After speciality formats in mega cities, the Mukesh Ambani-promoted Reliance [Get Quote] Retail plans to tap opportunities in towns with a population of less than 50,000. The company will set up 200 town centres and 665 rural business hubs in 850 towns in the country.

The town centres will consist of low-cost malls and stores and have a local touch.

According to a Reliance Retail executive, 20 per cent of the space will be occupied by local vendors selling their agricultural produce, food items and artifacts. Besides, there will be stores for foods and vegetables, entertainment, durables and apparels.

"Along with urban customers, we want to cater to the rural audience. The stores will be scaled-down models, with amenities targeting the rural audiences,'' he said.

The company has already selected properties in cities such as Shivkasi in Tamil Nadu and is negotiating in other towns, he said. The company was also looking to buy the cinema halls and auditoriums which are shut. The town centres will also have education centres which will double up as theatres at night. The company will set up multiplexes in some of these town centres as well.

The company is also setting up rural business hubs to procure fruits and vegetables. These hubs will act as collection centres for fruits and vegetables after doing the first-level grading.

The company will have a property portfolio of 25 million sq feet by next year. The company currently owns 330 Fresh stores, a digital store and one hypermarket.

The company has launched its B2B initiative, labelled Ranger Farms, to cater to small retailers in Hyderabad. It has also introduced its own label in the staples category under the Reliance Select brand.

The Rs 140,000 crore (Rs 1,400 billion) rural retail market is expected to cross the Rs 180,000 crore (Rs 1,800 billion) mark by 2010, according to a CII-Yes Bank study. This may go up to Rs 240,000 crore (Rs 2,400 billion) by 2015. Village households in India are expected to rise to 15.3 crore in 2009-10 from 13.5 crore in 2001-02, making rural India the largest potential market in the world, the report added.

The rural retailing space is dominated by ITC with its E-Choupal and Choupal Sagars, Indian Oil [Get Quote] with Kisan Seva Kendras, Godrej [Get Quote] with Adhar stores and DCM with Hariyali Kisaan Bazaar.