Reliance Opens Retail Chain to Gain Start on Wal-Mart

Bloomberg.com: Worldwide
Oct. 30 (Bloomberg) -- Reliance Industries Ltd. Chairman Mukesh Ambani starts his $5.4 billion retail venture this week, seeking to win customers and secure prime sites before Carrefour SA and Wal-Mart Stores Inc. are allowed to open stores in India.
Reliance, the nation's most valuable company, will open convenience stores and supermarkets in Hyderabad, southern India, before rolling out to all major cities in a few months, Gunender Kapur, president of food and grocery, said yesterday. The Mumbai-based oil refining and retailing group plans to open 1,500 outlets serving a third of towns and cities across India.
Record profits help Ambani, 49, secure a foothold in a retail market that's estimated by Morgan Stanley to surge 15- fold to more than $60 billion by 2015. A near doubling in store rents in a year will make start-up costs expensive for Carrefour and Wal-Mart when a ban on foreign supermarket chains is lifted.
``If you look at the experience in the U.S. and China, initially retail initiatives, as it is in India now, always start in locations which are easy for consumers to reach,'' said Chakri Lokapriya, who manages $220 million in Indian stocks at BNP Paribas Asset Management in London. ``As roads become better, it spreads outside.''
Indian retailers are gearing up for competition from overseas and local rivals by acquiring retail space in India's capital New Delhi, financial center Mumbai and technology city Bangalore, and the next set of big cities Kolkata, Chennai, Pune and Chandigarh. That's pushing up retail rents in India's nine largest cities, which account for 13 percent of the $300 billion retail market, according to Technopak Advisors Pte.