Reliance Retail targets new store profitability within a year or shut down

Business Standard

02-05-2025

Reliance Retail has set a new rule for all upcoming stores: they must become profitable within six to 12 months. If not, they will be shut down or replaced with a different retail format, according to a report by The Economic Times.
This is a big change from the earlier policy, which allowed up to two years to asses if a store could work. The move shows Reliance Retail is now more focused on profits and better margins, especially as it prepares for a future stock market listing (IPO).
In a recent private meeting with analysts, the management said that details of the IPO would be shared 'in due course,' according to a company executive.
The report mentioned that the company, which had a turnover of ₹2.91 trillion, will also slow down its store expansion. It now plans to open 500–550 stores a year, down from more than 1,000 earlier. In 2022-23, it had opened over 3,300 stores. In the last three years, Reliance Retail has also shut down over 3,650 stores that were not making money.
Reliance Retail operates in many categories like electronics, groceries, clothes, footwear, jewellery, eyewear, medicine, and handicrafts. It runs stores under brands such as Reliance Fresh, Digital, Trends, and MyJio.
'The days of crazy expansion are over, but store count will definitely go up every year... Otherwise revenue growth rate will become slower,' a person aware of the company's plans told The Economic Times.
According to him, the company is now more careful about where it opens new stores. 'With higher due diligence in location selection, over 90 per cent of the stores should achieve the breakeven target. Some may still not as market shifts by the time a store may come up,' he added.
Reliance is also focusing on premium products, especially in grocery and fashion. Its high-end formats like Freshpik and Gofresh are doing well, said Chief Financial Officer Dinesh Taluja during an earnings call last week.
It is revamping its budget fashion brand Trends to appeal more to young customers, using new technology similar to its other format, Azorte. Its profit margins over the last two years are improving too, due to a 'streamlining' process where it shut unprofitable stores and improved operations.
Reliance also wants to earn profit in areas that usually lose money—like online shopping. Taluja said its 30-minute delivery model will compete with quick commerce 'in a profitable manner with a very strong unit economics.' He explained that deliveries will be made from nearby stores, not from special 'dark stores'. This helps cut fixed costs and allows extra sales with only small extra expenses.