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Reliance Retail has temporarily closed several Centro department stores as part of a repositioning strategy to focus on its in-house brands and labels. Originally converted from Future Group's Central outlets, Centro stores are undergoing a remodelling process. Brands have been asked to retrieve inventory as Reliance explores a shop-in-shop model featuring its own and partnered brands, including Gap and Superdry. The closures come amid a slowdown in retail expansion and a 3.5% decline in quarterly revenue, attributed to weak demand in fashion and lifestyle. Despite challenges, Reliance remains focused on technology-driven efficiencies to strengthen its market leadershi
Reliance Retail has temporarily closed several stores within its department chain, Centro, as part of a broader strategy to reposition the format, focusing primarily on its own brands and labels, which it began introducing in India as a licensing partner in September 2022. The retail division of Reliance Industries had previously converted Future Group's Central stores into Centro outlets in locations where it had assumed the lease following Future Group's surrender of the properties. Advertisement
According to sources within companies impacted by the closures, Reliance Retail has already closed three stores and is expected to shut an additional two dozen by the end of this month. Executives have reportedly asked these companies to retrieve their inventory and fixtures, citing the need for renovation and repositioning of the format.
Reliance Retail communicated in a letter to its partner brands that it has decided to temporarily halt operations at all Centro outlets across the country as part of the store's remodelling process. The company noted that the display, storage, and sale of merchandise would be paused at these outlets, and requested that brands remove all goods, stocks, promotional materials, and any other items from the stores.
It remains unclear whether Reliance Retail will continue to host existing local and global brands once the stores reopen. However, the company is likely to utilise the space for its own brands in a shop-in-shop model. Reliance has either partnered with or acquired approximately 80 international brands, such as Gap and Superdry, in addition to its own labels, including Azorte and Yousta. Centro stores, which previously featured about 450 local and global brands, compete with Dubai-based Lifestyle International and Raheja's Shoppers Stop in the department store format.
Retail expansion in India has decelerated, with growth falling to 4% last year after a surge in consumer spending across various sectors, including clothing and automobiles, fueled by post-pandemic "revenge shopping."
Earlier this month, Reliance Retail reported a 3.5% decline in revenue from operations for the three months ending September. The company attributed the decrease to weaker demand in the fashion and lifestyle sectors and a more cautious approach to improving margins in its wholesale business. This marked the first instance of a revenue decline for India's largest retailer since the pandemic, when government-imposed restrictions led to temporary store closures.
Despite this setback, Reliance Retail's Chief Financial Officer, Dinesh Taluja, reassured analysts that the company remains on solid footing. He noted that although macroeconomic conditions remained weak, and the apparel, footwear, and lifestyle businesses experienced a decline, the company's core fundamentals were strong. He emphasised that Reliance is making significant investments in technology to streamline the "design-to-shelf" cycle and enhance design capabilities, ensuring long-term market leadership.
Furthermore, Reliance Retail has significantly reduced the pace of its store expansion and ramped up closures this fiscal year. In the first half of the fiscal year, the retailer reported only 110 net store additions, despite opening 795 stores. This indicates that closures have far outpaced openings, with store closures exceeding openings by more than six times. In contrast, during the same period the previous year, Reliance added 610 stores, opening 1,026 new outlets.
In conclusion, Reliance Retail's shift towards in-house brands and a focus on store remodelling reflects its long-term strategy amidst current market challenges. By streamlining operations and investing in technology, it aims to strengthen its market position.
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