Reliance: Leveraging $1.5 tn retail opportunity

The company is well placed to leverage it through online ecosystem and offline network by maximizing the reach across India’s consumption strata through a mix of trusted relationship between customers and brands, strong digital ecosystem, vast product and geographic presence and best in class retailing capabilities

Indian retail is a hyper growth market with FY2019 market size of $822 billion of which unorganised is around 89% i.e. $735 billion whereas organized is around 11% at $88 billion. This is expected to reach $1.5 trillion by FY2025 of which unorganised will be $1,228 billion and organised will be $237 billion.

In terms of growth, organised retail is planned to grow at a CAGR of 18% and unorganised retail is expected to grow at 9% and with this growth, India is planned to be the 3rd largest retail market in the world. Reliance Industries is well positioned to leverage this opportunity as it is focusing on retail in a big way through partnerships and technologies.

Let’s look at how Reliance is planning to leverage India’s retail opportunity.

Deep understanding of markets and customers – Reliance Retail is India’s largest retailer with 640 million customer footfalls and 125 million loyal customers and this gives them a deep understanding of markets and customers for so many years. This is bound to grow multiple times in 5 years time frame as the company is in the process to leverage demand and supply.

Trusted relationship with merchants and brands – Reliance Retail has an excellent relationship with merchants and brands. The company is also developing new brands in keeping with the emerging consumer brands. The company is also developing its own brand in different categories. All this gives them a wide array of brands to meet the requirements of all types of consumers in different verticals.

Vast presence across product categories – Reliance Retail focuses on varied product categories like: Consumer electronics, fashion & lifestyle, grocery, connectivity and petro retail. In terms of revenue, the Top 3 items are: Connectivity (40%); Grocery (26%); and consumer electronics (16%). There is a strong growth in grocery and connectivity and the company plans to leverage grocery in a big way with Facebook partnership through hyper localisation.

Widest geographic presence across the country – Reliance Retail has expanded its store footprint, both geographically and across the consumption baskets to tap the market opportunity in the smaller towns. The company added 1,553 stores during FY2020 taking the overall count of 11,784 stores covering an area of 28.7 million square feet. Having added a lot many physical stores, the company is planning to leverage online in a big way.

Best in class retailing capabilities – With different types of retail stores under its belt, the company is providing best in class retailing capabilities to its consumers. The company is also planning to extend this best in class retailing capabilities to consumer homes through use of PoS (Point of Sale) terminal, Jio Mart and around 30 million local kirana stores. This will be win-win for both merchants, brands and consumers.

Experience in rapidly scaling up business – Reliance Retail is the only Indian retailer to feature in the Global 100 Retailers list thanks to its rapidly increasing revenue and ability to scale its business to newer geographies. In FY2015, the company had a revenue of Rs. 17,640 crore and in FY2020 the revenue has scaled to Rs. 162,936 crore. In FY2015, the company had 2,621 stores and in FY2020 it has reached 11,784 stores. These numbers speak about its ability to rapidly scale up business on the retail front.

Strong digital ecosystem – Reliance has a strong digital ecosystem under its belt with Reliance Jio, the digital platform of the Group. Also its partner Facebook, Silver Lake, Vista and General Atlantic all have a strong digital experience. The coming together of business partners will help Reliance in coming up with innovative solutions to leverage both online & offline and organised & unorganised thereby leveraging India retail opportunity in a big way through digital commerce and omni channel capabilities.

Reliance Retail has already started the Jio Mart Pilot initiative, where the company supported its partner kirana stores by offering uninterrupted services and supplies during the lockdown period. Daily orders grew by 4x during the lockdown period as kirana partners focused on serving their neighborhoods during the time of crisis. Once the pilot is successful, the company plans to rollout it out pan-India as the focus is to leverage a $1.5 trillion retail opportunity.

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