Reliance Plans Major Expansion Of Fashion Store Business

Reliance Plans Major Expansion Of Fashion Store Business

Reliance's plans to diversify into e-commerce and expand in fashion. The announcement comes on the heels of India's new foreign investment curbs that have dealt at least a temporary blow to Amazon and Flipkart. Reliance Industries Ltd plans to grow the number of low-cost Reliance Trends fashion stores across India to 2,500 from 557 over the next five years and integrate them with its online business. The expansion, is the latest move by the conglomerate's billionaire owner Mukesh Ambani to grab a dominant share of Indian consumer spending in a struggle with rivals, particularly e-commerce giants Amazon.com Inc and Walmart Inc's Flipkart. Reliance's plans to diversify into e-commerce and expand in fashion come on the heels of India's new foreign investment curbs that have dealt at least a temporary blow to Amazon and Flipkart. Prime Minister Narendra Modi's government in December modified foreign direct investment rules for e-commerce, barring online retailers from selling products via vendors in which they have an equity interest, and also from making deals with vendors to sell exclusively on their platforms. Ambani founded Reliance Retail Ltd in 2007 to transform his petroleum behemoth into a consumer-facing conglomerate. The expansion plan should allow Reliance Trends, which sells accessories as well as clothing, to rapidly grow its private labels - the retailer's own brands, according to media reports. Reliance Trends would be in 300 cities in five years, from 160 now, it is reported. According to company sources, integrating the availability of private labels with its e-commerce venture and penetrating deeper into smaller, tier 3 and 4 cities is the next level of growth for Reliance Trends. Last year, Reliance Trends opened over 100 stores. Ambani's so-called "new commerce" venture aims to connect small and mid-sized merchants with his retail network and warehouses, helping them better manage inventory as well as boost sales of Reliance's private labels. Cheap prices for India's youth India has the world's largest population in the 18-35 year age group at 440 million people, constituting nearly half of its workforce, global consultancy Deloitte said in a recent report. With rising use of the Internet and smartphones, e-commerce retailers have doled out discounts to lure people to shop online for goods as varied as basic groceries and large electronic devices. "The millennial opportunity is what every retailer is looking at. Reliance is no different," said industry analysts. Retailers tend to make better margins out of their own brands than third-party brands because they can keep a much sharper eye on costs of production and associated marketing. Almost 80% of Reliance Trends' revenue comes from private labels. A team of designers work across seven centres in India and one in London to design items such as jeans, trousers, shirts and t-shirts. "They are looking at global fashion and then they are looking at how that fashion can be adapted for India at a price which is affordable to churn out their private labels," said analysts.