month more tax savings ! this will give boost to super markets.

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  32. companies like reliance fresh,bigbazaar..etc donot purchase from farmers as they ask for cash or they give goods on credit but not more than a week... these companies never pay on time thus they purchase from wholesalers o from mandi where people give huge quantities on credit...but at the same time wholesalers give goods of cheap quality to recover from low profit margins...but at the end we consumers suffer..

    its not wise to purchase from these big stores because now even a local kirana stores gives good services like free home delivery and discounts etc..

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  33. Iam anil from North Chennai and I want to know the procedure of getting a franchisee to run a reliance fresh outlet

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  34. Hi I am Balakumar.K.P Iam in bangalore .Actually i have 10,000kG OF fresh GINGER,i want to sell it Please contact me as soon
    My No:+919008027567

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  35. I support retailers like Reliance and Subhiksha. Reason is quite simple, they directly buy vegetables from farm fields. They pay directly to farmers , eliminating the role of commission agents. So, farmers are getting the right value for their efforts.

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  36. i would like what are the procedures for becoming a franchise of reliance fresh, please let me know.

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  37. v.dharmaraj
    chennai

    today i along with my wife and kid visited reliance fresh mart at alwarthirunagar in chennai. we tried to buy some of the items where offer price mentioned. but while billing at the counter, they billed only the mrp rate not the offered price rate. when questioned, they simply took out such items and did not billed. many items are stale dated. vegetables such as carrets etc become rotter. many of the items offered at only mrp, while the same we get pettyshop near our house, less than the mrp. such a big and rich industrial concern entering into retail business should attract the customers by selling or offering attractive prices than on mrp rate. pls rectify otherwise you will not get much of regular customers. a shop in trichy - femina shopping mall where they sell everything with offer price/less than mrp. pls follow them.

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  38. i want to have a reliance fresh franchise.

    kindly contact me on my email id
    shaily.yadav07@gmail.com
    NO. 9911197377

    ReplyDelete
  39. Hi
    umakant gupta
    lucknow
    i m the owner of a mini retail store name "chota bazar"
    get me informection about all product in relience fresh

    lucknow
    i m the owner of a mini retail store name "chota bazar"
    get me informection about all product in relience fresh


    me.umakant@gmail.com

    ReplyDelete
  40. Hi,

    I'm working as a Sr. Businees Executive and now would like to start up a business. Kindly advise me on how to go about getting reliance fresh franchise in delhi. Looking forward to recieving you reply soon.


    Thank You
    Vinod Kumar
    Email: doitmaaway@gmail.com

    ReplyDelete
  41. India Is slowly changing and in the process of being a developed nation. So such super bazaars are going to last even if not now..they are the future...People now don't have the time go and argue and bargain and just want to pick it up from the stores...

    contact me at achal.kagwad@hotmail.com

    ReplyDelete

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