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November 19, 2006

First cut view of Reliance's retain plans

Businessworld has an article on Reliance Fresh, the Anil Ambani group's venture into the neighbourhood convenience store business.

Eleven stores were up and running by the end of last week and 100 more will spring up before the end of the year. The plan is to have 3,000 Reliance Fresh outlets soon. (Several other formats in categories including apparel, electronics, etc., will follow soon.)

Sources say that Reliance believes each Reliance Fresh outlet could earn annual revenues of Rs 3 crore. That’s a sale per sq. ft of roughly Rs 12,500. Industry sources say this is in line with what other chains have achieved in the past. For instance, at its peak FoodWorld had managed a Rs 300-crore turnover on its 80 stores. The average size of a store was about 3,000 sq. ft — or sales of Rs 12,500 per sq. ft.

If Reliance Fresh can match that, the 3,000-outlet chain could be in line to clock revenues of about Rs 9,000 crore.

Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.