‘Retail industry will do better this year’3 min read . Updated: 16 Oct 2012, 05:45 PM IST
Reliance Retail’s Bijou Kurien on the firm’s expansion strategy, impact of the coming festive season
Mumbai: At a time when Indian consumers are reducing their discretionary spending, the retail unit of Reliance Industries Ltd said sales grew 48% to ₹ 4,910 crore in the first half of fiscal 2013 from a year earlier.
The management of Reliance Retail Ltd attributed the growth to its expansion strategy—the retailer opened stores across its value and speciality retail formats. Under the value format that comprises supermarkets and hypermarkets, the company opened two large-format Reliance Mart stores in Coimbatore and Aurangabad during the first half of fiscal 2013. Under the speciality category, the retailer opened Vision Express and Reliance Digital stores, during the same period.
Growth in same-store sales, or stores that have been in existence for more than a year, was 5-25% across formats. The company plans to add 200-300 stores this year, Bijou Kurien, president and chief executive officer (lifestyle business) of Reliance Retail, said in an interview on 11 October. The company announced its earnings on Monday. Edited excerpts:
What are your primary drivers of growth?
Value retail, which consists of Fresh, super and hypermarkets, is the majority of our overall retail business. As such, all our businesses are growing equally as we are adding more stores in speciality retail, but the format is smaller and hence the business revenues are not to the same extent as value.
You have been adding new stores and growing your network…
We have 1,350 stores in 122 cities across India, covering 7 million sq. ft across all formats put together. The stores are equally split between value and speciality retail. We added 300 stores last year and we will add another 200-300 stores this year. The number of stores opening in speciality will be higher. We have about 40 hypers (50,000-70,000 sq. ft) and supermarket stores (10,000 sq. ft). Fresh is 2,500-3,000 sq. ft.
What is your expansion strategy?
We are growing in all our markets and will look at expanding in states like Uttar Pradesh in the future where we are not present currently.
There has been a slowdown in discretionary spends. Will that impact the coming festive season?
From a mood perspective, there is a little downtrend in the consumer sentiment, which has affected retail spending certainly in the last six months.
Festive seasons draw consumers to the stores and we hope that happens this festive season. Luckily, this time the festive season straddles over two months as compared to one month last year. There is a sense that the industry will do better this year and depending on the type of format, there could be a growth of 10-20%.
What are the changes that we can expect at Reliance on account of the changes in foreign investment policy in retail?
I don’t see any changes happening as far as we are concerned.
What about the state of your joint ventures? Should we expect any changes?
We have joint ventures with Marks & Spencer, Vision Express and some others. I don’t see any of them going through any changes. There are some brands with Reliance Brands (a separate arm) handled by Darshan Mehta. He would be best suited to answer about them. We have made our partnerships with the understanding that both partners bring value to the table.
I can’t comment on that because even if we do look (at opportunities), we have non-disclosure agreements. Having said that, the truth is we already have a very strong presence in many of the retail categories. So, unless it plays a complementary role, we don’t even want to see it. Acquiring something then becomes a little bit of a challenge for us. It means rebranding sometimes, and sometimes a completely different assortment. So, unless you really can leverage the foundation and the brand, it doesn’t make sense to acquire at a price when you know that the market is not so good.