Reliance Retail, the wholly owned subsidiary of Mukesh Ambani’s Reliance Industries, is set to open 150 stores by March-end and double the number of stores across the country in all formats within five years.
“The target of clocking revenues up to Rs 45,000 crore can be achieved only with doubling the number of stores over the next five years,” said Bijou Kurien, president and chief executive (lifestyle). This will be a 10-fold increase in revenue for the chain, from the Rs 4,500 crore of 2009-10.
In 2010-11, the retail chain would have opened 350 stores, 150 in the last quarter of the current financial year, Kurien said. At present, Reliance Retail has 1,050 stores in all formats across the country. As for 2011-12, he said the plan was to opening another 400. “The thrust of the expansion drive will be on the value format in states of eastern India, along with Uttar Pradesh, where penetration has been relatively low,” he said.
At present, of the 20-odd format stores, both food and non-food, half of Reliance Retail’s revenues come from the food arm. The store size focus would remain 3,000 sq ft each, requiring typically an investment of up to Rs 1 crore.
While expansion is on the cards, there are possible problems in the shape of the continuous procrastination in implementation of the goods and services tax (GST).
“Until the GST is in place, we cannot effect a national unified supply chain. This hinders business, because in the absence of a unified taxation system, our supply chains continue to be state-based, negating uniformity,” said Kurien.
‘APMC amendment needed’
One of the biggest stumbling blocks to this expansion plan, said Kurien, would be the Agricultural Produce Market Committee (APMC) Act.
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“The current controversies on onion prices and inflation are testimony to the fact that the high prices being charged where consumers are concerned does not translate to profits for the farmers.
This heightens the need for amendment of the APMC Act,” he said.
In 2007, Reliance Retail committed Rs 2,500 crore toward expansion in the east, primarily in West Bengal.
The plans fell through for want of the licenses under the Act from the West Bengal government.