In expansion mode, Reliance Retail may spend Rs 2,500 crore

After the group’s aggressive focus on its telecom business under the Jio brand, Mukesh Ambani-led Reliance Industries is looking to significantly scale up the retail operations once again following a phase of consolidation. Reliance Retail, the largest retailer in terms of revenues and stores, is planning to grow across all formats — fashion, food and grocery as well as wholesale.

The chain is expected to open 200 fashion stores under Reliance Trends, a similar number of food and grocery stores in its Fresh and SMART format, and around 300 wholesale outlets as part of Reliance Market over the next three years. It has also chalked out plans to add 500 to 600 fuel stations. The business expansion could cost Reliance an estimated Rs 2,500 crore in capex, property market sources pointed out.

In the past one year, Reliance closed around 60 grocery stores to stem losses, reports suggest. It also exited some formats such as Reliance Kitchen in the recent past. The group has already converted Digital Xpress Mini stores into Jio Experience stores. Set up in 2006, Reliance Retail became the largest retailer in terms of revenue by 2014, overtaking Kishore Biyani’s Future Group. It posted revenues of Rs 21,612 crore in FY16, compared to Rs 17,640 crore in FY15. Raman Mangalorkar, chief executive at data analytics firm Atom Data Labs and former head of consumer and retail practice for Asia-Pacific at AT Kearney, said Reliance was focused on Jio and was in consolidation mode with retail business. But it is possibly stepping up the growth and roll-out of retail plans now, he added. 

“They have invested heavily in retail and need to start to show growth trends to the stock analysts, so that they can validate their grand plans of dominating in retail across India,” said Mangalorkar.

When contacted, a Reliance Retail spokesperson said, “Reliance Retail is a very consumer-centric business founded on technology, logistics and customer satisfaction as its defining principles. The benefits of our supply-chain infrastructure and technological solutions are shared with millions of small and medium businesses.”

 

He said Reliance Retail is central to Reliance’s consumer facing businesses and includes an omni-channel model, with large physical and digital presence.

“As part of Reliance Retail 2.0 initiatives, various omni-channel initiatives were expanded to offer differentiated experience to the customers. The e-commerce offerings from Reliance Retail now include AJIO, Footprint360, Reliance SMART, Reliance Trends, Payless ShoeSource, among others.”

At the end of the third quarter of FY17, Reliance Retail operated 3,553 stores across 686 cities with an area of over 13.25 million square feet. Reliance Retail opened the first Reliance Market in 2011 and runs 40 stores with over 2.5 million registered member partners as on December 31, 2016. Reliance Trends operates more than 320 retail stores across 177 cities. The company said it has relaunched Reliance SMART, the destination supermarket store. The chain also has 500 Reliance Fresh stores across 80 cities.

Reliance Retail’s profit before depreciation, interest and taxes rose 40.5 per cent in Q3FY17 to Rs 333 crore, compared to a year-ago period. Its turnover rose 47.22 per cent to Rs 8,688 crore in the same period.