Reliance Mart bets on value, private labels to drive sales

Chennai: With Globus going down the private label path, now Reliance too is betting that private label stores are where the money really is. Reliance Mart, the first hypermarket opened by Reliance Retail in Ahmedabad on Independence Day this year, has bet on the value platform and its private labels to drive sales.

According to K. Radhakrishnan, CEO, hypermarkets, Reliance Retail, the Ahmedabad store would serve as a good test market for mass brands that offer a value proposition. Stocking a high proportion of private labels in select categories such as apparel, grocery, staples, (atta, sugar, tea under the ''select'' and ''value'' labels) footwear and watches, apparel is said to be a differentiator, as 50 per cent of stocks are private labels with only half being made up by brands, that too only those perceived as value brands.

Footwear is next with 90 per cent private labels, as is another favourite category of watches at 15 per cent. Competitive pricing is key, which is illustrated by shirts and jeans offered at Rs199, t-shirts for Rs99, wrinkle-free shirts and trousers at Rs599.

Companies such as Celebrity Fashions, among others, which markets the Indian Terrain apparel range, supply to Reliance under its private label called Spirit. Arvind Mills too, for instance, has supplied a denim label to the Mart.

Reliance retail says all templates for expansion will flow from this store.

The next hypermarket is scheduled to come up in Jamnagar, followed hypermarkets in the NCR region, Hyderabad, Tirupathi, Vijaywada, Pune and Ludhiana. Though smaller, these stores would cover floor space in the range of 20,000 sq ft to 40,000 sq ft.

The company is planning for 30 Marts by year-end. First day sales at the Ahmedabad store pegged the record at over Rs60 lakh, which has lead the company to estimate an operational breakeven for the store in about three months. The store is averaging 7,000 bills a day.