Mumbai: A decade after it started selling food and groceries, Reliance Retail Ltd is reinventing itself, this time with greater vigour.

A subsidiary of Mukesh Ambani’s Reliance Industries Ltd (RIL), Reliance Retail operates Reliance Fresh neighbourhood stores, Reliance Super mini hyper markets, and Reliance Mart hyper markets. As part of consolidation, Reliance Super and Reliance Mart will be brought under one brand—Reliance Smart.

The experiment comes from experience. Of knowing what works.

“For all in modern retail now, it is now quite clear what works better and what does not," says Damodar Mall, chief executive officer, grocery at Reliance Retail while explaining that there is a lot more confidence now as everything is far more tested.

Reliance Retail has seen at least three shifts in strategy and leadership since inception in 2006. Initially, the company had planned to have 1,000 Reliance Fresh stores within the first two of years. The number of Reliance Fresh now stands at 597.

Over the years the company had also changed its stance to go bullish on the big box format and then changed that too later. There are close to 60 Reliance Mart and Reliance Super stores that will now become Reliance Smart.

Reliance Retail’s value retail business—which clubs its food and grocery businesses—accounted for 54% of its total revenue of 17,640 crore in 2014-15.

This time round, the company has taken a year to formally launch Reliance Smart and finalize its strategy, which looks at differentiating between neighbourhood stores under Reliance Fresh and the Reliance Smart stores which are positioned as destination stores.

Earlier, Reliance Fresh, Reliance Super and Reliance Mart were differentiated based on the store size and assortments that each carried. However, their value proposition was identical. They communicated to the consumer in the same language.

“The consumer walks to our Fresh store and casually drops in for her small needs whereas her visit to the destination store is a planned trip. Therefore, the language we speak to her and the branding must be different," said Mall, while explaining the genesis for the new strategy.

The strategy hinges on the fact that as markets become middle income, the two formats that will work are fresh-led supermarket, which has its strength in fresh fruits, vegetables and dairy, and which is the platform for Reliance Fresh, and the other will be a simple straight-forward value destination which is the platform for Reliance Smart.

At Reliance Smart, the retailer has taken an aggressive pricing platform to woo consumers. The company did various pilots prior to finalizing this model. Some of Mall’s confidence comes from the successful market testing of the Reliance Smart model in Gujarat, a state known for its hard-nosed consumers. He added that the new format has been a living experiment in the field as it incorporates feedback from the consumers, internal merchandising team and the marketing team.

Under the new strategy, the Reliance Smart format will be 8,000 to 30,000 sq. ft and will offer all items below MRP. Offers will be available round the year and discounts will be 2-50% across categories. The company wants to communicate—more you buy, more you save.

The store in most locations will be co-located with its consumer durables and electronics chain Reliance Digital and fashion and lifestyle chain Reliance Trends. Reliance Smart will not carry those categories.

Meanwhile, the Reliance Fresh format will be 3,000-6,000 sq. ft. The format will differentiate from Reliance Smart due to its easy accessibility and dependability while being overall good value for money. Also, the Reliance Fresh store will be more cosmopolitan in its branding and feel whereas the Reliance Smart stores will wear the ethnicity and look and feel of the location.

As such, though there will be an overlap of a few categories like fruits, vegetables and dairy between the neighbourhood and destination formats, the prices in the two formats could vary, said Mall.

Experts though are not impressed with the new branding. “Everyday, low pricing is standard in this format. Big box retailers have some merchandise attractively priced that are known as category drivers to pull consumers in. That is not so unique a play," said Rajat Wahi, partner and head, consumer, retail and agri sectors at consulting firm KPMG India, while noting that to differentiate, you have to stand for something different.

In the last couple of years, Kishore Biyani’s Big Bazaar chain of supermarkets whose tagline was ‘Isse Sasta Aur Accha Kahin Nahin (you won’t find it cheaper or better anywhere)’ has consciously moved away from it. It now looks at catering to the aspirational lifestyle of middle class Indians with a tagline that says ‘Making India Beautiful’, offering newer more evolved categories. Moreover, Big Bazaar still offers discounts and attractive pricing.

Even Avenue Supermarts Ltd, India’s most profitable retailer which owns and operates hypermarkets and supermarkets retail chain D-Mart, is known for similar pricing and deals.

Mall, though, feels that value as a platform cannot be vacated even as the customer aspires to move up. At Reliance Smart, the company is focusing on both the value and aspirational propositions.

At the entrance of the store, watermelons and kiwis both get pride of place, displayed side by side. The watermelon is the value anchor and kiwi represents aspirations. “We believe that value is a good anchor even as the customer aspires to move up," says Mall.

Meanwhile, Trent Hypermarkets Ltd, Tata Group’s retail venture with UK’s Tesco Plc that operates Star Bazaar hypermarkets has once again stepped up on its expansion plans, betting on the multi-format strategy as opposed to only one big box format it had initially started with in 2004.

To be sure, big box retailers still have a long way to go before their businesses find stability. The last two years have seen some consolidation with Biyani’s Future Retail Ltd acquiring Bharti Retail Ltd which operates super and hypermarket chain Easyday Future Retail. Biyani’s Future Consumer Enterprise Ltd acquired Nilgiris and Aditya Birla Retail Ltd acquired Total Super Store business from Jubilant Agri and Consumer Products Ltd.

“Retailers are still focusing on discounting and trying to build their customer base. This is similar to what we are seeing with online retailers as well. There is still a foundation that needs to be built. And profitability remains elusive for most," said Amod Joshi, equity research analyst, India Infoline Ltd.