Reliance Retail sales surged 10.5 per cent in the second quarter to US$600 million – and at least one analyst is tipping even greater performance ahead.
Ankita Roy, a retail analyst at GlobalData, says the Indian retail giant’s strategy to diversify its business – together with continuing improvements to its existing operations – will help it to scale new highs next year.
“With its prime focus on a business diversification strategy, Reliance Retail aims to integrate its products and services as a routine in consumers’ lifestyle. India’s middle-class population accounts for nearly 30 per cent of the overall Indian population, and if the company can leverage even a small portion of their wallet sizes, it will reap huge benefits,” she said.
“This explains the company’s focus on business-to-business (B2B) e-commerce and acquisition of startups and popular brands along with building a digital wholesale marketplace like Alibaba.”
Reliance is continuing to acquire small brands and businesses that can expand its offer and strengthen its foothold in growth markets.
In October, Reliance Retail acquired a 96.5-per-cent stake in Aaidea Solutions, which operates grocery-delivery business Milkbasket, and a 40-per-cent stake in Manish Malhotra’s apparel supplier MM Styles.
“The acquisition of Milkbasket will help Reliance Retail to meet the consumers’ preferences for convenience,” said Roy.
“Several other companies that have been recently added to the retailer’s portfolio include pharmacy startup Netmeds, online furniture startup Urban Ladder, and Zivame. With these, the company will be placed in direct competition with online giants such as Amazon, Flipkart and much pronounced Tata’s upcoming super app,” said Roy, highlighting the company’s efforts to boost its e-commerce presence as the Covid crisis drags on.
“The ongoing Covid-19 pandemic is still impacting consumer purchasing behaviour, driving a trend towards ‘on-demand’ and subscription-based grocery delivery services,” she said.
GlobalData points out that India’s retail sector remains highly unorganised with the modern retail sector comprising only 15 to 20 per cent of the entire retail Industry.
“Reliance Retail aims to step into the traditional retail formats and partner with smaller stores or merchants to make inroads into the potential tier 2 and tier 3 cities and reach new audiences.”