Business Today

Retail's Lightning Rod

Reliance Retail seems to be getting singled out among all the big retailers.

     Print Edition: October 21, 2007

Keen observers of the drubbing that Reliance Retail has been receiving in more than one Indian state would have noticed a few things peculiar about the unsavoury drama. One, Reliance Retail seems to be getting singled out among all the big retailers. Two, Reliance’s own response to the protests and acts of vandalism directed against its stores has been rather muted, except to say that it will sack the employees of the affected stores. Three, industry lobby, CII, has been rather quiet on this issue. So, what is one to make of this seemingly strange multiple tugs of war in organised retail?

At the receiving end: But why is CII not speaking out?
At the receiving end

Let’s take the questions one by one. First, on Reliance Fresh (the company’s store brand) getting singled out. This one is easy to figure out. No other organised retailer has a farm-to-fork strategy that Reliance has. It plans to invest some Rs 25,000 crore in not just setting up stores but building the entire supply chain, which includes warehouses, cold chains, and even aircraft to ship things around the country. So, the number of people its plans affect is vastly larger. Take Uttar Pradesh, for example, where it has been ordered to shutter all its 23 stores (15 in NCR). Here it has the strong support of farmers who are only too happy to find a way out of the clutches of market middlemen, and it is safe to assume that consumers would also want to support a venture that promises to give them better quality produce at cheaper rates. The only ones protesting against Reliance Fresh are the market middlemen, or to be more specific, the Rashtra Vyapar Mandal. In Orissa, too, it is the traders and small shop owners (the All Orissa Roadside Vendors’and Small Shops Association) who are leading the agitation. In West Bengal and Kerala, both communist-ruled states, the protests are not surprising and they are better off attacking Reliance than some small organised retailers.

But why has Reliance’s own response to the controversy so muted? Discretion, they say, is the better part of valour. Given the high stakes Reliance is playing, it probably does not want to bring things to a head and would rather work the system quietly but firmly. The only part in this drama that doesn’t make sense is that of CII. Why is the industry association quiet? It cannot be because its current President is a man who is a Reliance Retail competitor. Associations are meant to take up issues affecting industry in general. But sadly so far, CII has failed Reliance Retail.

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