Good Morning [%first_name |Dear Reader%],

Suffering from success.

That was my main takeaway as we wrapped up recording for this week’s Two by Two episode last Saturday.

Reliance Retail is an unusually huge entity, given the sheer number of companies, brands, and franchises it houses under its banner. Comments like, “They created a Dmart in a year” and “It’s the largest retailer by a mile” all popped up during the conversation. Seen in isolation, nothing about those comments suggests a company which is struggling. Nor does its 19,300-plus stores. 

But as the Reliance group plans to list it as a separate company, a closer look at its operations shows a few missteps that it has made along the way. We get a picture of a company that showed up for everything, won at most things, but is only now realising that it can’t win everything.

This was the central theme that emerged from our latest Two by Two episode hosted by Rohin Dharmakumar and Praveen Gopal Krishnan, and featuring deputy editor Seetharaman G, who covers all things retail for The Ken.

Two By Two • EPISODE 43

Reliance Retail pays the price for size

The retailer took the 'scale-first' approach everywhere it went. But it has fallen short on multiple fronts

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“It’s not just a retail company. It’s a retail conglomerate.”

That’s a line from one of Seetharaman’s editions of Trade Tricks earlier this year. And nothing about that quip he quoted from an equity analyst has changed in the little time since. In fact, it’s been true of Reliance Retail for a long time. 

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But they’re not a winner everywhere they’ve spread their wings, and a few dents in Reliance Retail’s shiny armour have started to show.

There’s groceries…

And Jiomart fell short. Especially in quick-commerce, which it paused just as the Bigbaskets, Blinkits, Instamarts, and Zeptos of the world were powering through, and has revived only now. 

Then there’s jewellery…

And trust takes time to build. 

Seetharaman, for instance, noted how it took Tanishq 10 years to convince customers to switch from their local jeweller, and how a large part in Tanishq’s success was the Tata name. But then again, Reliance Jewels was launched in 2007 and currently boasts 143 standalone showrooms and 212 shop-in-shop outlets, as per their website. So maybe Reliance has made its peace with not being number one everywhere.

Of course, these aren’t “losses”. Just smaller victories. But for Reliance, that’s odd enough. 

Unlike some of its competitors, Reliance hasn’t really suffered from a lack of capital. On top of that, it has also managed to attract outside capital by promising an eventual spin-off of its many verticals and listing them as separate entities.

But it hasn’t happened for Reliance Retail yet. And while its investors might be patient for now, they will not forever. 

So there’s that pressure building up. And if they file to go public, the real numbers across subsidiaries and verticals in its retail division will come to light.

There have been layoffs. There has been scaling back. And yet, all said and done, Reliance doesn’t really look weak. Just a bit shaky. As Rohin said during the conversation, “It’s a 100-meter dash, and they won it in like, seven seconds. And they just kept running. And now, they’re at the two-kilometer mark and they’re like, ‘Where’s the rest of the competition? Guys, I think we ran too much. We got to backtrack a little bit.’” 

That’s all for this week. If you want to get a sense of how the Reliance Retail narrative has shaped up over the years, I would suggest revisiting older editions of Seetharaman’s newsletter Trade Tricks.

And once you’re done listening to this week’s episode, please write to us at [email protected] and let us know what you think. 

Regards,
Hari Krishna

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