Reliance Retail changes strategy looking at evolving markets

Launched its first wholesale format, Reliance Market to cater to kirana stores, restaurants, institutional buyers

In the past few years, looking at the evolution of the retail sector in India, companies have changed their market strategies three to four times already.

For instance, while Reliance Retail had traditionally focused on smaller format stores, it is now stepping up its presence on big-box stores or hypermarkets that are built on about 60,000-80,000 sq ft and stock everything from food to apparel to furniture.

Most recently, last July it hired former chief operating officer of Walmart China, Rob Cissell, as chief executive (value formats) and Shawn Gray, a former vice-president of Walmart China, as chief operations officer.

The company launched its first 'wholesale' format under the name 'Reliance Market' in Ahmedabad. The format caters to kirana stores, small businesses, restaurants and various other institutional buyers.

Reliance Retail, a brand that offers everything from clothing, to optics, footwear, food, groceries, jewellery, digital products, is planning to raise up to Rs 4,500 crore from its parent company, Reliance Industries to open new stores. 
Reliance Retail, is already host to 100 optic stores in partnership with Grand Vision, brought Hamleys, considered world's most wonderful toy shop, to India. The brand also opened istore under Reliance Digital, a one-stop shop for all Apple products and services.

This investment is likely to aim aggresive growth in select formats. This is at the same time when some competitors are looking to shut shop and curtail expansions as cash inflows remain a major problem.

Funds are primarily likely to be invested in adding several big-box stores as well as in expanding aggressively in the consumer durables and apparel formats," a senior Reliance Retail executive said.

The release issued today to announce Reliance Industries' FY12 results, stated that Reliance Retail now operates in 1,300 stores as against 1,100 stores in Novemer 2011 across 18 states and operates over 6.5 million sq ft of retail space.

Reliance Retail, now has 22 formats from hypermarkets to speciality stores, exited two formats in 2008-09—Reliance Kitchen, which sold modular kitchen furniture, and Reliance Wellness, a beauty and lifestyle chain.

In RIL's FY12 results announced today, the share of "Others", which includes textile, retail, SEZ and telecom/broadband, amounted to Rs 14,526 crore compared to Rs 11,730 crore in the previous fiscal.

While, RIL's FY12 net rose only marginally by 2.2%, the aforementioned 'others' category showed an increase of 23.8% in the same period.

Reliance Retail merged nine loss-making subsidiaries of related businesses and created one consolidated entity, Reliance Fresh, has had in the six years of its existence three management changes in its food and groceries, and hypermarket businesses.

The most recent addition by the Reliance Retail was Quiksilver, a leading outdoor lifestyle company, with a store at Phoenix Mills, Mumbai. The first flagship store opened in New Delhi last year, a 1,400 sq ft store in Ambience Mall.

The company owns less than half-a-dozen hypermarkets, but the company under the leadership of two retail veterans Cissell and Gray, have been buying real estate for bigbox formats expansion.