Reliance Retail’s bet on small towns for growth has paid off as India’s largest retailer reported a 27% growth in second quarter revenue to ₹41,202 crore and a 67% growth in EBITDA to ₹2,322 crore, recording the 14th straight quarter of revenue and profit increase.
To put the scale in perspective, Reliance Retail quarterly revenue is higher than the annual revenue registered by the next largest retailer in the country.
Early break-even
“One third of our stores are in tier one cities and two-thirds in tier 2, tier 3 and tier 4 cities, so you know where the growth is coming from. Expansion in tier 3 and 4 markets gives us early break-even and while other retailers are focussing on major cities leading to competition, we are expanding in smaller cities, with big opportunities of growth,” Gaurav Jain, head of strategy, Reliance Retail, told The Hindu.
Reliance Retail beat the slowdown with athird of the growth coming from fashion and lifestyle, consumer electronics and grocery categories, that now account for over 60% of the total business. Most of this business comes from tier 3 and tier 4 cities.
Reliance Retail’s grocery sales rose by 30% and footfalls increased by 11%, according to Mr. Jain.
During its ‘Digital India Sale’ from August 10 to August 15, the company received 3.6 million footfalls, leading to a 44% increase in wireless phone sales, 38% increase in laptop sales and 117% increase in air care sales.
Asked about the growth segments, Mr. Jain said, “Fashion and lifestyle, consumer electronics and grocery EBITDA margins improved to 8.8%, contributing 86% of overall EBITDA.”
During the ‘Full Paisa Vasool’ sale from August 10 to August 15, Reliance Retail, received over 5.2 million footfalls leading to 33% increase in billing with 58% increase in sale of staples and 76% rise in sale of confectionery and snacks.
“Continuing growth trends in our retail business is heartening. Guided by our obsession to provide the best value for our customers, Reliance Retail delivered robust performance with record quarterly revenues and EBITDA,” said Mukesh Ambani, CMD, RIL.
Store expansion
Reliance Retail had opened 337 stores this quarter, averaging around four stores a day, taking the total number of stores to 10,901.
The stores cover all corners of the country with the network reaching almost 6,700 towns.
“The gains of modern retail are being brought to the real ‘Bharat’ as more than 2/3rd of stores are operated in tier 2, tier 3 and tier 4 towns,” said the company in a statement.
