Now in India, a greengrocer revolution

Shopper K.V. Mallya has just had an epiphany in the refrigerated-foods aisle. From now on, he muses, he won't need to haggle over the price of a parsnip or elbow his way though sweaty masses to buy wilted spinach.

To him, these are the joys of a new corner store – one with air-conditioning, posted prices, and even a juice bar. To most Indians, this store represents the vanguard of a retail revolution.

The mall is still a novel concept here that begets giddiness. Socialist-era laws banning foreign investment have so far kept out the world's biggest department store names, including Wal-Mart. As a result, 97 percent of India's retail sales are still made in the dust and din of mom-and-pop corner stores.

But India's largest private company – with annual revenues of $20 billion – is spending $5.5 billion to open Western-style supermarkets and modern convenience stores in 784 cities across this South Asian nation.

Within four years, Reliance Industries Ltd. intends to build 100 million square feet of markets and supercenters. That's more than half the size of Target's retail network in the United States, which was built up over 45 years. Experts call it perhaps the boldest experiment in the history of global retail, and the opening of this cozy corner market on a rainy morning in Hyderabad earlier this month is but the first modest step.

"It signals that India is ready for modern retail," says Deepankar Sanwalka, a retail expert at KPMG consulting in India.

The ribbon-cutting for Indian retail has been a long time in coming. First, India's state-run economy left its citizens and its companies too poor to support the prospect of organized national retail. Yet even after India began to open itself to the world in the 1990s, the market developed slowly. In addition, the continuing ban on foreign investment by retailers that sell more than one brand has prevented large multinationals from entering India.

Now, however, changes are afoot. By 2015, the retail market here is forecast to more than double to $637 billion, and organized retail is expected to increase its share from 3 percent today to as much as 15 percent. "The Indian consumer is much more confident," say Asitava Sen, a retail analyst at PricewaterhouseCoopers. "This is the element that will drive organized retail."

Single-brand retailers like Nike and Tommy Hilfiger are already taking advantage, filling storefronts nationwide. Multibrand foreign companies such as Wal-Mart and British grocer Tesco are reportedly looking at ways to get around the investment ban – either by opening wholesale stores that sell only to other businesses, which is legal, or by establishing partnerships with Indian companies.

For example, Australia's Woolworths has already joined with Indian giant Tata to create a new chain of electronics stores. But it is the launch earlier this month of 11 small corner markets, called Reliance Fresh, in Hyderabad, that best represents the newfound ambition of Indian companies in general and Reliance in particular.

It will soon roll out more corner stores nationwide. Larger supermarkets are expected to follow soon, with the huge Wal-Mart-style "hypermarkets" coming later.

Indeed, it is no surprise that Reliance has gone in first and gone in big. This is the company that intends to build two new cities on the outskirts of Delhi and Mumbai (Bombay), offering first-world power, roads, and amenities for as many as 5 million people. It is the company that built the world's third-largest refinery in 18 months when independent estimates suggested it would take five years. When it finishes a second refinery nearby in 2008, the operation will be the world's largest.

"That is the DNA of the company – thinking big," says Raman Mangalorkar, a retail analyst at A.T. Kearney.

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