Reliance: Luxury & Lifestyle Leader Too?


Mukesh Ambani’s Reliance Industries has been in the news for its unprecedented stake acquisition of luxury and lifestyle brands. What is the agenda?

By: Suman Tarafdar

Posted on: July 27, 2022
 
Think Reliance Industries, and the associated words that come to mind most are energy, petrochemicals, natural gas, telecommunications, mass media, and textiles. Well, in the past couple of years, Reliance Industries Limited (RIL) has made a determined foray into sectors that are – to put it mildly – not regarded as its core sectors. Whether through tie-up sprees with foreign brands or outright acquisitions, dozens of brands, including many global ones, are now part of the Reliance portfolio. And a vast majority are lifestyle brands, largely, but not limited to the luxury space.
 
Most of these fall under the umbrella of Reliance Retail Ventures Limited, which includes divisions such as JioMart, Jio Stores, Reliance Fresh, Reliance Digital, Reliance Trends, Reliance Smart Point, Trends Footwear, Reliance Brands Limited, Reliance Consumer Brands, Reliance Smart, Reliance Jewels, Hamleys, Reliance Mall, Project Eve, and 7-Eleven. Reliance Retail has over 12,000 stores across more than 7,000 cities in the country.

Mukesh Ambani, who has headed RIL after his father, is reported to be one of the richest individuals in the world, with a net worth of about $100 billion – give or take a few million depending on the vagaries of the market. How will the opening of Maison Valentino’s first boutique in Delhi, or a flagship store in Mumbai, impact his fortunes? Or make any noticeable dent? 

Just in July 2022, there has been news of the group bringing an American retailer with a significant global footprint of over 3,500 stores across the world, GAP and Italian luxury brand Valentino to India. Not to overlook UK-based Pret-a-Manger, which in the UK alone has over 400 locations and has a significant presence globally.
 
Mukesh Ambani, who has headed RIL after his father, is reported to be one of the richest individuals in the world, with a net worth of about $100 billion – give or take a few million depending on the vagaries of the market. How will the opening of Maison Valentino’s first boutique in Delhi, or a flagship store in Mumbai, impact his fortunes? Or make any noticeable dent?

What’s in the portfolio?

"In retail business, we continue to focus on enhancing our consumer touch-points and building a stronger value proposition for our customers,” Mukesh Ambani, chairman, Reliance Industries Limited, said in a statement as the latest quarter results, which showed huge growth, were released earlier this month.
 
Most industry watchers agree that the current buying spree started in 2019 with the acquisition of popular UK-based toy retailer Hamleys, which has proven to be a smash hit for the company. While the company has not revealed revenue numbers, empirical evidence in the form of new stores and anecdotal evidence of young parents flocking the stores suggests a roaring business.
 
The showcase till date are the 50 odd – and growing – high-end international brands — such as Armani, Burberry, Jimmy Choo, Hugo Boss, Steve Madden, Diesel, Gas, SuperDry, and others — that the company is retailing in India under Reliance Brands Limited (RBL) banner – thanks to its acquisition of Genesis Luxury Fashion Pvt. Ltd. By the end of the March quarter of this year, RBL had 680 stores and 916 shop-in-shops in India.
 
Then there has been the investment in Indian fashion houses. It started with a stake in Satya Paul in 2018 followed by another stake in Raghavendra Rathore the same year. This was followed by the apparel brand John Player, which it acquired from rival conglomerate ITC, which is divesting its apparel division, including Wills Lifestyle. The year of 2021 saw another flurry of acquisitions, with a 40% stake in Manish Malhotra’s luxury fashion label, a 52% stake in Ritu Kumar, a 60:40 joint venture with fashion label Anamika Khanna, and acquisition of lingerie brands Zivame and Amante. This year has continued the spree with a majority stake in Abraham & Thakore and Abu Jani & Sandeep Khosla, another 60:40 joint venture with Rahul Mishra, and a majority stake in yet another lingerie brand, Clovia.

