Reliance focuses on digital format to drive retail growth

Despite challenges posed by various e-commerce players, Mukesh Ambani-led Reliance Retail seems to be focused on consumer durable retailing.

Of the total 279 stores Reliance Retail opened during December FY15 quarter, 231 belonged to Reliance Digital, the durable format of Reliance Retail.

Reliance took the store count of Reliance Digital from 689 in September quarter of the current financial year to 920 during the December quarter, making it the largest consumer durable and electronics retailer in the country.

In comparison, Videocon group’s Next runs over 800 stores and Tata’s Croma has about 97 stores in the country.

Retail consultants said they are amused with Reliance’s focus on consumer durable retailing.

“I am surprised that Reliance is focusing on this segment despite competition from e-commerce players. Tata’s Croma is also not expanding rapidly,” said Arvind Singhal, chairman of Technopak Advisors.

But Reliance seems to be putting money where its mouth is. Reliance Digital, which debuted  in 2007 in Ghaziabad in the National Capital Region, posted a turnover growth of 32 per cent in the third quarter of FY15, highest after fashion and lifestyle category. About 24 per cent of Reliance Retail’s Q3 revenue mix came from Reliance Digital.

In the third quarter earnings, RIL said that  digital format sector kept up the pace of expansion through Digital Xpress Mini, a format that is positioned towards serving communication and mobility needs.

“In a short period, the format has established itself as the largest mobile phone retail chain in the country,” it said.

Reliance said it partnered with five leading international brands to launch several experience zones in digital stores. In the December quarter, Reliance Retail posted its highest ever profit before depreciation, interest and taxes in a quarter at Rs 227 crore, an increase of 114 per cent on yearly basis. Reliance’s turnover went up 19 per cent during the quarter at Rs 4,686 crore.

Reliance Retail now operates 2,285 stores across the country.