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Business Standard
02-05-2025
- Business
- Business Standard
Reliance Retail targets new store profitability within a year or shut down
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.
India.com
02-05-2025
- Business
- India.com
Mukesh Ambani, Isha Ambani's BIG warning to Reliance Retail's…, says perform or…
Reliance Retail is trying to be profitable and working on its operational efficiency before it goes for a potential Initial Public Offering (IPO). The company had earlier decided the period of break even after new stores are opened of two years but now it has shortened it to 6 to 12 months. Those stores who are failing to meet their target will be shut down or replaced with another retail format, according to the Economic Times report. Earlier Reliance Retail opened 1000 new stores annually but has reduced it to 500–550. In FY23, the company had opened over 3,300 stores but also closed more than 3,650 non-profitable outlets over the last three financial years. The company has 2.91 lakh-crore turnover and operates 19,340 stores across India as of March 2025. It sells products like electronics, groceries, apparel, footwear, beauty products, gold jewelry, eyewear, medicines, and handicrafts, in multiple formats like Reliance Fresh, Digital, Trends, and MyJio. Reliance Retail Premiumization Plan Reliance Retail is focusing on premiumization in apparel and grocery retail. The luxury retail business, managed under Reliance Brands, has different brands like Armani Exchange and Hugo Boss. Premium grocery formats Freshpik and Gofresh were widely accepted. Its value fashion store Trends is being rebranded to attract younger consumers, with the help of the latest technology similar to its Azorte format. Reliance Retail Q4 Results In the March quarter, Reliance Retail saw over 2.4 times growth in terms of the number of orders, which is a significant scale-up, said its CFO Dinesh Taluja during the earnings call earlier this week. 'And we are seeing very strong traction with a 2.4x quarter-over-quarter growth in daily exit orders. And this number will scale up substantially in the coming year as well. We are also starting to proactively market this proposition, our proposition of no hidden charges, quick delivery, and no delivery fees continues to resonate very well with the customers,' said Taluja. Reliance covers hyper-local deliveries, a sub-30-minute delivery, at 4,000 pin codes across the country through its network of existing stores, which has a much wider reach than any other quick commerce player in the country. Through its JioMart app, Reliance Retail is offering quick and scheduled deliveries, which currently has three types of services. There is an under-30-minute quick service, and second is a scheduled delivery, where the assortment is much wider, and then there is a subscription service, where a customer can subscribe and everyday goods are delivered at doorsteps early morning. 'All three are picking up very well. The average daily orders were up 62 per cent on a Y-o-Y basis,' he said, adding, 'Specifically, our under 30-minute offering, which has the widest network reach. We have almost 2,000-plus stores which are on the network, covering more than 4,000 plus pin codes. So this is much wider reach than any other quick commerce player. We have kind of re-pivoted our model completely to under 30 minutes delivery. 'There are some dark pockets where we will set up dark stores also, wherever there is a genuine requirement, there is enough volume and we cannot service it within 30 minutes, we may set up some dark stores as well. So that is on the quick commerce side of it. 'Our stores, purely on a standalone basis, are seeing double-digit like for like growth for last several quarters. So stores are also growing pretty rapidly. We are not seeing that impact either in metro or in any other city,' he said. Similarly, for its online fashion business Ajio, Reliance Retail has launched same-day and next-day delivery across 26 cities. 'So, we are increasing the speed at which we are able to deliver the products,' he said. (With Inputs From PTI)
Economic Times
02-05-2025
- Business
- Economic Times
Perform or Perish: Reliance Retail's warning to stores
Live Events Successful Streamlining (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel Kolkata: Reliance Retail 's top deck has given an express direction that all new stores must break even within 6-12 months, failing which they will either be shut down or replaced with another retail format, executives aware of the details told marks a shift from the leading retailer's earlier practice of allowing up to two years to assess a new store, and reflects a sharper focus on profitability and margins as it prepares for an initial public offering (IPO).In a closed-door meeting with analysts last week, the company management had said the IPO plans will be shared in due course, one of the executives ₹2.91 lakh-crore turnover company will also scale back its aggressive expansion, another executive said. It plans to open 500-550 new stores every year, down from more than 1,000 stores FY23, the company had opened over 3,300 the last three financial years, it had also shut over 3,650 stores that were not Retail sells electronics, groceries, apparel, shoes, beauty products, gold jewellery, eye wear, medicine and handicraft through its stores across several formats and brands including 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," another person aware of the plans said."With higher due diligence in location selection, over 90% of the stores should achieve the breakeven target. Some may still not as market shifts by the time a store may come up," he the end of March 2025, Reliance Retail owned and ran 19,340 stores pan email sent to Reliance Retail remained unanswered till Thursday press is also pivoting towards a premiumisation drive across apparel and grocery retail. The luxury retail business will continue to be under Reliance Brands through which it sells global brands like Armani Exchange and Hugo Retail's chief financial officer Dinesh Taluja told analysts in an earnings call last week that its premium grocery formats Freshpik and Gofresh are finding very good acceptance and it plans to launch more of these in the affluent company is also repositioning its value fashion store Trends for younger consumers with latest technology in the lines of another format be sure, Reliance Retail has improved its margins in the last two fiscals with the clean-up "streamlining" exercise-a push to improve margins through store rationalisation and improved operational company's Ebitda (earnings before interest, taxes, depreciation, and amortisation) margin improved to 8.3% in 2024-25 from 8.1% in the preceding year. In FY23 and FY22, it was 7.6% and 6.2%, told analysts the company is "pretty much done with the streamlining," but did not share any of the executives cited above said streamlining was a one-time exercise to improve financial parameters and Ebitda. "Going forward, unit economics and profitability will dictate expansion and new initiatives. The improvement in Ebitda will also improve valuations," he is eyeing profit even in high cash burn areas like ecommerce. Taluja said the company intends to do its 30-minute online delivery business to take on quick commerce "in a profitable manner with a very strong unit economics."Deliveries will be made from the store nearest to the consumer, avoiding the need for the company to set up dark said considerable fixed costs of dark stores are being taken care of by the store sales, whereas 30-minute delivery aids incremental sales with only an incremental cost incurred to deliver these orders.
