Now in India, a greengrocer revolution

Reliance certainly has its critics. Some wonder if its enormous investment will create the "Wal-Mart effect" in India, driving local traders out of business. Some see it as the a gunslinger of India's Wild West boom times, galloping over laws and common sense. They question whether such an enormous outlay is wise in retailing, where profit margins are small.

But it is precisely the enormous size of the enterprise that is crucial to its success, say company officials. The core of Reliance's business strategy is not merely building squeaky-clean stores, it is about building the retail infrastructure from scratch.

No one has ever attempted to do this in India, say experts and company officials. The reason is that changing the status quo would be prohibitively difficult, so retailers just trundle along. True, interstate taxes drive up prices, middle men delay delivery times, and roads as pitted as moonscapes slow things to a crawl. But for items like toasters and televisions, retailers merely pass on the costs to buyers.

Yet for food, speed of delivery can make the difference between a sale and a shipment of rotted green peppers in the trash bin. Today, as much as 30 percent of India's produce goes bad before it even hits store shelves. "The true source of differentiation is in solving the back-end [infrastructure problems]," says Mr. Mangalorkar. "The problem is that the back end is difficult to solve."

To do so, Reliance is having to build a 21st-century retail supply chain from growers to grocery-store shelves, in a chain that Reliance Chairman Mukesh Ambani calls "farm to fork."

Company agriculture experts are signing contracts with a roster of growers nationwide, so that "what we want, we will grow," says S.D. Saravanan, who helped set up Reliance's food network.

Reliance is offering farmers new technology as well as new techniques to increase yields and quality. Mr. Saravanan cites the simple example of persuading farmers to plant their tomatoes farther apart, which results in bigger tomatoes.

To go from farm to fork, Reliance is establishing local receiving centers, where produce is collected, cleaned, and polished. From there, it will be shipped – often in fleets of new, cooled trucks – to one of 68 distribution centers nationwide.

According to media reports, Reliance is planning to set up these distribution points at Special Economic Zones created by the government that include huge tax breaks. At the distribution centers, each fruit or vegetable will get its ideal climate: lettuce at 36 degrees F, carrots at 46 degrees, bananas at 68 degrees.

The cold storage will also allow Reliance to sell produce out of season. For example, Indians eat 80 percent of the apple crop during four months of the year, says Mr. Saravanan. Reliance will be in the unique position of being able to sell apples all year long. Saravanan expects that leafy vegetables grown in foothills of the Himalayas will be on store shelves 24 hours after harvesting. The current delivery time for most markets is three to four days, he estimates.

By selling in massive volumes and cutting delivery times, Reliance says it can ensure better quality and still compete on price. "Scale gives us confidence," says Saravanan, grinning beside a mound of tomatoes at a Hyderabad Reliance Fresh corner store during its grand opening.

By all appearances the concept is a hit. Customers choked cash registers, queuing in lines that snaked past the onions into the bread section. Stock boys buzzed back and forth amid the hum of activity, refilling vegetable crates that had been full two hours ago.

As Mr. Mallya searches for his favorite cheese, he admires the "ambiance" – the service and freshly swabbed tile floor. But he adds: "The rates are reasonable, too."

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