The expansion plans of Indian group Reliance Retail were put on hold this year in the face of the global financial crisis, but the company says it will begin rolling out new stores again in about six months when property prices have fallen.
Reliance had initially planned to have 2,000 stores by 2008 and 5,000 by 2010, but the retailer currently only has 700 stores in 60 cities in India.
“We will wait for another six months to book properties in Tier-II and III cities as we expect lease rentals and property prices to fall another 25-30 per cent,” an unidentified company source told the Business Standard.
“In bigger cities, we expect consumer demand to regain momentum in another 6-10 months helping us to expand our stores.”
Two and a half years ago, Reliance announced its expansion plan would be backed by an investment of US$5.13bn, according to the Business Standard. In the last financial year, however, it was hit with a loss of US$168,000.
India’s organised retail sector accounts for about 5 per cent of the country’s total retail business, valued at about US$350bn. That figure is expected to rise to 14-18 per cent by 2015, according to a McKinsey report.
