Business - Reliance Retail heads to rural India

NEW DELHI: After having scaled up its retail operation in cities, Reliance Retail is now looking at rural India. It is piloting a rural-business-hub (RBH) model in a Gujarat village, which if successful and implemented could rival that of DSCL’s Hariyali Kisan Bazaar and Future Group’s Aadhar.

RBH would offer farm input, food, grocery, consumer durables, and financial and health services. It will also provide farmers a platform to sell their produce, an equivalent of village haat. A community hall and entertainment facilities will form part of the hub.

A typical RBH would be spread over 3-5 acre and require an investment of around Rs 5 crore, besides the cost of land, a Reliance executive told ET. It couldn’t be ascertained how much Reliance has earmarked for its RBH project, but the company executive said it could run into hundreds of crores. The company plans to set up at least 40 hubs in Gujarat alone in the first phase.

RBH will serve twin functions for Reliance rural retail as well as sourcing for its urban retail centres. RIL Chairman Mukesh Ambani has talked of fomenting agricullture revolution in the country and giving farmer their due by cutting middlemen and directly procuring from them for company’s retail stores. Reliance has over 40 collection centres in Rajasthan, Jharkhand, Tamil Nadu, Gujarat and Madhya Pradesh. The company feels rural hubs may not initially turn profits, but is banking on big volumes to sustain the business.

Reliance Retail has scaled fairly rapidly in the past two years to set up over 700 stores across several cities. The tally of stores are still below its target, as its move were stalled in some states such as UP, where traders’ protest forced the company to shut down stores.

For its RHB business, the company aims to avoid difficult states such as UP, West Bengal and Bihar. Despite this, riding into hinterlands may not be easy for India’s biggest business house, as managing politics at village level is not that too easy, with each village being dominated by politics of a different hue.

Moreover, getting an efficient health services in place in rural India has been a major challenge for almost all governments in the country. Despite huge resources at their disposal, state governments have not been able to get doctors to the villages, as most doctors prefer a better life in city.