The pace of expansion of India’s Reliance Brands is amazing many.
In the midst of a slowdown in the retail industry when most of the retail businesses have been scaling back their expansion plans, Reliance Brands unswervingly carries on.
Reliance Brands, a subsidiary of Reliance Industries Limited, led by Mukesh Ambani, opened its first store in 2010. It operates around 60 stores housing 12 brands including Diesel, Brooks Brothers, Thomas Pink, and others, and intends to launch 40 more before the end of March 2013. It is keen to pursue new tie-ups with foreign brands.
Unlike the scenario two years back when it was possible for fashion retailers to attain annual sales growth of 25 per cent, things are more demanding now.
However, Darshan Mehta, CEO of Reliance Brands, says the company’s present aim is to have profitable stores which may enable them to attain overall profitability, a few years down the line.
He said the conglomerate is fortunate to have a patient parent who doesn’t zero in on the profits, but aims to build a robust business, despite the hurdles in their way.
Ambani, at the recent annual meeting, announced the retail business will be a prime thrust, owing to the huge potential of the sector. It is planning on growing six fold in the next four years. Reliance Retail comprises of 1300 stores, most of which are supermarkets, at present.
Companies like Future Group, the largest retailer in the country operating supermarkets and clothing outlets has rolled back its expansion to 2 million sqft from 2.5 million.
The present economic slowdown has forced many companies to step down their activities. The economic growth this year was the slowest in the last nine years. The import duties have also swelled with the 15 per cent fall in the value of the rupee.
The recent directive by the government making it mandatory for foreign companies to source 30 per cent of their goods from local vendors (including small and medium scale) has benefitted companies like Reliance, though it can discourage them (foreign companies) from setting up their own business.
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