Reliance exiting furniture business


September 21, 2014

Purvita Chatterjee/M. Somasekhar, The Hindu Businessline

Mumbai/Hyderabad, 21 September 2014

At a time when Swedish retailer Ikea is making big plans to enter India, the country’s largest retailer Reliance Retail is winding up its furniture format under Reliance Living.

All the stores under Reliance Living are now being shut down across cities such as Bangalore, Delhi and Hyderabad.

“We had 12 Reliance Living outlets across the country and most of them have shut down as furniture is no longer a focus area for the company,” said an official from Reliance Retail.

Reliance Living stores occupied large space across these metros stocking furniture, furnishing, home ware and kitchen items. Even other organised players such as Future Group’s Home Town and Lifestyle Group’s Home Centre have been struggling to make money from their respective formats.

In the case of the Future Group, it had to merge its Home Town stores with its durable format under e-zone to help it break even.

Slow churn

According to Devangshu Dutta, Managing Director, Third Eyesight, a retail consultancy, “The slow stock turn is the biggest issue for furniture retailers as the inventory and retail space get locked up unlike in the case of fast moving categories such as apparel, food and grocery.

“Besides, competitiveness of the fragmented unorganised retailers is too strong for the organised players to make money easily. Indian furniture retailers have yet to discover a model which works for them.”

Apart from furniture, last year, the multi-format retailer shut down its books and music format — Reliance Time Out — and even its non-vegetarian offerings under Delight. “Almost 40-odd stores under Reliance Time Out were shut since categories such as books and music have moved to the digital platform. We are constantly rationalising our formats depending on what works for us,” the official added.

Value format

However, other specialty retail formats such as Reliance Digital and Reliance Jewellery are helping boost margins and profitability for the company.

Today, it is the value formats (Reliance Fresh, Super & Mart) which are the biggest growth drivers for Reliance Retail. Value retailing now accounts for 55 per cent of the company’s ?14,500-crore turnover.

It is in the process of expanding its value formats and e-commerce will be a major part of these. Damodar Mall, CEO – Value Format of Reliance Retail, said: “We are already doing a pilot among our employees for e-commerce.”

Meanwhile, its ‘cash and carry’ format under Reliance Market has established leadership position in the category with 32 operational stores and 1.2 million registered members.

(Published in The Hindu Businessline.)