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.
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)
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 ?