Can Reliance Retail double its turnover in 3-4 yrs, as Isha Ambani claims?

At Reliance Industries’ annual general meeting (AGM) towards the end of August, shareholders were told that Reliance Retail would double its business in three to four years.

Is that a tall target? It sure seems so.
 

Reliance Retail is already the country’s largest retailer. Its financial year 2023-24 (FY24) gross revenue stood at more than Rs 300,000 crore. Doubling that will be akin to adding anot­her Reliance Retail to itself.
 

However, there is another way of looking at this target. The Indian retail market is among the fastest growing in the world, allowing a lot of elbow room for growth.
 

For instance, Reliance Retail’s growth in FY24, at the already sizeable base of the previous year, was 17.8 per cent, as Isha Ambani, one of the three scions of the Mukesh Ambani family, pointed out at the AGM.
 

If this rate can be sustained, Reliance Retail’s gross turnover will touch Rs 600,000 crore in four years. Add to that the fact that the Mukesh Ambani family is known to thrive on meeting tall targets.
 

Beyond Tier-III
 

Although already present across retail concepts, price segments, and fast-moving consumer goods in the country, Reliance Retail still has mileage left in the tank as it expands its stores into smaller towns beyond Tier-III, according to experts. They add that the aggression is fuelled by entering newer territories such as ethnic menswear and acquisitions.
 

“Reliance Retail is focused on expanding its current business and entering new businesses. Acquisitions as well will help them gain traction. There is a relatively decent pipeline of businesses that are available for acquisitions across the consumer space,” says Devangshu Dutta, founder of Third Eyesight.
 

Dutta adds that the company has been serious about putting money behind its statements. From two decades ago, when Reliance barely had any consumer presence, it now dominates the space, and growing further in it is one of its strategic priorities.
 

One of the drivers that automatically fuels growth is that India remains one of the fastest growing retail markets and is poised to become the third-largest by 2030. It is also among the top five retail markets in the world, at an estimated $951 billion in 2023.

According to the Deloitte-Future of Retail report, the growth of India’s retail sector is propelled by several factors, including increasing urbanisation, rising income levels, expanding female workforce, and an aspirational young population.

“This growth extends across various town classes, benefiting numerous local, regional, and international brands and manufacturers. They are being connected with consumers across diverse markets, thereby actively participating in India’s ongoing growth narrative. Grocery, fashion and lifestyle and consumer electronics constitutes over 90 per cent of the market,” the report says.
 

Far and wide
 

During the AGM, Isha Ambani, executive director of Reliance Retail Ventures, pointed out that Mukharochak Chanachur, a specialty from Kolkata, was now available in hundreds of Reliance Retail’s stores outside West Bengal. Laxmi Narayan Chiwda from Pune has co-created a Misal Mix exclusively for Reliance Retail’s Smart Bazaar stores. Brands like YogaBar, Soulfull, Mamaearth, and Storia are available nationwide through collaboration with Reliance Retail.
 

“We work closely with thousands of small and medium vendors, regional brands, and new-age start-ups, providing them a platform to grow and scale with Indian consumers. This creates opportunities for small entrepreneurs to showcase their products and expand their reach,” Ambani said.
 

Reliance Retail is the country’s largest omni-channel retailer with integrated stores, digital and new commerce platforms, and a large supply chain with the ability to deliver products across the country.
 

“As we continue to introduce new offerings and expand our reach, we believe this business will grow rapidly, enhancing both our market presence and profitability,” she said.
 

Reliance Retail’s focus on small towns means that is where two-thirds of its new stores are opening. “In many of these markets, we are the first modern retailer to establish a presence. Simultaneously, we are selectively expanding our premium formats, Fresh Signature and Freshpik, in large cities, continually innovating to enhance the consumer experience,” Ambani said.
 

Acquisitions in the air
 

Grocery is not only the largest but also one of the fastest growing segments, expanding at 2.5 times the rate of the rest of modern trade.
 

Dhanraj Bhagat, partner at Grant Thornton India LLP also believes that penetration of its stores beyond Tier 2 and 3 markets will help fuel growth for the company.
 

“Acquisitions and online sales across categories will also make it easier for Reliance Retail to double its business 

in the next couple of years,” he adds.
 

Newer formats in the fashion and lifestyle segment as well as rapid scaling up of some of the newest formats will help spread offerings in the segment further. 
 

Yousta (youth focused value fashion), Swadesh (artisanal led offerings), are poised for growth.
 

Partnership with ASOS and Shein will bolster the portfolio and Reliance Retail will incre­ase its presence in the fashion segment. Its plans in the luxury jewellery segment will add to the topline. Another category it plans is the intimate and inner­wear  (clothes which typically provide insulation) category, where its latest partnership with Delta Galil will help.
 

In the beauty and cosmetics segment, which is a fast growth segment, Reliance Retail intends to scale up its omni-channel presence across online and offline platforms such as Tira, Kiko Milano, Sephora, Blush Lace, and others. Its acquisition of Metro India Cash & Carry has strengthened its omni-channel capabilities, offering a wider assortment for kirana and HoReCa (hotels, restaurants, and caterers).

Capturing market
 

 India’s retail market, estimated at $951 billion in 2023, is among the top five in the world
 

 It is also one of the fastest growing and poised to become the third-largest market by 2030
 

 It is propelled by increasing urbanisation, rising income levels, expanding female workforce, and an aspirational young population
 

 Grocery, fashion and lifestyle, and consumer electronics constitutes 90 per cent of the market
 

 Experts say Reliance Retail has more mileage left as it expands in smaller towns beyond Tier-III