Will the investment go sour?

To Stay Fresh

With so much invested in Reliance Fresh, and the net profits dipping over the years constantly, the cause and effect has to be determined. One thing is for sure, that even though the people in India might be suddenly opened to the organized retail sector, within the last 3 to 5 years’ timeline, there has to have a cut-off when Reliance Fresh does make profits. Here is some food for thought:

  1. Trigger an efficient supply chain management – An efficient SCM for fruits in which the middleman is abolished should be in place, with the farmers getting at least 20% more than the mandis. This would excite the farmers to sell their best crops.
  2. Bring the farmers close to the retail shops, as close as possible – The taste of the fruits and vegetables are lost in transit. A fresh vegetable from the mandis would be much preferred than the ones from Reliance Fresh. Hence, it is essential that the farming lands are very near to the target stores.
  3. Try to sell goods with a greater shelf-life – Things like FMCGs would have a greater impact on the mind of the people than the fruits and vegetables. An average person generally buys the FMCG goods at lesser prices other than the fruits and vegetables sector.
  4. Concentrate on fresh fruits with a greater shelf-life – Damage and loss would be huge in the ones with the shorter shelf-life. The fruits with the shorter shelf-life should be preferred. Also, stacking them up in the cold storage would not be a great disadvantage then.
  5. Discard vegetables with lesser shelf-life – Partially cut down the vegetables with shorter shelf-life, as the vegetables would take less time to get damaged or loose the appeal to the customers.
  6. Wait for the tide to come- Never invest in haste. Even if you want to. This requires a definite plan, and a plan for scaling up in the process.
  7. For expansion, look out for factors as population density, proximity to agricultural lands, expected profits, nearby competition, number of nearby mandis, access to farming lands, and historical data of the competitors.
  8. Loyalty cards are a method to entice the repeated customers- Using a cash back system for the total reward points should add to the need and feel of the customers and consumers. This would drive an incentive.
  9. Localize the spectrum by analyzing the historical data gathered in the retail selling stores. By number crunching the analytical data, the forecast of sales to the peak load for an SKU can be determined, mainly the seasonal variation and yearly variation.
  10. Direct procurement in the states which allow this very concept should be in place. This would allow the middle man to be abolished, with greater margins for the goods that are sold.
  11. Shutting down immediate retail outlets that are loss making, and preserving those who are at least making nominal profits.

I guess, these facts and figures would definitely help the whole eco-system of Reliance Fresh. Reliance Fresh also needs to open up in the Tier II cities, not Tier III at this moment, as Tier III would still prefer the mandis.

 

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