Reliance Retail opened 1,276 new stores between April and December compared with 2,376 in the same period last year. Tata-owned Titan Company opened 239 outlets across brands including the Tanishq jewellery stores, down from 359 stores, while Avenue Supermarts opened 17 new DMart stores against 22 a year earlier.
V-Mart and Shoppers Stop opened more new stores than in the first nine months of last fiscal year. While the number for V-Mart was 46 against 42, its net store addition – after accounting for the poor-performing outlets that it closed – fell to 31 from 34. Shoppers Stop’s net count isn’t available as it has not reported the number of stores it shut. The retailer also operates in the bridge-to-luxury and premium segment, which is least impacted by changes to consumption patterns.
Top industry executives attributed the slowdown in store expansion to more focus on profitability when consumption had not picked up the way it was expected to and as most of the new markets are already filled up with 2-4 retailers, leaving little room for more outlets.
V-Mart managing director Lalit Agarwal told ET that till last fiscal year, a lot of virgin markets were still left to be untapped, but that opportunity has reduced now due to most retailers expanding in a big way. “There is also a mindset change in the expansion strategy where the focus is now on profitability since overall consumption has not picked up. The rural and mass segment has improved year-on-year, but we are yet to return to the original consumption levels,” he said. “Hence, expansion has become muted for the industry this fiscal.”
Also, last fiscal year’s expansion had some pent-up impact since store additions during the peak of Covid (FY21 and FY22) had slowed down due to restrictions in offline store operating hours. Jefferies in a report last week said Reliance Retail had slowed down retail business capex and it will remain moderate, “as peak investments in supply chain and digital infrastructure (that) are behind and pace of store adds, have come off”. The net store addition for Reliance Retail at 124 last quarter was the lowest in five years (excluding the Covid-hit quarters).