After announcing that the retail venture of Reliance Industries Limited (RIL) had posted pre-tax profits for the first time since the division’s inception in 2006, the Mukesh Ambani owned chain is concentrating its efforts on opening 2,000 outlets of Reliance Digital Xpress Mini in the current fiscal year. Reliance Digital Xpress Mini stores are a scaled down version of the popular Reliance Digital store that caters to only the mobile market and sell accessories and handsets. These stores are compact at around 250 square feet in area and along with the aforementioned mobile handsets and accessories will also sell the services of Reliance Jio – RIL’s hotly awaited 4G services in India.
This idea has been tried and tested by another telecom operator in India – Bharti Airtel. Sunil Mittal’s company has operated over 1,700 stores for over a year now and such Company-Owned Company-Operated (COCO) stores have proved to be hugely adventitious for Airtel. Reliance Jio has planned such COCO stores to maintain uniformity in customer services, an official said on condition of anonymity. Within Reliance Digital, analysts found that communication and mobile products were selling like hot cakes. Also, a company spokesperson commented, “Driven by rapid technology advancements, this category is witnessing faster replacement cycles.”
The concept in launching the new store is to provide a differentiated technology shopping experience to consumers. This will ensure that Reliance Digital remains a frontrunner in this segment. Also, because of the store’s size, it can be accommodated in a variety of locations such as business parks, malls and even places of high public traffic. The idea behind micro-stores hasn’t been lost on other brands as well. Apple, that had so far shied away from going directly to the neighbourhoods and restricted their stores to high street and malls, is now planning to aggressively push with smaller stores in large and tier-II cities in a renewed India-specific strategy.
The mobile and tablet market isn’t as lucrative as the TV or refrigerator market for dealers. With large scale consumer appliances like TV’s and refrigerators, the gross margin that a dealer makes is around 15%, whereas in the mobile market it’s only 6-7%. This is why it makes sense for retailers and brands to open more number of smaller stores where operating expenses such as rentals are low and can employ skeletal staff. Hence, the viability of smaller stores is much more than the largeformat outlets.