Reliance Wellness eyes Rs 6,000cr revenue

Reliance Retail's tenth retail format, Reliance Wellness, a chain of beauty and wellness products, is looking at Rs 6,000 crore revenues from its operations in the next three years. The company will have 1,200 stores by then.

The company has six wellness stores, including the 3,500 sq ft store it opened in Chembur, Mumbai, on Thursday and plans to open 150 stores by the end of 2008-09. For a 3,500 sq ft store, it employs 16 people and invests Rs 80 lakh.

RETAIL RUSH

Reliance Retail plans to set up 150 stores by the end of fiscal 2008-09

The company will invest Rs 25,000 crore in the retail business and plans to employ 1.5 lakh people

The Wellness stores covers health foods, personal care, healthcare and pharma sectors

"We will hire 19,000 people and invest Rs 900 crore in the wellness business," a company source said.

Reliance Industries has announced Rs 25,000 crore investment in the retail business and plans to employ 1.5 lakh people.

The wellness stores have four broad categories such as health foods, personal care products, healthcare products and pharma products and sell nearly 8,000 items.

"Health and wellness is a big industry and catching up fast in India. We want to be the one-stop shop for all the products relating to health and wellness. Lack of organised players providing the entire basket of health and wellness products made us look at this category," said Ninu Khanna, CEO, health and wellness, Reliance Retail.

According to estimates, health and wellness is a Rs 40,000 crore category and growing at nearly 15 per cent every year. Health and wellness products have a margin of 15 per cent to 30 per cent and sourcing them directly from manufacturers would increase the gross margins of the retailers, the sources said.

"We want to sell products at cheaper prices so that we can create market for most of the wellness and health products, which are needed by Indians," Khanna said.

Though the company will sell the products at the maximum retail price (MRP), they will have discount offers ranging from 5 to 25 per cent.

Analysts said if retailers in the segment got their merchandise right and educated customers on the merchandise, the format would work in the country.

"Indian consumers are new to many of the health products that are popular in the US. Since it is a niche segment, they have to get the merchandise mix right and educate consumers on the products. They can reap higher profits if they develop private labels, which have higher margins," said Hemant Kalbag of AT Kearney.

International chains such as Walgreen, CVC and Hutchison Whampoa's AT Watson have done well in the segment abroad, Kalbag said.

Reliance Wellness is not taking any chances. It is planning to organise events, seminars, workshops and camps on wellness issues, besides having an optician, dieticians and other health experts at the stores.

Initially, the company would focus on top-50 cities and later spread to tier-II and tier-III cities. The company has opened nearly 500 stores in the country, including fresh produce and grocery format Reliance Fresh.