EFE MATRIX

The researchers analyzed the external environment of Reliance Retail Ltd through its political,
economic, social, technological, environmental, and legal environment, the industry and finally
the competing firms. Thus, with the use of External Factor Evaluation Matrix, findings for this
paper will be summarized and will properly reflect the performance of Reliance Retail Ltd in
terms of opportunities and threats.

Key External Factors Weight Rating Weighted

Score

OPPORTUNITIES
1 Increase advertising for Private Brands 0.0900 4.00 0.36
2 Digital Strategy 0.1000 3.00 0.30
3 Rural Retailing 0.0700 3.00 0.21
4 Customer- Centric Approach 0.0800 1.00 0.08
5 Increasing per capita GDP 0.0700 3.00 0.21
6 Changing the Regulatory Scenario 0.0700 3.00 0.21
7 Shopping Culture

THREATS
1 Increasing Retail Segment Competition 0.0900 4.00 0.36
2 Supermarkets moving to 24/7 hours 0.0600 4.00 0.24
3 Security 0.0900 3.00 0.27
4 High Rental Costs 3.00
4 The tax and availability of land and real estate 0.0800 4.00 0.24
5 Competitive Market (Walmart) 0.1200 2.00 0.24

TOTAL 1.00 3.09

As reflected by the EFE table, Reliance Retail Ltd is capable of maximizing the aforementioned
opportunities. In addition, RR also has the capability to shield against threats in the industry with
a weighted score of 3.09. The following entries explain the rationale behind the data mentioned
above.

OPPORTUNITIES

Increase advertising for Private Brands

This is an opportunity for to add allure to your store’s brand. When these private brands get
marketed well, it can mean not only an increase in your bottom line, but an increase in the
number of Reliance Retail loyal customers. RR for instance, uses social media platforms to
spread information regarding their private brands like AJIO, Reliance Fresh, Reliance Smart,
RelianceSMART.in, Reliance Market, Reliance Digital, Jio Store, Reliance Trends and Project
Eve. Thus with high visibility of their websites, they were viewed by the researchers as a
superior response to this opportunity.

Digital Strategy
Going Digital is not only about e-commerce but the way interaction with employee and customer
engagement and investment in technology.
Customers are demanding an improved experience in items of how to search, browse products
and conduct transactions online.
Online retail sales is forecasted to grow at the rate of 31 per cent year-on-year to reach US$
32.70 billion in 2018.

Rural Retailing

India’s huge rural population has caught the eye of the retailers looking for new areas of growth.
ITC launched India’s First Rural mall “Cahupal saga” offering a diverse range of Products from
FMCG to electronic goods to automobiles, attempting to provide farmers a one-stop destination
for all their needs”

In total US$ 950 million in 2018 the share of rural Consumption is 45% and rest is from Urban
sectors so we can see the opportunity is there to retail outlets.

Customer-Centric Approach

Here the statement defines the more consumption the more growth rate is anticipated, as we
know the consumption of India’s population is growing day by day as per the IBEF record Total
consumption expenditure is expected to reach nearly US$ 3,600 billion by 2020 from US$ 1,824
billion in 2017.

Increasing per Capita Gross Domestic Product (GDP)

With the increasing trend of per capita GNI, households have higher disposable income. Their
income remaining after deduction of taxes and other mandatory charges are more available to be
spent on products and services. For this opportunity, RR was given a score of 3.0. With the
passing of the RAIN Law, the company will increase the prices of most commodities. The GDP
per capita at current price (US$) in FY2019 is 1,982.65 sources from IMF which shows the GDP
per capita increasing pattern year by year.

Changing the Regulatory Scenario:

This is in relation to the previous opportunity due to the rationale that with higher disposable
income, their purchasing power increases consequently. For this opportunity, RR was given a
score of 3.0. With the passing of the RAIN Law, the company will increase the prices of most
commodities. Aside from that, 7/11 is known to have a pricing strategy viewed to be high by
consumers. RR may implement this in consideration of the current purchasing power of its
market. However, the increase in prices may somehow sacrifice potential income.
Recently the Indian Government made the following two significant announcements that will go
long way in developing the Indian retail sector.

Permitting foreign investment of 50% of FDI in multi-brand retail trading.

And 100% of FDI in Single brand retail trading to make it more business-friendly .

THREATS

Increasing retail segment competition

as we know the competition in retail in India is going harder than anything because of entry of
Walmart, which is giant player in retail globally and the Alibaba will be the the threat for RR
beacause they can play strong strategies

Tax Reform for Acceleration and Inclusion Law

The tax and availability of land and real estate, here the GST is the major Tax measure for retail.

Security
With the nature of business of Philippine Seven Corporation, it is always likely to be a target for
theft and armed hold-up. Obviously the chain has put in various security measures in different
parts of the world, including video cameras, safes, and window barriers and so on.
Locations, these stores operate on a lean budget and only have minimal staff, which presents the
opportunity for some consumers to occasionally shoplift. Like with the security threat above,
video cameras may assist in this regard.

High rental costs

Due to the need to locate the 7-Eleven outlets in very convenient locations, they are likely to
incur higher rental costs as a result. This higher operating cost structure will mean that they will
need to adopt a price premium approach. There are some consumers who are happy to pay a little
bit more for convenience and speed of purchase, however other budget-conscious consumers a
more price sensitive.

Competitive Market
In addition to market access, the ease of doing business in a jurisdiction is also a decisive factor
for investors. According to the Global Competitiveness Index 2018-2019, the RR ranked 94th
out of 140 countries. This ranking demonstrates that the RR business environment, despite
positive developments in recent years, still remains challenging. This serves as a barrier to entry.

Supermarkets moving to 24/7 hours

Coming from the successful round-the-clock shopping started by SM Hypermarket Mall of Asia
in December 2016, 21 SM Markets stores were opened 24 hours in 2017 to accommodate anyone
in a Christmas shopping mood anytime. SM Markets’ move aims to cater to those staying late
hours at work or taking night shifts and will accommodate those shopping for Noche Buena
essentials at their most convenient time. No more rushing after work, no more enduring cravings
in the middle of the night, and most importantly, be able to get the ingredients fresh when you
need them. This is a potential threat to RR stores due to the possibility of SM Markets to execute
a not whole 24 hrs operation.