Darshan Mehta Reliance Brands
Darshan Mehta has largely spearheaded Reliance's Retail division  


Darshan Mehta, President & CEO Reliance Brands Limited, who has spearheaded the retail division for over a decade, told the Hindustan Times on the occasion of the partnership with Mr. Malhotra that “the new base of luxury consumers are younger, more agile and are coming from this part of the world. A few years ago I used to say in jest that the next Giorgio Armani or the next Calvin Klein would come out of India or China. It’s all turning out true over the last few years.”
 
Mr. Mehta has an ally in Isha Ambani, director, RRVL, who told Mint at the time Reliance Retail Ventures Ltd (RRVL) took a majority stake in Ritu Kumar, that very few countries can match the sophistication, style and originality of design, especially in the printing and painting of textiles and weaves found in India.

Isha ambani Reliance Brands
Darshan Mehta has found an ally in Isha Ambani as they both lead Reliance's Retail division now  


Sports – read cricket in India, of course was another early acquisition when the group got the rights to the Mumbai Indians franchise for about $112 million in 2008. It has since leveraged the massive viewership it brings to promote the group’s brands and presence.
 
Hospitality has also been on the RIL radar. East India Hotels owner PRS Oberoi divested part of his stake to the Ambanis to stave off rivals ITC, and the RIL share has continued to grow. RIL may be coy in admitting a controlling stake, but in 2019, it was widely reported in the media that the new Oberoi resort at Mumbai’s BKC would be named Anantvilas after Ambani’s son, Anant. Ambani also bought one of Britain’s most iconic country clubs, Stoke Park in Buckinghamshire for Rs. 592 crore in 2021.  On the other side of the pond, Ambani acquired a stake in the Mandarin Oriental New York for $98.15 million in 2019.

Why is RIL on a buying spree?

Given the size of the company, buying a lot of these brands outright or a stake is small change for RIL. And as most experts agree, not as profitable either compared to the other sectors the conglomerate is present in. So why venture into these relatively less profitable, low-margin projects with long gestation periods?
 
Experts seem to opine that these moves are less about profitability and more about branding. While Mr. Ambani is already among the richest men in the world, globally he is not as well-known as others he shares the top spots with, such as Jeff Bezos, Bill Gates and Elon Musk. Though of course, arguably better known than his other Indian peer in the list, Gautam Adani, who has a largely domestic presence.
 
It also may be a way to spread his ‘empire’ more globally – in common with other leading conglomerates. Thus, not relying on a single economic market or sector, but ‘spreading the risk’ in investment terms.
 
Another school of thought credits these moves to occupying the mindspace – and wallet of the newer and future customers by establishing early brand loyalty. Indeed, as retail globally is transforming to digital first, RIL seems to be eager to cash into this space.

Different brands, different formats

While there is surely a method to the acquisitions and alliances, Reliance Retail seems to follow a number of formats to associate with these myriad brands. With GAP for examples, it has become the official franchise partner of the US-based fashion brand across all outlets in India. Gap merchandise will be available in India across exclusive brand stores, multi-brand stores and online platforms.

While Mr. Ambani is already among the richest men in the world, globally he is not as well-known as others he shares the top spots with, such as Jeff Bezos, Bill Gates and Elon Musk.

Reliance Partner Brands infographic
 
Of course, not everything goes according to plan. At least not always. An effort to buy UK’s Boots, owned by US-based Walgreens Boots Alliance, which had put its UK subsidiary for sale in December 2021, has announced a cancellation of the sale. Boots, which currently owns over 2,000 stores in the UK, would have given RIL an entry into the lucrative pharma retail space, where the group is notably absent. Earlier this year, Mr. Ambani scrapped a $3.2 billion deal with Future Retail, which would have given it a huge leg up in India’s booming retail space, challenging Amazon’s rapid spread.
 
A recent report by Fortune India posited that Reliance was trying to be a ‘Walmart plus Amazon’ rolled in one, at least for the Indian customer. Indeed, with its tentacles spreading far and wide in the lifestyle-retail space, and by no means finished, especially as it competes with rivals such as Aditya Birla Group, which has been on its own Indian fashion brand acquisition spree, it may be difficult to disagree with this assessment.

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