Reliance Retail - which grew its retail footprint by 39 per cent (in square feet) since the pandemic, added multiple brands, and expanded its digital commerce - will further swell its network with the addition of Future Retail stores that came under its fold after the owner couldn't pay lease rent, analysts said.
Bernstein in a report said Reliance Retail is India's largest organized retailer both in terms of revenue and store network. It has 14,412 stores in India spread over 40 million square feet.
Its revenue has grown 5x in the last five years. Core retail revenue of $18 billion is greater than competitors combined, it said adding a 40 per cent compound annual growth rate (CAGR) has been best in class.
"The company has built an end-to-end retail strategy across 'new commerce', offline retail and e-commerce," Bernstein said.
It is 3x of the nearest competition and has delivered consistent growth across categories. "Grocery grew at double-digit, apparel, and electronics up 2x year-on-year. Digital/new commerce accounts for 20 per cent of core retail."
Core retail categories including grocery, consumer electronics and apparel have continued to scale strongly. Non-core retail has the 'connectivity business' which is the master distributor for Jio Services (recharge and customer acquisition) via Jio Stores / retail partners.
"We expect Reliance Retail to grow at 30 per cent CAGR over FY22-25 while expanding margins," it said.
As per company data, the mix was 21.2 per cent for grocery, 27.4 per cent for consumer electronics and 8.3 per cent for fashion. As part of non-core retail, connectivity was 34.3 per cent and petro retail was 8.7 per cent.
Connectivity business is the master distributor for Jio Services (recharge and customer acquisition) via 7,900+ small-format Jio Stores and 1 million-plus retail partners (mom and pop stores).
Jio Stores offer one of the largest distribution networks (6,600+ towns) for mobile phones, tablets, and accessories brands. The Mukesh Ambani firm has taken over the operations of at least 200 stores of Future Retail and offered jobs to its employees after the Kishore Biyani-led group failed to make lease payments to landlords.
Reliance Retail, the retail arm of oil-to-telecom conglomerate Reliance Industries, had in August 2020 agreed to take over the retail and logistics business of the Future Group for Rs 24,713 crore but the deal could not be closed as Future's warring partner Amazon went to courts citing violation of some contracts.
Future denies any wrongdoing. Future, which has more than 1,700 outlets, including the popular Big Bazaar stores, has not made lease payments for some of its outlets.
Facing closure, Reliance transferred the leases of some stores to its step-down subsidiary, RRVL, and sublet them to Future to operate the stores.
Reliance is building its new commerce business as it targets 15-20 million Kirana stores that will be used to fulfill orders from nearby customers. New commerce was up 3x year-on-year in October-December and is now available in 3500+ cities.
"Reliance Retail offers lower pricing compared to other distributors, better service level to onboard kiranas on the B2B platform, credit for working capital. Kirana's digitization strategy offers brands reach to merchants, better analytics. Consumers can order from kiranas directly through JioMart," the Bernstein report said.
The firm also has a strong premium brand portfolio which they can exclusively market on their platform. Reliance Retail added 50+ leading Indian & international brands in the recent quarter. Indian affluent consumers are increasingly focusing on premium brands that improve their lifestyle choices. This has resulted in premium becoming the fastest-growing category.
