Customer spending is purely based on sentiment and India‘s growth story is intact because of a feel-good factor in the market, Reliance’s fashion and lifestyle chief executive Akhilesh Prasad told ET. “India will be the fastest growing economy and there is no problem. So, we are managing customer sentiment which ensures the market grows.”
With more than 4,000 fashion and apparel stores, including brands such as Trends, Centro, Azorte and Fashion Factory, Reliance is by far the market leader in the segment. The retailer sold 430 million pieces of garment in 2022, enough to clothe the entire population of the US and Canada.
Reliance chairman Mukesh Ambani believes that the one who doesn’t grow actually shrinks, Prasad said. “And that’s the brief from our leadership,” he said. “We sell the largest number of garments in the country and in a year or two, we should be the highest in the world. We have 1.4 billion people (in India), so the market is already here.”
Reliance Retail has grown at 17% on a compounded annual rate over the last decade with consumer electronics expanding the fastest. However, in the past five years, growth has been majorly driven by fashion and lifestyle which expanded 43%, followed by grocery that grew 41%. Fashion contributes the highest to overall profitability with the widest margins at 24%.
The company said as income grows in India, the likelihood of growth in the premium segment is likely to be slightly faster now. Last week, the company opened the first standalone store of American brand Gap in India and said it would drive the partnership with India-centric merchandise as well as innovating technology like grab and go concepts.
“Gap has understood the India market better after that first stint. We have also sat intensely with them and explained how Indians have different usage of colour and a lot of seasonality,” Prasad told ET during the Gap launch.Fashion is the fastest-growing category in India’s tier-2 and tier-3 cities, with over 93% growth in fiscal 2022. In fact, online shopping novices typically start with purchases from the fashion segment.
Experts said India’s consumption structure has been skewed in the past over a narrow base of richer consumers accounting for a large chunk of the overall market. However, as the economy is broadening across many more cities and the impact is reaching further down the income ladder, the opportunity for value-formats and value-brands is expanding, an area where Reliance is entering with a youth-centric brand.
