Reliance Retail: Reliance Retail, India's largest retail chain, has announced a significant shift in its business strategy. The company has implemented a new rule for all its upcoming stores, mandating that every new outlet must achieve profitability within 6 to 12 months.
Failure to meet this target will result in either the closure of the store or its conversion into a different type of retail outlet. Previously, Reliance Retail waited up to two years to assess a store's viability. However, the company is now prioritizing profitability and healthy margins, especially as it prepares for a future Initial Public Offering (IPO).
Significant Change in Company Strategy
This strategic shift indicates Reliance Retail's increased focus on profitability and efficient operational models, rather than solely on expanding store numbers. While the company opened over 1,000 stores in a single year previously, it now plans to open only 500-550 stores annually. In 2022-23, the company added over 3,300 new stores, but also closed over 3,650 loss-making stores over the past three years.
RIL's Wide Product Range and Premium Brands
Reliance Retail offers a vast product diversity, encompassing electronics, groceries, apparel, footwear, jewelry, eyewear, pharmaceuticals, and handicrafts.
Its prominent store brands include Reliance Fresh, Reliance Digital, Reliance Trends, and My Jio. Furthermore, the company is now focusing more on higher-margin products, and its premium brands, such as Freshpik and GoFresh, are performing well.
Selective Expansion Instead of Unbridled Growth
A senior company official stated, "The era of unrestrained expansion is over, but the number of stores will increase year-on-year. Premature expansion could slow down the company's earnings momentum." Reliance Retail now conducts thorough site analysis before opening each new store and is confident that over 90% of new outlets will become profitable within the stipulated timeframe.
Profitability Strategy in Online Shopping
Reliance Retail also plans to achieve profitability in the online shopping sector. According to CFO Dinesh Tulja, the company aims to generate online profits through its "quick commerce" model. This model utilizes nearby stores for deliveries, reducing costs and boosting sales.
IPO Preparations
Reliance Retail may soon be preparing for its IPO. The company aims to enhance profitability while simultaneously building investor confidence. Regarding the IPO, the company has stated that all necessary information will be shared "at the appropriate time".
